Lord Sainsbury of Turville

ENGINEERING YOUR FUTURE

I was delighted to receive Professor Davies’s invitation to come to Dundee University and with it a most welcome opportunity to revisit Dundee.

The Government believes very strongly that our success in science and engineering is vital to Britain’s prosperity and also to many of our public policy objectives in areas such as health, the environment and Third World Development.

The Government also sees the quality of U.K. science as a major national asset. And as the Prime Minister said, we want the U.K. to be one of the best places in the world for science and innovation.

That is why we have put substantial extra resources into the science and engineering base.

In 1997/98 when the current Government came to power, the Science Budget was £1.3 billion. As a result of substantial increases in a number of spending reviews, the Science Budget will have more than doubled in real terms to £3.3 billion by financial year 2007/8. This has enabled the Research Councils to raise substantially the amount of research they support and to make a major start in repairing our scientific infrastructure which was badly under funded in the late 1980s and early 1990s.

I am pleased to say that Dundee University has been able to benefit from government support for scientific infrastructure. The Joint Infrastructure Fund (JIF) and its successor, the Science Research Investment Fund (SRIF), have been successful in increasing investment in research infrastructure throughout the UK, providing world-class buildings and equipment for leading edge research. Dundee University has benefited from awards of £5.2m under JIF, £7.1m under SRIF1 and £10.5m under SRIF2 assisting a wide range of projects including a centre for multidisciplinary research in engineering and physical sciences.

In looking at the health of our engineering research we now have the benefit of the International Review of engineering research in the UK, commissioned by the Engineering and Physical Sciences Research Council. It reported recently and praised much of the work being carried out in this country. It is clear that, given the resources and the opportunities, UK researchers can compete with the best in the world. But there are also areas of weakness which need to be addressed.

The international Review also felt that engineers should also be able to draw on the creativity of more traditional science, to pick up the new ideas, at the moment of their inception. Examples of basic science which have become basic technologies thanks to the work of engineers – for instance, the lasers used in CD players – are not hard to come by. When this does happen, the benefits can be enormous. We need to work harder at facilitating this exchange across the science-engineering boundary, and this is something we will be looking at.

The SR2004 Science Budget allocations to the Research Councils and also to the Royal Academy of Engineering have just recently been announced, and address some of these concerns. The Engineering and Physical Sciences Research Council (EPSRC) budget will be set at £568m in 2005/06 rising to £718m in 2007/08. A major proportion is earmarked for increasing the sustainability of the UK’s research base by providing investment for developing talented researchers, for renewing infrastructure in universities, and increasing the Research Council’s contributions to the full economic costs of research.

EPSRC will additionally place emphasis on improving the quality of the research base across all the disciplines of engineering and physical sciences. We provided money to support what we have called “ the health of disciplines” and engineering and physical science will be major beneficiaries. Support will come basically in two forms: identification of future growth areas for nurturing, and ‘critical care’ for areas which are vitally important for the future wealth and wellbeing of the UK, but which may, for a variety of reasons, be at risk of disappearing.

Potential growth areas of special interest include the interface between design and engineering and green chemical and process technologies, although there are many others. There is particularly strong, focused support for the development and implementation of new medical devices and technologies, focused on the quality, rather than the quantity, of life in the UK – the demographic timebomb of an ageing population is a clear driver for this.

There are also serious concerns that some areas of engineering and physical sciences research in the UK no longer have the capacity needed for research and postgraduate training. They may not be able to sustain the research capacity needed in the future, including the production of enough well-trained people and the development of leaders of research teams. EPSRC, HEFCE and SHEFC are working together on this problem to support a number of Science and Innovation Awards which are large, long-term grants supporting staff in a research group, with commitment from the host Higher Education Institution(s) to continue support after the end of the grant. The initial round of support will provide around £17M, with a significant proportion of this going to engineering. An announcement is expected in April, and similar levels of support can be expected in future years.

The settlement the Royal Academy of Engineering has received from SR2004 will see their grant-in-aid rise from £5.9m in 2005/06 to £8.9m in 2007/08, and it is worth noting that funding to the Academy attracts significant income from third parties, in ratio of approximately 1:3, thus further boosting the resources available.

The Academy plans to engage in numerous activities to support the health of the engineering disciplines as a result of the new funding. These include increasing the number of postdoctoral research fellows, increasing the number of research chairs and senior research fellowships, and they are also planning to develop a new scheme of research exchanges with China and India to enable top level engineering researchers to visit Chinese and Indian centres of excellence and vice versa.

The principal objectives for all of us in science are clear: to make the UK world class in all areas of science and technology, and to translate more effectively the new knowledge generated into innovation.

As well as supporting the science and engineering base strongly since 1997, the Government has also set itself ambitious goals for the future in the 10 year Science and Innovation Investment Framework. The Government’s long-term objective for the UK economy is to increase the level of knowledge intensity in the UK, as measured by the ratio of R&D spend across the economy to national gross domestic product, from its current level of around 1.9 per cent to 2.5 per cent by around 2014. If achieved, this would put the UK in a position to secure a leading place among the major European countries and substantially close the gap between the UK and the USA, the best performing, innovation-driven major economy.

This scenario represents a considerable challenge, both for the Government and for UK business. If overall levels of R&D are to reach 2.5 percent by 2014, then both the private research and public sector research will need to grow at an average annual rate of around 5.75 per cent in real terms over the next decade.

In line with this rate of growth, funding through the Department of Trade and Industry and the Department for Education and Skills will increase at an average annual rate of 5.8 per cent in real terms over the current spending review period. The Government has also stated its intentions to increase investment in the public science base at least in line with the trend growth rate of the economy throughout the ten-year period.

The second major objective of the Government has been to increase the amount of knowledge transfer from the science and engineering base. This has been a great weakness of the UK’s innovation system in the past, and the Government has introduced a number of schemes largely through HEFCE to improve our performance. In the UK these have included: University Challenge, which provide universities with seed corn funds; Science Enterprise Centres which have provided access to entrepreneurial skills for science and engineering undergraduates and graduates; and the Higher Education Innovation Fund which provides incentives for universities to transfer knowledge to the economy.

The Universities have risen to the challenge and we have seen a major cultural change in our universities over recent years and a vast improvement in the working relationship between universities and industry. The contract research income from business has risen from £242 million in 1999 to £328 million in 2002, an increase of 36 per cent. The gross income from Intellectual Property licensing has risen from £23 million in 1999 to £33 million in 2002. The number of spin-off companies is now over 200 a year whereas when we came to government it was nearer 70 a year on average. Today 24,000 science and engineering students are receiving enterprise training, whereas the figure in 1998/99 was 3000.

We want to build on this success, and the Director General of the Research Councils has agreed with each Research Council, plans and goals for increasing the rate of knowledge transfer and level of interaction with business, with explicit targets for each Research Council.

The Government has also sought to give incentives for more user-driven research, an increase in which will be essential if we are to reach our goal of total public and private research reaching 2.5 per cent of GDP. In December 2003, the DTI published the Innovation Report, ‘Competing in the Global Economy: the Innovation Challenge’. This set out an action plan to increase the level of innovation in the UK economy.

This included new procurement guidelines designed to make Government a more intelligent customer by using its huge £109 billion a year purchasing power to drive innovation through public procurement. It also included tailored help for small businesses to encourage them to innovate, new innovation missions for the Patent Office and the Design Council and a new regional focus on innovation with every English region having a Science and Industry Council.

The Innovation Report also outlined Government plans for a Technology Strategy to provide a business-driven framework for identifying emerging technologies where the UK has the research capacity to maintain a leading position and the potential to exploit such technology. By focussing on user needs in selected technologies, the strategy is most likely to be able to address the market failures in the UK innovation system.

The Strategy is guided by a Technology Strategy Board which is independent of Government and business-led mainly consisting of senior industrialist and venture capitalists. It will be implemented mainly through two of the DTI’s support products, collaborative R&D programmes and knowledge transfer networks. The funding programme underpinning the Technology Strategy was allocated an initial £150 million over the first three years, 2004/5 through to 2006/7. The first call for proposals was announced in April 2004, with a priority being given to new and renewable energy technologies, technologies for environmentally friendly transport, advanced composite material and structures, inter-enterprise (grid) computing, sensors and control systems, disruptive technologies in electronics and displays, and bioprocessing. A call had already been made for projects in the field of nanotechnology.

The Technology Strategy will, of course, be managed in a very different way from the grants of the Research Councils where grants are selected by peer review by other scientists and they are evaluated on the basis of the excellence of the science, as measured by, for example, citation rates. The projects supported by the Technology Strategy will be chosen on the basis of the priorities of industry, and evaluated in terms of new products and jobs created. In this way we hope to avoid the mistakes of the past when poor basic research projects of little interest to industry were selected on the basis that they were applied research.

In addition to the Technology Strategy, the Government has in recent years also introduced R&D tax credits for small and large companies to encourage them to do more research. So far these have been worth £700 million to businesses.

I have spent some time highlighting the various key policies and messages to emerge from the 2004 Spending Review, the 10 Year Science and Innovation Investment Framework, and the Innovation Report, and the way they all link into government support for scientific research, knowledge transfer, and innovation. The Government sees these elements as vital for economic prosperity.

But none of these actions will come to fruition unless we can inspire our brightest and most creative young people to take up careers in science and technology. Across the world, in countries as different as Germany, South Korea and the U.S.A, we are seeing young people turning away from science at a time when most people believe that in the future science and technology will play an increasing role in our lives.

We in Government are in hand to inspire young people to take up careers in science. Teachers and schools are fundamental to all of this and one of our most important initiatives is the establishment of the network of Science Learning Centres that will enable teachers to engage in Continuing Professional Development so that they can offer their students the latest understanding of developments in the technologies that underpin the curriculum subjects.

The Government is also putting extra funds into the UK-wide network of SETPoints co-ordinated by SETNET. The SETPoint task is to channel to schools the most appropriate of the many hundreds of activities - schemes, awards, competitions and curriculum resources- that external organisations offer to teachers to help them enhance the curriculum. SETPoints help teachers find the most suitable activities for their young people from the many thousands that are on offer. SETPoints are also responsible for the operation of the Science and Engineering Ambassadors programme. This offers teachers the assistance of young people who are using their skills in Science, Technology, Engineering and Maths in their careers, and who can tell young people about careers in science and technology from first-hand experience. Ambassadors act as role models to the young people they meet, illustrating that being scientists and engineers, at whatever level, is something to which everyone can aspire.

Our vision in the UK Government is that the UK should be a key hub in the global knowledge economy. This means that the UK should be a country famed not only for its outstanding record of discovery but also for innovation, a country that invests heavily in business R & D and education and skills, and exports high-tech goods and services to the world. We also want to be a country with strong science and technological links with the best research around the world, so that we can stay always at the leading edge. Finally, we should be a country to which talented entrepreneurs and world-class companies, attracted by the quality of our research, by the strong links between universities, research institutes and industry, by geographic clusters of high-tech companies, by their ability to raise finance, particularly venture capital, and by our quality of life.

We are making good progress in achieving these goals but there is still much to be done.

We also want the U.K. to be a country that invests heavily in business R&D, and education and skills, and exports high-tech goods and services to the world.

I believe we are making real progress, though I know that there is till much to do, and I am delighted that Dundee University, with its record of producing first class engineers and industry leaders, is playing its part.