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COM (2013) 494 (12344/13)

EXPLANATORY MEMORANDUM ON EUROPEAN UNION DOCUMENT

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS: Public-private partnerships in Horizon 2020: a powerful tool to deliver on innovation and growth in Europe

Submitted by the Department of Business, Innovation and Skills on July 2013

SUBJECT MATTER

1. This Communication provides the overall rationale for a series of EU-level Public-Private Partnerships (PPPs), as defined in the Horizon 2020 Main Regulation, that will undertake or fund research, development and innovation (RDI) activities, primarily collaborative R&D projects, in specific areas. These PPPs fall into two categories: the Joint Technology Initiatives (JTIs – Innovative Medicines Initiative, Fuel Cells and Hydrogen, Clean Sky, Bio-based Industries and Electronic Components and Systems) and contractual PPPs (cPPPs - Factories of the Future, Energy Efficient Buildings, Green Vehicles, Future Internet, Sustainable Process Industry, Robotics, Photonics and High Performance Computing). It also covers the Joint Undertaking on the European Air Traffic Management System (SESAR) that draws on the same Treaty Articles as the JTIs.

2. The Communication also describes the Public-Public Partnerships that are planned for Horizon 2020 (European and Developing Countries Clinical Trials Programme 2, European Metrology Programme for Innovation and Research, Eurostars 2, Active and Assisted Living Research and Development Programme) as these have several characteristics in common with PPPs. The JTIs and Public-Public Partnerships are to be implemented via regulations that will be the subject of separate Explanatory Memoranda.

3. The Communication outlines the justification for the use of PPPs, which are that they:

 allow Europe to take a strategic approach to RDI in particular areas underpinned by a long-term commitment;  (in the case of the JTIs and Public-Public Partnerships) provide a legal structure to pool funding-resources to create a critical mass and reduce risk;  can more readily support interdisciplinary approaches;  facilitate standardisation and norm-setting;  provide a framework that encourages international companies to undertake RDI in the EU;  address key technologies and markets identified in the Horizon 2020 regulatory package.

4. The Communication briefly explains the distinction between JTIs and cPPPs: while the aims of the former require particular approaches that require EU legislation

1 of 5 the aims of the latter can be met through the procedures and instruments provided previously under the 7th Research Framework Programme and in future under Horizon 2020.

5. The Communication highlights the main lessons-learned from the experience with the JTIs under Framework Programme 7, drawing on published independent interim evaluations of the JTIs. It then lists and outlines the rationale for the selection of the five JTIs proposed for support under Horizon 2020, together with their funding. It highlights where lessons from the evaluation will be introduced into the JTIs’ operations.

6. The Communication only provides the foreseen funding levels for the JTIs, however the draft proposals for the Public-Public Partnerships give proposed funding levels.

SCRUTINY HISTORY

7. COM(2009) 615 Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships. HMT lead 16586/09. Sifted to sub-committee A and cleared on 12 March 2010. Commons ESC cleared as raising issues of Political importance in report 7, 09-10.

8. COM(2008) 800 A European Economic Recovery Plan. HMT lead. 16097/08. Sifted to sub-committee A where it was cleared on 12 February 2009. Commons ESC reported the document for debate in report 1, 08-09 and the debate took place on the floor of the House on 20 January 2009.

MINISTERIAL RESPONSIBILITY

9. The Secretary of State for Business, Innovation and Skills has the principal Ministerial responsibility for research and innovation matters, including the United Kingdom’s policy on EU research and development. The Secretary of State for Energy and Climate Change is primarily responsible for energy innovation matters. The Secretary of State for Transport has an interest in the transport aspects. The Devolved Administrations have an interest and have been consulted during the drafting of this EM.

LEGAL AND PROCEDURAL ISSUES

10. The rationale for Commission action for JTIs and the SESAR Joint Undertaking is provided by Article 187 on the Treaty on the Functioning of the EU (TFEU); that for the Public-Public Partnerships is provided by Article 185 of the TFEU. There are no legislative implications arising from this Communication as it is not itself a proposal for regulation. However there will be 10 proposals for decisions foreseen as a result of this Communication; each will be the subject of a separate EM.

APPLICATION TO THE EUROPEAN ECONOMIC AREA

11. Countries that have an Association Agreement with Horizon 2020 can apply to become Members of the Joint Undertakings that will implement the JTIs. Such countries can also apply to join Article 185 Joint Programmes.

2 of 5 SUBSIDIARITY

12. There are no implications for subsidiarity arising from this Communication. Subsidiarity issues as they apply to the JTIs, SESAR and Public-Public Partnerships will be covered in the corresponding EMs. The merits of EU-level approaches to the problems addressed by the cPPPs are analogous to those for EU-level collaboration in Horizon 2020 ie access to resources and skills not available nationally. Participation by UK stakeholders in the cPPPs is voluntary and the cPPPs do not prevent Member States from supporting RDI in those areas through national programmes.

POLICY IMPLICATIONS

13. The Government supports the Europe 2020 Strategy and the associated Innovation Union Flagship Initiative that recognise RDI are key to the creation of better paid and more durable jobs and sustainable economic growth in Europe. It agrees that in specific, well-defined areas formal partnerships between the Commission and/or the private sector and/or with Member States are the most effective way of meeting the Europe 2020 goal and those of the Horizon 2020 programme. The Government agrees that, overall, interim evaluations of the current JTIs show that: they attract a high-quality industrial participation, including SMEs; they develop long-term commitments and strategies in RDI and interdisciplinary approaches to address the challenges.

14. The Government endorses the Commission’s analysis of the potential benefits of PPPs and Public-Public Partnerships provided by the Commission. It agrees that good progress overall has been made by the JTIs judged against their relevance, effectiveness, efficiency and the RDI quality although there are areas in which improvements are needed. More detail on these aspects for the JTIs and Public-Public Partnerships will be provided in the Explanatory Memoranda for their legislation.

15. The draft Horizon 2020 Main Regulation lists the criteria against which proposed contractual PPPs will be judged. The Government notes that the Communication states the contractual PPPs identified are under consideration and expects to see how those in the list meet the criteria before endorsing Work Programmes with contractual PPP funding lines.

16. The UK welcomes the proposed cPPP in robotics, which will be supporting RDI actions in robotics and autonomous systems. This was identified as one of the “8 great technologies” by the Government, in recognition of the UK’s world-class strengths in the underlying science and engineering at the heart of these systems, together with access to the markets that could exploit them. The UK is therefore well placed to take a lead in developing and integrating these technologies. In order to drive the commercialisation process, the robotics and autonomous systems sector recognises the importance of the EU as a significant source of innovation via potential research partnerships and industrial collaboration.

17. The Government also supports the proposed cPPP in photonics. Photonics has been extensively supported by the Engineering and Physical Sciences Research Council as a priority area in ICT with £120M worth of currently supported research

3 of 5 projects. Photonics was identified by the UK Technology Strategy Board in 2012 as an enabling technology for the future growth of the UK economy.

18. The Government welcomes the focus on 5G in the refreshed cPPP on Future Internet. 5G has been highlighted in the Information Economy Strategy. In that strategy the Government draws attention to the 5G Innovation Centre at the University of Surrey that has already attracted £50M of Government support and which will be the first operational test-bed for 5G technologies and services.

19. The Government supports the proposed cPPP on Factories of the Future as a means of encouraging this growth with the development of advanced manufacturing processes and technologies. In addition, the cPPP enables UK companies and their European partners to promote their developments in other applications and across the entire industry in Europe. This cPPP aligns well with the UK Government’s Industrial Strategy and the UK Technology Strategy Board’s High Value Manufacturing strategy.

20. The Government also supports the proposed cPPP in Sustainable Process Industry. The UK Chemistry Growth Strategy Group identifies accelerating innovation, rebuilding the UK chemistry supply chain, climate change solutions and securing competitive energy and feedstocks as key priorities, all aligned with the objectives of the Sustainable Process Industry cPPP. In addition, a Sustainable Process Industry has been identified by the UK Technology Strategy Board in their High Value Manufacturing Strategy published in 2012 as a key component of the manufacturing supply chain in the future growth of the UK economy.

CONSULTATION

21. BIS ran a "call-for-evidence" between 13 Oct 2010 and 4 Jan 2011 to gather views of stakeholders on our priorities for the successor to FP7. Around half the respondents commented on JTIs. Industrial respondents, the primary beneficiaries of JTIs, expressed strong support in principle for the JTI model but called for simplification of the mechanism and increased accessibility for SMEs.

IMPACT ASSESSMENT

22. There are no legislative changes resulting from this Communication and no immediate cost / burden to business. An impact assessment is not required.

FINANCIAL IMPLICATIONS

23. The Communication foresees the PPP activity mobilising 22B€ (£18.9B) over the next seven years of which 8B€ (£6.9B) will be provided by Horizon 2020, around 4B€ (£3.4B) from Member States and 10B€ (£8.6B) from businesses and other sources. No figures are given in the Communication for the spend on Public-Public Partnerships.

24. The EU funding contributions will come from the relevant activity line(s) within Horizon 2020, the Framework Programme for Research and Innovation (2014- 2020). The total foreseen budget for Horizon 2020 is around €70B in 2011 prices (£60B). This is the figure which emerged from the multiannual financial framework

4 of 5 (MFF) settlement at the February 2013 European Council, which is still subject to formal agreement with the European Parliament.

TIMETABLE

25. There are currently no plans for Council Conclusions on this document.

David Willetts Minister for Universities and Science Department for Business, Innovation and Skills.

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