RT HON ALAN JOHNSON MP, SIR BRIAN BENDER, PROFESSOR SIR DAVID KING AND PROFESSOR SIR KEITH O'NIONS

24 APRIL 2006

  Q80  Adam Afriyie: In effect, what has happened is that the innovations group has been taken over by or assimilated into the OSI? Is that technically what has happened?

  Alan Johnson: Not taken over, no.

  Q81  Adam Afriyie: Absorbed?

  Alan Johnson: Incorporated into.

  Sir Brian Bender: As the Secretary of State was saying in his earlier answer, one of the points is to bring together the push from the science end and the pull from the business end into the Office of Science and Innovation rather than having separate parts. One of the tests looking forward would be to ensure that the good work David Hughes did in building up relations with our Business Group is not lost by this change because the relationship between the Business Group and the Department and the Office of Science and Innovation will continue to be very important for getting the science push and the innovation pull in one place. That seems to us to be the next step, building on the success of the last three or four years.

  Q82  Adam Afriyie: I did not hear any statement in the House of Commons; I did not see a written statement; the website did not say anything about it. Why all the secrecy?

  Alan Johnson: I do not think there was secrecy about this. It was a departmental issue. We announced it as soon as we had made the decision. I do not know whether we put it on our website. We should have done.

  Sir Brian Bender: The purpose of writing to the Chairman of this Committee and the Chairman of the Trade and Industry Committee and the Lords Science and Technology Committee was to put into it the parliamentary domain as soon as the decision had been taken. 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. Similar material was sent to a number of external stakeholders in the academic sector and in the business sector.

  Q83  Chairman: I do not think it was a question of a slight. We were very grateful for the letter you sent us. This seems to be such a significant change in terms of the direction, admittedly moving forward. I firmly accept the point that you are making. Not to have made more of it does not seem to be in line with the way the government operates.

  Alan Johnson: We have been hiding our light under a bushel. It was significant but not significant enough for a parliamentary statement, I would suggest. We made sure that those people who needed to know and all the stakeholders knew very quickly. That was done. I have not checked but maybe the press and the media just did not pick it up as a story but it was there. I thought it was quite a significant story but we cannot insist that they report it.

  Q84  Adam Afriyie: You have mentioned that there will not be any rebudgeting which I am sure is reassuring in some quarters. What will the changes mean in practice for the personnel within the OSI or the former two groups? What changes in personnel will there be or is it simply that the existing groups will work in exactly the same way, just under a different umbrella? Once you have made these changes, do you anticipate further changes that we are not aware of at the moment?

  Alan Johnson: The principal change is the key alliance of the DG for science and innovation so we have one DG now responsible across the whole piece and the recruitment of a Director of Innovation which we are currently advertising for.

  Sir Brian Bender: I hope it goes without saying that David King remains head of the Office of Science and Innovation and the government Chief Scientific Adviser. That is not altered by this. Within what we are talking about, there are a bit over 140 posts for people who were in the Office of Science and Technology and around 250 who were in the Innovation Group who are now part of the Office of Science and Innovation. We are recruiting for a Director of Innovation who would report to Keith O'Nions, who would be very much focused on the business pull side of things. It is probably a bit early to say, although Keith may want to add something, whether the working methods simply by bringing people together can squeeze out any inefficiencies or any particular focus. That is something that needs to be thought about as we look forward. The other element which is relevant to this was the statement as part of the Chancellor's Budget speech about the possibility or prospect of the Technology Strategy Board, which is at the moment staffed from the Department, becoming more an arm's length body. As we work through what that may mean, that would have implications for the staffing.

  Q85  Adam Afriyie: Sir Keith, you now take over as director general. Are there any further changes in personnel or any other reorganisations in the back of your mind? Are you very happy with the way it is at the moment or are there changes on the horizon?

  Professor Sir Keith O'Nions: The present situation offers a great opportunity in having the budgets for innovation and science alongside. I expect that this will produce a synergy between them. The Research Councils are much involved in knowledge transfer and progressively in innovation. It will make for a stronger, more complete argument in the Comprehensive Spending Review and it is an important part of it. In terms of the organisation in the area for which I am now responsible, it does not change the fundamental relationship between David King and myself. Fundamentally, that is the same as it was in the OST. It is a very strong relationship. Within the combined group of what was the science base innovation groups, we are in the process of appointing a Director for Innovation. We are looking for somebody that complements with overall skills in innovation, a strong person from business. There are some vacancies within the Innovation Group which have come along in a natural way, and which we will be filling, but that is it for the foreseeable future. My job is to put together the strongest possible team, particularly in a year when we are making the best case we can for future support of these areas as part of the Comprehensive Spending Review.

  Q86  Adam Afriyie: Are you sure we will not see you again, in the next six months or a year, saying that there are further changes?

  Professor Sir Keith O'Nions: Not all of these decisions are in my gift. If there are other changes, I am not anticipating them. Work is under way to understand what the options are for putting the Technology Strategy Board at arm's length and as yet we do not know fully what the implications of that might be.

  Q87  Chairman: I am a little unclear as to who initiated the review in the first place. Why was that review undertaken? Were you unhappy with something? What were its main findings and why has it not been published?

  Alan Johnson: The Permanent Secretary and I instigated the review. I was new; Brian was even newer. We were struck by the fact that whilst over half of our budget was science it was still the case that the DTI were not perceived as being responsible for science. Science is an element of everything we do but was not seen as such. We were looking around for how we could tackle that. That is not just about this organisational change. There is a lot more we have to do to deal with that misconception. Certainly there had been a piece of work done before that we decided to revisit. We commissioned the Gaskell Review as a result of that. In terms of why you cannot see it, I think you should see it if you want to.

  Sir Brian Bender: It was, like any such report, produced for internal purposes. I would be a bit concerned if it was intended for publication because it was not written for publication but equally, if the Committee wish to see it, then the Committee can see it.

  Q88  Chairman: Could we have sight of it on a confidential basis?

  Sir Brian Bender: Absolutely.

  Q89  Dr Turner: You say that the OSI will bring together science push and innovation pull more effectively. Can you expand on that a little bit? Why do you feel it is really necessary and how do you think that this reorganisation is going to make that work better?

  Professor Sir Keith O'Nions: The notion that investment made in science or the research base is pushing new knowledge and transferring knowledge into business against business defining its own requirements—i.e., user defined requirements—is to the first order quite a good way of describing it. Because those things need to be married well across business sectors, whether they are traditional sectors in chemistry or pharmaceuticals or whether they are newer sectors in creative industries, for example. There is an argument on that push/pull basis for putting these together. People who have analysed this in a lot more detail, as to how the intricacies of that push/pull relationship work, come to the conclusion that it is rather more intertwined than simple push/pull and this is often called "open innovation". Because it is more intertwined in relationship, I think the argument is probably even stronger that these things to be in one place because both are trying to get knowledge out there, to meet user defined requirements and that relationship is going to be much easier to deal with if it is in one place. I think the argument is quite a strong one.

  Q90  Dr Turner: What obstacles do you see?

  Professor Sir Keith O'Nions: The clear obstacle would be if budgets were threatened. The Secretary of State has given his undertaking that the budgets around the science and technology strategy are secure so that removes that threat. The other threat is simply our inability to do it properly and that is my job so it depends on the level of confidence that you have in my response to the last two questions.

  Q91  Dr Turner: There is no answer to that, is there?

  Professor Sir Keith O'Nions: Not a polite one.

  Q92  Dr Turner: David, on 15 February when you were before us, you said there was still a lot of work to be done on innovation and the wealth creation agenda. Was the creation of the OSI part of this work? What else do you think needs to be done?

  Professor Sir David King: The whole science innovation and wealth creation agenda is enormously important. There is still a big patch of work to be done in sorting out how we move from the current opportunities that have been largely thrown out by the fundamental research, the university research, in the form of small, high tech companies and pulling those opportunities into the large scale industries where big wealth creation is possible. There is still an enormous amount of work to be done. In other words, I still stand by the point that I made. I feel that we now have a situation which is different from what we have 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. I think that was a prerequisite for moving this whole agenda forward.

  Q93  Dr Turner: Given that the OSI is very much more embedded in the DTI than the OST apparently was, seemingly to the outside world, how do you think it is going to affect the over-arching responsibilities that you for instance have, David, to review and bring together science across government?

  Professor Sir David King: Your question is a good one. As head of the Office of Science and Innovation I report to the Secretary of State but also to the Prime Minister so I have that dual responsibility. Within the office we still have the transdepartmental science and technology team and within that team we seek science and innovation strategies from each government department. This is by way of reminding you that while £3 billion is the budget for the Office of Science and Innovation through the Research Councils there is another £2.5 billion approximately that goes into research and development through government departments. Part of my function is to oversee the proper use of the money in those departments and this includes overseeing a science and innovation strategy. The science and innovation programme we are now discussing also operates in other government departments. I also see my role, despite my keenness to see this embedded through the Secretary of State and the DTI, as the protector of those parts of the Science Budget that would not necessarily be seen to deliver on the wealth creation agenda.

  Chairman: I am going to come back to your role because I think it is important to see where everybody fits in together.

  Q94  Adam Afriyie: Sir Keith, you said that the Office of Science and Innovation would be more effective with communication and coordination. What was the problem in the past?

  Professor Sir Keith O'Nions: I do not think you should look at it like that. Sincerely, if you go back, let us say, five years and look at the success of the Innovation Group and the establishment of the Technology Strategy Board and what David Hughes achieved there, that has moved that agenda along at quite a pace. In terms of the Research Councils, knowledge transfer and innovation have moved way up the agenda in the performance management of the Research Councils. As I told you the last time I was here we have a group under Peter Warry looking at how we can increase their impact and hopefully we are trying to make a step change there. You have two things that have been on an upward rising trajectory. There is nothing wrong. The question is how much further and faster can we drive this extremely important agenda which not only grips the Government Chief Scientific Adviser but is now at the centre and a core part of the DTI. What was wrong? 15 years ago, we just were not doing this stuff. It is a matter of how quickly it comes right.

  Q95  Adam Afriyie: It is a matter of evolution, a bit like metrics and the use of them.

  Professor Sir Keith O'Nions: That is another issue.

  Q96  Adam Afriyie: What will be the role of the Technology Strategy Board within the OSI?

  Professor Sir Keith O'Nions: In the near term, it will continue the excellent work it has been doing in terms of defining on behalf of business the optimum innovation platforms and programmes, including knowledge transfer networks and knowledge transfer partnerships. That will continue. It is very important that myself and others in the DTI make it clear that the changes that have taken place maintain business as usual for the Technology Strategy Board. In parallel to that we are looking, following the budget, at options for an arm's length body but this has to be to reinforce the independence and the impact of the user defined research and technology strategy.

  Q97  Adam Afriyie: Why do you feel it necessary to have it at arm's length if it has such a key function?

  Professor Sir Keith O'Nions: Let me give you a personal view. It is extremely important, if we are going to get the best impact from our few billion pounds a year in the Research Councils and the interventions we make in the Technology Strategies, to have a clear user defined strategy—ie, business has given its best view of where these financial interventions will have best effect, rather than somebody like me sitting in Victoria Street trying to think what they should be. A clear independence of that process is crucial for us to get the best value for money.

  Q98  Adam Afriyie: You mentioned the business involvement in setting the strategy but how will the activities of the Board be reviewed and evaluated? Will that also be an independent function?

  Professor Sir Keith O'Nions: The Board is 18 months old and we have not undertaken a quinquennial review of its activities. It is a non-departmental public body formed as an NDPB advisory board. The normal practice is, on a cycle, to review the activities of all NDPBs in an independent way. After 18 months we would not be expecting to undertake a very major, external review of its function, but we would expect to do that for any NDPB, whether it be a Research Council or any other body.

  Q99  Adam Afriyie: When it does happen, whenever that may be, do you expect it to be independent?

  Professor Sir Keith O'Nions: I would expect to have an independent input into it. Any decision made for advice to the Secretary of State and the Secretary of State owns the NDPBs under the aegis of the DTI. Yes, that would be normal practice in my experience.