Review of Government Funded Research and Innovation (Reid

Review of Government Funded Research and Innovation in Wales

Research and innovation make vital working together towards these goals. I contributions to the economy and society of have come across wonderful ambitions and Wales. They are underpinned by judicious achievements in research and innovation investment from the Welsh Government. from Anglesey to Newport and from Port With continuing pressure on public finances, Talbot to Deeside. reforms to higher and further education in Research and innovation also contribute more Wales and the approach of major changes widely to the image, culture and national in UK and EU funding, it was timely for the identity of Wales and these vital contributions Welsh Government to commission a review have been made clear to me throughout my of Government-funded research review. Indeed, I see opportunities to give and innovation. I was delighted to have more prominence to research and innovation this opportunity to lead the work. in the national narrative of Wales. I agreed with the Welsh Government that I have been guided by Cabinet Secretary for my work should proceed quickly and that Education, Kirsty Williams, who said at the I should report around the end of 2017, start of my review: before UK Research and Innovation (UKRI) is created formally, while BrExit negotiations “Our aim is to make sure that every are still underway and before education and penny we invest in this area delivers the research reforms in Wales are finalised. maximum benefit to the people and economy of Wales. I am looking forward I aimed to pursue a transparent process. to the education sector, business, learners Broadly speaking, I spent the first half of and others getting involved.” the review receiving evidence and meeting people from many parts of Wales and from and by the Minister for Skills and Science at UK-wide bodies with interests in Wales. that time, Julie James AM, who said: During the second half of the review I shared “The aim of this review is to look at all emerging findings with stakeholders from the investment the Welsh Government business, local authorities, Government, makes into research and innovation further and higher education and refined and how it is making a difference and my views in response to their feedback. what we can do to change things for Throughout the work I benefitted from the future as this area is vital to Wales’ advice from a distinguished panel of prosperity.” advisors and from Welsh Government This led me to follow three principles. I have officials, however, the conclusions and recommended that Welsh Government recommendations are mine alone. resources are concentrated on cost-effective I found enormous enthusiasm for the Welsh investments, in areas of high potential, Government’s ambition to use research and where: innovation to raise levels of productivity, • only the Welsh Government can provide build a stronger and more resilient economy, financial support – other sources of protect the environment and ensure the funding are not readily accessible in the well-being of future generations. I have seen public or private sector. countless examples of talented, energetic people in business, universities, further • Welsh Government funding not only education and local authorities already provides a direct impact but also creates

i incentives to deliver wider Welsh of course, would be subject to normal Government objectives. Government budget negotiations and • the historic dependence on EU funding process. can be replaced not only with Welsh …Similarly, given the current economic Government money but also by even more climate, there are a number of success in UK-wide funding competitions recommendations with financial and by attracting higher levels of business implications that will need to be investment. considered as part of future budgeting At a time of great pressure on public rounds. These include recommendations spending, these principles help align my on quality research funding, knowledge findings with the wider agenda set out in the transfer, the Learned Society of Wales Welsh Government’s strategy ‘Prosperity for and the unhypothecated amount All’ in September 2017. allocated to the Higher Education Funding Council for Wales’s recurrent Describing that strategy, Cabinet Secretary for budget.” Economy and Transport, Ken Skates AM, said: I have no overview of the range of public “Our new overarching strategy spending priorities in Wales. Only the Welsh ‘Prosperity for All’, which the First Government can balance the many demands Minister launched today, sets out a whole for scarce funding. My review contributes to Government approach for a competitive the budget considerations referred to by the and fairer economy that can help us Cabinet Secretary in her Senedd statement. increase health, wealth and well-being in all parts of Wales.” I encountered long-standing structural weaknesses in the research and innovation Throughout my review, I have been standing ecosystem that put Wales at a disadvantage on the shoulders of Professor Sir Ian compared with other parts of the UK in Diamond, whose perceptive examination funding competitions. That disadvantage of higher education funding and student has been masked by the availability of EU finance arrangements was my starting point. structural funds, whose future remains I endorse all of Sir Ian’s recommendations unclear. The growing budget in UKRI now relating to research and innovation. I expand presents major opportunities for businesses on them to take account of events that he and universities in Wales to win sizeable could not have foreseen at the time of his amounts of additional research and report, including the £2bn yearly increase in innovation funding. There is no limit to the the budget of UK Research and Innovation, proportion of UKRI funding that can be won the UK-wide industrial strategy and the in these competitions and the benefits to consequences of BrExit for research and Wales that would come from that success. innovation. Only the strongest competitors will When publishing the response to Sir Ian win. Funding not secured for Wales will Diamond’s review, Cabinet Secretary Kirsty go elsewhere in the UK. Against that Williams AM told the National Assembly background, I set out recommendations, Plenary in the Senedd, in November 2016: building closely on Sir Ian Diamond’s “… I can therefore confirm that we proposals, on how to sustain research and are implementing, with only minor innovation competitiveness in Wales and modifications, the full Diamond package, contribute to Prosperity for All. whilst also delivering a future dividend for further and higher education. This, ii Professor Graeme Reid University College London 22 December 2017

iii Contents

Foreword by Professor Graeme Reid i

Contents 1

Summary and Recommendations 2

Acknowledgements 8

1. Background to Recommendations 10

2. Reason for this Review 34

3. Review Methodology 38

4. Written Evidence Summary 40

5. Oral Evidence Hearings Summary 52

Annex 1 Proposed R&I Budgets 63

Annex 2 Companies working in collaboration with universities and research institutes in Wales 65

Annex 3 Literature and expertise in research and innovation policy 68

Annex 4 Explanatory Note from Professor Kevin Morgan 74

Annex 5 Reid review advisory panel membership 77

Annex 6 Letter inviting submission of oral evidence 78

Annex 7 Text of ‘Appendix 1’, referenced in the Annex 6 invitation letter 79

Annex 8 Written evidence providers 83

Annex 9 Formal and Informal oral evidence hearings 84

Annex 10 Schedule of visits made and other meetings 88

Annex 11 List of Acronyms 91

1 Summary and Recommendations

Credit: Cardiff Catalysis Institute, Cardiff University

2 The contributions of research and innovation will need to work together to become to economic productivity, population health stronger and more influential in pursuing and social well-being are widely documented. this competitive funding. The Welsh The research and innovation ecosystem Government has a central role in driving in Wales is strong and includes strikingly through this change by setting pivotal successful examples of university-business incentive and reward structures for the collaboration and research impact. But the whole research and innovation ecosystem. research base does not have the scale needed The Welsh Government should introduce to deliver its full potential to the people a powerful, performance related, incentive of Wales. and reward system, based on winning Major changes are already underway in the competitively awarded research and research funding landscape in Wales and innovation funding from outside Wales. across the whole of the UK. The funding of If Wales does not win this money post-compulsory education and research is in competitions, it will go elsewhere in being transformed in Wales. BrExit will bring the UK. to an end EU structural funds for Wales. 2. That initiative can only succeed if the Their replacement – the UK Shared Prosperity research and innovation ecosystem is fit for Fund – is at an early stage of development competition. To that end, it is essential that and its method of allocation remains unclear. Wales has at least parity in the levels of Large funding increases in the new funding un-hypothecated research and innovation organisation UK Research and Innovation funding compared to the rest of the UK. (UKRI) will open major opportunities to those The low level of this un-hypothecated who can win competitions. These changes funding relative to the rest of the UK has will bring threats and opportunities to Wales. been a structural weakness in Wales for My review sets out proposals to grasp the around two decades and is reflected in opportunities and mitigate the threats. relatively low levels of funding secured in I have observed weaknesses that, unless competitions at UK-wide and EU levels and they are addressed, will hamper the Welsh fragile levels of business income in Welsh research and innovation community’s universities. This funding shortage can only ability to adapt to the new UK funding be addressed by the Welsh Government: environment. I have found great strengths no other funding source is available. and national assets in Welsh Universities The degree to which this weakness is and in research and innovation centres that addressed will have a major influence on have been developed in Wales during the Welsh performance in the increasingly last decade but I am not convinced that the competitive UK-wide landscape for potential of these assets is fully exploited for funding from UKRI, businesses and the benefit of Wales. research charities. This recommendation has my highest priority. To respond to external changes and address the Welsh Government’s national priorities, 3. The level of skills and knowledge within I propose that the research and innovation the Welsh workforce will need to increase landscape undergoes major changes in the significantly to deliver Welsh Government following ways: ambitions for enhanced productivity, competitiveness and prosperity. To drive 1. BrExit will bring a major shift away from EU up skills and employability across all WEFO funding towards the competitive- abilities and address the requirements awarded funding from UKRI, research of the Well-being of Future Generations charities and industry. The research (Wales) Act 2015 (WBFG Act), it will be and innovation community in Wales necessary, over time, to give wider access

3 to Welsh innovation funding so that • Increase the visibility of Welsh research Further Education Colleges, Research and innovation outside Wales. and Technology Organisations, business incubators and others can work together Recommendation 2: I recommend with Higher Education in new innovation that the Welsh Government hubs across Wales. These new innovation strengthens the Welsh research base hubs could build on existing facilities and enables Welsh researchers to and capabilities in Welsh Universities and attract a greater share of UK-wide research institutes, getting the hubs off to funding by implementing Diamond’s flying starts. recommendation for QR funding Recommendations: and creating an additional Future of Wales Fund specifically to incentivise To create these changes, I make the following Welsh researchers to win funding recommendations, costings for which are at from outside Wales. Annex 1. The Welsh Government is rightly enthusiastic Recommendation 1: I recommend about capturing a larger share of research that the Welsh Government increases and innovation funding from sources outside the visibility and influence of Welsh Wales. The Welsh Government has also research by creating a new Welsh accepted proposals from Sir Ian Diamond’s Research and Innovation London review to protect QR funding at £71m Office (WRILO). yearly in real terms from 2016 onwards and introduce knowledge exchange funding at The creation of UKRI, its rising budget and £25m yearly1. the uncertainties associated with BrExit will shift the balance of opportunities for Sir Ian also recommended – and I support research and innovation funding from the – further funding of £1m yearly for the EU towards the UK. To take advantage of Learned Society of Wales and £3.75m yearly these developments, I recommend that the for postgraduate research scholarships. Welsh Government creates a new ‘Welsh I endorse entirely Sir Ian’s recommendations Research and Innovation London Office’ in research and knowledge exchange. I (WRILO), ideally using existing premises propose additional incentives to capture a in Victoria Street, Westminster, to increase larger proportion of growing budgets in UKRI Welsh contributions to UK-wide decisions and mitigate uncertainties arising from the and to: BrExit process, each of which were unknown • Act on behalf of the Welsh Government, at the time when Sir Ian published his review. Welsh Ministers and in the interests of the Reinforcing the Welsh Research Base Welsh research and innovation community. Supporting Welsh researchers in an ever • Identify and promote funding more competitive funding environment opportunities for universities, businesses across the UK and aligning the purpose of and research institutes in Wales arising at such funding with the WBFG Act are high UK and international levels; but achievable priorities. Implementing all of • Attract talent and investment into the the Diamond recommendations, particularly Welsh research and innovation community for QR funding, should have the highest from the rest of the UK and internationally priority of all. along with the Sêr Cymru initiative and

1 http://gov.wales/docs/dcells/publications/160927-he-review-final-report-en.pdf

4 Once QR funding levels reach the level This will incentivise and reward: proposed by Diamond, I recommend the • further increases to the scale of creation of a new funding stream, the Future business collaboration with universities of Wales Fund, which should be allocated in Wales to universities in direct proportion to the amount of additional funding they secure • further increases in university in competitions outside Wales. I recommend collaboration with public sector bodies that £30m yearly (some 0.2 per cent of in Wales Welsh Government spending) is set aside • the attraction to Wales of for the Future of Wales fund. collaborators from business, charities This will enable the Welsh Government to and public sector bodies elsewhere. deliver a system which will: Over time, I recommend that Further • incentivise and reward those who Education colleges should also be made attract further talent and leverage eligible for the Innovation & Engagement further research investment into Wales Funding but that will require further work by from elsewhere; HEFCW, TERCW and the FE sector to develop criteria for funding and performance metrics. • protect and grow existing strengths in the Welsh research base; Diamond envisaged that the reinstated innovation and engagement funding would • secure greater impact for Wales be used to support a small number of hubs from that research base, not least on and a competitive scheme for institutions productivity levels. and business. I strongly support Diamond’s I leave the final decision on the operation of concept of hubs and competitions and I have the Future of Wales Fund to the proposed recommended that these should form part of ‘Tertiary Education and Research Commission the proposed St David’s Investment Fund Wales’ (TERCW) and the Welsh Government set out under recommendation 3 to bring but I offer an illustration in the highlighted them closer to business. box 1 on page 23-24 of this document. Innovation and Engagement support Recommendation 3: I recommend that the Welsh Government increases Sir Ian Diamond recommended that the visibility, coherence and impact HEFCW’s funding for innovation and of research and innovation in Wales engagement activity should be re-instated, by creating a single overarching with funding of £25m yearly. I fully support brand for its innovation activities: that recommendation. However, the the St David’s Investment Fund. This research and innovation and wider political should be worth some £35m yearly landscapes have changed significantly in in the first instance but with the the meantime. I therefore propose that the potential to grow to £100m yearly or reinstated Innovation and Engagement Fund more, post-BrExit. should be distributed to universities on the basis of performance metrics, to incentivise The St David’s Investment Fund should universities to attract the highest levels of consolidate the planning and presentation of external income through collaborations with support for innovation in business and the businesses and other partners. public sector from across Welsh Government The scope of this innovation and and public bodies in Wales. Coherent engagement funding should include the planning and presentation should help vital civic mission of universities. businesses, science parks and other institutes

5 integrate Welsh Government support with • Run pilot competitions for time- that from agencies elsewhere in the UK limited projects that advance progress by offering higher levels of visibility and towards the goals in the productivity coherence for a wide range of innovation roadmap, for example by attracting activities in Wales. Coherent presentation will business investment in R&D into Wales also help to raise awareness in the business and stimulating R&D investment from community of the scale of opportunities in businesses already operating in Wales. Wales. Funding and other support may well These competitions should be explicitly continue to be managed by a number of aligned with the WBFG Act and should different areas of the public sector in Wales usually operate as public-private but those differences need not be on display. partnerships that respond to specific I recommend the St David’s Investment Fund opportunities such as the proposed should: nuclear power and aerospace initiatives • Be underpinned by a new productivity in north Wales and opportunities in the roadmap and a coherent description of semiconductor, renewable energy or life all public sector investment in business sciences sectors in South Wales. innovation in Wales. • A distinctive approach is needed to • Create three industry-led innovation promote business innovation in rural hubs in the first instance, building communities. The population of Wales on the recommendations by Sir Ian includes many geographically disperse Diamond, each aiming to raise around rural communities. By one analysis, around £5 – £10m yearly together with other 1 in 3 people in Wales live in rural areas partners including City Deals, Sector compared to 1 in 5 people in England. Deals, Catapult Centres, the UK Research UK-wide industrial strategy focuses on Partnership Investment Fund and cities and established industry sectors. Innovate UK to seize specific economic There are already calls for a coherent rural 3 opportunities in Wales. Many sources of development strategy for improving the funds are available to support business infrastructure of rural Wales, promoting innovation and, while Welsh Government food, farming and forestry and boosting will have a key catalytic role, I see no tourism. I, therefore, propose that the reason why it should be the largest requirements for private sector financial source of funds for these hubs but the contributions in economic growth hubs Welsh Government has a unique role in and time-limited competitions be relaxed providing predictable, long-term support in rural communities such as mid-Wales that provides a foundation for external but that the longer term ambition for investment. Experience in Scotland2 higher levels of business investment suggests there would be advantages in should remain. recruiting directors and managers from The First Minister has stated clearly his the private sector while anchoring hubs in intention to replace EU structural funds Welsh Universities or research institutes. with funding provided directly from HM These can provide administrative support Treasury. Meanwhile the UK Government and access to networks of businesses and is developing a Shared Prosperity Fund4 to researchers, particularly during the early replace EU structural funds. I recommend life of each hub. that the research and innovation component

2 http://www.sfc.ac.uk/innovation/innovation-centres/innovation-centres-review.aspx 3 https://www.theplanner.co.uk/news/report-calls-for-city-deal-type-support-for-welsh-rural-areas 4 http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/ Commons/2017-07-03/2380/%20via

6 of that funding – which should amount to some £65m yearly if EU structural funds for innovation are replaced fully – should be managed under the St David’s Investment Fund. It may be several years before the EU funding comes to an end and is replaced by HM Treasury. That will provide time to evaluate smaller, early investments before any larger sums of EU-replacement funding are available for investment. Health Care Research I have received little evidence or commentary on Health Care Research Wales (HCRW) compared to the amount of evidence I have received on research and innovation more widely. In any case, health research is handled separately from the generality of research and innovation in both Wales and other parts of the UK. The HCRW budget is lower, relative to the Budget for the English National Institute of Health Research, than I would expect from the size of the Welsh population relative to England but the shortfall in Wales may be explained by policy choices available to the Welsh Government. I hope that the shortfall is kept under review but I make no assessment of its impact on the efficiency and effectiveness of health care in Wales and no recommendation for its future scale.

7 Acknowledgements

This review is largely an assimilation of views, observations and data provided by leaders in business, education, local authorities, government and other organisations. I have been fortunate in receiving so much help and advice, both in written evidence and in meetings during the review. I have had support from Research Councils, Innovate UK, Higher Education Funding Councils, technology transfer experts, medical research charities, membership bodies in the business and academic sectors, National Academies and members of advisory committees. I visited many universities, research institutes and innovation centres in Wales and each time acquired fresh insights and contributions for the review. But the same key messages reached me again and again and I have reflected them in my findings. Officials gave me several tutorials on the internal workings of Welsh Government. Huw Morris provided wise advice and guidance at many points in the review. Robert Hoyle provided management and secretariat support throughout the process and the review would not have been delivered without his energy, enthusiasm and commitment. I thank each of them for their support. In particular, I thank the distinguished panel of advisors, who gave so much of their time to the review. They were a wonderful team and a delight to work with. Each of them brought individual expertise and insights that proved invaluable at every stage of the work. Members of the panel are listed elsewhere in this report.

8 9 1. Background to the Recommendations

Credit: Electroimpact UK Ltd.

10 Research and innovation contribute delivered and harvesting impact from further significantly to economic productivity. Widely afield often brings additional challenges. cited work by Haskel, Hughes et al. sets out Kevin Morgan’s work for the National theoretical and empirical evidence5 while Centre for Universities and Business (NCUB), research by Richard Jones6 (2016) explores submitted in evidence to this review10, the causes of the UK’s stagnant productivity. highlights the strength of the relationship Research and Innovation also enrich cultural between businesses and universities in life and help Governments address societal Wales but there are specific opportunities to challenges7. A full analysis of the rationale for increase incentives and rewards for academic public spending on research and innovation interactions with business. is beyond the scope of this review. Annex The level of R&D investment in Wales, 2 describes examples of business/university compared to other parts of the UK is shown collaborations and research impacts already in Figure 1. present in Wales while Annex 3 summarises Direct comparison between areas of the UK key literature and sources of expertise on is not straightforward: each region will have research and innovation policy. its own distinct characteristics and some There is unequivocal evidence that high will have greater concentrations of research quality research and innovation are present intensive industries than others. For example, across Wales8 but in smaller proportions London’s uniquely strong concentration than elsewhere in the UK. Research impact of financial services industries, company in Wales is higher than the UK average9 headquarters and major research universities but Wales has a relatively small research influences the shape of its business R&D. REID REVIEW – RJR Reconstructions of Figures for Online Version community from which impact can be Cambridge has attracted so much R&D Figure 1

3.5 3 2.5 2 1.5 1 % Spend on R&D 0.5 0

Figure 1: % GVA invested in R&D in areas of the UK

Figure Figure1: Regional 2 expenditure on research & development performed in UK businesses, 2015 to 2016.

5 http://www.sciencecampaign.org.uk/resource/UKScienceBase.html86% 6 http://speri.dept.shef.ac.uk/2016/04/14/new-speri-paper-innovation-research-and-the-uks-productivity-crisis/ 7 http://www.esrc.ac.uk/research/research-and-impact-evaluation/economic-impact-reports/ 8 https://www.learnedsociety.wales/our-publications/wales-and-the-world/ 9 https://www.learnedsociety.wales/our-publications/impacts-academic-research-welsh-universities/ 10 http://www.ncub.co.uk/blog/wales-a-strong-innovator and Annex 4.

12%

1% 0% 1%

Approx. Per Cent

England Scotland Wales Northern Ireland Other

investment from global corporations that More recently, Cabinet Secretary Ken Skates it propels the sparsely-populated East of AM stated in the Foreword to the Welsh England to one of the most research intensive Government’s report ‘Science for Wales areas of the UK. 2017’, published in December 2017: Whatever the explanation, the level of ‘This shortfall [in research capacity] has investment in R&D is low in Wales but with resulted in Wales, with some excellent, a sizeable and encouraging level of growth indeed, world-leading academics, still as shown in Figure 1a. Examples, elsewhere not winning the proportionate share of in this report, suggest a close link between competitively-awarded research funding universities and business R&D, as is the case that it should.’ across other parts of the UK. This shortage of research capacity along with Low levels of R&D investment has been other factors, contributes to low levels of recognised for some time by Welsh productivity in Wales compared to the UK Government. Its 2014 publication ‘Innovation and many other OECD countries. Overall, Wales’11 stated hard work in Wales generates less wealth than the same level of effort in England and ‘Levels of R&D in Wales are nowhere near Scotland. That gives people in Wales a raw as high as we would like, and we do not deal. win a large enough share of available competitive funding.’

£ million 2015 2016 % change UK 21,038 22,224 5.6

North East 306 302 -1.3 North West 2,116 2,346 10.9 Yorkshire and the Humber 769 750 -2.5 East Midlands 1,531 1,655 8.1 West Midlands 2,159 2,303 6.7 East of England 4,200 4,393 4.6 London 1,892 2,296 21.4 South East 4,765 4,693 -1.5 South West 1,476 1,500 1.6 Wales 368 435 18.2 Scotland 953 1,072 12.5 Northern Ireland 501 481 -4.0 Source: Office for National Statistics. Note: Differences may occur between totals and the sum of their independently rounded components.

Figure 1a: Between 2015 and 2016 Wales had one of the highest growth rates in R&D in the UK, albeit from a low base.

11 http://gov.wales/topics/science-and-technology/innovation/innovation-wales-strategy/?lang=en

12 The Impact of BrExit ‘The money that is spent will help deliver BrExit may well bring a reduction in R&D sustainable, inclusive growth based on investment from the EU. The UK Government our modern industrial strategy.’ has guaranteed support for EU projects On 3 July 2017, Chief Secretary to during a transition period12. The increase the Treasury, Elizabeth Truss, told the of £2bn yearly in UKRI’s annual budget is Westminster Parliament: greater than the total annual amount of “The government’s manifesto committed research and innovation funding the UK to create a UK Shared Prosperity Fund. receives from the EU (£1.5bn, according to a Further details will be set out in due report from the House of Lords Science and course. The government has provided Technology Committee)13. a guarantee for all European Structural At a UK-wide level, most EU funding and Investment Fund projects signed for research and innovation is won in before the UK leaves the European competitions under the Horizon 2020 Union (EU) if they provide good value programme. In Wales, however, most EU for money and are in line with domestic funding for research and innovation comes strategic priorities. This includes projects through structural funds. That difference that continue beyond the UK’s departure means that BrExit has distinctive implications from the EU.” (My italics). for Wales. Plans for BrExit continue to evolve with The Welsh Government has set out a clear proposals for a two-year transitional phase policy on the replacement of EU structural being proposed by the Prime Minister in her funds14: Florence speech in September 2017. If this ‘During the referendum campaign voters transitional model of BrExit is adopted, it in Wales were assured that leaving the remains unclear when within the transition EU would not result in Wales being period EU Structural Funding would cease. worse off and it is vital to public faith If structural funds for R&D are replaced by in political process that this promise is HM Treasury and the Welsh Government honoured. Replacement funding from UK maintains that level of funding going to sources must reflect current EU funding research and innovation in Wales, this would for regional economic development in maintain Welsh investment in R&D at 2017 Wales, agriculture and the countryside.’ levels. With sizeable increases in the UKRI budget15, however, that level will continue The UK Treasury has made no public response to lag behind the UK overall. Without Welsh so far to this Welsh Government position Government intervention, there is a risk that but the Conservative Party Manifesto for the the R&D investment gap between Wales and 2017 General Election stated: the UK overall will increase. ‘We will use the structural fund money There is no realistic prospect of Welsh that comes back to the UK following Government investment alone raising R&D BrExit to create a United Kingdom Shared levels in Wales to levels proportionate to Prosperity Fund, specifically designed to the UK overall. Nor should that burden reduce inequalities between communities fall on the Welsh Government exclusively, across our four nations.’ (My italics).

12 https://www.gov.uk/government/news/chancellor-philip-hammond-guarantees-eu-funding-beyond-date-uk-leaves-the- eu 13 https://publications.parliament.uk/pa/ld201516/ldselect/ldsctech/127/127.pdf 14 https://beta.gov.wales/sites/default/files/2017-01/30683%20Securing%20Wales%C2%B9%20Future_ENGLISH_WEB. pdf 15 https://www.gov.uk/government/publications/autumn-statement-2016-documents/autumn-statement-2016

13 when increasing levels of UK-wide funds are leap-frog ahead of some competitors’ levels available to universities, research institutes of investment in research and innovation, and businesses in Wales. reaping corresponding levels of economic Attracting R&D investment to Wales should and social impact. This review also sets out therefore be a priority step on the path to: practical steps towards that ambition through proposals for reforms to the incentives and • Contributing to higher levels of rewards for universities in Wales and higher productivity in Wales; levels of Welsh input to UK-wide policy and • making Wales a more attractive funding processes. destination for business investment; and Background to Recommendation 1 • persuading larger numbers of talented people to pursue a wide range of careers I recommend that the Welsh in Wales. Government increases the visibility and influence of Welsh research by HM Treasury announced in the Autumn creating a new Welsh Research and Statement last year, 2016, a £2bn yearly Innovation London Office (WRILO). increase in UK-wide investment for research and innovation to be administered by UKRI, BrExit and the creation of UKRI will shift the taking the UKRI Budget to some £6bn yearly balance of opportunities for research and and serving the research community across innovation funding from the EU to the UK. all parts of the UK. Further announcements To take advantage of this development, the were made in the November 2017 Budget. Welsh Government should create a new There will be no Welsh quota for that research and innovation office in London, funding: no upper or lower limit to the perhaps using existing premises, to: proportion of UKRI funding that can be won • Act on behalf of the Welsh Government, in competition. That could be good news for Welsh Ministers and in the interests of the all parts of Wales – provided Wales can seize Welsh research and innovation community. the new opportunities on offer. But action will be needed in Wales – in government, • Identify and promote funding universities and business – if Wales is to opportunities for universities, businesses capture at least its pro-rata share of UKRI and research institutes in Wales arising at budgets. UK and international levels. Wales could take advantage of these • Attract talent and investment into the opportunities both to mitigate the expected Welsh research and innovation community fall in income from the EU and to grow the from the rest of the UK and internationally scale and impact of the Welsh research base along with the Sêr Cymru initiative. to levels comparable with a larger number • Increase the visibility of Welsh research of OECD countries. Otherwise, money that and innovation outside Wales. could have been brought to Wales will go The new office should not be responsible for elsewhere in the UK. significant levels of research and innovation Catching up with the competition need funding, but it will need a budget for, say, not be the limit of Welsh ambition. With 3 or 4 staff and associated costs. judicious use of resources from the Welsh The responsibilities of the Research and Government, this review sets out a realistic Innovation office should include: ambition for the research community in Wales to increase the level of research • Attracting new candidates for the highly funding won in UK-wide competitions and successful Sêr Cymru scheme; building

14 Welsh participation in the new Rutherford the British Science Association’s successful Fund; and expanding Welsh participation 2016 festival in Swansea. in existing international research and • The research and innovation office scholarship funds at all levels of higher will need a sponsor in the heart of the education and research, such as the Welsh Government with which it agrees Newton Fund and the Kennedy, Fulbright its business plan (objectives, resources, and Chevening scholarships. accountability, etc.) and to which it can • Raising the profile of Welsh science and report new opportunities for Wales. research in the FCO’s international science Wales and the world and innovation network to identify more Wales produces 0.2% of the world’s scientific opportunities for Welsh participation in knowledge but nearly half of Welsh research international exchanges and collaboration. papers were internationally co-authored16. • Working with the Welsh Ministers to Researchers in Wales have already established encourage leading academics and business networks around the world. The business and people from Wales to seek appointment academic communities in Wales should use to governing councils and key committees those networks to attract even more business in UKRI, the UK Government Office investment, research funding and talented for Science (GO-Science), Research people to Wales. Charities and other bodies that influence UK-wide budgets for research and innovation research and innovation policy at UK and will grow by £2bn yearly – about 30 per international levels. Ministers and the cent – following an announcement in the Chief Scientific Adviser for Wales could 2016 Autumn Statement. The UKRI budget meet such office-holders once each year to for research and innovation is due to reach learn of their experiences and ensure that at least £6bn yearly by 2020-21. Research they are aware of Ministerial priorities. charities and research-intensive businesses • The new research and innovation office have long histories of investing alongside should convene periodic meetings where Research Council and Innovate UK funding, experienced Committee and Board taking the total sums dependent on their members can share their experience with decisions to £10bn yearly or more17. The prospective applicants from Wales. UK Government has re-stated and is now • The research and innovation office should planning to deliver, a Conservative Party encourage Welsh leadership of initiatives 2017 manifesto commitment to raise total by UK-wide bodies, following the example UK-wide R&D investment to 2.4 per cent of of Dr Drew Nelson and Professor Colin GDP by 2027. Riordan who lead the Growing Value The distribution of UK-wide funding may Wales project for the National Centre for change following the formal creation Universities and Business. of UKRI and the earlier introduction by • The r esearch and innovation office and UK Government of overarching funding the Learned Society of Wales should streams for the industrial strategy and global encourage UK-wide and international challenges. Meanwhile, EU funding for research and innovation bodies to hold research and innovation in the UK will enter more major events in Wales, following a period of uncertainty and may well decline following BrExit. Arrangements for the next

16 LSW’s Wales and the World estimates that Wales quotes 2013 research (updated 2016) by Elsevier showing that Wales has 0.14 per cent of the world’s researchers yet produces 0.24 per cent of the published papers. 17 The UKRI Budget is more than £6bn yearly; HEBCIS data shows UK universities external earnings are well over £4bn yearly. Further investment happens outside universities.

15 Research Excellence Framework assessment A similar distribution is evident if immediate in 2021 are now taking shape following a sub-committees to governing boards are review by Lord Stern18 and contributions from taken into the analysis. the then Chief Scientific Adviser for Wales. The appointment of the UKRI Board It is critically important – and urgent – that reinforces this overall distribution. Members perspectivesREID REVIEW from – WalesRJR Reconstructions of Figures for Online Version are included in of that Board were never intended to UK-wide policy formation during these represent geographic regions, business changes.Figure This 1 will require more widespread sectors or academic disciplines. That was contributions to research and innovation clear from the outset of the appointments policy from3.5 the business and academic process. Nevertheless, the 12 Board members communities3 in Wales. include one person affiliated in Scotland and The scale and2.5 quality of research in 11 with English affiliations. Wales, particularly2 in Cardiff and Swansea Background to Recommendation 2 Universities1.5 but also in Bangor, Aberystwyth and other institutions,1 is not reflected in I recommend that the Welsh the membership% Spend on R&D 0.5 of governing boards and Government strengthens the Welsh research base and enables Welsh key advisory 0 committees of UK-wide and international bodies responsible for policy researchers to attract a greater share and funding as shown in Figure 2 (based of UK-wide funding by implementing on October 2017 data). Early appointments Diamond’s recommendation for QR to the advisory structure for the 2021 funding and creating an additional Research Excellence Framework show higher Future of Wales Fund specifically to proportions of Welsh-affiliated members incentivise Welsh researchers to win Figure 1: % GVA invested in R&D in areas of the UK but these positions do not advise directly on funding from outside Wales. funding allocations. Figure 2

86%

12%

1% 0% 1%

Approx. Per Cent

England Scotland Wales Northern Ireland Other

Figure 2: Geographic affiliations of members of Governing Boards of UKRI funding bodies in October 2017. ‘Other’ refers to a member who had unclear affiliation within the UK. 18 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/541338/ind-16-9-ref-stern-review. pdf

16 The impact of Welsh research on the investment. economy and society is built on foundations (iii) the Welsh Government alone can of excellence. That impact is already support rather than areas for which recognised and documented, most recently alternative sources of funding are by the Learned Society of Wales. The pattern available. of existing impact demonstrates clearly the benefit to Wales of having clusters of the QR funding should be the highest priority highest quality research with the freedom, in Welsh funding for science, research and agility and incentives to: innovation, reflecting the scale of benefit it delivers to Wales, both directly and through • create and support major the leverage of resources from elsewhere. No collaborations with business and public other source of funding is available for this services in all parts of Wales. underpinning of the research base in Wales. • leverage funding from UK and Research Funding international sources into the Without competitive levels of funding to Welsh research base through funding support the underpinning capability, strategic partnerships and collaborations with initiatives to address specific economic and business, charities and other universities. societal challenges in Wales would inevitably • explore frontier areas of research – the take longer to launch (as each one would fields that subsequently attract business need to wait for researchers to complete collaborators and develop into funding existing projects before becoming available) competitions from bodies such as UKRI and would take longer to deliver impact and research charities. (underpinning capabilities would need to be • attract talented research students assembled before researchers could focus and researchers – the ones likely to on the challenge they were set). In a fast- win funding competitions at UK and moving world, these delays could undermine international levels – at every stage of the competitiveness of the research and its their careers by offering high quality appeal to business investors. infrastructure for research and a degree QR funding mirrors the endowment funds of stability and resilience that cannot be available to major research universities in provided from unpredictable funding the USA and beginning to appear in larger competitions. research universities in the UK. Many well- • recognise and reward research informed observers attribute the high excellence through the allocation of performance of UK and US science to the research funding in response to the availability of sufficient unconstrained core internationally respected, UK-wide, funding, whether through QR or endowment Research Excellence Framework. funds. The Welsh Government should focus scarce Un-hypothecated funding for university resources for research and innovation on research plays a fundamental role in the areas that: competitiveness of these institutions by providing the resources to: (i) deliver clear benefits to businesses, public bodies, charities and other • meet the cost of entering financial organisations in Wales. partnerships (sometimes at short notice) with other organisations. (ii) have demonstrable potential to leverage further funding into Wales, • accept research grants from funders that thereby increasing the return on Welsh do not meet the full economic cost of

17 research. Such funders include Research The terms under which QR funding is Councils, medical research charities and allocated has a major influence over the the EU. incentives it creates. The Welsh Government’s • nurture researchers at early stages of decision, following Sir Ian Diamond’s review, their careers who are not yet ready to win to protect QR funding levels over the next research funding competitions. few years will provide underlying support for the Welsh research base. But more recent • provide stable careers (rather than short- decisions by the UK government may well term contracts) for leading researchers in bring an increase in QR funding for English an environment where even the strongest universities, leaving Wales at a disadvantage teams will encounter gaps between yet again unless it keeps pace with competitively awarded research grants. English QR. As shown in Figure 3, Scottish • support adventurous explorations at the Universities already receive higher levels of frontiers of knowledge where exciting QR funding than their Welsh counterparts discoveries lay the foundations of research and secure correspondingly larger levels of funding programmes. Research Council funding.

Research Total Research Population Country untry QR (%) Councils (%) Income (%) (% of UK) Wales 3.9 3.6 3.5 4.8 England 80.1 80.3 81.4 84.3 Scotland 13.7 14.7 13.4 8.3 Northern Ireland 2.3 1.4 1.6 2.8 UK Total 100 100 100 100 Sources: HESA Resources for Institutions of Higher Education 2015/16 (for all figures, except recurrent research funding). HEFCE, HEFCW and SFC Recurrent Grant Circulars, 2015/16 (for recurrent research funding only)

Figure 3: Percentage Share of UK Research Income by Country – 2015/16. Figure 4

Percentage share of UK QR and total research income over time - Wales

5.0% QR 4.5% Total Research Income 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% Percentage of UK Total Total Percentage of UK 0.5% 0.0% 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Financial Year

FigureFigure 4: 8 Percentage share of UK QR funding and total research income over time in Wales. This only exists as a download by Professor Reid, from the HESA website and will 18 have to be handled as an image. I made a text box with the equivalent text in English and Welsh to cover the letters and digits which are the only bits, which are fuzzy. I don’t know it you can do similar. I have mocked up the chart itself below but I need to get the data and have e-mailed Professor Reid to ask for it. (Random data figures entered at present behind it).

External income to universities 35 IP (including Sales of Shares) 30

25 Facilities and Equipment Related Services 20 Regeneration and Development 15 Programmes

Income (£m) 10 Consultancy 5 CPD and CE 0

Collaborative Research

Academic Year Contract Research

This pattern has persisted over a number of Figure 5 demonstrates a close correlation years, as shown in Figure 4. between the level of core QR funding and Welsh universities will therefore continue to be success in winning funding from Research at a disadvantage in competitions for funding Councils and other sources. It should be and talent unless core funding in Wales keeps noted that this is a snapshot of one year only. pace with the rest of Britain. As the Royal A similar picture emerges if Research Council Society said in their evidence to this review: funding alone is considered. ‘The ‘Quality-related’ funding stream Stagnation or reduction of core QR funding is very important in underpinning in Wales unavoidably undermines research research capacity within institutions, competitiveness and brings consequent enabling them to compete effectively reductions in funding leveraged from UK- for competitive funding streams.’ wide and international sources. In turn that dilutes the attractiveness of Wales to the The Wellcome Trust, the largest charitable most talented researchers, risking a spiral of funder of research and innovation in the UK, decline. Only Welsh Government can provide said: this underpinning resource: no alternative ‘…Government money [for research source of core funding for university research and innovation] should be channelled is available. through effective structures, including Any portion of the UKRI budget not captured the UK’s unique dual support system. by Wales will instead go to other parts of This balances competitively-awarded the UK. grants to individual investigators with QR investment in universities….Wellcome Sir David Grant, Board member at IQE and continues to see the dual support system Renishaw, said: as fundamental to our investment in UK “From a business perspective, I think you research.’ should persuade the Welsh Government

QR Vs Total Research Income 2014/15 (Log Scale)

£1,000,000,000

y = 0.0696x1.1933

Swansea University £100,000,000 Cardiﬀ University

Aberystwyth University

Bangor University

£10,000,000 University of South Wales Total Research Income

£1,000,000 Cardiﬀ Metropolitan University

University of Wales Trinity St David

£100,000 £100,000 £1,000,000 £10,000,000 £100,000,000 £1,000,000,000 QR Figure 5: QR funding against total research income in UK universities (note – log scales). Source: HESA Finance Record 2014/15, UK Funding Council Data. For ease of presentation, institutions with zero QR values and the remaining lowest quartile have been excluded.

19 to invest larger sums in QR but sharpen to that approach but the widespread, up the purpose of the additional sometimes counter-intuitive, range of impacts funding.” together with the experience of both QR Andrew Evans, Director, Commercial Services funding in other parts of the UK and large at SPTS Technologies, said: endowment funds in top universities in the United States leads me to the firm view that “SPTS Technologies, an Orbotech centralised planning of QR allocations could company, is a leading supplier of etch never foresee the patterns of impact it will and deposition process solutions and generate and is more likely to diminish the equipment for the global semiconductor value of that funding than enhance it. and microelectronic industries. Our business is based upon understanding the An extensive analysis of the impact of needs of manufacturers producing the academic research in Welsh Universities was devices of today and the technologies of carried out by Kings College London for the 19 tomorrow. SPTS conducts all its global Learned Society of Wales . Data from that R&D, as well as driving its product work supports the proposition that research and technology innovation, from impacts occur across a broad spread of Newport, Wales. Our key research and academic disciplines and geographic regions innovation is further strengthened by – as shown in Figure 6. our longstanding relationships with I have also considered whether the QR Universities such as Swansea and Cardiff, funding should be directed more strongly with whom we have been involved in towards HE Institutions that deliver the cutting edge research and pushing the greatest impact. Figure 7 uses data from boundaries of technology for over a the Research Excellence Framework to plot decade. UK universities in rank order of research This valuable cooperation would not power (research excellence x volume) versus be possible without the core research impact power (impact excellence x volume). funding from Welsh Government that The degree of correlation is so strong that underpins universities’ capabilities and I see every reason to continue allocating the innovation funding from both Welsh QR funding largely on the basis of research and UK governments that supports our excellence. The assessment of research engagement with academia.” (My italics). excellence in the UK has been refined over a period of more than 30 years and has won Increases in the scale of the Future of Wales the confidence of businesses and academics Fund should enable Welsh Universities around the world. From this and other data, to leverage further resources into Wales, research excellence is a strong predictor or exploiting the recent £2bn pa increase in research impact. UK-wide funding for research and innovation The Future of Wales Fund as well as increasing their share of the underlying £4.7bn yearly budget. Any portion Unprecedented increases in research and of the UKRI budget not captured by Wales innovation funding at UK levels were first will instead go to other parts of the UK. announced in the 2016 Autumn Statement and have been reinforced and expanded in I have considered whether the QR funding the November 2017 announcement relating could deliver greater value to Wales if it to the UK Government’s industrial strategy20. was focused on a preferred set of academic disciplines. There may be a superficial appeal This time of change creates opportunities

19 https://www.learnedsociety.wales/?post_type=publication&p=11485/ 20 https://www.gov.uk/government/news/record-boost-to-rd-and-new-transport-fund-to-help-build-economy-fit-for-the- future 20 Mid & South South South Total Unit of North West Wales Wales Wales case Assessment Wales Wales Central East West studies Clinical Medicine 0 Public Health, Health Services and 0 Primary Care Allied Health Professions, Dentistry, 2 1 1 4 Nursing and Pharmacy Psychology, Psychiatry and 2 1 1 4 Neuroscience Biological Sciences 1 1 1 3 Agriculture, Veterinary and 2 2 1 1 6 Food Science Earth Systems and Environmental 1 1 2 Sciences Chemistry 1 1 2 Physics 3 1 2 1 7 Mathematical Sciences 1 1 1 1 4 Computer Science and Informatics 1 1 2 Aeronautical, Mechanical, Chemical 0 and Manufacturing Engineering Electrical and Electronic Engineering, 0 Metallurgy and Materials Civil and Construction Engineering 0 General Engineering 2 1 5 1 9 Architecture, Built Environment and 1 1 Planning Geography, Environmental Studies 1 2 3 and Archaeology Economics and Econometrics 0 Business and Management Studies 1 2 2 2 7 Law 2 1 2 1 6 Politics and International Studies 1 1 2 Social Work and Social Policy 1 1 1 3 Sociology 1 1 1 3 Anthropology and Development 0 Studies Education 0 Sport and Exercise Sciences, Leisure 1 1 2 and Tourism

21 Mid & South South South Total Unit of North West Wales Wales Wales case Assessment Wales Wales Central East West studies Area Studies 0 Modern Languages and Linguistics 7 4 4 5 1 21 English Language and Literature 4 4 2 2 1 13 History 3 2 4 4 13 Classics 0 Philosophy 1 1 Theology and Religious Studies 0 Art and Design: History, Practice and 1 1 2 Theory Music, Drama, Dance and Performing 5 1 7 13 Arts Communication, Cultural and Media Studies, Library and Information 1 1 Management

Figure 6: An illustration of the breadth of research impact: the table shows a sample of the impacts occurring in regions of Wales, categorised by the academic disciplines used in the 2014 Research Excellence Framework.

2014 REF - Overall Research Power and Impact Power

Research Power - Ins6tu6on Rank Order

140 120 100 80 60 40 20 0 0

20 Swansea University University of South Wales 40 Cardiﬀ University

University of Wales Trinity St David 60 Aberystwyth University

Bangor University 100 Impact Power - Ins6tu6on Rank Order

120

140

Figure 7: REF 2014 data comparing research power and impact power of universities across the UK. Note 1: Research power is based on institutions' overall REF quality profile (of which 20% is contributed by impact) and the volume of staff submitted. Impact power is based on institutions' REF impact sub-profile and the volume of staff submitted. Note 2: Chart excludes institutions which submitted to 5 UoAs or fewer. 22 for the relatively small, agile community in Wales to seize a greater share of UK-wide Box 1 – Illustrative arrangements for research and innovation funding. I therefore The Future of Wales Fund recommend the creation of a new funding The benchmark level of income stream – the Future of Wales Fund – that from sources outside Wales could would have the specific purpose of increasing be defined for each university by the proportion of UK-wide funding captured calculating the average of the last 5 by Welsh Universities. years income. Income from Research The incentive properties of judicious Councils, charities, businesses, formulaic funding were demonstrated international sources and elsewhere recently when the introduction of research could be included. impact to the basis of QR allocation Funding from HEFCW and Welsh provoked a significant change in culture Government would be excluded and behaviour in the academic community, from current and future calculations. releasing previously untapped potential and Funding from the EU would be demonstrating previously undocumented excluded from current and future achievements in the academic community. calculations at least until its future is I propose a similar approach to stimulate clear. greater levels of competition for UK-wide In future years, funding secured research and innovation funding, particularly above the current benchmark through UKRI but not confined to that level from outside Wales would be source. In the first instance, I suggest that calculated. For each pound secured the Future of Wales Fund should be focused above the benchmark, 50 pence on universities in Wales since they have the from the Future of Wales Fund could greatest capacity to capture UKRI funding. be allocated to Universities, up to But I do not exclude the possibility of the maximum value of the Fund. wider eligibility if state-aids requirements (If the fund is oversubscribed, then can be satisfied and robust allocation the allocation would be scaled back processes can be established. I leave it for proportionately for all recipients). the Welsh Government and HEFCW (or its The Future of Wales Fund therefore successor) to design the detailed method creates a guarantee for the Welsh of implementation but I offer an illustrative Government that it will only be spent description here: after additional funding is attracted to Wales. On the figures above, a £30m yearly Future of Wales Fund would attract a further £60m yearly to Wales. The benchmark level should be updated every 5 years but no sooner than that. Otherwise the incentive properties of the Future of Wales Fund would be diluted by increasing levels of research income. Once the Future of Wales Fund has been established, I would not be surprised if the level of funding

23 Innovation and engagement funding attracted from outside Wales A distinct allocation of funding for business continues to grow. At that stage, collaborations within the Future of Wales after about 5 years, the benchmark Fund raises the profile of this important level could be recalculated and the activity and provides visible Government level of incentive (50 pence per one endorsement of external collaborations pound, in the above example) from as valued parts of academic life. This the Future of Wales Fund could be endorsement has proved valuable in other revised. parts of the UK and I have no reason to Also, once the Fund is established, question its value in Wales. funding might be weighted to align Collaborations between universities and the incentives with wider policy businesses are important features of the objectives. For example, higher levels research and innovation landscape. The of incentive could be attached to examples given in Annex 2, provided business investment or investment in by Universities Wales, reveal part of the a strategic priority (dementia; nuclear rich portfolio of collaborations already technologies; air quality; etc.). underway. The re-introduction of innovation Some academic disciplines (e.g. life and engagement funding would enable sciences and engineering) have universities and businesses to take their more opportunities than others collaborations to even greater heights. The (e.g. humanities and arts) to win allocation of that funding could be designed sizeable external funding through by TERCW to give greater incentive for competitions. There is a case for universities to collaborate with SMEs and weighting Future of Wales awards businesses in specific sectors (e.g. in rural to compensate for that disparity. economies). I leave it for HEFCW and, in due Universities across the UK have diversified course, TERCW to decide whether to their research and innovation income introduce such a weighting. substantially over the last 15 years or so. This increase is widely attributed to the I have considered whether the Future of introduction of financial incentives and Wales Fund could replace a proportion of rewards for innovation and engagement: the QR funding, rather than add to it. I advise HEIF fund in England being the largest. The strongly against replacing any portion of scale of that UK-wide increase is illustrated in QR with the Future of Wales Fund. Such a Figure 8. replacement would risk encouraging larger No other source of this funding is available. numbers of competitive bids, without As shown in Figure 9, taken from Kevin first supporting a larger number of strong Morgan’s evidence to this review, equivalent competitors and without having funds funding in Scotland, Northern Ireland available to cover the overhead costs of and England has grown in recent years, successful bids. Furthermore, Research promoting growing income to universities Councils operate a so-called Demand from business, charities and other external Management System that can lead to sources. Such growth should return to sanctions against individual researchers who university-business collaboration in Wales. repeatedly submit unsuccessful funding bids. The consequence for Wales is illustrated in Figure 10, which compares external income to Welsh Universities with that to UK Universities overall.

24 Figure 1: Selected HE-BCI income streams, 2003-04 to 2015-16

Figure 8: External income to UK-wide universities over the last decade. Source: Data from the Higher Education Statistics Agency (HESA).

2014/15 2013/14 2014/15 % change Country untry I&E budget KE income KE Income In KE income £ million £ million £ million England 150 3200 3400 6 Scotland 17.1 412 453 10 Northern Ireland 3.96 93 121 30 Wales 0 201 193 - 4

Figure 9: Funding to promote university – business collaboration. Notes: 1. English funding has grown more than 25 per cent in 2016/17, taking its 2016/17 total to almost £200m. 2. I&E = Innovation and engagement funding (from Funding Councils). 3. KE = knowledge exchange income (from business).

25 Note that Wales and UK totals are shown on different scales so care should be used in interpretation.

Figure 10: Total external income to universities in Wales and across the whole of the UK.

Background to Recommendation 3 Moving innovation funding into TERCW? The Welsh Government 2017 consultation I recommend that the Welsh ‘Public Good and a Prosperous Wales’21 Government increases the visibility, explores whether the Post Compulsory coherence and impact of research Education and Training Commission should and innovation in Wales by creating have responsibility for business innovation as a single overarching brand for its well as research and knowledge exchange. innovation activities: the St David’s This proposal has not featured prominently Investment Fund. This should be in the written and oral evidence I have worth some £35m yearly in the first received but I offer the following personal instance but with the potential to observations. grow to £100m yearly or more, post- BrExit. Drawing on previous personal experiences of reforms to research and innovation funding, With a healthy level of QR funding in place to I suspect that the effectiveness of research support the research base in universities and and innovation support in Wales will depend a powerful incentive system to encourage more on clarity of purpose; definition of universities to win sizeable levels of funding success; efficient execution and policy from competitions at UK and international stability, than on the precise organisational levels, the Welsh Government should create structure. In other words, research and more coherent funding and presentation of innovation support could work effectively innovation support for business, under a whether or not innovation functions are single new St David’s Investment Fund, to absorbed into the new TERCW. promote the existing scale of this activity and Whether or not innovation support comes achieve more effective engagement with under TERCW, teams of officials with investors, outside the Welsh government. different backgrounds, objectives and responsibilities will need to work together

21 www.consultations.gov.wales/sites/default/files/...

26 effectively for the benefit of businesses, coordinated mission for research and universities and other organisations in Wales. innovation across the Welsh Government That said, if innovation functions are aligned with the WBFG Act. absorbed into the new Commission then: • FE should be integrated into the • over time I would expect to see a healthy productivity agenda, initially by the TERCW fusion of values and working practices and FE Institutions preparing case studies across the HE, FE and innovation on the impact of FE on the economy and communities, along the lines experienced society. Over time FE institutions should in Scotland following the creation of the be encouraged to participate in projects Scottish Funding Council some years ago; supported by the St David’s Investment Fund that will contribute to productivity • there would be a single line of gains in Wales. accountability (the Board of the new Commission reporting to Ministers) for the The development of an implementation entire agenda; and plan for the productivity roadmap will provide an opportunity to assess future • there would be a single, more powerful, needs for high level advice. I have been voice for research and innovation interests impressed by reports of the work of in Wales: but the Science Advisory Council for Wales • there would be a significant risk that (SACW) and the Innovation Advisory higher and further education interests Council for Wales. The TERCW, the Chief would outweigh those of business Scientific Adviser for Wales and the Welsh innovation and these risks would need Government will need to agree on their to be managed and mitigated at both needs for advice in future. governance and management levels. Whether or not innovation support is The creation of TERCW would be an moved into TERCW, the creation of a single opportune time to consolidate innovation consolidated Research and Innovation programmes with HE and FE. I am therefore Advisory Council for Wales should be working on the assumption that innovation considered. support will be consolidated under TERCW Innovation Hubs but my recommendations do not depend With core funding for university- on it. business collaborations in place, the A Productivity Roadmap for Wales Welsh Government should create three The Cabinet Secretaries for Education and new innovation hubs, along the lines for Economy and Transport (responsible recommended by Sir Ian Diamond, supported for science and research) should ask the in part from the St David’s Investment Fund, TERCW and the new Chief Scientific to seize specific opportunities to support Adviser for Wales to create a roadmap economic growth with research and skills. with milestones, through which HE, FE and Hubs will vary in size from sector to sector but business innovation can contribute together experience from Scottish Innovation centres to higher economic productivity in Wales. and Innovate UK Catapult Centres suggests • That roadmap should integrate existing that an indicative budget of £10m yearly in Welsh strategies for health research, total for the three hubs would be sufficient computing, innovation and other relevant to make a significant impact both regionally topics, ideally including infrastructure, and sectorally within Wales, providing that regulation and skills. The roadmap should significant further resources are attracted from mark the beginning of a new, more sources outside the Welsh Government.

27 Each hub should usually be industry led with looking to invest over £10bn in a new directors and managers having significant nuclear power station at their Wylfa experience of working in the industries Newydd site, Northern Anglesey. Bangor served by the hubs. Hubs could operate University and Horizon have already successfully under many different operational signed a Memorandum of Understanding models but experience in Scotland22 and in which will enable both organizations several catapult centres suggests that they to collaborate and work more closely will deliver results more quickly if they are together in future years23. Nuclear power anchored in a university, research institute, or stations need a range of skills including college that can provide back-office support, physical sciences, natural sciences, health access to facilities and existing networks in and behavioural sciences, business, the business and academic communities. administration and law. So staff and That approach resonates with the preferences student briefings have been provided of firms who rate innovation institutions by Horizon and other partners such as as important to their business. CBI Wales the National Skills Academy for Nuclear submitted in evidence the chart at Figure 11, and the Nuclear Graduates Programme taken from the 2016 CBI innovation survey. to raise awareness of the sector and its opportunities. Of course other technology institutes and 24 clusters, often related to universities, already • SPECIFIC is led by Swansea University, provide invaluable expertise and capabilities with Strategic Partners Akzo Nobel, aligned with specific business demand: NSG Pilkington, Tata Steel and Cardiff University and a wide range of business • Horizon Nuclear Power (a wholly owned and academic partners. It enables subsidiary of Hitachi Ltd), is currently Figure 11

Companies who rate UK innovaHon insHtuHons as important

UniversiHes 78%

Overseas networks 42%

Innovate UK 39%

Catapult Centres 34% % of respondents Supply chains 33% excluding 'not aware'

Research Councils 31%

ApprenHceships 30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

CompaniesAnnex – Figure who 4 rate UK innovation institutions as important (% of respondents excluding ‘not aware’) Figure 11:Figure Preferences 4. Sources of firms of innovationwho rate innovation rated as institutions'high' amongst as important Welsh firms to their business.

22 http://www.sfc.ac.uk/innovation/innovation-centres/innovation-centres-review.aspxScientific journals and trade/technical publications 23 https://www.bangor.ac.uk/news/latest/bangor-university-students-succeeding-in-nuclear-27498Technical, industry or service standards 24 http://specific.eu.com/ Professional and industry associations Conferences, trade fairs, exhibitions Government or public research institutes 28 Universities or other higher education institutes Consultants, commercial labs or private R&D institutes Competitors or other businesses in your industry Clients or customers from the public sector Clients or customers from the private sector Suppliers of equipment, materials, services or software Within your business or enterprise group Sources of innovation 2012-2014 0 10 20 30 40 50 Percentage of responses

buildings to generate, store and release creating 500 high-value jobs. This Cluster their own energy using only the energy has already been recognized by award of from the sun. It was created in 2011 with £150m funding from Innovate UK27. a £20m commitment from the public and • In Aberystwyth University, IBERS28 (the private sectors. This has allowed Swansea Institute of Biological, Environmental University to generate more than £40m & Rural Sciences) is located in a strong of funding for allied projects. In April agricultural area. Research at IBERS creates 2016, SPECIFIC began phase two of new knowledge that drives innovation the project with £26m in funding from through applied research, education the Engineering and Physical Sciences and training for the benefit of society, Research Council (EPSRC), Innovate UK nationally and globally. With partners in and the European Regional Development government and industry and award- Fund through the Welsh Government, as winning innovation programmes, IBERS well as further investment from Swansea has a long-term commitment to the University, the industrial partners and transfer of knowledge to help build a match funding from Cardiff University. Knowledge-Based Economy, creating high- • The TWI Technology Centre (Wales)25 is value employment in agri-food, energy, located in Port Talbot and focussed on the environment and human and animal industrial non-destructive testing. Its health, nutrition and welfare. research spans the so-called ‘valley of Clearly they are among the candidates to death’ between academe and industry. It host innovation hubs. Many sources of funds employs 33 people, of whom 23 are PhD for innovation hubs are available and I see no and degree qualified. Funded from public reason why the Welsh Government should be sector, industry and competitively-awarded the main source of financial support. Instead, sources, its balance of funding gives it a Welsh Government funding should be used degree of resilience to market fluctuations. as a predictable, long term foundation on Part of TWI Wales’ success is its ability to which investment from other public and connect industry with academia, by the private initiatives can build. Sector Deals, City use of industrial PhD schemes. Deals, Catapult Centres, Innovate UK and • In May 2017 Cardiff City Region, various bespoke initiatives around the UK with Welsh Government, announced and internationally have already followed this an investment of £37.9m to create a approach. state-of-the-art foundry for compound I therefore recommend that, in most cases, semiconductor applications development the readiness of other public and private and high-volume manufacturing. The investors to contribute to a Hub is one of the Compound Semiconductor Cluster spans key criteria, when selecting hubs for support. academic research and commercial activity and builds upon Cardiff University’s strong Rural communities have geographically capabilities in that area26. The Cluster dispersed populations and fewer is a collaboration between IQE; Cardiff opportunities to attract external investment University; SPTS Technologies; MicroSemi; through UK-wide initiatives and private Infineon and others and is expected to sector investors. It would be unrealistic to leverage up to £375m of private sector apply the same key criteria to the selection of investment over the next five years, innovation hubs. In rural communities higher

25 http://www.twi-global.com/about/twi-group/twi-technology-centre-wales/ 26 http://www.cardiff.ac.uk/institute-compound-semiconductors 27 https://www.gov.uk/government/news/compound-semiconductors-new-catapult-centre-in-wales 28 https://www.aber.ac.uk/en/ibers/about-us/

29 levels of public sector support may well be and economic development bodies to inevitable in the first instance but the longer Wales. This should include – but not be term goal of attracting business investment confined to – continuation and growth of should remain. the highly successful Sêr Cymru initiative. Whether or not innovation funding falls Building on existing success within TERCW, the proposed post compulsory Science and research already deliver major body should aim to expand the range of benefits to the economy and society of industry sectors collaborating with HE and Wales: FE institutions through smaller, pilot projects • Attracting and retaining business and experimental initiatives in tourism, food, investment in R&D. financial services, agriculture, retailing and other sectors, each located near a cluster • Delivering highly skilled people to the of sectoral activity across Wales. These labour market. experiments should explore new models • Improving public services in areas such as for collaboration and may well inform the health and social care. creation of future Economic Growth Hubs. • Enabling mature businesses to improve Making Wales even more attractive to their performance. business and charity investors in research and innovation • Creating new businesses. From time-to-time, as resources permit, Examples of existing collaboration between the St David’s Investment Fund should also businesses and universities, provided by provide time-limited funding for projects that Universities Wales, are given in Annex 2. are selected in competition. The competition High quality research is often delivered in (for a ‘St David’s research and innovation substantial clusters of activity concentrated award’) should invite bids from individual into a few locations. This allows expensive organisations or groups of organisations facilities to be shared and a broad spread of across Post-compulsory education; public expertise to be assembled in many different sector, business and charities that: ways to meet research challenges. The intellectual stimulation of a large research • contribute to productivity gains or community tends to attract the talented otherwise address economic or social researchers that underpin research success. challenges across Wales. Regions that host a large cluster of research • are clearly aligned with the WBFG Act. tend to benefit from research impact, directly • leverage the largest sums of investment and through the enhanced ability to acquire into the project from UKRI, EU (if those benefits from research conducted available), charities and other sources elsewhere in the world. But many regions of outside Wales. Experience with the UK Wales benefit from the research conducted in Research Partnership Investment Fund, clusters. which has already supported projects in For example, Colin Sirett, Chief Executive Wales, suggests that as much as 2 to1 Officer of the Advanced Manufacturing leverage (i.e. £2 external investment for Research Centre in Sheffield told me that: each £1 of Welsh Government investment) can sometimes be achieved but 1 to 1 “Following proposals from industry leverage is often a more realistic ambition. and academia, in November 2016, Cabinet Secretary Ken Skates announced • attract new talent investment from the establishment of an Advanced businesses, research and technology Manufacturing Research Institute in organisations, charities or other innovation

30 Deeside. Recognising the compelling case for such an initiative to support the development of future manufacturing technologies in Wales, a £20m budget was assigned. This brings together Welsh industry, Welsh Government, Deeside Enterprise Board, AMRC (Advanced Manufacturing Research Centre), Coleg Cambria, Swansea University, Glynd ˆwr University and other Welsh Universities for participation in collaborative research projects. Two open access facilities are planned, one in Broughton, one in the Deeside Industrial Park (final location to be confirmed). The Broughton facility will be operated by AMRC and, as such, will be recognised as part of the UK High Value Manufacturing Catapult. This will provide access for Wales to the HVM network and collaboration across the UK, attracting further funding. Working closely with industry, the £20m Welsh Government investment will be matched through collaborative and directed research projects.” NCUB’s Growing Value Wales project29 led by Dr Drew Nelson of IQE and Professor Colin Riordan from Cardiff University has received lists of existing and emerging ‘hotspots’, shown in Figure 12. A new advisory structure, which consolidates the Science Advisory Council for Wales and the Innovation Advisory Council for Wales may well be given responsibility for identifying opportunities for new innovation hubs and time-limited projects under the St David’s Investment Fund. I can make no firm recommendation on the advisory process, until the responsibilities and governance arrangements for TERCW have been finalised but l offer that suggestion for consideration over the longer term.

29 http://www.ncub.co.uk/what-we-do/growing-value-wales-task-force

31 Current ‘Hot Spots’ Region University Compound semiconductors SE Wales Cardiff Catalysis SE Wales Cardiff Energy technologies SE Wales Cardiff Creative sector SE Wales Cardiff/Cardiff Met./S. Wales Life sciences/drug discovery SE Wales Cardiff Hydrogen technologies SE Wales South Wales Automotive and power systems SE Wales South Wales Aircraft maintenance SE Wales South Wales Design and product research SE Wales Cardiff Metropolitan Plant/crop breeding West Wales Aberystwyth Nuclear power technology North Wales Bangor Advanced materials SW Wales Swansea Energy technologies SW Wales Swansea Non-destructive Testing SW Wales UW Trinity Saint David Emerging ‘Hot Spots’ Region University Cyber security SE Wales Cardiff/South Wales Environment SE Wales South Wales Digital manufacturing SE Wales Cardiff Metropolitan Food and drink SE Wales Cardiff Metropolitan Data science SE Wales Cardiff Software SE Wales Cardiff Parasitology/infectious diseases West Wales Aberystwyth Food and drink technologies West Wales Aberystwyth Advanced manufacturing North Wales Bangor Energy and environment North Wales Bangor Life sciences SW Wales Swansea Computational science SW Wales Swansea Construction innovation SW Wales UW Trinity Saint David

Figure 12: Existing and emerging hotspots of collaboration between business and universities demonstrate the wide geographic spread of opportunities for economic growth.

32 33 2. Reason for this Review

Credit: Cardiff Catalysis Institute, Cardiff University

34 For many years in Wales, there has been Professor Peter Halligan and Dr Louise Bright a perception that the Welsh research and have published, in 2015, more recent analysis innovation scene has not been delivering the of the case for expanding the capacity of the levels of success that it should relative to its Welsh research base, to address Wales’ lack population size with respect to the rest of the of researcher numbers, available to compete UK. For at least two decades, the proportion for more research funding31. of competitively awarded research funds In March 2016, Professor Ellen Hazelkorn from the UK Research Councils has been published her review of post compulsory around 3.0 per cent to 3.4 per cent of the education and training in Wales. Titled UK total, despite the population of Wales Towards 2030: A framework for being approximately 4.9 per cent of the UK’s building a world-class post-compulsory population. By comparison, Scotland has education system for Wales32, her report some 8.3 per cent of the UK population but recommended the creation of a new ‘at attracts over 14 per cent of Research Council arm’s length’ body from Government, which funding. would be responsible for overseeing all It has been argued by many that this Post Compulsory Education and Training in shortfall in research income is a direct result Wales (PCET). In order to integrate the full of underfunding of the higher education range of post compulsory education and research base over decades in Wales’ training programmes in Wales, Professor universities by the Higher Education Funding Hazelkorn recommended bringing together Council for Wales (HEFCW) and by the Welsh and aligning Further Education, Higher Government (WG). These arguments of a Education, Life Long Learning, Adult and shortfall focussed mainly on the number Community Education, Apprenticeships and of researchers in Wales who could pursue other education activities which included those Research Councils who had the largest post graduate (taught and research higher budgets, i.e. the Engineering and Physical degrees) as a logical full extension of the Sciences Research Council (EPSRC) and the term ‘post compulsory education’. As Medical Research Council (MRC) and that, much HE sector research activity involves with a greater number of researchers in these significant learning and training, even at areas, the ‘gap’ in competitively awarded post-doctoral level (for example, the Welsh Research Council income coming into Wales CRUCIBLE programme), Professor Hazelkorn could be closed. In recognition of this and in recommended that all research and an attempt to make a statement of intent, innovation activities and funding be included Science for Wales30 was produced in 2012 within this new PCET body. Furthermore, by the then Chief Scientific Adviser for Wales, Professor Hazelkorn recommended that Professor John Harries, acting on behalf an independent review of research and of the Welsh Government. From this was innovation in Wales be conducted. born the Welsh Government’s Sêr Cymru In September 2016, Professor Ian Diamond programme, which provides funding to published his final report, titled The Review recruit research talent from all over the world of Higher Education Funding and Student to increase researcher numbers in Wales. Financing Arrangements in Wales33.

30 http://gov.wales/docs/det/publications/120306scienceen.pdf 31 Leadership Foundation for Higher Education report ‘The Case for Growing STEMM Research Capacity in Wales’ https:// www.lfhe.ac.uk/en/research-resources/research-hub/2015-research/the-case-for-growing-stemm-research-capacity-in-wales. cfm 32 http://gov.wales/topics/educationandskills/publications/reports/review-of-the-oversight-and-regulation-of-post-compulsory- education-and-training-in-wales/?lang=en 33 http://gov.wales/topics/educationandskills/highereducation/reviews/review-of-he-funding-and-student-finance- arrangements/?lang=en

35 This recommended major changes in the Government funded support arrangements for HE students with a shift from partial funding of tuition fees wherever students study to a means-tested maintenance grant system, thus helping to alleviate much student living expenses hardship while being a student but at a cost of incurring longer-term debt in the form of student tuition fees loans. In making this transfer, the Welsh Government could expect to make considerable savings on student tuition fee financing which could be transferred to the post compulsory education sector as additional government financing. This has been termed the ‘Diamond Dividend’ and has been referenced expectantly by many stakeholders during the course of this Review. The Welsh Government has accepted the recommendations made by both Hazelkorn and Diamond and is in the process of consulting on the implementation of both. Furthermore, this Review is the enactment by the Welsh Government of the Hazelkorn recommendation to undertake an independent review of government-funded research and innovation in Wales.

36 37 3. Review Methodology

Credit: SPTS Technologies

38 3.1 Timing industry, local authorities, the UK Research I agreed with the Welsh Government from Councils, Innovate UK, the fledgling UK the outset to do this review quickly, so that Research and Innovation, HEFCW and the findings and recommendations would medical research charities. The starting point be available before UKRI is formally in for these discussions were the questions operation in April 2018 and before BrExit listed in Annex 7. Many supplementary negotiations conclude as soon as 2019. questions were also discussed. Furthermore, with the publication of the During these formal oral evidence hearings, Welsh Government’s White Paper on ‘Public a voice recorder was used to record to Good and a Prosperous Wales – Building keep a full account of the proceedings and a reformed PCET system’34 published in these recordings will be made available, on June 2017, the recommendations would be request, from the time of the publication of available in time to inform the development this Review. The oral evidence hearings took of the legislative programme in late 2017 or place during May and June 2017 and are early 2018 for implementing the Hazelkorn summarised in Section 5. reforms. Therefore, compromises on scope 3.5 Informal Oral Evidence Hearings and depth of the review have been made but we are not aware of any great sacrifices in Informal oral evidence hearings were the quality of analysis made through these conducted during April to October 2017, compromises. without the use of a voice recorder. The complete list of witnesses, for both formal 3.2 Advisory Panel and informal hearings, is shown in Annex 9. I led this Review and the conclusions 3.6 Visits and other meetings and recommendations are mine alone. In undertaking this Review, however, I The schedule of these visits and meetings is was assisted by an Advisory Panel whose in Annex 10. membership is given in Annex 5. 3.3 Call for Written Evidence On 14 April 2017, invitations were distributed to key stakeholders within Wales inviting them to submit written evidence. An example of the invitation letter is shown in Annex 6, with the Appendix to this letter giving background at Annex 7. Responses were invited by 30 June 2017. The written evidence was collated by Robert Hoyle from the Chief Scientific Adviser’s Division. Dr Hoyle’s summary of this evidence is shown in Section 4 and the Written evidence providers listed in Annex 8. 3.4 Oral Evidence Hearings During April 2017, formal oral evidence hearings were organised with key stakeholders. These included senior figures from the Welsh HE and FE sectors, Welsh

34 https://consultations.gov.wales/sites/default/files/consultation_doc_files/170620_reformed_pcet_system_final_en.pdf

39 4. Written Evidence Summary

Credit: Aberystwyth University

40 The written evidence was provided in sectors that are not currently represented response to four questions. There were in the Industrial Strategy’ to be subject to 29 responses to the call for evidence. For Welsh Government promotion as this offers this summary, all the responses have been more of a local Welsh flavour to research grouped according to the question but and innovation activities than would the with the outliers either included under each UK Government’s Industrial Strategy. For question, as appropriate, or summarised example, one niche area that were cited separately. Further, within each question was Cardiff Metropolitan’s Zero2Five Food summary, the responses have been Industry Centre, which brings together HE subdivided into three main groups: 1. HEI with FE (Coleg Llandrillo Menai), a County sector, 2. industrial and local authority sector Council (Ceredigion) to facilitate pan-Wales and 3. informed body sector (charities, innovation delivery through knowledge academies and societies). transfer supported by £11.9m Helix project Unless otherwise indicated, the universities from the WG Rural Development Fund. will be referenced by their location name This has worked with over 200 food e.g. Cardiff University will be referenced companies and has generated hundreds of as ‘Cardiff’. When this has the potential to manufacturing and technical jobs. Localised cause confusion, a fuller name will be used – exploitation of expertise was highlighted e.g. Cardiff Metropolitan. further: HEIs working with the public sector have the potential to address some 4.1 Question 1 of the seven principles of the WBFG Act. How can future support for Government- For example, University of Wales Trinity led investment and support for research Saint David (UWTStD) is working with and innovation in Wales be aligned with Public Services Boards on crime, policing the requirements of the Well-being of and safe communities and in doing so is Future Generations (Wales) Act (2015)? addressing the goal of ‘A Wales of Cohesive What link should there be between the Communities’. Glynd ˆwr University noted WBFG Act (2015) requirements and the that ‘the UK Government’s approach to economic and industrial strategy of the industrial strategy acknowledges the need Welsh and UK Governments? for the benefits to be spread more equally, 4.1.1 HEI sector responses and closely- a recognition of the fact that concentration related organisations, including HEFCW. of advantage, either regionally or within Wales needs to create the conditions in which communities, does not lead to the maximum a greater proportion of the added value benefit in terms of ‘healthy, resilient, is locked into the economy. Cardiff stated cohesive, equal, […and…] culturally vibrant’ that ‘both the Wales and UK Government communities. interventions through the industrial strategy The need to align R&I more closely with should focus on projects that support a the WBFG Act was explored further by the number of sectors, anchor existing supply South East Wales Academic Health Science chains in the UK and encourage more to Partnership (SEWAHSP) who stated that be based in the UK. More locally, Bangor funding ‘could be targeted and will generally suggested that R&I development strategies support one or more of the 7 well-being need to reflect regional differences in Wales goals.’ Swansea developed this theme and, where possible, align these to the UK further by suggesting that investment ‘fit Industrial Strategy. with the work of’ the Future Generations The role of niche expertise was illustrated by Commissioner and, where appropriate, Cardiff Metropolitan who called for ‘Welsh the National Infrastructure Commission for Wales’ and the Future Trends Report.

41 There was a note of caution expressed by needs to be a focus on STEM in schools Bangor, who suggested that the seven WBFG and that undergraduate courses and post- Act goals should be as much as ‘guiding doctorial researchers in manufacturing and principles’ in funding strategy decisions, advanced materials need to be aligned with which need to be balanced against seeing major foundation industries such as steel and them as ‘specific objectives’. Aberystwyth emerging technology companies with the echoed this by suggesting that, ‘if the Welsh aim of revolutionising manufacturing in Government aims to support excellent the UK. science there must be funding/support Business Development Wales suggested that available that is not tied to economic or well- modern R&I ‘is often seen as ‘out of reach’ being priorities but is curiosity driven’. and only relevant to high tech businesses’. 4.1.2 Business, industrial and local They agreed that ‘we need to focus authority investment on the high value, high returns’ TWI (Philip Wallace) stated that the WBFG market but that we should not exclude SMEs Act provides ‘a good underpinning’ for future and micro-businesses having access to R&I Government-led R&I in Wales and, although resources. it does not dictate R&I strategy, it does 4.1.3 Informed body sector (charities, provide the ‘wider aspect’ within which all academies and societies) proposed initiatives should be assessed. Rob The Learned Society of Wales argued that Rolley of General Dynamics stated alignment the expansion of R&I funding is implicit could be achieved ‘By developing a clear and in the WBFG Act. By stating ‘The lack of tangible roadmap... of what interventions funding for research and innovation is could deliver aspects of the vision outlined ensuring that Wales cannot compete with in the WBFG Act.’ These ‘interventions the rest of the UK and funding cuts mean we would help to define both a short and long- cannot adequately support the teaching of term plan of actions’ with KPIs and ‘success our doctors, health professionals, scientists factors, against which investment can be and engineers. This lack of investment sought’ and these reviewed periodically ‘to disadvantages the future for the people of ensure the investments are delivering value Wales and the policies being followed are against the agreed success criteria’. the opposite of those needed to support the To help align the support for innovation and WBFGA[ct]’. business development with the WBFG Act, The British Academy suggested that Andy Middleton of Tyf Group suggested challenges facing future generations will that the Welsh Government could use the B only be tackled by ‘the bringing together of Corp Assessment. Andy Middleton quoted knowledge and expertise from across the full Madeleine Albright (former US Secretary of breadth of research disciplines’ as highlighted State) ‘...the B Corp movement shows us that in their ‘Crossing Paths’ report. This report business, the driving force of our economy, illustrates the barriers which prevent can be an agent of change and live up to interdisciplinary research and the Welsh society’s standards’ for alleviating poverty, Government ‘should recognise the need to preserving ecosystems and building strong facilitate an interdisciplinary approach to communities and institutions. tackling these major challenges for future Byron Tucker, Tata Steel Europe, gave a generations’. clear message that ‘A prosperous Wales 4.2 Question 2 needs to generate wealth’. He went on to What can be done by the Welsh suggest that future generations need to be Government, Welsh universities and appropriately trained and skilled, that there

42 the private sector to increase the Wales argued that HEIF funding should competitiveness of the research and cover interdisciplinary R&I and that a ‘sector innovation landscape in Wales, thereby based approach’ by pursued in which, for increasing the attractiveness of Wales example, ‘psychologists and designers can as a place to undertake research work together with end users to design and innovation and attract inward products and processes’. HEFCW argued that investment and investors from outside their equivalent ‘Innovation and Engagement Wales, both in academia and in industry? Fund (IEF)’ should be reinstated and that 4.2.1 HEI sector responses and closely ‘The provision of baseline funding to support related organisations, including HEFCW. innovation and engagement related to activity in FE is long overdue’. The value A common, strong theme that emerged from of HEIF is recognised in the UK Industrial this question was on the issue of innovation Strategy because it supports ‘knowledge and knowledge exchange (KE) funding and transfer infrastructure in English universities’ its equivalent in England: Higher Education and ‘supports the REF Impact agenda’ Innovation Funding (HEIF). In Wales, this is (HEFCW). non-existent, having been phased out by the Higher Education Funding Council for Wales Aberystwyth suggested that there is a need to (HEFCW) in about 2014. Cardiff stated that create better opportunities and incentives for that the EU Structural funds have taken the higher investment in Welsh R&D partnerships place of HEFCW’s innovation and KE funding and that ‘industry push investments’ be and, with the probable loss of much of this promoted by providing funding for both sides due to BrExit, KE activities were at great risk. of the HE and industry engagement, thus Aberystwyth described how R&I in Wales’ promoting relationship building between top universities had benefited enormously them. HEIF would achieve this. Trinity Saint from EU structural funds which had helped David developed this theme further by build state-of-the-art research infrastructure, suggesting that FE should be part of the mix, by bringing large teams of research experts i.e. that HE and FE should partner to provide a together and by growing long-term wide range of skills, training and R&I expertise collaborations with industrial partners. Most in a ‘back to basics approach with appropriate universities agreed and made a specific funding levers’ to deliver a new system of request for the reintroduction of HEIF given technical education system fit for the use and the impending demise of EU structural funds. benefit businesses in a modern economy. Bangor called for the restoration of HEIF-type South Wales suggested that the Strategic funding in Wales and that it should be based Insight Programme (funded by HEFCW on the HEBCIS metrics and ‘be distributed but discontinued) would be beneficial for on hypothecated, flexible and sustainable driving short term cross placements between principles’ and ‘within a strong, regionally universities and industry or the public sector. relevant strategic framework centred on This Programme encouraged the development place-based innovation’. South Wales agreed of collaborative partnerships by the transfer with the HEBCIS suggestion and added both ways of staff on a temporary basis. This that higher TRL-level R&I could be a major was key for development of each partner’s determinant in the award of HEIF funding, understanding of the culture and ways of thus driving the emphasis to industry driven working of the other. R&I rather than a university driven approach. Swansea stated that ‘With the impending Trinity Saint David suggested that HEIF loss of EU structural funding in Wales, it ‘funding can then be focused on the most is incumbent on all the actors to create effective KE (Knowledge Exchange) activities an environment where we can increase for the economy and society’. Further, South our market share of these ‘hard to get’

43 investments. Key to achieving this step There was comment about businesses, change is the importance of the HE sector industry, recipients and beneficiaries in Wales continuing to produce world class, taking a more active role in the research industry led research and innovation in and innovation undertaken as envisaged collaboration with the private sector’. Further, in the role of the Catapults. Thus, Cardiff Swansea states ‘Regional R&I investment Metropolitan called for coordination with should not be perceived as an accessible UK-wide R&I initiatives, for example, the alternative to the ‘hard to get’ funding’, Connecting Capabilities Fund and Research although adding that local investments Partnerships Investment Fund (RPIF) and have been a crucial stepping stone that has suggested that collocation and collaboration enabled researchers and the private sector between industry, academic research and build R&I capacity. commercialisation. They gave the example Swansea developed this comment further of PDR (Cardiff Metropolitan’s Centre by suggesting that more work needs to be for Product Design and Research), which done by the Welsh Government, industry combines leading research and consultancy. and the HE sector in Wales to define ‘our The emphasis on focussing on beneficiaries collective offering’, i.e. ‘we must have a clear was described well by SEWAHSP who stated understanding of our proposition (USP)’ that research could be focussed on patient (Unique Selling Points) and that ‘the rich and clinically-led research such as through tapestry of research, innovation, high-level the ‘Efficiency through Technology Fund skills and infrastructure (in Wales)... needs to and Research for Patient Benefit Scheme’. be packaged in a more coherent manner that HEFCW suggested that a more targeted fund underlines the Team Wales approach’. should be made available ‘to support defined priorities ... or priority business sectors’, The dual support mechanism for funding such as that provided by Sêr Cymru Grand R&I was mentioned by Universities Wales Challenges. (UW) and Tamsin Mann of PraxisUnico. One component of this mechanism is the One area could be enhanced is the un-hypothecated Quality-related Research publication and promotion of R&I outcomes funding (QR). UW and Cardiff Metropolitan by industry and business. Aberystwyth called for HEIF type funding to be included as suggested that ‘Welsh Government should un-hypothecated funding. Aberystwyth stated incentivise private companies to showcase that ‘...QR must remain un-hypothecated’ and their successful and current collaborations that ‘great care must be taken not to weaken with Welsh HEIs that have or are likely to lead Wales’ participation in the dual funding to Economic Impact’. This would illustrate model of UKRI’ and this was echoed similarly the delivery of R&I services by the academic by Bangor who stated that ‘Dual support is community in response to the ‘pull’ from widely recognised as a fundamental strength industry. of the UK’s HE research infrastructure, so if Glynd ˆwr University suggested that there Wales is to remain competitive QR funding is should be developed ‘a scheme based at essential and must be maintained and grown the university which is similar to Knowledge over time’. HEFCW stated that R&I in Wales Transfer Partnerships but where the idea is needs ‘a competitive and sustained source at a lower level of maturity. This would entail of unhypothecated baseline infrastructure Masters students being taken on, on an funding’ and suggested that it be re-branded, undertaking that their project is on an area, possibly being called ‘HERIO (‘to challenge’ which is a potential development for the in Welsh), SBARC (‘spark’ in Welsh) or FFRES company’. (fresh’ in Welsh) funding.

44 4.2.2 Business, industrial and local as being most closely aligned to science authority. and research’ will not help productivity: Business Development Wales suggested that ‘Commercialisation, wealth creation and real- we need to ‘develop a culture where research terms wage growth are the things that will and innovation is part of daily life and that help solve the productivity problem’. in itself will attract inward investment’. To increase the competitiveness of R&I in To achieve this, Byron Tucker suggested Wales, Philip Wallace of TWI Technology that new innovation centres such as the Centre (Wales), argued that a clear map of proposed National Steel Innovation Centre Wales’ R&I stakeholders and world-class could create these conditions. Such centres excellence and capability is required – a ‘will bring SMEs, supply chain partners and capability map which would need to be foundation industries together to generate realistic and believable. Further and perhaps new ideas and bridge the technology valley most importantly, he argued for ‘an overall of death, thereby bringing promising ideas research and innovation strategy with a to commercialisation’. This was echoed real vision for the role of Welsh science and by Dr David Owen who concluded that innovation in the world’. This world view was Wales should ‘Initiate funding mechanisms developed further by Mr Wallace and Colin to meet Proof of Concept/Valley of Death Sirett, both of whom suggested that R&I challenges’. Colin Sirett of AMRC stated needs to look outside of Wales for strategic that ‘Collaborative R&D between Industry collaborations, i.e. ‘to gain a foot in the door’ and Academia is based on stability of focus (Sirett) and ‘world-class resources to support and environment’ and suggested that the the Welsh strategy, either by collaboration success of UK Government’s ‘Automotive or inward investment of money and people’ Propulsion Council, Aerospace Technology (Wallace). Andy Wood of Qioptiq commented Institute and Catapult Centres’ is due to that ‘Whilst the PhD route is relatively cost- ‘funding programmes that extend beyond effective for the company, the output from any one Government Administration the sponsored PhD projects compared to period’. Further, Andrew Evans of SPTS what was promised in the programmes of Technologies illustrates this point with the work ……. has been disappointing overall’, Compound Semiconductor Catapult which adding ‘Universities over-promise on what ‘has already brought together both business they will deliver and the output is strongly and academia in the region’ and which is dependent on the capability of the student ‘an excellent example of industry leading and the commitment of the supervisor’. academia’. Consequently, we need to ‘Recogise that The issue of whether academia is leading Universities and Industry have different industry or vice versa was explored further by agendas and (we need to) develop a new Kellie Beirne from Monmouth Council and model for the support of industrial focused Chair of the Innovation Advisory Council for R&D’. ‘There is an opportunity to establish Wales (IACW). With regard to the meaning of Wales as the UK centre of expertise’ in niche innovation, she argued that ‘Innovation is not areas such as ‘for optics’. a subject; neither is it a theme or programme 4.2.3 Informed body sector (charities, – it is mind-set – a way of thinking that can academies and societies). be applied as we come to consider how we Cancer Research UK (CRUK) stated that might solve some of the wicked issues and ‘The medical research and innovation problems of today and tomorrow’. She went landscape in Wales would benefit from a further by stating ‘Innovation, therefore, strategic approach that is both ambitious cannot just be seen as ‘belonging to science’’ and sustainable’. This would ‘enable Wales and that a continued view of ‘Innovation

45 to carve a unique space for itself in the RAEng discussed funding mechanisms and competitive international research arena’. recommended ‘that the Welsh Government This strategic approach should ‘Ensure gives increased priority to supporting (that) the right balance of funding across knowledge exchange activities through the basic, translational and clinical research is creation of a long-term flexible funding developed and maintained’. stream’. In further detail, the RAEng The mapping of parts of the R&I landscape ‘recognises that QR funding provides has been undertaken by Nesta in a valuable funding stream that allows collaboration with the Welsh Government institutions to achieve their own strategic and IACW. Kirsten Bound from Nesta objectives...in a rapid and responsive manner and IACW described the ‘Arloesiadur’ or to pursue risky or innovative activities’. ‘Innovation Directory’ initiative. This is a new They called for ‘QR to be maintained way of looking at the innovation system in real terms’ in line with the Diamond and promises to increase competitiveness of recommendations. CRUK echoed this theme the R&I landscape in Wales in two ways – by stating that the ‘Welsh Government internally by helping to identify opportunities should continue to recognise the importance for collaboration between organisations of and support for Quality-Related (QR) active in different research topics and funding as is reflected in their response to disciplines and designing innovation the Diamond review’. The British Academy interventions to harness these; and externally developed this further, stating ‘Maintaining by promoting Wales to potential investors the flow of quality related funding in and partners. particular to excellent research wherever it is found within Wales will be crucial for the Strategy and mapping of Wales’ R&I assets ongoing competitiveness of its research and was a theme explored by the Royal Academy innovation landscape’. The Learned Society of Engineering (RAEng). The Academy of Wales (LSW) extended this reasoning stated ‘Wales needs to focus on creating an to expensive STEM subject undergraduate enabling environment, articulating a clear teaching. vision of an innovative, smart nation and promoting its success’. It called for mapping The was considerable comment about R&I and in order to maximise the value of any infrastructure; the LSW praised the ‘very mapping exercises, ‘the Welsh Government successful Sêr Cymru’ programme as a means should use the outputs...to enhance of building research capacity but this needs the breadth and range of connection to be developed in a holistic manner by opportunities, including links between considering at the whole issue of expensive the research, innovation and industrial STEM undergraduate and postgraduate communities, building on and promoting support as recommended by Diamond. High existing effective initiatives such as the quality infrastructure was a theme explored semiconductor cluster’ (RAEng). Further and further by RAEng and that ‘enhancing the in response to the opportunities presented by digital skills of the Welsh workforce ... will the UK Industrial Strategy Challenge Fund, be fundamental to Wales’ competitiveness the Royal Society stated that ‘Small amounts across a range of sectors...’. The British of public investment in areas where little Academy (BA) suggested that the Welsh funding is available can have a bigger impact Government ‘should ... work with UKRI than their monetary values might suggest’, to identify potential new areas of growth thus could ‘businesses (be) supported to take that are appropriate to Wales’ and gave the up emerging technologies (which) could help creative economy as an example which is Wales to compete’. growing fast in the UK and Wales.

46 On the business side, both the RAEng and BA for staff and students’. This was echoed by suggested that business management skills Trinity Saint David who called for ‘continued and business finance are areas that require access to Erasmus, MSCA programmes and development: ‘Moreover, effective adoption Horizon 2020’. Further, they suggested that of technology throughout businesses ‘The sector could also work with the Inward and improvements in management and Investment to explore opportunities in other workforce skills are just as important and countries ... and proposed links the UK depend on the understanding and insight Government is developing with the US and which HSS (Humanities, Social sciences) can elsewhere’. bring’ (BA). Although equity finance deals There has been a growing realisation that in Wales are comparatively low compared with the impending loss of EU structural to the UK, ‘there would be value in stronger funds and the changes taking place with promotion of these investments’ (RAEng) that UKRI, there is no overall guiding policy or exist would ‘demonstrate to investors and strategy in Wales. Bangor developed this companies across the UK the opportunities theme specifically by stating that Wales available in Wales’. should ‘Have a clearer national strategy and 4.3 Question 3 defined roadmap for delivery’. What can be done by the Welsh The issue of any Barnett Formula Government, business and universities consequential, in relation to the Industrial to increase research and innovation Strategy Challenge Fund, was developed income in Wales in the light of the by Cardiff Metropolitan who argued that implications of BrExit and the increased this should be available to all the Welsh funding announced in the 2016 Autumn universities and not just the top four (Cardiff, Statement and UK Government’s 2017 Swansea, Bangor, Aberystwyth) as had Budget, the Global Challenge Fund and been in a recent allocation by HEFCW. The other, opportunistic Government funding justification for this appeared to be that, opportunities? in the case of Cardiff Metropolitan, the 4.3.1 Responses from the HEI sector and funds ‘could potentially be used to better closely related organisations including effect’ and, further, ‘A competitive model HEFCW. could also be explored in anticipation of Swansea argued that ‘More high level a Welsh allocation of Industrial Strategy engagement between Wales and the UK funding’. HEFCW added that the Welsh Government is crucial in order to influence Government should ‘Commit to securing any stakeholders at a UK level’ and that ‘A consequentials arising from UK Government’s greater communication and dissemination of ... additional funding for research and the USP (of Wales) is paramount to ensuring innovation’ and that the Welsh Government that Wales can secure a growth in research should ‘secure this funding for HEFCW to and innovation income’. Swansea went allocate for research and innovation activity further in that they ‘encourage the Welsh in Wales’. Government to explore strategic links with The consequences of BrExit were discussed the UK government in attracting inward by HEFCW, who called on the Welsh investment in a way that will strengthen the Government to ‘Make the case for regional indigenous research and innovation base’. investment to replace EU (…structural...) Regarding BrExit, Swansea stressed ‘the funding in Wales’ in line for example with need to continue to welcome and recruit the UK Shared Prosperity Fund promised by talented European staff, ... students and the Conservative Manifesto’. This is essential encourage outward mobility opportunities because Wales has used structural funds in

47 place of QR and HEIF funds for R&I capacity Bangor states: ‘KESS is an excellent exemplar building; this is a theme developed by of how a skills focussed programme can Cardiff who stated that ‘Wales (and Cardiff deliver measureable benefits to businesses in University) has used EU funding to invest in Wales’. Bangor goes further, suggesting that infrastructure to a far more significant extent ‘Initiatives to retain highly qualified young than universities in England’. The degree people in Wales are required – such as PhD to which Welsh universities have become studentships for Welsh students studying in dependent on EU funds for R&I activities Wales’ end extending this to ‘MScs etc’. The and capacity building and the need to have support for KESS was echoed strongly by the replacement funding was emphasised by SEWAHSP who ‘has been very engaged with Cardiff who stated that ‘Cardiff would ... KESS2’. welcome assurances from Welsh Government The issue of who or what type of that advances are being made to secure organisation is best placed to manage a viable future for this type of activity’. research and innovation funds was addressed Again, but outside of EU or QR and HEIF by HEFCW, stating ‘Funding collaborative funds, Cardiff calls for ‘the continuation of research, development and innovation project initiatives such as Sêr Cymru to help retain activity between business and universities competitiveness’. should remain a Welsh Government role’ Regarding QR, Cardiff states simply ‘that QR and ‘Welsh Government has a distinctive funding remain at least at its current level of role to support research, development and £71m’. Also, Cardiff states that ‘Improved innovation activity in the business sector’, but support from Welsh Government for the does request that ‘mechanisms to ensure that delivery of major projects, programmes and HEFCW (or its replacement body) can provide centre status applications would ...... make input to decision making processes need to applications and proposals from Wales more be hard-wired into our structure’. It is implicit competitive’. Further, Trinity Saint David in what HEFCW writes elsewhere that the stresses that QR ‘is vital for meeting the QR and HEIF funding for universities and, Full Economic Cost of research, helps fund possibly, FEIs should be part of its operation essential organisational infrastructure..., or that of the replacement (Hazelkorn) body, contributes to .. physical infrastructure, (and) i.e. at arms length from Government. This enables universities to leverage in additional suggests that HEFCW sees the future funding research investment...’. arrangements as being very close to the Trinity Saint David developed the theme of current funding landscape. ‘supporting KE activities where universities 4.3.2 Business, industrial and local work with industry to deliver solutions’ authority. because these will increase levels of R&I and Kellie Beirne from Monmouth Council ‘allow companies to grow’. They gave the and IACW was explicit in suggesting that example of ‘non-destructive testing where a post-BrExit state offers the chance to the University works with the three major forge different collaborations and seek global and national NDT companies – TWI, new opportunities. ‘A far more far-sighted Oceaneering and Silverwing’. As stated approach to unlocking innovation potential during the Reid visit to TWI, TWI values would take us beyond the buzzwords this relationship with Trinity Saint David and jargon – big data, automation and very highly. The Knowledge Economy Skills AI – to demonstrating how such emergent Scholarships (KESS) managed by Bangor technologies have applicability to Wales’ have played a major role in providing the wicked issues and challenges. Operating funding necessary to promote industrial and a ‘challenge-driven’ approach to defining academic knowledge exchange partnerships.

48 problems and developing solutions 4.3.3 Informed body sector (charities, ...... in order to build solutions that are academies and societies). transformative, truly disruptive and capable The Learned Society of Wales responded by of bringing about long lasting benefit to stating Wales ‘needs to have a vision and a Wales’. Further, she states ‘We cannot clear strategy. It needs to fight for funding keep doing the same things and expecting for regional capacity development and it different and better outcomes and relying needs to ensure that appropriate people and on the ‘usual suspects’ to guide and dictate structures are in place to drive programmes’, pace. It is time to disrupt the thinking mentioning Sêr Cymru and Compound that got us to this point in the first place’. Semiconductors as examples of successful She goes on to describe the creation of models. CRUK stated that ‘There should be ‘a National Innovation Body as the best a long term and sustainable commitment means of creating a distributed system of to initiatives to attract scientists to Wales, innovation (which could) ... deliver a number such as the Sêr Cymru initiative.’ They of measureable and distinctive benefits extended this to include ‘adequate provision that simply could not be realised through a of research nurses and clinical trials support government-led approach’. This is in contrast staff in the NHS Health Boards’. Further, LSW to the view held by HEFCW. requested that an ‘agile approach should The issue of what R&I should be pursued was be applied which enables advantage to be explored by Business Development Wales taken of emergent opportunities – so-called who suggested that Wales needs to ‘Develop ‘strategic serendipity’’. a focus’ and asked ‘– what are we good at? The Royal Academy of Engineering stated – what are our strengths? – what do we have ‘As the UK proceeds ... to leave the EU, that is of value to others? – who needs this it will be essential that measures are put knowledge, landscape, environment, etc’. in place to ensure continuity of funding These are questions which will help define streams to support this type of research and the ‘challenge-driven’ approach advocated by innovation capacity and capability building Kellie Beirne. in Wales in the future’, especially ‘where Philip Wallace of TWI suggested that EU funding has been particularly catalytic ‘Coordination of all resources leads to and effective in Wales’. This was echoed effective proposals and projects’ and that by the British Academy who suggested Wales needs to ‘Be realistic where partners ‘The Welsh Government, alongside the UK are needed outside of Wales – partner Government’ could seek to advocate for the with the best’. Further, he suggested that UK’s continued involvement in EU funding ‘Strategic use of Welsh money (is used) as programmes’. Cancer Research UK echoed seed funding for attracting further funding’ this in more detail stating that the ‘Welsh and that Wales needs to avoid ‘too many ad government should prioritise alignment hoc activities’. This points to his earlier point with the new EU Clinical Trials Regulations’ and similarly to that of others, that Wales because ‘The ability for UK researchers to needs ‘an overall Welsh strategy’ for R&I. collaborate with European counterparts is key to conducting research for paediatric patients Rob Rolley stated that ‘There is not a and those with rare diseases’. shortage of challenges’ but ‘the challenge is translating them into a need. Health, 4.4 Question 4 education, transport, energy, skills etc. – we What is the optimum balance between need to be visible and active on the global (a) geographically focused use of stage and not continue to lick our wounds funding and (b) focus of funding regarding BrExit’. on existing research and innovation

49 excellence and capability, bearing in contribution to the Industrial Strategy. mind the Cabinet Secretary for Economy Swansea recognised that ‘Wales has and Infrastructure’s new regional benefitted hugely from geographical research approach to economic development? and innovation funding as a result of 4.4.1 HEI sector responses and closely investments’ from a range of EU structural related organisations including HEFCW funds programmes which themselves are HEFCW was clear in this point stating ‘Our differentiated on a geographical basis in view is that the bulk of funding for research Wales. should be directed towards supporting Perhaps a good solution could be as South research excellence, based on outcomes of Wales suggested: ‘By maintaining the dual the UK-wide (REF) and volume of activity’. funding system we believe a healthy balance However, ‘it is possible ... to operate formula- can be achieved between regional funding based funding “strategically”’. and funding excellence wherever it is found’. The universities were more equivocal. Bangor 4.4.2 Business, industrial and local stated that ‘There is a strong case that there authority should not be a trade-off between (a) and Philip Wallace of TWI suggests that, as ‘Wales (b). Instead an appropriately ‘smart’ strategy is a relatively small country’, there should be would maximise the synergy between ‘No need to duplicate existing facilities’ and geographical focus and focus on excellence, that Wales should ‘Support what is already to produce the best outcome with maximum available’, implying the R&I infrastructure net benefit’. Similarly, Cardiff’s response which is supported by QR and that ‘ensure was ‘We welcomed the UK Government’s existing resources work for all of Wales’. He commitment to the place-based approach goes one to say that ‘Where there is a need within the Industrial Strategy Green Paper, for new facilities, then location can be key, whilst stressing the importance of any but selection should be based on technical investments being based on research and concerns primarily and economic concerns innovation excellence’. secondly’, i.e. by placing facilities where In addition, ‘Cardiff Metropolitan supports they will be best supported and used rather geographical investments in initiatives such than on a geographic distribution. This is as the Cardiff Capital Region and in the developed in more detail by Byron Tucker of development of clusters; however funding Tata Steel who stated ‘Tata Steel has found based on capacity-building and capability that geographical proximity to manufacturing linked to Welsh priority areas rather than the is important, particularly for the realisation of status quo or geography is likely to drive R&I innovation in manufacturing processes and to competitiveness’. Cardiff Metropolitan went realise process developments demonstrated on to say ‘Niche pockets of excellence within at laboratory scale’. For other R&I activities, challenger universities could support the new he states ‘The case for concentrating funding regional approach’ of the Welsh Government on existing and successful R&I assets.... is and that ‘Fostering emerging excellence in that of critical mass. Spreading resources too areas that will be strategically important in thinly can be counter-productive’. Hence, it the future could be an innovative use of depends on the nature of the R&I activity, replacement structural funds’. Further, Cardiff whether it is of lower TRL levels R&I or Metropolitan suggests that Welsh strengths whether it is close to market (higher TRLs), could be aligned collectively with components which should determine where investments of the Industrial Strategy and that the Welsh in R&I are made. Business Development Government could ‘facilitate discussion Wales suggested a similar theme by stating with UK Government on’ this collective ‘the investment should go where the returns

50 are high’, i.e. concentrated on ‘growth of Deeside and the surrounding area. He orientated enterprises’. identified that ‘of the three characteristics 4.4 3 Informed body sector (charities, of the firm economy; clusters, urban academies and societies). agglomeration and a diversity of investments’ that the most appropriate for the Mersey The Learned Society of Wales stated ‘there is Dee is ‘diversity of investments’ which is a need to fight for a specific and significant characterised as ‘differentiated patterns part of the funding released by the UK of new and evolved MNE’ (Multi-National Government for research and innovation Enterprises) ‘and privately owned companies’. to be allocated directly to Wales’. The He argues that ‘An appropriate response distribution of this in Wales could be based is to be sensitive to firm and place-based on ‘the City Deals and the north Wales differences’, that thinking should go beyond links with the Northern Powerhouse. The sectors and that ‘local, regional and national development of nuclear engineering research institutions should design an integrated at Bangor and the links with Horizon are approach towards industry appropriate to examples of exciting possibilities which could addressing the diversity character of firm benefit a large geographical region’. investments ... across North Wales’ and Cancer Research UK thought that elsewhere. maintenance of a dual funding mechanism in Wales ‘will help ensure that important research areas are protected at the same time as investing in emerging areas and developing talent’. This was echoed by the Royal Academy of Engineering who stated ‘The Academy believes that while excellent research should be funded where it is found, geographically focused funding has a significant role to play in supporting innovation excellence and capability’. The Academy introduced the concept of ‘Innovation Assets’ i.e. the use and exploitation of existing infrastructure to support new innovation in defined geographical areas. Thus, it seems, the general opinion is that Wales having a dual funding system is the means by which both excellence and geographical focus can be accommodated, as proposed by the dual funding model in the PCET White Paper, i.e. Quality-related Research (and innovation) funding (QR and HEIF) and Strategy-related Research and Innovation funding (SRI) are the means to address both options in the question. Paul Hildreth, a PhD student from UCL, discussed the types of company that are found in a particular region of Wales, that

51 5. Oral Evidence Hearing Summary

Credit: IQE plc

52 5.1 Universities, Colleges & Independents The Panel offered the suggestion that – 3 May 2017 ‘anyone who needs a Government steer is • Dr Louise Bright, University of South Wales not worth steering’ because steering creates a dependency society (Holford). The response • Professor Richard Day, Glynd ˆwr University to this suggestion was that the drive needs • Iestyn Davies, Colegau Cymru Colleges to come from the universities and not Wales from government and that the universities • Dr David Owen, Life Sciences Bridging should be more collective on this issue (Day). Fund Further, there needs to be a wider collective involving FE colleges, thus joining up various There was a plea for certainty over R&I courses, research (PhDs), apprenticeships funding, especially on year-to-year certainty and, by implication, other teaching and skills and also for the reintroduction of innovation development activities (Bright). Funding is funding so as to be on a par with England a ‘useful tool’ for achieving this (Bright). (Bright). Further, there was a call for the Thus, Government should take a lead available funding to be focussed on areas on mechanisms which promote a more of strength and not to be spread too thinly, collegiate approach but not dictate specific especially so for innovation funding which areas of endeavour. offers the biggest opportunity for the future (Owen). Wales needs not to be too There is a need for a strategy which joins up introverted and needs to look more widely research and innovation, post compulsory in order to attract more companies to Wales education and government and that (Davies) and that much R&I activity in Wales the (Welsh) Government needs to show is far from being ‘Catapult-like’. leadership in bringing this about (Davies). However, the Welsh Government should There is a need for a clear, long-term strategy not get in the way but develop long-term and leadership by the Welsh Government funding mechanisms which promote and which focuses activities and funding on encourage this collective approach (Davies). areas that are of national importance. The funding needs to have clear outcomes and On the issue of Innovation funding (meaning expectation attached to it and funding HEIF type), it was acknowledged that some should not be focussed on specific HEIs of it worked and that some of it did not (Davies). Further, funding should not be (Bright). It was suggested part of innovation available to sustain the research institutions is about helping companies understand – it should be used to exploit research and existing knowledge and not just about innovation (Davies). gaining new knowledge. Thus, innovation needs a fresh approach without being The levels of ‘joining’ between research driven by too many KPIs (key performance and innovation, i.e. between Government, indicators) which distort behaviour (Bright). institutes and researchers levels is poor One area which could help in the future, as and there are large areas of potential it has in the past, would be for Government improvement at universities (Owen). Further, to provide small sums of funding which it was reported that there is a mismatch allow people within SMEs or companies to or ‘disjoint’ between economic policy and spend time in universities and colleges for university policy. The rhetoric is correct about a short period and vice versa, thus allowing the value of research and innovation and each to understand the cultures and ways its impact but the (Government’s) policies of working of the other. The example of the are not aligned to what is being undertaken Strategic Insight Programme was given as a (Bright). very successful way of achieving this two-way

53 flow of people (Davies, Bright, Day). question of how to get the best out of QR On the issue of collective working between funding was raised, how do we get better HE and FE in delivery of the R&I agenda, outcomes for learners, R&I and others? the Panel suggested that there was little (Davies). In order to make the most effective evidence of a common approach. However, use of QR, there needs to be the research the University of South Wales illustrated its strength coupled with strong teaching (of engagement with FE with the example of its undergraduates, enriched by the research strategic alliances with five FE colleges in the (Day)) and effective knowledge transfer South Wales area and that the present one and engagement mechanisms so that a full ‘shop front’ to businesses in the area (Bright). service offering is provided to industry and This single point of entry is important to business; thus, excellent (QR funded) research companies and SMEs from experience is turned into ‘impact’ in REF (Bright). USW (Owen). has done well on ‘impact’ because it is an ‘institution of their region’ and impact is The issue of innovation ‘Hubs’ (as identified what they do (Bright). by Diamond) was discussed. It was thought 5.2 Universities Wales – 3 May 2017 that Hubs could be useful for innovation and knowledge transfer (KT) activities if they • Professor Colin Riordan, develop along the lines of the Catapults VC Cardiff University Centres but there was not much agreement • Professor Hilary Lappin-Scott PVCR on how they should be constituted or Swansea University operate. The Hubs idea was compared • Amanda Wilkinson, Director, to the HEIF (Higher Education Innovation Universities Wales Funding) type funding provided in the past to universities. It was thought that, in the past, • Lisa Newbury, Deputy Director, discrete innovation and KT funding provided Universities Wales to institutions quickly become core funding • Olivia Jones, Universities Wales and was lost within the institutions and that this funding might be deployed more The potential or probable loss of Structural effectively in Hubs (Davies). However, Wales Funds from WEFO is an issue, especially with does not have a sufficient critical mass of BrExit. Although the level of WEFO funding industry in order to justify specific innovation of approximately £50m per year to the HE hubs, thus they need to be more general in sector is not large compared to the recent nature (Davies). HEFCW funding of approximately £150m yearly, nevertheless it is a very important The Panel explored the issue of QR funding source of funding, especially so with the (Quality-related Research funding). The recent loss of HEIF-type funding (Lappin- uncertainty between Research Excellence Scott). To overcome this loss, some form Frameworks (REFs) and ‘in-year’ uncertainty of UK Government funded replacement is is a problem (Bright, Day) because it required and that the First Minister has said discourages long term planning. Some QR that he is seeking a replacement regional funding needs to be response mode funding, fund (Riordan). The basis for this should i.e. some of it kept back by institutions to be success of application and the return allow exploitation of opportunities which on investment and the example of the arise within the REF periods (Bright, Day). The Compound Semiconductor Catapult was example of criminology research at USW was given which has leveraged several different given (Bright) and that a small amount of QR sources of funding (Riordan). can make a big difference in developing R&I, especially with industry (Day). However, the

54 It was recognised that QR funding has been Regarding the WBFG Act, the respondents maintained, even at the expense of other thought that it was good in some ways, for funding from HEFCW and that this is a good instance creating the right environment and thing. However, Barnett consequentials providing support but that it was too slow are not always visible when they traverse for fast-moving industry. Further, it takes the Welsh Treasury and its seems that in too much effort for SMEs to access funding very recent times this is lost within Welsh routes. However, it could be used to drive 17 Government (Wilkinson). Universities Wales and 18 year olds into employment, so long as recognises that the funding is under pressure there was a strategy plan to do this (Rolley). within Welsh Government, especially There was considerable comment on the with the move of funding to Health and maturity of the environment in Wales to Social Care so it is vital that the Diamond foster university and industry collaboration. Recommendations on QR are implemented It was thought that the environment was (Wilkinson). Further, QR is fundamental to not mature (Wallace) and that there was too the structure of universities’ research capacity much focus on universities’ fundamental and also it is symbolically critical for attracting research rather than on the needs of industry researchers to Wales (Riordan). which is much nearer to market (Wallace). On the issue of Innovation Hubs (as in Academia needs to structure its research Diamond), these could be useful although to meet industry’s long term goals (Rolley). there was little clarity on how they would There is a wide gap in available funding operate. It was suggested that they could for bridging the gap between academic be the ‘go to place’ for industry to engage research and the needs of industry and this universities a sort of ‘clearing house’ is fuelled by Wales research being ‘siloed’ (Riordan). They could include FE Colleges so (Owen). In the Finance and Services Sector as to offer skills and training and could be especially, support is very bureaucratic and coordinated across the universities by the universities are hard to engage generally, PVCR Group (Riordan). When asked what even for large companies. There needs to budget should be provided, there was little be greater unity between the universities in clarity with a suggestion of £30m yearly but Wales and they need to ‘stop fighting as big that the case needs to be made (to fund fish in a small pond’ (Mines). There is little the Hubs) and then see how much money coordination between universities and no is available (Riordan). What is clear, though, national coordinating strategy in Wales – this is that the funding should not be at the coordinating strategy needs to be developed expense of QR funding (Riordan). (John). 5.3 Industry – 7 June 2017 On the relationship between Wales and the • Philip Wallace, General Manager, TWI UK, there was agreement that there should Technology Centre (Wales) not be a split, that Wales should align itself with aspects of the Industrial Strategy where • Rob Rolley, Technology Director, General there is the research and innovation strength Dynamics and alignment with industrial need. For • Byron Tucker, Technology Centre Manager, example, there is a major revolution required RD&T Programme Manager, Tata Steel in steel product development, metallurgy • Dr Penny Owen, GE Healthcare and manufacturing processes over the next ten years and that focus by Welsh R&I will • Dan Mines, Admiral Insurance help secure steel’s future in Wales (Tucker). • Justin John, Business Innovation Manager, However, this has to be seen in the context Cardiff Medicentre. of the UK and even the world and that these

55 global ‘grand challenges’ are what should On the issue of the creation of UKRI, it was drive the R&I agenda in Wales (Wallace). thought to be too early to tell what the Further, significant amounts of funding impact would be on the R&I landscape. could come from world sources and that R&I However, there needs to be a consideration players should gear themselves up to win this of the balance between Capital funding to (Wallace). Revenue funding, i.e. there is no point in The issue of market pull on research and providing funding for Capital infrastructure innovation was explored; it was thought without the on-going Revenue funding to that the market will move to areas where support it (Wallace). This applies equally to the research and innovation environment the balance between funding for academic is most attractive (Owen, Mines) and that research compared to funding for knowledge Wales has only niche expertise, i.e. the transfer, innovation and exploitation of research capability that exists is not aligned research (Wallace). Supporting innovation significantly to market needs, either in and exploitation, narrowing the ‘valley of Wales or the UK (John). Hence, specialist death’, driving ‘cross-sector’ collaboration support is required from elsewhere in the and mitigating risks while transferring UK, e.g. Strathclyde University (Wallace). The knowledge to production are all areas that implication was that, if Wales is to benefit require funding (John, Rolley, Tucker). It was from its research and innovation capability, clear that industry’s view is that research this capability has to be aligned more closely and innovation is seen and funded equally with market needs and, where necessary, well in industry as it is in academia and be prepared to collaborate with anyone else that, traditionally, industry R&I endeavours who offers capabilities in the ‘gaps’ (Owen, have not been given the same funding or Wallace). prominence as academic research activities. 5.4 Public Bodies – 7 June 2017 BrExit was thought to be a risk to the availability of R&I funds in Wales. Although • Kellie Beirne, Deputy Chief Executive, there has been lots of interaction between Monmouthshire County Council and governments, this has not yet generated a Co-Chair of the Welsh Government’s meaningful strategy (Rolley). Consequently, Innovation Advisory Council for Wales there are risks to the talent pipeline and also • Professor Jon Bisson, Health and Care to parity on regulatory frameworks which Research Wales. Welsh Government guide research, innovation and adoption of • Gareth Clancy, ONS (Office of National technologies into the market place (Owen, Statistics) Wallace). However, it was thought also that there are more important things to industry The concept of ‘innovation’ as applied to than BrExit (Rolley) such as making the most public bodies is much wider than in the of what we have got already. In the case of more narrow sense of technology and that steel, this industry faces global challenges Wales needs to recognise this and develop which are bigger than the BrExit issues but a support strategy to help drive innovation the loss of EU funding will hasten these in this area (Beirne). Further, there is a need challenges. Wales needs to obtain from for national strategy which consolidates the UK Government or generate more R&I funding, strategies and priorities (Clancy) and funding itself to support such industries which brings closer coordination between facing these global challenges, for instance the proposed PCET body and health and care by the creation of the UK National Steel research (Bisson). In developing a national Innovation Centre (Tucker). innovation strategy, this needs to be ‘at arm’s length’ (to government) and offer

56 coherence for all funding opportunities and and adopt ‘leader status’ in priority areas strategies (Beirne). There are too many bodies (Clancy), develop and promote these as funding R&I in Wales and HEFCW spreads its ‘USPs’, for example, the case of compound resources too thinly to be effective (Clancy). semiconductors (Beirne) or ‘big data’ (Bisson, On the issue of FE and HE collaboration, Clancy). it was felt that they did not work closely 5.5 University innovation and enterprise enough on certain issues. The provision of offices – 7 June 2017 new skills was an issue which is not being • Dr Dave Bembo, Director, Research and served by FE, for example in data analytics Innovation Services, Cardiff University (Clancy) and in aspects of the NHS despite • Dr Garry Reed, Director of Research & the NHS having strong links with FE (Bisson). Enterprise Office, Bangor University It was suggested that FE and HE should work more closely together on the delivery of these • Dr Ceri Jones, Director of Research, higher end skills, especially where advanced Engagement and Innovation, Swansea apprenticeships are concerned. However, University currently, there is little incentive for HE to • Kathryn David, Director of Commercial undertake apprenticeship training and that Services, UWTStD and WILO group this needs to be addressed. It was thought that structural funds have To explore what works in driving innovation, been too complex and bureaucratic and there is a need for ‘test beds’ to try out therefore a large burden which influences new ideas of working (Beirne), for example universities’ abilities to engage industry. the current example of Compound Restoring HEIF would overcome this (Garry Semiconductors and IQE. One key quality of Reid). Although WEFO funding has been these ‘test beds’ is the acceptance of greater good at driving some academia and industry risks, especially for the public services and collaborations, generally the funding periods private sectors. Traditionally in the public have been too short to enable long-lasting sector, there has been too much aversion trust and understanding being built up to risk – you are damned if you do but not between the two (Bembo). Further, the damned if you don’t, i.e. it is too easy to do large numbers of different programmes of nothing (Beirne). Regional ‘test bed’ facilities, support have not helped in the alignment hubs or structures that allow for higher and achievement of objectives and that closer risk endeavours are required, probably on cooperation or even a single strategy would a regional basis (Beirne). Further, there is a help (Jones). need to identify clearly what R&I solutions are required and this requires R&I expert Although this group thought that universities people to be embedded within organisations, worked well with industry, there were mixed especially local authorities and other public views on what they thought industry’s view sector bodies (Bisson). would be of academia’s collaboration with industry. On this question, the answer was On the issues of BrExit and the creation of ‘yes and no’ (Bembo). ‘Yes’, universities work UKRI, it was thought that it is too early to well with industry in relation to knowledge tell what the impact would be on the R&I transfer, for example the establishment of landscape (Clancy). However, there is a the Compound Semiconductor Catapult and clear need to have Wales better promoted ‘No’ in relation to issues related to state aid at UK Government level and with UKRI rules and IP Ownership (Bembo, Jones). (NB: and that this will require a concerted effort this contrasted with industry’s actual view to engage both more effectively (Bisson, that academia was hard to engage generally, Beirne). To aid this, Wales needs to identify see above). Further, the loss of dedicated

57 HEIF funding has hampered engagement in Wales would hamper their universities’ with industry, especially SMEs (David). It was abilities to win this new funding, especially agreed that science had captured the term the Industrial Strategy Challenge Funding ‘Innovation’ (Reid), that university innovation and Global Challenges Research Funding. is predominantly ‘technology transfer’ They thought there remained the question of and that the HE sector is poor at ‘service how this extra funding would be allocated, innovation’, i.e. meaning public sector or i.e. whether some of it would find its way services sector innovation (Reed). To help to Wales through the Barnett formula and address these issues, the group was agreed whether additional funds might be sought on the need for HEIF type funding to be to replace the to-be-lost WEFO funding as a reinstated at least to the level of the original result of BrExit. HEFCW funding and to be on a par with the 5.6 Research Councils, Charities & UK rest of the UK (Reed, David, Bembo, Jones). Research & Innovation – 15 June 2017 It was suggested that HEIF funding should be • Professor Sir John Savill CEO MRC distributed by a formula based on perhaps on HEBCIS data (Jones) and amount to £10m • Professor Duncan Wingham, CE of NERC yearly over the HE sector (Reed). • Dr Paul Burrows, Executive Director of On the question of providing innovation Corporate Policy and Strategy, BBSRC funding to FE, there was caution. It was The Research Councils said that none of thought that this would be of benefit in the Welsh universities are in the top 30 the development of complementary skills UK universities for competitive awards of and training provision (for example in funding. They have below the national relation to the skills required for compound average success rate of winning bids overall semiconductor processes and manufacturing) (i.e. percentage of submitted bids won) but that it should not be pushed too hard (Burrows). or too quickly, i.e. it should be managed carefully (Jones, David, Reed, Bembo). On MRC awards, only Cardiff makes any However, in developing a ‘one-stop shop’ significant impact. For example, recent for industry to engage, there has been little awards for CUBRIC and for the Dementia collaboration between HE and FE hitherto Research Institute although Swansea has had but that degree apprenticeships are being minor success with the Farr Institute (Savill). considered as a means to achieve greater There is a lack of critical mass in Wales and a collaboration (Reed). lack of push for translational schemes (Savill). To address engagement with industry, the Wales’ success at winning NERC funding group thought that Hubs could help but the shows a similar pattern to the BBSRC in that question of how they were to be set up and there is little that is internationally renowned managed was an issue (David). One way and what there is lacks critical mass would be to set the Hubs up in alignment (Wingham). with supply chains around particular sectors, It was thought that the Sêr Cymru groups of SMEs or large businesses (Jones). programme was very commendable but that The Hubs need critical mass, need to reflect it is too early to tell whether it will make regional economies and not overlap with any difference in the long term. The reason existing support provision (Bembo, Reed). why Sêr Cymru holds out hope is that it The group thought that the creation of UKRI (a) specialises on priority areas, (b) fosters and the additional £4.7bn UK Government coordination nationally and internationally funding presented challenges and and (c) aims to recruit and retain the best opportunities. The lack of HEIF-type funding (Burrows). All three of these things are what

58 are required for improving Wales’ success of poor quality) and one way to do this is (Savill). Further, there is a need to ‘play to engage more closely with the Research into’ UK national activities in a way that Council on individual calls (Burrows). Where is not done currently. This requires Welsh real UK-wide expertise exists in Wales, for affiliated researchers becoming much more example CUBRIC, it should be made a priority involved in governing councils and other for funding and be exploited further (Savill). decision making bodies as well as engaging Other appropriate areas for exploitation in in national initiatives such as the Alan Turing agriculture are oats and upland farming (at Institute (Savill). IBERS) (Burrows). However, although these What is clear is that the funding landscape research strengths have scored highly on is changing rapidly with the creation of UKRI ‘impact’ (in REF) it should be recognised that and the establishment of the competitively- much of this research is not likely to lead awarded ISCF and GCRF funds. Further, these to many publications in Nature and other new funds are more ‘innovation’ related highly valued publications, therefore implying rather than pure research which will require a a balance needs to be sought between shift in approach and delivery by institutions. excellent research and more applied R&I Wales needs to recognise this change in (Savill, Burrows). landscape and adapt accordingly otherwise 5.7 Charities – 15 June 2017 it will be left further behind (Wingham). • Dr Anne-Marie Coriat, Head of Research To complicate matters, the RCs themselves Careers, Wellcome are not quite sure how to respond to the • Katherine Mathieson, CE, British Science changing landscape because it is obvious that Association most of the new funding will not be routed through the RCs but be routed either directly • Ms Emma Greenwood, Director of Policy from Government or through Innovate UK and Public Affairs, CRUK (Wingham and implicit in the responses from • Mr Simon Gillespie, CE British Heart all three). Foundation or BHF On the issue of place based R&I, there is an Wales has significant strengths in niche argument for not always using ‘excellence’ areas such as patient electronic systems, criteria for award of funding but it is hoped cancer registration data, biomarkers and that the same funding pot is not used for blood cancer but, overall, there are too few both (funding excellent research and funding researchers in the fields of interest to CRUK regional or geographical R&I) (Wingham). and BHF (Greenwood, Gillespie). Wales needs However, if seeking ‘regional’ funding, Wales a more strategic approach which coordinates needs to collaborate with others in the UK closely with common UK challenges. Wales because, ultimately, any benefit of the R&I gets about 1 per cent of BHF’s £100m activity has to be UK-wide benefit. As such, annual spend in the UK because of a lack of the collaboration between NIHCR and HCRW researchers (Gillespie). (Health and Care Research Wales) is a good example, which is working to the benefit of To address this lack of Charity research Wales (Savill). income, Wales needs to focus available resources on (a) people, (b) facilities and (c) For future success, Wales needs to complementary funding (Welsh Government, concentrate on key areas and build these Research Councils, etc.), thus fostering the into national renowned capabilities by right environment and infrastructure for recruiting people (Savill, Wingham). Further, the Charities to invest. If this was achieved Welsh institutions need to improve their in, for example, cancer and genomics, then applications for funding (i.e. too many are they would be likely to invest for the long

59 term (Gillespie, Greenwood). For this to • Phil Sooben, ESRC Director for Policy and happen, there has to be a long-term strategic Resources and Deputy Chief Executive approach (Greenwood). Wales (and Northern Ireland) has not The nature of Charities work involves performed well in competition for Innovate engaging the general public. This is an area UK funding, partly because Welsh Institutions in which more work could be done and have sought funding from WEFO instead not just in Wales, as this helps develop the (Baughan). However, the Compound talent pipeline and recruitment of people Semiconductor Catapult is a good example into health and medical research. The recent of Innovate UK success. There is a need to British Science Festival at Swansea was improve communications to businesses of a major success and this points the way the benefits of Innovate UK funding and the forward on public engagement (Mathieson). Welsh Government has a role to play in this In many areas of medical research, science (Baughan). research is key to finding treatments but The Research Councils fund excellence this is not always recognised by the public; wherever it is found and will continue to hence proper public engagement is essential do this. Where they can fund research on a (Greenwood). regional basis is where there are strengths With regard to what research is undertaken, aligned to UK strengths, for example this needs to be informed by ‘research Compound Semiconductors. However, to journeys’, i.e. research maps so that grow regional strengths, there has to be subsequent lines of applied research can be a long strategic plan which pulls together identified, for example clinical application QR funding, aligns student teaching with research, thus a route to patient can be relevant UK industry and encompasses identified (Gillespie). Wales has some other funding support (Nelson). Wales has advantages in this respect in that it has several ‘pockets of excellence’ which have a clearly defined and not too divergent the potential to be developed in this way population. This offers an opportunity for but there has to be the concerted effort more targeted research (Greenwood). by all involved to concentrate resources All of the Group agreed that excellent on these pockets (Sweeney). Wales, being research should be funded wherever it small, has the potential to do this though its is found and this could include existing Government funding mechanisms. or new Centres should these be of high Regarding the participation of Welsh enough quality. However, any Centre affiliated researchers in the Research would have to be in line with the funder’s Councils’ councils and decision making needs; for example brain cancer research is bodies, candidates are selected on their merit poorly provisioned in the UK so there is an and scientific expertise with no favouring opportunity here which CRUK is pursuing or ‘fair sharing’ for the Devolved Nations. actively (Greenwood). While they encourage people to apply from 5.8 UK Research and Innovation (UKRI) – all over the UK, they do recognise that 15 June 2017 Wales is under-represented overall. There are opportunities opening up with the • Kevin Baughan, Deputy Chief Executive, creation of UKRI for people to apply and they Innovate UK welcome applicants from anywhere within • David Sweeney, Executive Chair the UK (Baughan, Sooben). Devolved Nation (Designate), Research England involvement is essential to ensure that the • Professor Philip Nelson, Chief Executive UKRI works collectively in the interests of the EPSRC whole of the UK (Sweeney).

60 The new Industrial Strategy Challenge Fund across the UK (Sooben) and this may mean is being run differently from other calls. that the research capability is not necessarily A ‘Challenge Director’ will be recruited to co-located with the industrial strength run the challenge calls and these represent (Baughan). Thus, regional opportunities are opportunities for people to get involved explored only when there is a clear rationale (Baughan, Sooben). Being ‘Industrial’, having for doing so. involvement with, or engagement from The future funding of research and industry will be essential (Nelson). innovation is open to new ideas. The The balanced funding principle, as defined Innovate UK is really passionate about new in the Higher Education and Research Act ideas which drive new initiatives, drive 2017 was explored. It was thought that this new investors and which are potentially balance will apply only to the budgets of disruptive (Baughan). Research in the UK is Research England (i.e. un-hypothecated QR) really productive in academic terms but this and the Research Councils (hypothecated is against a low national spend; thus there is research) and will not include Innovate a need to foster new sources of funding, for UK. It would include ISCF or GCRF funding example venture capital. HEIF-type funding that was managed by Research Councils for universities is critical for knowledge (Sweeney). The Research Councils will have exchange and industrial engagement and to to work closely with Innovate UK which may help this process of attracting new sources complicate this balance (Nelson). Further, of funding (Sweeney, Nelson). Wales, being a while some of the new funding may be small nation, has the opportunity and agility managed by Innovate UK and Research to make this happen quickly, i.e. but only by Councils, it may not be a formal part of being bold! (Baughan, Sooben). Innovate UK or Research Council funding. Since some of it may be routed through the Research Councils, QR would need to increase to maintain the overall balance. There may then be a Barnett consequential (Baughan). There was no indication of the UK Government trying disadvantage the Devolved Nations. UK Government is trying to do what it considers is best for the UK as a whole (Nelson). On regional issues, Innovate UK starts with the needs of the market and how the UK can exploit these markets. Then it seeks companies and research strengths which can deliver solutions and commercial offerings into these markets. It then considers which funding mechanism is best suited to foster the activities between industry and research and puts out calls accordingly, for example, the Catapults, the Innovation and Knowledge Centres (IKCs) or Small Business Research Initiatives (SBRIs) (Baughan). Key to all of this and to the joint activities with the Research Councils is that there have to be benefits

61 Annexes

Credit: PCI Pharmaceuticals

62 Annex 1 – Proposed R&I Budgets Innovation and Engagement Funding would The table below includes proposals for be better introduced progressively, to allow resources that would implement the time for the preparation and evaluation of recommendations in my review. I make business cases and development of capacity no recommendation on the timing of this within the business, higher education and resource allocation. In practice, the timing of further education sectors. any funding changes would be influenced by: The future trajectory for WEFO funding • Opportunities and pressures on overall and its replacement is subject to external levels of research and innovation in Wales influences and I have handled it distinctly arising from increases in the budget for within the table. Once the scale and terms of UKRI announced by HM Treasury Autumn future funding are defined, I propose that the Budget 2016 and being introduced distinction can fade and it can be integrated progressively over a period until 2020/21. fully into the St David’s Investment Fund. By that time, the UKRI budget will have Diamond recommended that funding be increased by £2bn yearly. made available to support funding premia • Pressures on research and innovation for expensive subjects and I support fully that in Wales from the impact of BrExit on recommendation. I have made no provision EU structural funding. These in turn will for it in this table because I have focussed depend on the process and timing of the only on research and innovation. Funding UK’s withdrawal from the EU. During this remains in the £50m unhypothecated review, I have assumed that EU structural budget, after my recommendations on funding will fall to zero by 2023-24 or innovation have been supported. thereabouts. • Opportunities for research an innovation in Wales from the introduction of the UK Shared Prosperity Fund to replace EU structural funds. These in turn will depend on the scale, timing and other arrangements for the Shared Prosperity Fund. During this review, I have assumed that EU structural funds will be replaced in full but that the timing is unclear and the terms of that replacement will be the subject of negotiation. • The priority given to research and innovation within the wider context of Welsh Government budgets, taking those factors into account. Some funding proposals, such as QR funding, PGR Scholarships and Sêr Cymru and Innovation competitions could be introduced in full at short notice. They support existing work that would return benefits to Wales from an early uplift in resources. Other proposals, including the Future of Wales fund; innovation hubs; LSW funding and

63 Proposed Proposed Current Funding stream additional total funding funding funding £m p.a. £m p.a. £m p.a. QR 71.00(a) 0.00 71.00 Diamond implementation PGR 5.00 3.75(b) 8.75 Innovation and Engagement 0.00 25.00(c) 25.00 LSW 0.00 1.00(d) 1.00 Sêr Cymru 6.00(e) 0.00 6.00 Future of Wales fund 0.00 30.00(f) 30.00 Sub-total 82.00 59.75 141.75

WG Innovation 10.00(g) 0.00 10.00 WEFO [+ replacement](h) 65.00 0.00 [65.00](h) St David’s Investment Fund Innovation Hubs 0.00 10.00(i) 10.00 Innovation competitions 0.00 15.00(j) 15.00 Sub-total if WEFO funding not 75.00 25.00 35.00 replaced Sub-total if WEFO funding replaced 75.00 25.00 [100.00](h) If WEFO funding not replaced 157.00 84.75 176.75 Total for research & innovation If WEFO funding replaced 157.00 84.75 [241.75](h) @ £65m

Notes: (a) QR – Diamond recommended that QR should at least be maintained at £71m in real terms. The HEFCW Funding Circular for 2017/18 states that a funding reduction of £28.5m has been applied to HEFCW’s total funding. That reduction is not reflected in this table. (b) PGR – Diamond recommended £3.75m yearly for PGR scholarships in addition to existing funds. (c) Innovation and Engagement – Diamond recommended reinstatement of HEFCW’s Innovation and Engagement funding at £25m yearly (d) LSW – Diamond recommended £1m yearly for the Learned Society of Wales. (e) Sêr Cymru – Welsh Government has advised that it has £6m in its budget on an ongoing basis, for a successor to Sêr Cymru. (f) Future of Wales Fund – No source of funding has yet been identified for this recommendation. (g) Welsh Government Innovation – Welsh Government officials have advised me that the Welsh Government budget for Innovation has been £5m yearly, with a historic outturn of £10m yearly. (h) WEFO replacement funding – I understand that WEFO replacement funding remains under discussion with HM Treasury. The Welsh Government’s Securing Wales’ Future states that it is crucial that EU funding is replaced by a revision to the Block Grant (p. 5). I assume that the source of replacement funding would the UK Shared Prosperity Fund. Meanwhile, WEFO replacement funding is shown in [£] alongside budgets that exclude WEFO replacement funding. (i) Innovation Hubs – these could be funded using £10m yearly of the £50m yearly unhypothecated funding, which Diamond recommended should be provided to HEFCW, from the funding released elsewhere by his recommendations. (j) Innovation Competitions – these could be funded using £15m yearly of the £50m yearly unhypothecated funding, which Diamond recommended should be provided, to HEFCW from the funding released elsewhere by his recommendations.

64 Annex 2 – Companies working in 3. Renishaw collaboration with universities and Renishaw plc and Cardiff University research institutes in Wales have worked together on a number of 1. Horizon Nuclear Power Ltd. programmes from investment in joint A wholly owned subsidiary of Hitachi, research projects and studentships to Horizon Nuclear Power Ltd. is currently larger joint initiatives such as the Renishaw planning to invest of the order of £10bn Advanced Metrology Laboratory. More in a new nuclear power station, Wylfa recently, Renishaw, the University Hospital Newydd, on Anglesey. Bangor University of Wales and Cardiff University celebrated and Horizon have signed a Memorandum of the first robotic-assisted neurosurgery Understanding for joint working on student procedure for epilepsy in Wales and a further work and study placements; collaboration for collaborative project which looks to conduct research and use of facilities and educational a stem cell transplantation procedure engagement with local young people, to that could benefit people affected by raise awareness of STEM subjects. Huntington’s disease in Wales. Sasha Davies, Head of Strategic Gareth Hankins, Renishaw’s Development Wales, Horizon Nuclear Manufacturing Director said, Power Ltd. said: “As a company at the cutting edge “We look forward to working with the of engineering technology we were University as the Wylfa Newydd project delighted to be invited to participate moves forward, utilising the first-class in this modern facility which offers the research and development facilities and best possible learning opportunities for expertise it has developed over many students in the fields of manufacturing, years.”35 engineering and physics. The Renishaw Room is already in constant use and will 2. IQE help expose our name and technologies The world’s leading manufacturer of to the next generation of high-class advanced semiconductor wafers, IQE plc is graduate engineers and physicists.”37 headquartered in Cardiff. They are working in partnership with Cardiff University. The aim, Paul Skinner, General Manager of backed by the UK and Welsh Governments, is Neurological Products at Renishaw, added: to make Wales the home of the world’s first “We are pleased that Renishaw’s compound semiconductor cluster, generating expertise in engineering is continuing over 5,000 high-value jobs. to support pioneering research at the Dr Drew Nelson OBE, Chief Executive, University Hospital of Wales. It is exciting IQE plc said: to be part of a collaboration that sees precision engineering and innovative “This JV with Cardiff University is a surgical practice working in synergy to key step in creating the World’s first improve patient outcomes.”38 Compound Semiconductor Cluster, spanning the complete Technology 4. Tata Steel Readiness Level (TRL) scale from basic Swansea University’s relationship with research to full scale production.”36 Tata underpins SPECIFIC39 Innovation &

35 https://www.hefcw.ac.uk/documents/publications/hefcw_reports_and_statistics/HEFCW%20Innovation%20Nation%20 English.pdf (p.32) 36 http://www.openiqe.com/news/2015/07/09/iqe-and-cardiff-university-establish-a-joint-venture/#.WczqiFtSyUk 37 http://www.renishaw.com/en/renishaw-supports-new-engineering-and-physics-library-at-cardiff-university--10819 38 http://www.cardiff.ac.uk/news/view/751954-stem-cell-transplantation 39 Sustainable Product Engineering Centre for Innovation in Functional Coatings

65 Knowledge Centre, which works with local led to numerous benefits such as the new authorities to implement the Buildings as Airbus Centre of Excellence in Cyber Security Power Stations project and the establishment Analytics, within the School of Computer of the Steel Science Centre which will Science. address the current and future challenges of Dr Kevin Jones, Head of Cyber Security sustaining primary steel-making capacity in Innovation at Airbus, said: the region and the UK. “Collaborating with leading Universities, The partnership has created impact by such as Cardiff, to research and develop leveraging additional UK and EU funding; sophisticated machine learning and data spin-outs; community outreach programmes; analytics for attack detection is a key new research buildings and student approach in the future protection of placements. critical systems. The launch of the Centre Paul Jones, Technology and Innovation of Excellence in Cyber Security Analytics Manager at Tata said: is an enabler for the rapid transfer of “We have been working with the College research into operational activities and of Engineering at Swansea University ensures that researchers are able to through the Steel Training Research access the latest techniques and dat, and Innovation Partnership (STRIP) and and in addition are supported by Airbus 42 Sustainable Product Engineering Centre experts.” for Innovation in Functional Coatings 6. Haydale Graphene Industries (SPECIFIC). It is a great way for us to tap Haydale Graphene Industries is focused into the knowledge and enthusiasm on the commercialisation of graphene and that exists in abundance within the other nano materials. They have strong links university.”40 with Swansea University’s Welsh Centre Dr Martin Brunnock, Director, Tata Steel for Printing and Coating (WCPC) – one of Strip Products UK said: the world’s leading centres for research and development of printing and coating ‘’The graduates that come from our processes. In 2016, the company exercised its Swansea EngD partnership are the life rights, under its existing pipeline agreement blood of our technical and management with the university and Swansea Innovation, sections. Their research outputs directly to acquire a new invention. affect our business competitiveness and the large number that work in our supply Ray Gibbs, CEO at Haydale said: chain continues to add value after they “I am pleased to announce this second have left the University.’’41 invention acquired from Swansea under 5. Airbus Newport the Pipeline Agreement. As previously Airbus Group’s Endeavr initiative with stated, our strategy is to work with Cardiff University and Welsh Government experts in our chosen market sectors to aims to boost innovation across Wales. The rapidly develop commercial products partnership brought together companies, using our HDPlas™ functionalisation academia and government to bridge the gap process. This announcement from early stage research to the development demonstrates that this strategy is of commercial value. This relationship has working and we are optimistic that the

40 http://www.telegraph.co.uk/sponsored/business/business-reporter/11469739/swansea-science-and-innovation-bay- campus.html 41 http://www.swansea.ac.uk/business-and-industry/businesspartnerships/tatasteel/ 42 https://www.cardiff.ac.uk/news/view/733311-cyber-security-centre-of-excellence-to-open-at-cardiff-university

66 new invention will further enhance 9. BEACON Biorefining Centre of Haydale’s commercial opportunities in Excellence the application of graphene and carbon Led by Aberystwyth University and in nano-materials.” collaboration with partners at Bangor and 7. Cogent Power Swansea Universities, it was established in Cardiff University’s alliance with Cogent 2011 with £10.6m of EU funding support Power – a business within Tata Steel – spans through the Welsh Government. BEACON several decades. Together, the partners are uses biorefining expertise at the universities working on exciting new research, including to support research and development at the reduction of transformer noise and small and medium size companies. the manufacture of high-efficiency motor- Dr Ahmed Ali, Research Director, generators for electric and hybrid vehicles in Compton Group, said: collaboration with innovative customers. “The results obtained from this Mark Cichuta, Director of Product and [BEACON] separation project will Process Development at Cogent Power, play a vital role in helping Compton said: Group and our US partner companies “The collaboration has enabled Cogent progress the development towards to extend its technical and research commercialisation.” capability by utilising the expertise of the Craig Bartlett, Director, MDF Recovery Ltd Cardiff University team. It has also been said: able to develop relationships via the “BEACON has assisted MDF Recovery to pan European Horizon 2020 scheme and test and optimise our novel technologies 43 other collaboration instruments.” in such a short time frame, something no 8. Pfizer other organization could offer.”45 Pfizer will collaborate with Swansea University and other relevant partners on initiatives aimed at improving health across Wales. Plans include the establishment of a Pfizer Innovation Hub at the University. Erik Nordkamp, Managing Director of Pfizer UK said: “We are pleased to announce our intention to collaborate with Swansea University. Partnership working between the pharmaceutical industry, academia and the NHS is essential for tackling today’s demands on the health system. Through sharing our different skills and expertise we really can make a difference to improving health outcomes for patients, developing new ways of supporting the provision of healthcare.”44

43 http://www.cardiff.ac.uk/news/view/765911-engineering-alliance-picks-up-partnership-award 44 http://www.arch.wales/latest-news.htm?id=65 45 https://www.hefcw.ac.uk/documents/publications/hefcw_reports_and_statistics/HEFCW%20Innovation%20Nation%20 English.pdf

67 Annex 3 – Literature and expertise in base attracts foreign direct investment and research and innovation policy indigenous business investment (the Cardiff There is a large volume of high quality semiconductor cluster being one example). literature on science and innovation policy Businesses hopefully make a good return on and the economics of R&D. I summarised these investments but there is a wider picture the literature in an earlier publication46. The – by way of career opportunities for local Campaign for Science and Engineering is people, new customers for local firms and a currently building a library of evidence47. more prosperous environment for the wider population – that is difficult for individual The literature includes theoretical and investors to capture. empirical evidence on public spending research and innovation, including analysis of Some analyses try to define a generic relationships and interdependencies between optimum level of national R&D investment public, private and charitable investments. and arrive at figures of around 2.3 – 2.6 Universities, including Cambridge; Cardiff; per cent of GDP (roughly the level of the US Imperial College; Kings College, London; and Germany). These levels equate to 2017 Manchester; Sheffield; Sussex and UCL Manifesto commitments from several political have institutes or research groups focused parties but they are well above existing levels on science and research policy. National of investment in the four countries of the UK. Academies, notably the Learned Society of Productivity, wage growth and public Wales, are building strong reputations for spending on science and research their economic and policy analysis. Several Numerous analyses by the OECD and highly consultancy firms including Rand Europe; cited work by Hughes & Haskel48 support Technopolis; Oxford Economics and Biggar the case for public spending on research and Economics specialise in the evaluation development to raise levels of productivity. and analysis of the impact of research A summary of the arguments was recently programmes and research disciplines. Much published by Professor Richard Jones at of their work is in the public domain. Sheffield University49. Broadly speaking, the literature on the After several years of stagnation in earnings economics and policy of R&D investment and productivity across most parts of the supports public spending for research – UK, these analyses have underpinned particularly at the frontiers of knowledge wider attention on R&D investment levels. – and has done so consistently over several Manifestos from Conservative, Labour and decades. The case for public spending Liberal Democrat parties, ahead of the on R&D is, in essence, that the benefits 2017 general election, each called for major of research investment are difficult for increases in R&D from both the public and individual investors to capture, particularly private sectors. A recent analysis from Bank if the research findings are in the public of England staff pointed to the importance domain and the timing of the ultimate to the productivity agenda of attracting benefit is unpredictable. Government foreign firms with histories of higher R&D therefore intervenes on behalf of the investment, higher productivity and as a fresh population of taxpayers, takes risk on their source of innovative practices50. The Centre behalf and harvests benefits for the whole for Social Justice called for an acceleration of community. For example, a strong research

46 http://www.ncub.co.uk/index.php?option=com_docman&task=doc_download&gid=180&Itemid 47 http://www.sciencecampaign.org.uk/engaging-with-policy/evidence-base.html 48 http://www.sciencecampaign.org.uk/asset/4567DD2A-0604-42E5-AF8EEA248D3DCE1B/ 49 https://www.sheffield.ac.uk/news/nr/innovation-research-and-the-uks-productivity-crisis-1.506369 50 https://bankunderground.co.uk/2017/08/17/foreign-owned-firms-and-productivity/

68 public spending increases on R&D to address outside the public sector research and higher stagnation in productivity and, consequently, education system. 51 earnings . That said, many challenges remain, There are dissenting voices, with Terrence particularly in discovering how best to Kealey (The Economic Laws of Scientific support smaller firms and firms with no Research, 1996) one of the more prominent, history of collaborating with universities. arguing against almost all public spending In evidence to this review, Professor Kevin on university research. But the balance of Morgan has submitted a helpful explanatory evidence and argument and the choices note which is reproduced as Annex 4 of made by cash-strapped governments this report, comparing the preferences around the world weighs heavily in favour of ‘innovation aware’ firms with a wider of public spending on R&D as a significant population of businesses. Professor Morgan’s contribution to productivity and a source of analysis gives some sense of the scale of the other economic and social impacts. challenge in engaging more businesses in University-business relations university collaboration. Twenty years ago, the relationship between Measuring the success of university-business universities and businesses was rightly collaboration is not trivial. The total level of criticised. University – business relationships external income is the accepted measure across the UK are now widely admired and good quality data is already collected around the world. Indeed, businesses and UK-wide by the Higher Education Statistics policy-makers from other countries visit the Agency52. UK frequently to observe our approach and I would recommend caution before departing to meet organisations that lubricate, analyse from that measure, at least until new plans and professionalise the relationship. These for a Knowledge Exchange Framework include the National Centre for Universities have had time to develop further53 but the and Business (NCUB); NESTA; PraxisUNICO; limitations of existing metrics should also be and, in Scotland, Interface. recognised. In particular, the overall income Funding streams that incentivise and reward metric gives no recognition to relationships university-business collaboration have that generate little revenue for the university been refined over the last 20 years or so, but are of significant value to the business. progressing from somewhat burdensome I suspect that relationships with smaller and over-specified competitions (such as firms and businesses with no experience of University Challenge and Science Enterprise collaboration would benefit if a wider range Challenge, around the millennium) into more of measures could win the confidence of the sophisticated formulaic allocations designed business and academic communities. to incentivise and reward strong relationships. In this review, I recommend the introduction These funding models – the Higher Education of a funding incentive in Wales to encourage Innovation Fund being the largest in the UK – university-business collaboration. That are often admired internationally. In England approach has been a great success in and Scotland, funding for university-business Scotland and England. I have seen nothing collaboration has been increased substantially to persuade me that Wales is different in and has been accompanied by persistent that regard. growth in university earnings from sources

51 https://www.centreforsocialjustice.org.uk/core/wp-content/uploads/2017/09/CSJJ5710_Productivity_report_WEB-170918. pdf 52 http://www.hefce.ac.uk/ke/hebci/ 53 http://www.hefce.ac.uk/ke/KEportal/

69 Evaluations of Innovation and Research • USA for DARPA; Commercialisation • Finland for TEKES; Countless evaluations of research and innovation initiatives have been published • Singapore for A-Star; around the world while the relationship • Scotland for its Innovation Centres; and between businesses and universities has • Innovate UK for its Catapult Centres been subject to many studies. Dame Anne Dowling, herself the author of such a review, Each of these models has distinct in which she catalogued and analysed earlier characteristics, reflecting the economic work54, observed: disposition of Government; the sentiments of private investors; the health and scale “..business-university collaboration has of the research base; and the structure been an exceptionally popular target for of the business community. We can and reviews and studies in recent years.” should learn from the experiences of these Such a large volume of recommendations organisations but attempts to mimic the – almost 300 between 2010 and 2015 success of other nations by replicating – appeared from these reviews that the their research commercialisation models National Centre for Universities and Business should be approached with caution, since produced an online tool for those wishing to their design and management of individual search and analyse review recommendations. initiatives are likely to reflect the wider Frequent messages from these UK-wide environment in which they operate and even reviews included: the most successful models cannot be ‘cut • The need for simplification of government and pasted’ into other countries. support for innovation and knowledge One theme, however, is visible throughout exchange. these models: a strong identity for the • The need for stable, predictable support innovation agenda, even if beneath that from Government rather than a continual identity lies a variety of operational models flow of new policies and initiatives. each of which is tailored to a specific geographic area, business sector or economic • Continued incentives and rewards through challenge. The single, clear identity simplifies the English Higher Education Innovation the outward appearance of the work, makes Fund. it easier to promote to new audiences in the • The challenge of encouraging smaller business community and fosters a sense of firms to experiment with university common purpose among the participants. collaboration for the first time (thereafter The UK has an unfortunate history of SMEs can make informed decisions about changing the names and specifications collaboration). of business support initiatives, often re- While there is a degree of uniformity inventing similar services under different internationally about environment in titles and management teams. This leaves which top quality research thrives, often in businesses confused and frustrated. Dame universities, there is a diverse and somewhat Ann Dowling illustrated vividly the complexity opaque set of conditions for optimum of business support and innovation schemes harvesting of research impact. in her report. • Germany is rightly admired for its The impact of science and research Fraunhofer Institutes; The 2014 Research Excellence Framework

54 http://www.raeng.org.uk/publications/reports/the-dowling-review-of-business-university-research

70 – and the QR funding that depended on it Successful new businesses are indeed created – raised the profile of research impact in the by spinning out enterprises from universities. academic community and provided a stimulus Some of these businesses are subsequently for better understanding and assessment acquired by larger corporations. There is a of the impact of academic research on separate debate on whether such acquisitions the economic and society. A 2017 report prevent the growth of large new indigenous commissioned by the Learned Society of firms or whether they provide fresh new Wales55 describes both the range of academic injections of capital that can be reinvested disciples from which impacts arise and the in further enterprises. However that debate breadth of geographic locations and types of is resolved, major business successes from beneficiary in Wales. spinout companies make up a small and I have explored the impact of science and unpredictable part of the impact landscape. research more widely elsewhere and I They make wonderful success stories when refer readers to that document for a fuller they occur but they are not the primary treatment of the evidence56. pathway to research impact. Data from the Higher Education Statistics Agency – and One key point is worth bringing out here shown elsewhere in this review – shows because it bears directly on the rationale for that some 3-4 per cent of external income R&D investment by the Welsh Government. to universities comes from patents and It is tempting to imagine that the dominant licensing, less than one tenth of the amounts impacts of research arise in the form of coming from consultancy and contract patents or spin-out companies. The evidence research. paints a rather wider picture, illustrated in the diagram below.

Channels through which high quality research leads to economic and social impact

55 https://www.learnedsociety.wales/wp-content/uploads/2017/06/The-impacts-of-academic-research-from-Welsh- universities.pdf 56 http://www.ncub.co.uk/index.php?option=com_docman&task=doc_download&gid=180&Itemid

71 Larger, more consistent impacts come That is a healthy part of research and from two sources: the supply of highly innovation. But it compliments – rather than skilled people to the labour market and the replaces – the attractions of collaboration attraction of foreign direct investment (or and joint ventures in close proximity, such investment from other part so the UK to as IQE in Cardiff, the SPECIFIC initiative in Wales) in R&D carried out by businesses. Swansea, IBERS in Aberystwyth and the A 2010 study by the Royal Society57 major emerging opportunities in nuclear demonstrated that around half of PhD engineering in the Bangor area. graduates leave universities directly after The adoption of evidence into public graduation and a further proportion at policy later career stages – taking highly valued The plethora of R&D policy analyses inform research skills into a wide range of careers. public policy through direct consumption The availability of highly skilled people, along by officials and ministers; contributions to with access to university research expertise, Parliamentary inquiries and contributions to are major determinants of R&D locations policy reviews. for business investors, as shown both by the clustering of business research around Policy papers, strategies and government research universities and by the number consultations build on these analyses. The of business-university collaborations that Foundation for Science and Technology now operate at a strategic level rather than conducted a recent survey of science through a series of smaller transactions and innovation strategies published or (sponsoring a PhD student or sponsoring a commissioned by the UK Government since single project). 1945. They reveal a growing frequency of reviews and evaluations – from one in the To some degree, businesses in Wales will 1940s, three in the 1960s, eleven in the acquire scientific and research capability from decade after the millennium and six so far in academic research performed elsewhere, the current decade. These numbers exclude at the expense of Governments and other reviews specific to individual business sectors funders outside Wales. At one rather and academic disciplines59. simplistic extreme, a company or product could be developed in Wales based on The main themes in these reviews are: research in a university located elsewhere. For • a. Funding: a constant theme has been the this to succeed, however, the business would difficulty in meeting the stated aspirations first need to acquire the capacity to absorb of consecutive governments to raise research findings. This is challenging, risky government spending as a percentage of and expensive – particularly at the frontiers of GDP and to encourage UK businesses to knowledge. A report to the Prime Minister’s follow suit. Council for Science and Technology (CST)58 explored this challenge in a population of • b. Commercialisation: from 1946 onwards high technology SMEs and revealed the there has been at best a mixed picture and complexity of acquiring knowledge from at worst a continual struggle to take the remote sources. world-class ideas created by UK scientists and innovators and convert these into Of course businesses and universities in Wales patents and commercial opportunities – will collaborate and share knowledge across compared to traditional competitors and many UK-wide and international networks.

57 https://royalsociety.org/~/media/Royal_Society_Content/policy/publications/2010/4294970126.pdf 58 https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/research-projects-output/ barriers-to-growth.pdf 59 http://www.foundation.org.uk/Events/pdf/20171018_Summary.pdf

72 competition from a rising number of new countries. • c. Skills and Higher Education: although significant effort has been expended over many decades, these issues will require constant funding, resource and commitment to remain at the current levels in an ever more technically advanced and globalized world, let alone surge ahead as a number of strategies have forecast.’ These themes persist over time. It appears that they are more difficult to address than they are to describe in policy reviews.

73 Annex 4 – Explanatory note from The ranking of information sources has been Professor Kevin Morgan very consistent throughout the life of the Universities as Sources of Innovation: UK Innovation Survey, with internal sources An Explanatory Note being the most important followed by market The NCUB report – Growing the Value of sources (such as suppliers, customers and University-Business Interactions in Wales – clients etc) and institutional sources (such as was published in June 2017 and submitted universities and public research institutes etc) as evidence to the Reid Review of Research lagging way behind the commercial sources and Innovation in Wales (Morgan et al, – as Table 3 from the latest UK Innovation 2017). As the lead author I would like to Survey (below) illustrates. take the opportunity afforded by the Reid This ranking of sources of information is an Figure 11 Review to clarify a figure that appeared in established feature of the innovation studies the main report because it has caused a literature and it is widely accepted by both good deal ofCompanies who rate UK innovaHon insHtuHons as important confusion in both academic and scholars and policy-makers in and beyond business circles. The figure (4) in question is the UK. Professor Alan Hughes, one of the reproducedUniversiHes below and it was drawn from the UK’s foremost78% authorities on the subject, UK Innovation Survey, a source we explicitly succinctly summarised the position when he acknowledgedOverseas networks in our report. 42% said: “This is not to deny that there are some businesses or sectors for which interactions Some peopleInnovate UK seem to have interpreted39% Figure 4 to mean that Welsh firms have a with the university sector may be relatively particularlyCatapult Centres low opinion of universities34% as a more important or be ranked more highly % of respondents source of innovation. Although this may of than these averages suggest. Moreover, Supply chains 33% excluding 'not aware' course be true in some cases, the main point the evidence is not to be taken to suggest that the role of universities is unimportant. I wishResearch Councils to establish here is that, in surveys31% of this kind, universities are invariably ranked Rather it is to emphasise that universities are muchApprenHceships lower than the principal sources30% of only one part of the innovation eco-system innovation – namely intra-firm sources, and that many other actors have extremely 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% suppliers, clients or customers. important parts to play” (Hughes, 2014).

Annex – Figure 4

Figure 4. Sources of innovation rated as 'high' amongst Welsh firms

Scientific journals and trade/technical publications Technical, industry or service standards Professional and industry associations Conferences, trade fairs, exhibitions Government or public research institutes Universities or other higher education institutes Consultants, commercial labs or private R&D institutes Competitors or other businesses in your industry Clients or customers from the public sector Clients or customers from the private sector Suppliers of equipment, materials, services or software Within your business or enterprise group Sources of innovation 2012-2014 0 10 20 30 40 50 Percentage of responses

Source: UK Innovation Survey

74 Two important points flow from this observation. First, universities are ranked higher with firms that areinnovation aware, as the following table from the 2016 CBI Innovation Survey demonstrates:

Table 3: Sources of information (% of all firms with some innovation activity rating “high”)*.

Per cent Size of Enterprise 10 – 250 250+ All (10+ Information sources employees employees employees) Internal Within the enterprise itself or within the 46 60 47 enterprise group Market Suppliers of equipment 23 25 23 Clients or customers from private sector 20 26 20 Clients or customers from the public sector 9 12 9 Competitors or other enterprises in your industry 13 16 13 Consultants, commercial labs or private R&D 4 7 4 institutes Institutional Universities or othe higher education institutes 2 3 2 Government or public research institutes 2 3 2 Other sources Technical, industry or service standards 6 10 6 Conferences, trade fairs, exhibitions 6 5 6 Scientific journals and trade/technical 1 2 1 publications Professional and industry associations 6 7 6 * = Unweighted base = 8,735

75 Figure 11

Companies who rate UK innovaHon insHtuHons as important

UniversiHes 78%

Overseas networks 42%

Innovate UK 39%

Catapult Centres 34% % of respondents Supply chains 33% excluding 'not aware'

Research Councils 31%

ApprenHceships 30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

ExhibitAnnex E:Companies – Figure 4 who rate UK innovation institutions as important (% of respondents, excluding not aware). Figure 4. Sources of innovation rated as 'high' amongst Welsh firms The second point concerns the importance Professor Kevin Morgan of the innovationScientific eco-system journals and trade/technical – one of publicationsthe Dean of Engagement key themes of our NCUBTechnical, report industry –or whichservice standards Cardiff University Professional and industry associations highlights the need for the supply-side of 2 October 2017 knowledge generationConferences, to be better trade fairs,aligned exhibitions Government or public research institutes with the demand-sideUniversities orof other knowledge higher education institutes exploitation.Consultants, We argued commercial that labs thisor private will R&D require institutes a more strategicCompetitors partnership or other businesses between in your industry government, universitiesClients or customers and business from the public sector Clients or customers from the private sector in WalesSuppliers if a stronger of equipment, sense materials, of collective services or software purpose is to be forged.Within your We business also arguedor enterprise group Sources of innovation 2012-2014 that university leaders in Wales need to 0 10 20 30 40 50 demonstrate a stronger commitment Percentage of responses to knowledge exchange to ensure that businesses have a clearer appreciation of and easier access to relevant university partners. These changes would do much to elevate the status of universities as sources of innovation for the private, public and third sectors of Wales. Hughes, A. (2014) Keeping a sense of perspective, State of the Relationship Report 2014, National Centre for Universities and Business, London Morgan, K, Healy, A, Huggins, R, and Thomas, M (2017) Growing the Value of University-Business Interactions in Wales, National Centre for Universities and Business, London

76 Annex 5 – Reid Review Advisory Panel Membership Dr Wendy Ewart Chair of Welsh Government’s Sêr Cymru Independent Evaluation Panel and former Deputy Chief Executive and Chief of Strategy of the Medical Research Council Professor Peter Halligan Chief Executive Officer, Learned Society of Wales Professor Karen Holford Deputy Vice-Chancellor, Cardiff University Dr Sarah Main Executive Director, Campaign for Science and Engineering Ms Alexandra Vincent Research Councils UK and, recently, Arts and Humanities Research Council Professor Robin Williams former Vice-Chancellor, Swansea University and Chair of the Science Advisory Council for Wales Mr Andrew Evans SPTS Technologies Ltd. Mr Colin Sirett AMRI and formerly Airbus The Review secretariat function was provided by Dr Robert Hoyle, Chief Scientific Adviser’s Division (CSAD), Welsh Government. Further administrative support was provided by Mr Adam Wadding of the CSAD.

77 Annex 6 – Letter inviting submission of oral evidence

Adran yr Economi, Gwyddoniaeth a Thrafnidiaeth Department for Economy, Science and Transport

[x] April 2017

Dear ,

Re: Invitation to attend Reid Review Oral Evidence Hearing on Research and Innovation in Wales at the Temple of Peace, King Edward VII Ave., Cardiff, CF10 3AP from 00:00 – 00:00 on [x] June 2017. I write to bring to your attention the review of research and innovation in Wales which I am undertaking on behalf of the Welsh Government. As part of this review, I am seeking oral and written evidence in response to a number of questions; I should be very grateful if you would be prepared to attend an oral evidence hearing on the date given above. Should you accept, please be prepared to answer questions similar to those given in Appendix 1 of this letter. I am asking others to appear at the hearings so you should expect to be present with three of four others. Please note that your contribution may be cited in the report and an audio recording of your session will be made available publically on publication of my report. This Review has been commissioned for the Welsh Government by the Cabinet Secretary for Education, Kirsty Williams AM, the Cabinet Secretary for Economy and Infrastructure, Ken Skates AM, and the Minister for Skills and Science, Julie James AM. The Review was announced in the Senedd by the Cabinet Secretary for Education on 31 January 2017, building on the work undertaken as part of the Hazelkorn Review. The findings of the review will be mine alone but I plan to draw heavily on advice and guidance from a series of oral evidence hearings conducted by my Advisory Panel, the results of which will be cited in the final report. In addition, a call for written evidence will be published separately. This review has been commissioned to identify current research and innovation strengths in Wales and to outline how these strengths can be developed to enable them to continue to support business, communities and Government effectively in the future, not least in the context of Brexit and the potential loss of significant research and innovation funding. The Welsh Government’s aim is to position Wales as a small smart nation which can achieve the scale and quality of research and innovation which compare favourably with other OECD members within 10 years. Please could you contact Dr Robert Hoyle ([email protected]) to confirm whether you are able to attend.

Yours sincerely,

Graeme Reid

Parc Cathays ● Cathays Park Caerdydd ● Cardiff Ffôn ● Tel 02920 826609 CF10 3NQ

[Appendix 1 to the letter is reproduced as Annex 7 below.]

78 Annex 7 – Text of ‘Appendix 1’, 8. What are the implications of the White referenced in the Annex 6 invitation Paper for the relationship between letter Welsh HE funding and similar funding in Appendix 1. Example questions used to other countries of the UK? start Oral evidence hearing discussions 9. Whether there are new strategic goals –a selection adapted to suit witnesses for research and KT (knowledge transfer) organisation or background. within the new organisation – the new 1. How would you describe the strengths Commission? and weaknesses of the research base in Wales? 10. If a ‘Diamond Dividend’ or a replacement from UK Government for lost WEFO 2. Is the number and quality of applicants funding become available, how should from Wales for seats on Governing this be proportioned between un- Councils and Advisory Committees in hypothecated QR and what the White Research Councils at the level you would Paper describes as Strategy-related expect from a country the size of Wales? Research and Innovation hypothecated 3. There is a growing emphasis on larger funding? collaborations, whether through the new 11. How should industry in Wales and that Challenge Funds or the creation of new elsewhere in the UK relevant to Wales be research institutes. What advice would encouraged to drive R&I collaborations you offer to Welsh Government and with the HE/FE sectors? Welsh Universities, on how researchers in Wales could improve their competitive 12. What advantages and opportunities does strengths in this new environment? the integrated nature of the proposed Commission (HE, FE, Apprenticeships, 4. UK Government puts growing emphasis skills and training and industry on ‘place’. According to its Industrial engagement) offer, for the benefit for strategy green paper (page 111), Wales? How should these be organised Research Council investment per person within the Commission? in Wales is around half that in the UK as a whole. Is that pattern of concern to 13. How can future support for Research Councils? Government-led investment and support for research and innovation in Wales be 5. If there was a single change the Welsh aligned with the requirements of the Government or Welsh Universities could Well-being of the Future Generations make, to raise the level of Research (Wales) Act (2015)? What link should Council income in Wales, what would it there be between the WBFG Act be? requirements and the economic and 6. What is your assessment of the impact of industrial strategy of the Welsh and UK the research base in Wales from Research Governments? Council funding? Do research excellence 14. What can be done by the Welsh and high impact come from the same Government, Welsh universities and research groups? the private sector to increase the 7. How does your organisation plan to take competitiveness of the research and advantage of the opportunities set out innovation landscape in Wales, thereby in the white paper – is it going to be increasing the attractiveness of Wales proactive? If so, what do they have in as a place to undertake research and mind? innovation and attract inward investment and investors from outside Wales, both

79 in academia and in industry? Statement and UK Government’s 2017 15. What can be done by the Welsh Budget, the Global Challenge Fund and Government, business and universities other, opportunistic Government funding to increase research and innovation opportunities? income in Wales in the light of the d. What is the optimum balance between implications of BrExit and the increased (a) geographically focused use of funding funding announced in the 2016 Autumn and (b) focus of funding on existing Statement and UK Government’s 2017 research and innovation excellence Budget, the Global Challenge Fund and and capability, bearing in mind the other, opportunistic Government funding Cabinet Secretary for Economy and opportunities? Infrastructure’s new regional approach to 16. What is the optimum balance between economic development? (a) geographically focused use of funding Please answer questions using no more than and (b) focus of funding on existing 500 words per question. You are welcome to research and innovation excellence provide additional prior published evidence and capability, bearing in mind the should you feel it relevant and appropriate. Cabinet Secretary for Economy and Additional Information: Infrastructure’s new regional approach to Professor Graeme Reid’s Review of economic development? Government funded Research and Appendix 1. Questions for written Innovation in Wales evidence Professor Graeme Reid (University College a. How can future support for London and former head of research funding Government-led investment and support at the Department of Business Innovation for research and innovation in Wales be and Skills) has been asked by the Cabinet aligned with the requirements of the Secretary for Economy and Infrastructure Well-being of the Future Generations (Ken Skates AM), Cabinet Secretary for Act (2015)? What link should there be Education (Kirsty Williams AM) and Minister between the WBFG Act requirements for Science and Skills (Julie James AM) to and the economic and industrial strategy undertake a review of strengths, gaps and of the Welsh and UK Governments? future potential to sustain and grow strong b. What can be done by the Welsh research and innovation activity in Wales. This Government, Welsh universities and review builds on work undertaken in recent the private sector to increase the reviews of student finance and funding by competitiveness of the research and Professor Sir Ian Diamond and the review of innovation landscape in Wales, thereby the oversight of post-compulsory education increasing the attractiveness of Wales by Professor Ellen Hazelkorn. The last of as a place to undertake research and these reviews recommended a review of innovation and attract inward investment research and innovation strategy and policy. and investors from outside Wales, both Professor Graeme Reid’s review will identify in academia and in industry? research and innovation strengths in Wales c. What can be done by the Welsh and outline how these assets can be used Government, business and universities more effectively by business, communities to increase research and innovation and Government. The Welsh Government’s income in Wales in the light of the aim is to position Wales as a small smart implications of BrExit and the increased nation which can achieve the scale and funding announced in the 2016 Autumn quality of research and innovation which

80 compare favourably with OECD member Partnerships, Innovation Advisory Council states within 10 years. for Wales, Science Advisory Council for Professor Reid’s review will:- Wales and other groups. These analyses will consider how firms, public services 1. Collate the results of recent analyses and research groups in universities of research and innovation activity in connect locally and globally to support Wales. This collation will be used to the needs of Welsh communities, generate a map of research excellence business and the economy. It will also and innovation strengths in Wales. consider how the connections and Recent analyses include the results of interactions between these groups can the Research Excellence Framework in be improved to enable Wales to become 2014, the analysis of innovation and a more entrepreneurial state (Mazzucato, business support arrangements in Wales 2013). completed by the REAP panel in 2016, the Science and Innovation Audits of 3. To consider how future Government- South West England and South East led investment and support for research Wales submitted by the GW4 network and innovation in Wales can be aligned of universities in 2016, the Science and with the requirements of the Well-Being Innovation Audit for the rest of Wales of the Future Generations (Wales) Act led by Swansea University in 2017, the (2015). The seven well-being goals are as Innovation Advisory Council’s recent follows: review of innovation activity and the • a prosperous Wales; analysis of research impact in Wales • a resilient Wales; completed by staff from Kings College London in 2017, as well as the report • a healthier Wales; on research in Wales by Halligan and • a more equal Wales; Bright and the Elsevier Report on Science • a Wales of cohesive communities; in Wales (Halligan and Bright, 2015; Elsevier, 2016). • a Wales of vibrant culture and thriving Welsh language; and 2. Seek to identify patterns and themes in the development of business and • a globally responsible Wales. public services in Wales which draw on To also consider the implications of BrExit research and innovation strengths in for Government-funded research and Wales and further afield. This analysis innovation in Wales. to be undertaken with staff in the Welsh Government’s economy and 4. Work with people from the business, infrastructure department drawing on higher education, public service and expertise and support from the office of research communities in Wales, the the Chief Scientific Adviser for Wales, U.K. and further afield to consider how Innovation Division and representatives current activities and future plans can of the academic, business and public be aligned with the five principles of the services communities at national and Well-Being of Future Generations Act regional levels. This national and regional 2015. The five principles are as follows: analysis will draw on work undertaken • look to the long term; as part of the Cardiff City Deal, Swansea • focus on prevention; City Deal and North Wales local growth deal bid processes, as well as reports • deliver an integrated approach to from the Regional Employment and Skills achieving the 7 well-being goals;

81 • work in collaboration with others to Professor Reid’s advisory panel will find shared sustainable solutions; and receive written and oral evidence over • involve diverse populations in the spring and summer months to help decisions that affect them. inform the development of the report and recommendations. The panel will balance 5. Make recommendations for the science and innovation expertise. development of a research and References: innovation strategy for Wales and guiding principles to inform future Elder, J.; Cunningham, P.; Gok,A. and investment and funding decisions Shapira, P. (2013). Impacts of Innovation by the Welsh Government. These Policy: Synthesis and Conclusions, recommendations to be informed by Manchester Institute of Innovation Research, analyses of what works in other parts University of Manchester. Available at: http:// of the UK and further afield as revealed www.innovation-policy.org.uk/share/20_ by systematic studies and evaluations Impacts%20of%20Innovation%20Policy%20 of science and innovation policy of Synthesis%20and%20Conclusion_linked.pdf. the sort completed by the Manchester Last accessed 17th January 2017. Institute of Innovation Research (MIOIR), Elsevier (2016). International Comparative National Centre for Universities and Performance of the Welsh Research Base Business (NCUB), National Endowment 2010-2014, 2016 update. Available at: for Science Technology and the Arts https://www.elsevier.com/__data/assets/ (NESTA), Organisation for Economic pdf_file/0010/221410/HEFCW-Report-final- Cooperation and Development (OECD), adjustment-02112016.pdf. Last accessed 5th Science Policy Research Unit (SPRU) and February 2017. the ESRC What Works Centre for Local Halligan, P. and Bright, L. (2015). The Case Economic Growth (e.g. Elder et al, 2013 for Growing STEMM Research Capacity in and Martin, 2015) and by Professor Reid Wales, Stimulus Paper, Leadership Foundation himself (Reid 2014). To also consider for Higher Education. these proposals in the light of related recommendations for innovation, Martin, B. (2015). ‘Twenty Challenges for knowledge exchange and research Innovation Studies,’ Science Policy Research contained in the Diamond Review Report Unit, University of Sussex and Judge Business 2016. School, University of Cambridge. Available at: https://m.sussex.ac.uk/webteam/gateway/file. Professor Reid will be supported in php?name=2015-30-martin.pdf&site=25 Last his work by staff from the Welsh accessed 19th January 2017. Government and by a small panel of advisors with experience in the following Mazzucato, M. (2013). The Entrepreneurial fields: State: De-bunking Public vs Private Sector Myths, Anthem, London. • research and innovation in business Mazzucato, M. (2013). The Entrepreneurial • research and innovation in health and State: De-bunking Public vs Private Sector social care Myths, Anthem, London. • research and innovation policy and Reid G (2014) Why should the taxpayer fund funding in an international context science and research?, National Centre for and Universities and Business http://www.ncub. • research and innovation in universities co.uk/reports/why-science.html • research and innovation in Wales

82 Annex 8 – Written evidence providers 25 Sir David Grant, NPL 1 PraxisUnico/AURIL Association for 26 Wrexham Glynd ˆwr University, Professor University Research and Industry Links, Richard Day Tamsin Mann 27 CBI Wales 2 Bangor University 28 The Wellcome Trust 3 Swansea University 29 Glynd ˆwr University, Prof Richard Day 4 Cardiff University PVCR, DR Aulay Mackenzie, PVC 5 Cardiff Metropolitan University Partnerships 6 Aberystwyth University 30 Andy Wood, VP Technology – Optical Systems, Qioptiq Ltd 7 Compound Semiconductor Cluster Chris Young for Welsh Government 31 The Royal Society 8 University of Wales Trinity Saint David Reports 1 Professor Kevin Morgan, GVW Report. 9 University of South Wales 2 Learned Society of Wales, Impacts 10 Universities Wales of academic research from Welsh 11 Cancer Research UK universities: A comprehensive review of 12 Business Development Wales the REF 2014 impact case studies 13 British Academy 3 Paul Hildreth, University College London, Bartlett School of Planning; 14 Royal Academy of Engineering Understanding the Mersey Dee Economy, 15 Tata Steel in Europe, Byron Tucker, R&D unpublished PhD work Manager, Port Talbot 16 AMRC, University of Sheffield, Colin Sirett, Chief Executive Officer 17 TWI Technology Centre Wales, Philip Wallace, Associate Director 18 Kellie Beirne, Deputy Chief Executive, Monmouthshire County Council & Chair of Welsh Government’s Innovation Advisory Council for Wales 19 Andrew Middleton, Tyf Group and member of the Welsh Government’s Innovation Advisory Council for Wales 20 South East Wales Academic Health Board 21 World’s First Compound Semiconductor Cluster, Chris Young, Welsh Government 22 Dr David Owen, Life Sciences Bridging Fund 23 Andrew Evans, Director – Commercial Services, SPTS Technologies 24 Kirsten Bound, NESTA

83 Annex 9 – Formal and informal oral evidence hearings Formal hearings

Person providing evidence Post/Position at Institution/Organisation Wednesday 5 April 2017 Professor Julie Williams Chief Scientific Adviser for Wales Dr Alastair Davies Head of Innovation, Welsh Government HEFCW Council Member & Chair of the HEFCW Research, Professor Robin Williams Innovation & Engagement Committee Alyson Thomas Head, Research, Innovation & Engagement, HEFCW Assistant Pro Vice-Chancellor (Enterprise) & Professor of Professor Dylan Jones-Evans Entrepreneurship, University of South Wales Deputy Director, Entrepreneurship & Delivery, Duncan Hamer Welsh Government Professor Peter Halligan CEO, Learned Society of Wales Wednesday 3 May 2017 Director of Research & Business Engagement, Dr Louise Bright University of South Wales Professor of Composites Engineering & Academic Leader, Professor Richard Day Mechanical, Aeronautical & Electrical Engineering, Wrexham Glynd ˆwr University Iestyn Davies CEO, ColegauCymru Dr David Owen Chair, Advisory Board to the Life Sciences Bridging Fund Vice-Chancellor & President, Cardiff University & Professor Colin Riordan Chair of Universities Wales Professor Hilary Lappin-Scott Senior Pro Vice-Chancellor, Swansea University Amanda Wilkinson Director, Universities Wales Lisa Newbury Deputy Director, Universities Wales Olivia Jones Political & Public Affairs Policy Adviser, Universities Wales Wednesday 7 June 2017 Philip Wallace General Manager, TWI Technology Centre (Wales) Rob Rolley Technology Director, General Dynamics Technology Centre Manager, RD&T Programme Manager Byron Tucker Tata Steel Then GE Healthcare & Interim Chair of the Life Science Hub Dr Penny Owen Wales Dan Mines Executive at Admiral Insurance Justin John Business Innovation Manager, Cardiff Medicentre Deputy Chief Executive, Monmouthshire County Council & Kellie Beirne Chair, Innovation Advisory Council for Wales

84 Person providing evidence Post/Position at Institution/Organisation Head of Health & Care Research Wales (HCRW), Professor Jon Bisson Welsh Government Assistant Deputy Director – Head of Analytical Capability Gareth Clancy ONS (Office for National Statistics) Dr Dave Bembo Research & Innovation Services Director, Cardiff University Dr Garry Reed Director of Research & Enterprise Office, Bangor University Director of Research, Engagement & Innovation, Dr Ceri Jones Swansea University Director of Commercial Services & WILO Group, Kathryn David University of Wales Trinity St David Thursday 15 June 2017 Paul Hildreth The Bartlett School of Planning, University College London Professor Sir John Savill CEO, Medical Research Council (MRC) Professor Duncan Wingham CEO, Natural Environment Research Council (NERC) Executive Director of Corporate Policy & Strategy, Biology & Dr Paul Burrows Biological Sciences Research Council (BBSRC) Katherine Mathieson Chief Executive, British Science Association Emma Greenwood Director of Policy & Public Affairs, Cancer Research UK Mr Simon Gillespie Chief Executive, British Heart Foundation Kevin Baughan Deputy Chief Executive, Innovate UK David Sweeney Executive Chair (Designate), Research England CEO, Engineering & Physical Sciences Research Council Professor Philip Nelson (EPSRC) Director for Policy & Resources & Deputy Chief Executive, Phil Sooben Economic & Social Research Council (ESRC) Wednesday 28 June 2017 Dr David Blaney Chief Executive, HEFCW Bethan Owen Director of Institutional Engagement, HEFCW Linda Tiller Senior Research Manager, HEFCW Mr David Allen Council Member, HEFCW Professor Robin Williams Council Member, HEFCW Dr Colin Wyatt Council Member, HEFCW Professor Mark Smith Council Member, HEFCW/Lancaster University (phone) Wednesday 5 July 2017 Director of Wales Centre of Excellence in AD (Anaerobic Professor Sandra Esteves Digestion), University of South Wales Mark Chicuta Director of Product & Process Development, Tata Steel Chris Morris Technical Director, Fre-Energy Ltd.

85 Person providing evidence Post/Position at Institution/Organisation Asset Engineer, Welsh Water (for Victoria Wilson, Dr Richard Matthews Asset Scientist Head of Knowledge Transfer & Commercialisation, Philip Allen Innovation, Welsh Government SMART Cymru Senior Operation Manager, Tony Guile Welsh Government Professor Helen Langton Deputy Vice-Chancellor, University of South Wales Professor Jenny Ames A/Pro Vice-Chancellor–Research, University of South Wales Thursday 16 November 2017 Deputy Chief Executive, Monmouthshire County Council & Kellie Bierne Chair, Innovation Advisory Council for Wales Josh Miles Policy Manager, Federation of Small Businesses Deputy Director, Entrepreneurship & Delivery, Duncan Hamer Welsh Government Paul Matthews Chief Executive, Monmouthshire County Council Deputy Director for Connect Portfolio, Development Group, David Wilkes Innovate UK Leighton Jenkins Assistant Director, CBI Wales Chris Meadows Head of Open Innovation, IQE plc Dr Alastair Davies Head of Innovation, Welsh Government Innovation Development, Senior Manager, Michael Bacigalupo Welsh Government SMART Cymru Senior Operation Manager, Tony Guile Welsh Government Head of Business & Innovation, Welsh European Funding Geraint Green Office (WEFO) Tom Smithson Head of Strategy, Welsh European Funding Office (WEFO) Senior Strategy Manager, Advanced Material & Phil Catherwood Manufacturing Sector Team, Welsh Government Head of Innovation & Industry Engagement, Tom James Welsh Government with NHS Wales Deputy Director Technology & Innovation, Ifan Evans Welsh Government with NHS Wales Mick McGuire Director, Business & Regions, Welsh Government

86 Informal hearings

Person providing evidence Day and date Rebecca Endean UK Government, BEIS Thursday 15.6.2017 Sharon Ellis UK Government, BEIS Thursday 15.6.2017 Dr David Blaney HEFCW, Chief Exec. Thursday 15.6.2017 Meeting with the Innovation Advisory Council for Wales (IACW), Kellie Beirne, Deputy Chief Executive Monmouthshire County Council Wednesday & co-Chair of IACW & Mr Ian Menzies, Lead 9.8.2017 Executive & Managing Director of Northrop Grumman UK Ltd. & co-Chair of IACW. Meeting between SACW members who attended: Dr Wendy Ewart, Prof Chris Gaskell, Prof Hywel Thomas (for Prof Colin Riordan), Dr David Owen, Prof Tim Jones SACW member Professor Peter Halligan & SACW Chair Professor Robin Williams also attended. Discussion with HEFCW. Director Chief Economist Meeting with Welsh Treasury officials: Director of the WRA Tuesday 5.9.2017 Andrew Jeffreys, Jonathan Price, Dyfed Alsop Implementation Programme Meeting with HEFCW Officials: Dr David See above for Blaney, Bethan Owen, Alyson Thomas, positions with in Tuesday 5.9.2017 Linda Tiller HEFCW Meeting with Professor Kevin Morgan Cardiff University Tuesday 5.9.2017 Meeting with Welsh University Vice- Wednesday Chancellors at UUK Conference in London 6.9.2017 University of Wales Trinity Saint David Meeting with the Wales Pro Vice-Chancellors Swansea University for Research group in London: Professor Universities Wales Michael Philips, Professor Hilary Lappin-Scott, Universities Wales Tuesday 19.9.2017 Olivia Jones, Lisa Newberry, Alyson Thomas, HEFCW Rick Delbridge, Professor Richard Day Cardiff University Wrexham Glynd ˆwr University Chair, NPL Management Ltd. Meeting with: Sir David Grant Board & former Vice- Chancellor, Cardiff Thursday 28.9.2017 University, IQE & Renishaw (non-exec director of each)

87 Annex 10 – Schedule of visits made and other meetings

TWI, Port Talbot: Philip Wallace & Peter Oakley Wednesday University of Wales Trinity St David, Port Talbot: 28.6.2017 Professor Mike Phillips, Pro Vice-Chancellor for Research and Innovation Professor Peter Charleton, NDT Chair Andrew Collins, Neath Port Talbot County Borough Council Swansea University: Professor Richard Davies Vice-Chancellor Tuesday Professor Hilary Lappin-Scott, Senior Pro Vice-Chancellor 18.7.2017 Professor Steve Wilks, Pro Vice-Chancellor Ceri D. Jones, Director Research, Engagement & Innovation Services Team Swansea University Tour of Active Classroom & SPECIFIC: Professor Richard B. Davies Professor Hilary Lappin-Scott Professor Steve Wilks Ceri D. Jones Sharon Lusher, Pembrokeshire College Mark Jones, Gower College Professor Keith Lloyd, Swansea University Medical School Wednesday Professor Ceri Phillips, College of Human & Health Science 19.7.2017 Professor Elwen Evans QC, College of Law, Professor J. Spurr, College of Arts & Humanities School of Management, Professor Marc Clement Professor Bernd Kulessa, College of Science Professor Steve Brown, College of Engineering Tour of Bay Campus facilities: led by Professor J. Sienz Professor Martin Bache, Institute of Structural Materials (Rolls Royce collaboration) Dr Charlie Dunnill, Energy Safety Research Institute Bangor University: Ashley Rogers, North Wales Business Council Sasha Davies, Horizon, Wylfa Newydd & Chair, Regional Skills Partnership. Mark Salisbury, Horizon, Wylfa Newydd, Head of Training, Operations Maggie Griffiths, Assistant Principal, Coleg Llandrillo Menai Professor John Hughes, Vice-Chancellor Wednesday Professor David Shepherd, Deputy Vice-Chancellor 13.9.2017 Professor Jo Rycroft-Malone, Pro Vice-Chancellor, Research and Impact Professor Paul Spencer, Dean of College of Physical and Applied Sciences Dr Rob Elias, Director of Bio-composites Centre Dr Garry Reed, Director of Research and Enterprise Office (REO) Bryn Jones, Head of Enterprise and Innovation (REO) Frank Fitzmaurice, Executive Director of Marketing & Communications

88 Bangor University: Professor John Hughes, Vice-Chancellor Professor David Shepherd, Deputy Vice-Chancellor Professor Jo Rycroft-Malone, Pro-VC Research and Impact Professor Paul Spencer, Dean of College of Physical and Applied Sciences Thursday Professor Colin Jago, Dean of College of Natural Sciences 14.9.2017 Professor John Healey, Director of Research, College of Natural Sciences & senior staff from SEACAMS/SOS at Bangor University Menai Science Park, Anglesey (M-SParc): Ieuan Wyn Jones, Director, M-SParc Pryderi Ap Rhisiart, Project Manager, M-SParc Emily Roberts, Project Administrator, M-SParc Aberystwyth University: Professor Elizabeth Treasure, Vice-Chancellor Professor Chris Thomas, Pro Vice-Chancellor Wednesday Professor Mike Gooding, Institute Director IBERS 11.10.2017 Professor Neil Glasser, Institute Director IGHPP Professor Qiang Shen, Institute Director IMPACS Dr Jenny Deaville, Deputy Director RB & I Dr Rhian Hayward, Chef Executive AICE Professor Elizabeth Treasure, Vice-Chancellor Professor Chris Thomas, Pro Vice-Chancellor Professor Mike Gooding Institute Director IBERS Professor Neil Glasser, Institute Director IGHPP Professor Qiang Shen, Institute Director IMPACS Thursday Dr Jenny Deaville, Deputy Director RB & I Mike Shaw – Group Manager 12.10.2017 Community Regeneration and European, Ceredigion County Council Invited Eifion Evans – Chief Exec Ceredigion County Council Professor Tim Woods, Institute Director IAH Professor Reyer Zwiggelaar, Head of Graduate School Visit to Gogerddan Innovation & Enterprise Centre, Aberystwyth University

89 Cardiff University: Cardiff University Executive Board members: Professor Ruedi Allemann, Pro VC, Physical Sciences & Engineering College Professor Gary Baxter, Pro VC, Biomedical & Life Sciences College Professor George Boyne, Pro VC, Arts, Humanities & Social Sciences College Professor Amanda Coffey, Pro VC, Student Experience & Academic Standards Ms TJ Rawlinson, Director, Development & Alumni Relations Ms Clare Sanders, Director, Communications & Marketing Mr Rob Williams, Chief Finance Officer Thursday Deans of Research, Directors – University Research Institutes (URI), senior staff: 6.11.2017 Dr Dave Bembo, Director, Research & Innovation Services Professor Phil Bowen, Director, Energy URI Professor Gill Bristow, Dean of Research, Arts, Humanities & Social Sciences Dr Isabelle Durance, Director, Water URI Professor Stephen Fairhurst, Director, Data Innovation URI Professor Martin Innes, Director, Crime & Security URI Professor Derek Jones, Director, Cardiff Univ. Brain Research Imaging Centre Professor Kevin Morgan, University Dean for Engagement Professor Jim Murray, Director, European Cancer Stem Cell URI Professor Richard Wyn Jones, Dean for Public Affairs

90 Annex 11 – List of Acronyms AHRC The Arts and Humanities Research Council AMRC Advanced Manufacturing Research Centre BA The British Academy BBSRC Biology and Biological Sciences Research Council CBI Confederation of British Industry CE/CEO Chief Executive/Chief Executive Officer CSAD The Chief Scientific Adviser’s Division, in the Welsh Government CST The Council for Science and Technology (The Prime Minister’s) CUBRIC Cardiff University Brain Imaging Research Centre EngD Engineering Doctorate – a PhD-level Research & Taught Degree EPSRC Engineering and Physical Sciences Research Council ESRC Economic and Social Research Council FCO The UK Government’s Foreign & Commonwealth Office FE Further Education FSB The Federation of Small Businesses GDP Gross Domestic Product GW4 ‘Great Western Four’ – alliance of Bath, Bristol, Cardiff & Exeter Universities HCRW Health and Care Research Wales HEBCIS Higher Education Business and Community Interaction Survey HEIs Higher Education Institutions HEIF Higher Education Innovation Funding (operated in England by HEFCE) HEFCE Higher Education Funding Council for England HEFCW Higher Education Funding Council for Wales HESA Higher Education Statistics Agency HVM high value manufacturing IACW The Innovation Advisory Council for Wales IBERS Aberystwyth University’s Institute of Biological, Environmental & Rural Sciences IKC Innovation and Knowledge Centre JV Joint Venture KE knowledge exchange KPIs key performance indicators LSW Learned Society of Wales MNE multi-national enterprise MRC The Medical Research Council

91 NCUB The National Centre for Universities and Business (HQ in London) NDT non-destructive testing NERC Natural Environment Research Council NIHCR National Institute for Health Care Reform OECD Organisation for Economic Cooperation and Development ONS Office for National Statistics PCET post-compulsory education and training QR ‘Quality research’ R&I Research and innovation REF Research Excellence Framework (2014) RAEng The Royal Academy of Engineering SACW The Science Advisory Council for Wales SBRI Small Business Research Initiatives SEWAHSP South East Wales Academic Health Science Partnership SFC Scottish Funding Council (HE & FE) SME small and medium-sized enterprises STFC Science and Technology Facilities Council TERCW The proposed Tertiary Education and Research Commission Wales TRL(s) Technology Readiness Level(s) UCL University College London UKRI United Kingdom Research and Innovation USP unique selling point(s) UW Universities Wales WBFG Act The Wellbeing of Future Generations (Wales) Act 2015 WCPC The Welsh Centre for Printing and Coating, at Swansea University WEFO Wales European Funding Office WG Welsh Government WRILO The proposed Welsh Research and Innovation Office, London