1.  The UK is a world leader in research. Home to some of the best research universities and research institutions, the UK represents 1% of the global population but produces 9% of the world's scientific publications and 12% of the scientific citations.

  2.  Every day, researchers are making breakthroughs that revolutionise our health, our security, the environment and our quality of life. Pushing the very frontiers of science, researchers have developed the fundamental building blocks upon which so many other discoveries are being made. Watson and Crick's methodical but curious exploration brought to light the structure of DNA and laid the foundation for the UK's world leading bioscience sector. Today's researchers continue to ask those important "what if" questions at the edges of the unknown. A direct approach to research can elicit expected findings, but at times researchers stumble across breakthroughs with unrelated but highly valuable applications.

  3.  The UK's investment in research improves the relative international and overall innovation performance of the UK economy. Significant innovations emerge from all research disciplines.

  4.  Research is an important long-term investment in our economy and job creation. To maximise the impact of UK research and to ensure that earth-shattering innovations do not remain hidden in labs and researchers' notebooks, research institutions undertake a range of activities broadly described as knowledge transfer. This includes collaboration with industry, training skilled people, identifying the "commercial" applications of research and moving discoveries into the marketplace. Commercialisation professionals at universities and Research Council Institutes work with researchers to identify practical uses of research, protect their intellectual property by "spinning out" new companies and license their innovation to existing companies, thus stimulating the UK economy.

  5.  In the past three years, 25 university spin-out companies have floated on the stock market at a value of £1.5 billion. Spin-outs have been proving to be attractive investments for venture capitalists. 61% of university spin-out companies formed during 2005 were funded through external investment finance. The DIUS Higher Education Innovation Fund (HEIF) provides £110 million per year for UK universities' research-to-market activities. Since HEIF was launched, the income from patents, licences, intellectual property and consultancy have all increased significantly.

  6.  Each year the Research Councils invest around £2.8 billion in excellent, world class research and training. This supports the work of tens of thousands of researchers in universities and research Institutions a cross the UK. This funding gives the best researchers the time, resources and support to pursue their research ideas and helps to train talented graduates and postgraduates who will go on not just to careers in research, but also into business, finance, education and the public sector.

  7.  The Research Councils invest in a balanced portfolio of research and training which encompasses:

—  highly innovative and novel research;

—  capacity building in new and emerging disciplines;

—  sustaining progression in well established areas;

—  training of highly skilled people;

—  investing in strategic priorities; and

—  maintaining national capacity.

  8.  Major advances in knowledge and understanding arise from these activities. With effective knowledge transfer of research outputs and intellectual property, and the flow of trained people, Research Councils deliver greater national prosperity through:

—  the development of new or improved products;

—  the establishment of new businesses; and

—  new or improved public policy and public services, and cultural benefits.

  9.  This enquiry enabled Research Councils to consider their performance in knowledge transfer, to present their strengths and areas for improvement in the future.

  10.  In parallel with this enquiry, Peter Warry led an Economic Impact Group which reported to the Director General of Science and Innovation, to consider how Research Councils could demonstrate that they are delivering—a major increase in the economic impact of their investments.

  11.  Recommendations focussed on Research Councils leadership of the knowledge transfer agenda; their role in influencing knowledge transfer behaviour of universities and Research Council Institutes; increasing their engagement with user organisations.

  12.  The report recognised that Research Councils have pivotal roles, both as funding bodies and as leaders of the research base. It noted that Councils were increasing their emphasis on knowledge transfer and the economic impact of their work but must increase this emphasis further without sacrificing the research excellence for which the UK is rightly admired.

  13.  Since the Government response to the enquiry on knowledge transfer, the emphasis on the economic impact of the Research Councils has increased.

  14.  Research Councils UK published their Warry Action Plan in January 2007. In the autumn RCUK will publish its "Warry Progress report". This will outline progress in responding both to the House of Commons report on knowledge transfer, as well as the recommendations of the Warry Economic Impact Group. This will include the following:

—  Economic Impact Study.

—  User Satisfaction Survey.

—  Comparative Analysis of Research Council Knowledge Transfer schemes.

—  Partnership with Technology Strategy Board.

—  How economic impact considerations will be reflected in Research Council peer review.

  15.  As part of the CSR07 allocation process Research Councils have been required to provide a baseline of economic impact and to describe the practical steps they will take to deliver a step change in their delivery plans for the next spending period.

IN RESPONSE TO THE COMMITTEE'S QUESTIONS IN RELATION TO SPECIFIC RECOMMENDATIONS, DETAILED INFORMATION IS SET OUT BELOW

Recommendation 2, paragraph 25

  We are not convinced that measures put in place to facilitate national co-ordination of knowledge transfer are sufficient and we believe that there is a need for co-ordination between all UK funders of knowledge transfer to be enhanced. We recommend that the Government takes the necessary steps to ensure a co-ordinated knowledge transfer strategy. We recommend that the Research Councils lead the development of a strategy through which engagement between all organisations currently involved in support of knowledge transfer can be enhanced. We consider that there is a particular need for increased engagement between RDAs and the Research Councils. We call on the Research Councils to develop effective working relationships with all RDAs, strengthening links where necessary, disseminating good practice and supporting RDAs in building up their expertise.

  16.  The Research Councils recognised the need to improve co-ordination between key organisations in the knowledge transfer arena. Since the initial response to the Committee the Research Councils have worked more closely with the Regional Development Agencies (RDAs) through Regional Innovation Science & Technology (RIST). This has facilitated and enabled the co-ordination of knowledge transfer (KT) activities. The Research Councils have engaged with other KT stakeholders via the Confederation of British Industry(CBI) Inter-company Academic Relations Group (ICARG) and, Professor Esler, in his role as RCUK Knowledge Transfer and Economic Impact champion, has lead this agenda on behalf of all Councils influencing key stakeholders.

  17.  The Councils recognise that still more can be done in this area and plan to work more closely with the Technology Strategy Board, Regional Development Agencies (RDAs) and Devolved Administrations (DAs) in the future.

Recommendation 3, paragraph 29

  We welcome efforts to develop a clear, cross-Council understanding of what the term "knowledge transfer" should mean to the research community. We urge the Councils to clearly communicate what is and isn't included within their view of knowledge transfer.

  18.  The Research Councils acknowledge the need to improve understanding of knowledge transfer expectations and achievements, by both the research and user communities. This is of even greater significance where economic impact considerations are included, as recommended by the "Warry" report. The Councils individually and collectively have sought to improve the coherence of their communication on this matter in the following ways:

—  the publication of Impacts: Successes from UK Research (in conjunction with UNICO and Universities UK) to celebrate the success of Research Council supported Knowledge Transfer. This was launched at a House of Commons breakfast event hosted by Phil Willis on 15 March. The KT co-ordinator project aims to improve the collective Research Council knowledge transfer portfolio. It seeks to achieve much greater harmonisation, rationalisation and joint presentation (eg via a KT portal) of KT schemes; and

—  to improve the understanding between the research and peer review community regarding expectations for knowledge transfer and economic impact, the Research Councils have reviewed how knowledge transfer and economic impact considerations should be reflected within peer review assessment. The outcomes of these will be promulgated to the research community in the Warry Progress Report.

  19.  Going forward an Economic Impact conference is planned for 2008 to publicise the outputs of the RCUK Economic Impact Project.

Recommendation 4, paragraph 32

  Whilst we accept that the Research Councils may sit at the "push" end of the research chain, we are concerned by the perception that they are not interested in the requirements of industry. We urge them to address this perception and to ensure that user requirements are fully considered when determining funding priorities.

  20.  The Research Councils have always sought to involve their key stakeholders, including industry and other users, in developing strategy and delivery of research. In the last year, the Councils have investigated new systematic approaches to understand users and their expectations and experiences of the research communities.

  21.  RCUK have now completed a User Satisfaction Survey, which sought the views of around 400 expert users on the strategies, delivery and capabilities of the Research Councils. Prior to commissioning the study, Research Councils collectively agreed that "users" would be defined as those organisations and individuals who make use of Research Council funded outputs and outcomes (research and/or trained people) and those who have some direct relationship with one or more of the Research Councils. Higher Education Institutions (HEIs) and Research Council Institutes (RCIs) were excluded from the scope of the survey.

  22.  The survey represents the first attempt to understand, in a systematic fashion, the expectations and experiences of those users that have worked closely with the research councils during the previous two years. The results provide commentary on Research Council strategies and processes, and indicate areas of both strengths and weaknesses as perceived by users. The survey will help councils to improve their engagement with business. It will be repeated biennially to allow improvements in user engagement and experiences to be monitored. The findings will be published in the Warry progress report.

  23.  Industry and other users participate in many Research Council activities, including the peer review assessment of research. Peer review contributes to the success the UK has had in developing a world class research base. It is fundamental to the work of the Research Councils, who seek to operate it as efficiently and effectively as possible.

  24.  Research Council Delivery Plans are due to be published in early 2008.

Recommendation 5, paragraph 35

  We welcome the effort made by the Research Councils to set out future knowledge transfer priorities within their Delivery Plans. We find that some of the Research Councils have taken a narrow approach and that consequently, their Delivery Plans do not reflect the wider view of knowledge transfer.

  25.  The Research Councils and RCUK are currently developing new revised delivery plans. The new delivery plans will give prominence to economic impact using the Treasury Green Book definitions which encompasses broader societal impacts. Knowledge transfer makes an important contribution to economic impact.

Recommendation 6, paragraph 38

  We are concerned by negative perceptions of Research Council communication and engagement with their stakeholders. We urge the Research Councils to take steps to engage business users more effectively. It is important that the Councils clearly consult and act upon the views of all stakeholders, addressing the perception that they are only interested in informing them.

  26.  The User Satisfaction Survey has identified the strengths and weaknesses of each Research Council, as perceived by users. Councils aim to publish the survey, together with an initial response which outlines how the Councils will further improve their relations with users.

Recommendation 7, paragraph 40

  We believe that there is a need to enhance SME-Research Council engagement considerably. We recommend that the Research Councils are more proactive in their engagement with SMEs, recognising that very distinct challenges must be overcome if SMEs are to be successfully involved in knowledge transfer, for example in collaborative work with universities.

  27.  Research Councils will continue to encourage collaboration between Small and Medium Enterprises (SMEs) and the research base, through support for collaborative research, postgraduate training, networking and knowledge transfer. Research Councils work with RDAs to provide more innovative approaches including including knowledge transfer voucher schemes targeted at SMEs.

  28.  RCUK anticipates that a significant increase in SME involvement will be achieved through partnership with the Technology Strategy Board. Research Council involvement in Technology Strategy Board products targeted at SMEs such as KTP and Knowledge Transfer Networks is expected to grow. Councils would particularly welcome a more flexible approach to KTP in order to attract new businesses—for example shorter KTPs to reach micro-enterprises within the creative industries. Furthermore, Research Councils are keen to work with the Technology Strategy Board to develop ways of working which facilitate greater SME engagement.

Recommendation 10, paragraph 53

  We commend PPARC for its efforts to promote the importance of applicability and knowledge use to researchers. We urge PPARC to actively communicate its intentions where knowledge transfer is included within grant proposal evaluation criteria and to clearly convey the message that knowledge transfer will not determine the success of a grant application. We recommend that the other Research Councils consider this approach as a mechanism for embedding a more result-orientated culture.

  29.  In 2006 RCUK initiated a project to review the efficiency and value for money of Research Councils' peer review processes. One strand of this project considered the extent to which peer review assessment can, or indeed should, reflect economic impact considerations. The feedback from the research community on this particular issue highlighted a need for the Councils to ensure there is clarity about what the Research Councils expect from the research and peer review communities, and also identified scope to build upon best practice approaches within the Councils.

  30.  In terms of the peer review of applications for research funding, RCUK wishes to emphasise that research quality is, and will remain, the primary determinant for Research Council funding. RCUK has reviewed the approaches currently used within the Councils to ensure that assessment and funding decisions effectively reflect economic impact considerations; this formed the topic of a Research Council workshop in July 2007. Different approaches are used to reflect the nature of specific research domains, characteristics of the user community or other strategic considerations. For example assessment criteria for medical research reflects healthcare priorities, practice based subjects give particular attention to the involvement of practitioners, and individual schemes and directed programmes tend to have bespoke assessment criteria, which are usually explicit in any guidance and/or call for proposals documentation. It is reasonable to anticipate variation in these assessment criteria in future—both within and between Councils. There are opportunities to spread best practice, and adopt common processes.

  31.  RCUK will publish a detailed response and actions as part of the "Warry" reporting in the autumn.

Recommendation 11, paragraph 55

  We welcome the publication of Research Council performance assessment metrics but consider that refinement is required. We are particularly concerned that the Output 2 metrics, as they stand at present, measure activity rather than output and that they may influence the activities of the research community. We recommend that the Research Councils and RCUK regularly review the assessment metrics and the impact they are having, reporting back periodically.

  32.  The Research Councils acknowledge the importance and also the difficulties in the measurement of research outputs and impacts. In March 2007 RCUK commissioned an Economic Impact Study, a one-off report in which Research Councils describe the economic impact of the investment in their field. The report is helpful in highlighting the many different and complementary ways that Research Council-funded research leads to benefits for the economy and society, and also serves the purpose of defining baseline approaches to allow better and more consistent assessment of economic impacts in future. The findings will be published in the autumn on the RCUK web site as part of "Warry" reporting.

  33.  Councils have agreed to develop better data collection to manage their business. A project will collate output data collectively and in a more integrated fashion across all the Councils, replacing or augmenting existing reporting processes such as end-of-project reporting. The Outputs Project will be initiated in 2008, reflecting the new requirements to support economic analysis as revealed through the economic impact project; it is also one of the recommendations of the RCUK Peer Review Efficiency Project.

Recommendation 12, paragraph 59

  We have found little evidence of Research Council co-ordination or sharing of best practice in the context of their knowledge transfer activities and we have not been persuaded that the Knowledge Transfer Group has achieved much in the two years since its formation. Also, despite their clear remit to co-ordinate and harmonise, we have not seen any added value from RCUK in this area. We urge the Research Councils and RCUK to take the necessary steps to enhance the effectiveness of their co-ordination in knowledge transfer.

  34.  The new high-level Knowledge Transfer and Economic Impact Group (KTEIG) was established in September 2006, and has been meeting on a regular basis since. The Group provides strategic direction and advice to the RCUK Executive Group on the delivery, co-ordination, monitoring and evaluation of activities which will increase the economic and social impact of Research Council's investments, and increasing the external visibility of these impacts. The Group has provided strong leadership, particularly to increase the policy impact of the Councils. For example, the RCUK response to the Sainsbury Review, pursuing opportunities with the new Technology Strategy Board, leading the harmonisation/rationalisation agenda within councils, and sponsorship of a number of joint projects and initiatives.

  35.  KTEIG is responsible for overseeing the development and the co-ordinated delivery of a programme of work that will contribute to increasing, and demonstrating an increase, in the economic and social impact of Research Council's investments. In 2007 the programme consists of the following three primary projects:

(1)  KT Co-ordination Project;

(2)  Economic Impact Project; and

(3)  User Satisfaction Survey.

  36.  The KT Co-ordination project (started in June 2007) consists of a comprehensive and comparative review of Research Council Knowledge Transfer schemes. The review investigates the scope for harmonisation and re-branding of KT schemes across the Research Councils. The final report of the review will be published in the autumn of 2007. Recommendations from the review will be taken forward by KTEIG and developed into actions, as required, as part of the "Warry" Action Plan.

Recommendation 13, paragraph 62

  We were impressed by the evidence we have received and welcome such clear Research Council successes in supporting knowledge transfer.

  37.  No update.

Recommendation 14, paragraph 65

  We commend PPARC for the approach that they have taken to develop a single, flexible scheme. We recommend that the other Research Councils, with support from RCUK, apply this simplification to their own knowledge transfer funding strategies. Communication of Research Council knowledge transfer funding strategies should be improved. We recommend that RCUK develops a single, simple web portal through which information on all Research Council knowledge transfer schemes can be easily accessed.

  38.  As outlined above, during 2007 Research Councils have undertaken a Knowledge Transfer Co-ordination Project to consider harmonisation and branding. In taking this forward KTEIG/RCUK will be laying the foundations for a developed web portal.

  39.  Harmonisation of terminology and branding is an essential prerequisite for the development of a new web portal. It is envisaged that a portal will be specified and initiated as a project during 2008, subsequently enabling users to access Research Council services more effectively. Research Councils currently evaluate their knowledge transfer schemes to form judgements on the relative success of investments. However, many KT programmes are still in early stages and Councils will be able to take a more robust approach as data becomes available.

Recommendation 18, paragraph 79

  It is difficult to see how the Research Councils can effectively allocate funding to different knowledge transfer activities in the absence of comprehensive data on their impact. We recommend that the Research Councils proactively seek out information required to evaluate impact and that, once such data has been obtained, full impact analysis of all Research Council knowledge transfer schemes is conducted. In addition, we recommend that Research Council funding for knowledge transfer is neither increased or decreased until more is known about the impact of the schemes.

  40.  Research Councils currently evaluate their knowledge transfer schemes to form judgements on the relative success of investments. However, many KT programmes are still in early stages and Councils will be able to take a more robust approach as data becomes available.

  41.  Innovative schemes to attract SMEs are referenced in response to Recommendation 7.

Recommendation 19, paragraph 83

  We welcome the idea behind conducting an External Challenge of Research Council activity in support of knowledge transfer. We consider that the processes employed led to a report with questionable independence. RCUK did not fully consider the resources required for a full review of this area, giving the External Challenge Panel a near impossible task. We recommend that the Councils conduct a detailed review of the processes involved in this External Challenge. Such a review should take account of problems such as provision of appropriate resources and timescales, and should enable the development of best practice to inform future exercises of this nature.

  42.  The Research Councils and DIUS have agreed that the external scrutiny has been superseded by the obligation to report against "Warry" economic impact. The lessons learned have informed the organisation and development of "Warry" reporting.

Recommendation 20, Further encouraging exploitation business skills development

  We welcome recognition by the Research Councils of the importance of enhancing business skills and we encourage them to further develop training activities in this area, making them available to as many researchers as possible.

  43.  One of the overriding themes within the RCUK Delivery Plan is to promote a more entrepreneurial culture within the UK research base. This manifests itself in many ways, for example:

—  RCUK will continue to foster a collaborative approach between HEIs and industry to promote the sharing of good practice on skills training, ensure relevance in training, and provide researchers with access to entrepreneurship, knowledge transfer and business skills.

—  RCUK is seeking to embed the development of transferable skills relevant to employers within the PhD by providing additional support to postgraduate researchers via single, co-ordinated annual payments to HEIs.

—  New researchers receive training in commercial awareness and enterprise through the Young Entrepreneurs Scheme (YES).

—  RCUK also supports the Business Plan Competition, which provides support and training to academic researchers to develop high quality business plans to commercialise research carried out in UK universities and Public Service Research Establishments.

Recommendation 21, paragraph 88

  We believe that the Research Councils should maintain a "hands off" approach to management of Intellectual Property within universities.

  44.  Following the recently published report to the Funders Forum by the Peter Saraga group, the Research Councils are reviewing their guidance and expectations on IP management. RCUK currently sees no need for a change in current policy and management of IP from research in HEIs will continue to be the norm—in the majority of cases, management of IP by the organisation undertaking the research is the most effective route.

September 2007