Scotland: Towards the Knowledge Economy

ANNEX B: BUILDING AND EXPLOITING THE SCIENCE BASE

This annex sets out a range of measures not covered in the report that the Government is undertaking to strengthen the science base, to encourage company research and development and foster business-academic collaboration.

B.1 Long Term Capacity Building

Joint Infrastructure Fund (JIF). The £600m JIF is a partnership involving DTI/OST and the Welcome Trust. It is a competitive UK-wide initiative designed to address the basic shortcomings in the country's scientific infrastructure on which the ability to generate good quality science and engineering research depends. All universities can apply for funds which will be disbursed from April 1999 to March 2002. The remit of the Fund covers the whole spectrum of research equipment, scientific research, buildings and refurbishment of laboratory and related space. This initiative is critical to modernising the research base on which knowledge, its generation, exploitation and application to business depend. Foresight. This programme builds bridges between business, the science and engineering base and Govern-ment. It aims to identify new opportunities in markets and science and technology over the next 20 years, and the action the country has to take to grasp these opportunities. This programme is therefore designed to inform a wide range of actions and supports more focused business and scientific initiatives such as SE's cluster strategy and university research. SHEFC Research Development Grant. In response to the Foresight programme, about 5% of the Council's research resources are allocated through this mechanism. HEIs bid for these funds in order to build or re-shape research capacity to respond to the perceived future needs in local, Scottish, UK and international contexts. These resources fund new infrastructural developments which demonstrate "foresighting". The Research Development Grant, a range of SHEFC special allocations and their support for specific projects such as CONNECT and the Royal Society of Edinburgh Commercialisation and Foresight seminars represent Scotland's parallel to the Reach Out Fund in England. Foresight Link Awards. The DTI will provide a second round of funding of £10 million to promote high quality research partnerships between universities and business, particularly small business. The Foresight panels have identified the technol-ogies and markets thought likely to be important over 20 years. Research projects will take forward their thinking and the results will represent a development of the know-ledge pool in the key areas.

B.2 Knowledge Transfer

University Challenge. This competitive UK wide scheme was designed to enable the winning universities to access seed funds to assist the transformation of good research into prototypes that will attract venture capital and can be taken forward by the market. It allows the universities to make the choices about which projects to take forward and specifically meets a funding gap which is widely held to have arrested the movement of scientific discoveries through their various subse-quent stages into the commercial world. The results of the competition were announced on 10 March 1999, and included two successful Scottish bids: Strathclyde and Glasgow Universities secured £3 million; and Edinburgh University (with the Moredun and Roslin Institutes and PPARC's UKATC on Blackford Hill) was awarded £2.25 million. This success could mark a step-change in the focus and resources being brought to one particular stage of the technology transfer process and the commercial exploitation of science.

Teaching Company Scheme (TCS). DTI will also double its contribution to the TCS which, through collaborative partnerships, directly facilitates the transfer of technology and knowledge between the science and engineering base and business. TCS operates through programmes in which academics in universities work with companies on strategic projects lasting 2/3 years which will lead to major productivity enhancing changes in the company. The project work is carried out by high quality graduates and at the moment there are 70 projects active in Scotland. This will rise to about 120 following the increase in funding. Over time TCS will influence significant numbers of SMEs and should be seen as one of the main mechanisms for directly drawing the small and medium sized company base into a productive relationship with the science and engineering base.

Faraday Partnerships. The Government also plans a national network of Faraday Partnerships building on the initial work of the Engineering and Physical Sciences Research Council. This initiative is also aimed at directly enhancing the transfer of technology, in this case from engineering laboratories to commercial operation. The distinguishing feature of Faraday Partner-ships is the co-location of innovating small businesses, scientists and engineers to share ideas and commercia-lise research. In that respect they can be distinguished from the TCS where the technologist moves to the particular company and from Science Enterprise because of the sectoral emphasis and the absence of a teaching element. Each partnership will bring together up to 40 small companies with their science and engineering partners.

LINK. The Government's principal mechanism for supporting pre-competitive, collaborative research partnerships between UK industry and the research base. Companies from all areas of the UK can partici-pate in LINK and the involve-ment of SMEs is actively encouraged. LINK is primarily, but not exclusively programme-based ie in consultation with industry and the research base, and taking account of Foresight, LINK sponsors will identify high priority market or technology areas where industrial research is needed, design a 3-5 year programme, inviting project proposals to meet this need and allocate a budget to support projects with up to 50% funding. There are currently 22 LINK programmes open to applications and Government expenditure on LINK runs at about £33 million per annum, with DTI and EPSRC being the main contributors.

College Business Partnerships (CBP). Announced by the DTI in 1996. This pilot aims to promote technology transfer between FE colleges and SMEs and is based on the same principle as TCS, ie a company working in partnership with a college or university on a technology transfer project. However, instead of recent degree graduates on 2-3 year projects, CBP involves young people (with NVQ/SVQ Level 4) spending a year in an SME to undertake specific technology transfer projects under joint college/industrial supervision. DTI are considering the future of this scheme.

B.3 Business Research and Development

To stimulate business R&D, where Britain and Scotland do not rank highly in the inter- national league table, the Chancellor has announced a new tax credit for investment in R & D by small and medium sized businesses, including businesses not yet making a taxable profit. The effect will be that the Exchequer underwrites almost one third of the R & D costs for small businesses. This incentive will boost the amount of R & D undertaking by companies and may also result in more university and research institute research and technology transfer as a result. The Competitiveness White ,Paper announced that the Government is considering extending the popular SMART scheme to help small busi-nesses finance the development of their own technologies and tap into scientific resources. To some extent these changes have already been anticipated by LEC arrangements in Scotland. Individuals resident in Scotland who intend to start a business if they win an Award, and sole traders, partnerships, independent companies or parts of groups operating in Scotland which have fewer than 50 employees are eligible to enter the SMART competition for a grant to carry out a technical and commercial feasibility lasting 6-18 months. Winners who successfully complete the first stage of their projects may then apply for further support to assist with the development of a pre-production prototype. Support to enhance small companies' innovation capacity is not part of this but LECs have a strong presence in this area which is not matched by English arrange-ments. It should be noted that universities and research institutes may not enter SMART, although commercial companies already spun-off from the science base are eligible. There is thus a clear distinction to be drawn between SMART and University Challenge: the latter will mainly be applied at the pre-commercial stage to develop a concept within the university environment before any company has been formed. Moreover, other associated commercialisation activities such as the preparation of a business plan and market research cannot be funded through SMART.

B.4 Collaboration

Fit for the Future. The Government is providing substantial funding for the CBI's Fit for the Future campaign which aims to stimulate a massive increase across the country in the number of businesses adopting best practice. The campaign will provide an umbrella for national, regional and sectoral best practice initiatives. CONNECT. This is not a Government Initiative, but it is an important University of Edinburgh attempt to promote the exploitation of science by bringing together academic researchers, technology based businesses and venture capitalists in a series of themed seminars and conferences. ERDF funds have been a critical factor in the success of the initiative to date. Scottish Enterprise and SHEFC have also helped, not least to establish regional centres in Glasgow and Aberdeen. They see CONNECT as an important component of commercialisation and the wider TVI, which is the reason for its inclusion in this annex.