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Select Committee on Science and Technology Sixth Report

2 From OST to OSI

Background

8. On 28 February 2006, Sir Brian Bender, the Permanent Secretary at the DTI wrote to our Chairman to inform us that, as a result of a recent review within the DTI, a new Office of Science and Innovation would be created by merging the DTI's Innovation Group into the Office of Science and Technology.[3] The OSI would have the twin purpose of "investing to develop further the excellence of the UK's research base; and promoting technological and other business innovation".[4] Sir Brian Bender stated that the changes would "allow more effective co-ordination between these areas and more coherent communication of our work".[5]

9. The OST dates back to 1992 when the Science Branch of the Department of Education and Science joined the Office of the Chief Scientific Adviser in the Cabinet Office. It moved to the DTI in 1995. The Innovation Group had an even shorter history, being created in 2002, following an internal DTI review of the UK's performance in innovation. Prior to the merger with the OSI, the Innovation Group had three key responsibilities: to run main innovation schemes, such as LINK and Smart; to run the Patent Office and National Measurement System; and to promote technologies, such as genomics, e-science and basic technology. Its objectives were to encourage a faster take-up of emerging technologies by business; a significant increase in knowledge transfer; a better skilled workforce; and increased investment in innovation.[6] The Government described its achievements during its short lifetime as including:

establishing the Technology Strategy and Technology Strategy Board;
achieving international recognition for the work of the Innovation Group in developing UK innovation policies;
highlighting the specific needs of the service sector and the importance of design in innovation thinking;
raising the importance of public procurement in stimulating innovation and reinvigorating the Small Business Research Initiative scheme, working with the construction industry and other Government Departments such as the Department of Health;
influencing the Department for Education and Skills' thinking on skills and the emphasis on demand side/employer led skills development in the workplace; and
the work of the Patent Office in promoting Intellectual Property Rights (IPR) for Small and Medium-sized Enterprises and schools, especially the development of the model contracts for IPR collaboration.[7]

10. The structural changes announced by Sir Brian Bender also involved changes in personnel. The OSI as a whole has become substantially larger than the former OST since the Innovation group brought in around 250 posts to the OSI's 140-150,[8] although the merger has reduced the number of Directors-General in that part of the DTI by one.[9] It was made clear from the outset that David Hughes, the Director-General of the Innovation Group and the Chief Scientific Adviser (CSA) for the Department, who had led the group since its inception, would not move over to the new OSI. Instead, his role of CSA was added to the portfolio of responsibilities awarded to Professor Sir Keith O'Nions, the former Director-General of the Research Councils, now DGSI, who also took on oversight of the Innovation Group. In April 2006 the DTI advertised for a new Director of Innovation to head the group, reporting to Sir Keith. Professor Sir David King continued as head of the OSI and GCSA.

Objectives of the reorganisation

11. The review which led to the reorganisation of the OSI was commissioned in autumn 2005 by the Secretary of State and the Permanent Secretary of the DTI, both then fairly new appointees, to "examine the organisational and working methods of the DTI's activities on science, innovation and business relations and support".[10] The review was intended to "help the Department achieve effective integration and ensure that its strategic focus appropriately addresses the enterprise, innovation and knowledge economy agenda, to meet the challenge of globalisation".[11] The then Secretary of State, Rt Hon Alan Johnson MP, explained that he and Sir Brian Bender had been "struck by the fact that whilst over half our budget was science, it was still the case that the DTI were not perceived as being responsible for science".[12] The resulting changes were intended to ensure that "the department now has a complete marry up between the push of science and the pull of innovation".[13]

12. It appears that it was the innovation side which had been falling behind prior to the changes. On 15 February 2006, before the reorganisation was announced, Sir David King told us that "the Office of Science and Technology was placed in the DTI some years ago with an effort to focus on the innovation and wealth-creation agenda from within the science base … I believe there is much work still to be done".[14] Innovation has become an increasingly central part of the Government's agenda, starting with a report in December 2003 on Competing in the Global Economy: The Innovation Challenge which focussed on knowledge transfer, innovation in procurement, small businesses, regulatory frameworks and regional innovation. This was followed in July 2004 by the Government's Science and Innovation Investment Framework, 2004-2014 which stated that "harnessing innovation in Britain is key to improving the country's future wealth creation prospects".[15] In evidence, the then Secretary of State contended that the change to OSI "was in no way saying that innovation has failed either in the personalities involved or the system involved".[16] It was rather to be seen as "a process of evolution".[17] Nevertheless, its short existence of less than four years implies that the Innovation Group had not met the heavy expectations laid upon it.

13. From the OSI perspective, Sir Keith O'Nions welcomed the changes as aiming to "bring the OSI closer into the department and place science and innovation more firmly into the heart of its strategy".[18] This was seconded in oral evidence by Sir David King who felt that "we now have a situation which is different from what we had before in the sense that this agenda of science, innovation and wealth creation is not only fully owned by the DTI in the form of the Secretary of State but is also now very much at the centre of the DTI's activity."[19]

14. Whilst we welcome greater integration and greater awareness of science throughout the DTI, we had concerns that increased identification of the OSI with the DTI would have a negative effect on its role in influencing science across Government. There were also concerns that it could lead to greater emphasis on wealth creation at the expense of basic research. This is particularly relevant at a time when the Research Councils are increasing their own focus on knowledge transfer activities. Our witnesses saw the role of Sir David King as key to meeting these concerns. The then Secretary of State argued that he saw the GCSA as "a long stop": "his independence and the fact that he reports directly to the Prime Minister and is the Government Chief Scientific Adviser allow him to see issues like this in context".[20] Sir David King himself stressed that he retained his role in overseeing the science and innovation strategy work of all government departments and "as the protector of those parts of the Science Budget that would not necessarily be seen to deliver on the wealth creation agenda".[21] He argued that he could "only provide the challenge that maintains that process" of protecting this part of the research base "if the Office of Science and Innovation operates as a true entity".[22] We note these reassurances but the OSI must remain alert to the potential of closer integration with the DTI to compromise its role in looking at science across the whole of Government and its duty to promote the health of UK science, including basic research as well as innovation and economic returns. This may argue for a separate Ministry of Science and we recommend that the Government consider this in any future change to the machinery of government.

ROLE OF THE DIRECTOR GENERAL FOR SCIENCE AND INNOVATION

15. We had further concerns about the expanding role of Professor Sir Keith O'Nions within the OSI/DTI. In the reorganisation, he gained responsibility for a new grouping of some 250 people, in addition to the existing science and engineering base, and also a new role as Chief Scientific Adviser to the DTI. Sir Keith told us that he "greatly" welcomed this "third hat" but that it was "nothing like a full time job".[23] We were surprised to hear this, and were concerned that the additional time commitment involved in taking on the role of DTI CSA had not been properly considered in the reorganisation, particularly as Sir Keith readily accepted that "I already have a day job … I spend five days a week involved in science and innovation".[24] Sir Keith suggested that we ask him six months later whether he was able to perform all three jobs well.[25] In the event, when we asked the new Minister for Science, Malcolm Wicks MP, in January 2007, we were told that he did "not have any concerns" about Sir Keith O'Nions' workload. [26]

16. The mission of the DTI to promote the role of the CSA at the heart of policy-making sits uncomfortably with the decision that the duties of its own Adviser are so light that they can simply be grafted on to an already full workload. This is especially so in a year in which the DGSI has a considerable additional task in the form of negotiations on the Comprehensive Spending Review. We also have concerns in principle that the DTI CSA ought to be independent and not hold another position within the department, as we have discussed in our previous report on scientific advice and evidence-based policy-making. The departure of the previous Chief Scientific Adviser was an opportunity for the DTI to change its stance on appointing its own independent CSA. We hope that the DTI will keep the arrangement whereby the DGSI also undertakes this role under review. It must be prepared to consider separating the roles, should it become apparent that the job of the DGSI has become overloaded.

Implementation of the changes

17. The changes proposed as a result of the review were implemented straightaway since the Secretary of State saw no point in delaying and it seemed advisable to have them in place before the Budget.[27] Seven months after the restructuring, we visited the OSI to gauge the effect of the changes. We heard only positive feedback from staff and management, with comments such as that the reorganisation had brought out more synergies between the two groups than had been previously suspected. The incoming Minister for Science told us in formal evidence that he himself was "certainly impressed … by the commitment of all the colleagues in OSI, not just to science but to the innovation agenda".[28] Sir Keith O'Nions agreed that nearly a year on from the changes "there are some really tangible benefits", particularly in bringing together "the business defined technology strategy opportunities and the more scientifically defined opportunities in the science base".[29] He cited as example "the relationship of intellectual property and patents, and metrology … and how this also fits together as part of the support of the environment where the innovation takes place".[30] The merger of the OST and the Innovation Group has been a success. We congratulate both those who had the foresight to plan the change and those responsible for implementing it.

The review process

18. The first indication that we—or anyone else outside the DTI—had that the reorganisation was to take place was in a letter sent by the DTI Permanent Secretary to our Chairman at the end of February 2006. The results of the internal review were implemented with a minimum of fanfare: the DTI did not even issue a press notice about the changes, and there was no written or oral statement in the House. The Permanent Secretary explained that "We did not feel it was significant enough to merit a parliamentary statement, written or otherwise, but certainly no disrespect was intended and absolutely no secrecy".[31] He assured us that "similar material [to the letter to our Chairman] was sent to a number of external stakeholders in the academic sector and in the business sector".[32]

19. The then Secretary of State accepted that "we should have" put the decision on the DTI website.[33] We agree that whilst this was a story of limited media appeal, it was an important change which should have been promulgated more widely. The new Minister for Science, Malcolm Wicks MP, gave us a commitment that there would be an announcement in advance of changes and a ministerial statement to the House, should similar reorganisations take place in future.[34] We welcome the commitment to make a ministerial statement to the House and we expect to receive earlier notification of any structural changes to the department which involve the OSI in the future.

The Technology Strategy Board

20. The Technology Strategy Board was transferred to the new OSI as part of the Innovation Group. Established in October 2004 to implement a recommendation made in the DTI 2003 Innovation report, and expanded on in the Science and Innovation Investment Framework 2004-2014, the Board's role is "to operate on a cross-Government basis, advising the Secretary of State for Trade and Industry on business research, technology and innovation priorities for the UK, the allocation of funding across these priorities and the most appropriate ways to support them".[35] It fulfils this role through the development and delivery of the Government's technology strategy and oversight of the DTI-led technology programme, which invests £200m a year in collaborative R&D projects and Knowledge Transfer Networks. The Board consists of a mixture of business people, venture capitalists, regional members, a Research Council Chief Executive and high-level representatives of the DTI and Government, including Professor Sir Keith O'Nions.

21. The Technology Strategy Board was granted a wider remit in the Science and Innovation Investment Framework: Next Steps document which accompanied the March 2006 Budget, to "stimulate business innovation in those areas which offer the greatest scope for boosting UK growth and productivity".[36] At the same time, it was announced that "plans for [the Board] to operate at arm's length from central government are being developed".[37] The timescale for this project envisages the new body being formally inaugurated in April 2007 and then fully operational by July.[38] It will also move from London to Swindon as part of this change. The period of appointment of the current members which was due to expire in October 2006 has been extended by a year to cover the period of change.[39]

22. Some criticism has been voiced about the effectiveness of the Board. When its first annual report was published in November 2005, commentators noted that "much of the strategy is still up for discussion" and "something is happening though few people seem to know quite what".[40] In March 2006, the Board was accused by an editorial in Research Fortnight of being 'amateurish'.[41] The Board implicitly acknowledged some truth in this criticism of its performance when it stated in its latest annual report that "we believe that during this second year the Board and the activities it supports have started to make a real impact".[42] We note that in the recent Budget the Government announced "a number of initiatives to strengthen the impact of the TSB", including targets for collaborative research with the Research Councils, £100 million for collaborative R&D, new innovation platforms, two new Knowledge Transfer Networks and the use of secondees from industry.[43]

23. We have raised concerns that there should be effective oversight of the Board itself as it moves to become an arm's length organisation with a current budget of £200 million to deploy. The Minister for Science did not answer this question directly but assured us that "in terms of the overall strategy, in terms of the broad priorities, we want quite a lot of ministerial engagement on this".[44] The quinquennial review of the Board is still some time away. We are anxious that it not be delayed because of the change in status. We recognise that the changes announced in the Budget arose from early conclusions of the Sainsbury Review (see further below), but we are not convinced that that Review has addressed this issue. The need to appoint new members in October 2007 should provide an opportunity for a review of the Technology Strategy Board's activities in order to inform decisions on new appointees. We recommend that this review be carried out before October.

3 Ev 95 Back

4 Ev 71-72 Back

5 Ev 95 Back

6 Speech by Lord Sainsbury, Innovating Regions in Europe Network, Stratford-upon-Avon, 17 June 2002 Back

7 Ev 71-72 Back

8 Q 84 Back

9 Ev 72 Back

10 Ev 71 Back

11 Ibid Back

12 Q 87 Back

13 Q 74 Back

14 Q 13 Back