A d v ic e Pa p er (09 -13)

S E P T E M BE R 2 0 0 9

SETTING SCIENCE AND TECHNOLOGY RESEARCH FUNDING PRIORITIES:

a response to the House of Lords Science and Technology Committee

Summary

Science and technology in the UK is currently at a pivotal moment in determining its future.While our
science base is at present second only to that of the USA in scope and output, major investments and structural changes by other countries mean that significant changes are required to maintain the UKs position.

There is a strong economic case to be made for Government support in science funding.The development
of knowledge capital is the only major competitive advantage for nations such as the UK and its maintenance and development will be an imperative for a strong and dynamic economy. Further, analyses show that long-term returns on investment in research are higher than most other forms of public investment.

However the role of the science base in preparing for an unknown future, and the developing possibilities
and ideas to address future challenges to the human ecosystem, must also be recognised as vitally important. Scientific research is also an area where the UK has shown itself able to make a major contribution to humanitys understanding of the world and itself, and as such is an important attribute of national identity.

It must be recognised that fundamental research, targeted programmes and translational activities form a
research continuum.To divert funds away from fundamental research in favour of targeted programmes now will mean that the continuum will not be fed by either ideas or creative skills for the future.

There are three basic functional roles in stimulating and funding a creative and useful science base: a body
that funds highly creative research, maintaining excellence and diversity; a means of maintaining thematic research priorities to address key challenges and develop pre-competitive research; and means whereby government is able to make clear long term commitment to particular technology areas in order to stimulate investment from private companies.

Research Councils should redirect their efforts towards their fundamental mission of stimulating and funding
the highest levels of creativity.This is currently being undermined by the increasing pressure on Councils to deliver short-term benefits.

The role of Government is twofold: to ensure that there are intermediary processes able to deliver thematic
programmes of research that deliver on specific policy objectives; and to create intermediary functions to stimulate the take up of pre-commercial opportunities created by fundamental research.

The Government also has a role to play in stimulating private investment, by demonstrating sustained
commitment through setting long term national priorities, such as targets for energy and green technologies, while allowing flexibility in how these are achieved.This approach should lead to more effective integration of all parts of the research continuum.

We have been impressed by the American model of the National Academies, which can call on a vast range
of expertise to advise government on science and suggest that consideration should be given to formally utilising the strengths of UK academies.

It is important that the UK engages effectively with the European dimension to make maximum use
of the opportunities the EU offers and the leverage it provides to have a greater impact on the global stage.
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Introduction
1 The Royal Society of Edinburgh (RSE), Scotlands National Academy, is well placed to respond to the invitation from the House of Lords Science and Technology Committee to inform its inquiry on setting science and technology research funding priorities. It has distinguished Fellows involved in a wide variety of areas of scientific research, including medicine, physics, chemistry, biological sciences, engineering and technology. In this response we address what we believe to be the key high level issues that must be considered by the UK Government when setting research funding priorities for science and technology.We are also sending a copy of the Societys report Picking Winners or Responding to Demand 1, which was a response to a recent call for evidence from the Innovation, Universities, Science & Skills (IUSS) Committee, and which also addresses issues relevant to the House of Lords Committees inquiry. The present is likely to prove a pivotal moment for UK science and technology.The global competition for excellence in science and technology, as the key economic and social driver for the future, is becoming more intense (Box 1) and the current financial crisis has created overwhelming pressure to make severe funding choices.The UK is fortunate at this juncture in having made significant increases in science funding in recent years.This has complemented the development in recent decades of highly competitive processes that have fostered an ethos of excellence that has made our science base the most productive and cost-effective in Europe and, globally, second only to that of the USA in its scope and impact. However, given the relatively low proportion of GDP that the UK invests in science, and the major investments and structural changes being made by other countries, it would be dangerously naive to suppose that these achievements can be maintained without significant changes. Box 1 Fast developing economies such as India and China have been investing heavily in science, producing a rapid expansion of research output. The Obama administration in the USA has provided a short-term injection of major funds for science programmes and the US Congress has written (June 2009) to the US Academies of Science and Engineering and the Institute of Medicine requesting that they collaborate to identify the actions that the US should take in maintaining the excellence in science and education that will be required to meet national goals in the 21st century 2. Both Germany and France are instituting structural changes designed to improve the efficiency of their science bases and Korea and Singapore continue to increase investment in their technologically specialist research bases.

The present dilemma

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The rationale for Government support The economic case

4 The immediate, most persuasive rationale for science and technology funding in Government eyes is the economic one. In a global economy, the only major competitive advantage for a country where labour rates are high by international standards is through the availability of knowledge capital, of ideas.The vital source of many such ideas comes from research, particularly in science, engineering and technology, and through the capacity of those undertaking research at the international cutting edge to rapidly anticipate and import new ideas no matter where they originate. Should business primarily fund this research? International evidence is very clear on this. It will not. A publicly funded science base, and in particular the people whose development it supports, is a key element of the national intellectual infrastructure on which business depends. If it is not provided by the state at a high level that is excellent by international standards, business will simply go elsewhere to find it.

1 http://www.royalsoced.org.uk/govt_responses/2009/sci_eng.pdf 2 http://democrats.science.house.gov/Media/file/AdminLetters/BG_RH_AcademyOfScience_6.22.09.pdf. See also the Statement of Norman R.Augustine before the Committee on Science of the US House of Representatives, October 20, 2005.

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6 There have been numerous analyses that show the returns on investment in research to be high. One such recent analysis suggests that research into cardiovascular sciences produces a return of 39% per annum over 30 years 3. It is important to note however that such returns are not immediate. In cases such as that above, the time-to-benefit was an average of 17 years.The seeds of current benefit were generally sown many years before, and the precise route to benefit was not clear when the seeds were sown. If Government prioritises research where the lead time to benefit is predictable and short, by implication ones where market applications are obvious and returns relatively low, it risks jeopardising the harvest of greater returns from scientific discoveries that unexpectedly open up new and powerful possibilities. This does not mean to say that we should sit idly by waiting for the economic fruits of basic research to reveal themselves. Mechanisms that scan the output of basic research for application are crucial, but we should not measure its utility on too short a time frame. Preparing for the future 8 Another fundamental role of the science base that is not adequately recognised is to create the possibilities and ideas, and the scientists and citizens who embody them, that an unknown future may need.Thirty years ago, scientists who studied climate change were regarded as harmless but irrelevant. However, serendipitous investment in their work revealed processes that we now recognise as threatening the future of the planet and their successors are playing a crucial role in assessing how we need to adapt. 9 In this regard, it is important to recognise that the planetary-scale challenges to the human ecosystem that are coming into focus may make demands on science and technology that far exceed the challenges of economic growth.At the same time we must not assume that we necessarily know what all those challenges will be. Energy, agricultural production, water supply and infectious disease are already on the list, but many others could join them. It is vital that the science base retains the diversity and vitality needed to address novel issues as they arise. It must not have objectives defined only in terms of short-term economic benefit.

Box 2 Fundamental work on the biochemistry and cell biology of protein kinases was of no commercial interest for 25 years. Now, one in three targets being pursued by the pharmaceutical industry is a protein kinase and drugs like Gleevec have revolutionised the treatment of chronic myeloid leukaemia.

The cultural rationale 10 Finally, we do not apologise for arguing that the urge to understand nature and our place in it is profoundly human and that Britains sense of identity is partly conditioned by the many towering scientific contributions it has made to that understanding. A nations sense of what it has and continues to contribute to human understanding is crucial to its social and political vitality. We should not underestimate it.

Although it is not credible that there are policies for the science base that would help in lifting the economy from recession in the short term, we argue that there is a longer term imperative to rebuild the manufacturing capacity of the UK economy. In a context of increasing scientific and technological excellence in many countries, and an increasing shift by them to policies for high value, knowledge-based production, maintaining or increasing funding for the science base and improving the structures through which it operates must be important priorities.

The research continuum

11 As pressures on resources grow, the long running debate on the balance of funding between targeted research, to address immediate concerns, and fundamental research, to maintain long term scientific vitality, intensifies. In reality, research is a continuum that cannot be easily subdivided according to whether it has short- or long-term goals. Fundamental research, targeted programmes and translational mechanisms for pre-commercial and commercial research are parts of a continuum in which fundamental research finds its way into application, though on highly varying timescales.

Academy of Medical Sciences Medical research: whats it worth? (November 2008)

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12 The public expectation for government policies to produce tangible results through targeted research in the short term is understandable. Responding to this demand by diverting funds away from fundamental research in favour of targeted programmes that depend on earlier fundamental research, ensures that the continuum pipeline will not be fed, either by ideas and concepts or the highly transferable and creative skills that come from doing fundamental research.A farmer does not forego planting next years seed because of his enthusiasm to sell this years crop. Moreover, major innovations that create new possibilities, new markets and new solutions often arise from quite unexpected sources (e.g. Box 2). We are profoundly concerned that the Research Councils decisions to require applicants to identify potential economic value in their work will lead proposers systematically to skew their objectives in favour of the short term, perversely undermining the creativity of the research base.We cannot afford to undermine the long-term creativity of the research base.We will go on to suggest (paragraphs 16-19) that the Research Councils dilemma in balancing funding for fundamental understanding against short term economic benefit should be addressed by institutional changes. 14 In practice such functions interact strongly.Those actors in domain a) will be influenced in their proposals by priorities in b) and c), whilst investors in domain c) will be influenced by the level of excellence in domain a), and so on. 15 In an economic climate in which it will be imperative for the UK Government to make most effective use of its budgets, it must ensure that the structure of responsibility is clear, that the responsible bodies have attributes that are well-designed to discharge their function and that modes of operation are efficient in supporting the research continuum.We now consider how this might be better achieved in the UK setting.

Stimulating and funding creative research the role of Research Councils

16 Research Councils have been increasingly expected to play both their traditional role of stimulating and funding research excellence and in addition promoting the exploitation of research findings. They are expected to stimulate contributions to wealth generation by combining both push from the science base and somehow to simulate pull from markets.At the same time, as research budgets for government departments have fallen, Research Councils are expected to deliver targeted research to address governmental priorities4. 17 As a consequence, the Research Councils now sprawl across the different functions in paragraph 13 in a confusing and inefficient fashion. By presenting a mixed message to applicants, of excellence on the one hand and short-term applicability on the other, we believe that they fall short in their principal role of stimulating and funding the highest levels of creativity, whilst being inappropriate proxies for market pull. 18 We suggest that Research Councils should be re-directed towards their fundamental mission, of stimulating and funding the most creative science at the highest international levels of excellence. Highly creative scientists in an internationally competitive science base are the bedrock upon which the benefits summarised in paragraphs 4-9 are based. 19 We also suggest that the current plethora of Research Councils and other funding organisations leads to complexity that hampers the ability of research organisations to drive forward their activities effectively.This can be particularly damaging where cross-disciplinary responses across the research continuum are required to meet some of the major challenges (see Box 3).

Key functional roles

13 We suggest that there are three basic functional roles in stimulating and funding a creative and useful science base: a) A body that funds highly creative research, irrespective of the position of that research in the continuum in paragraph 11. Its purpose is to maintain the excellence, diversity and creativity of research and to ensure that the UK remains a major attractor for international researchers. b) A means of setting thematic research priorities on issues of current importance such as for example energy technologies or meso-scale climate forecasting. c) A means whereby government commits itself to sustained, long term objectives for a particular economic sector (such as renewable energy, pharmaceuticals or aerospace) or public function (such as the renewal of national infrastructure) that gives private companies the confidence to invest in the expectation of long term financial returns and the incentive to pull strongly on the research base.

4 For example, the proposed 2010-2015 BBSRC strategic plan lists Bioenergy/Biorenewables and Food Security as two of their three priorities. These appear to be driven by Central Government thinking rather than scientific thinking.

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attempt to cover this role. In Germany it is a role undertaken by Frauenhofer Institutes and in the USA by bodies such as the National Institute of Health. It represents a serious deficit in the UKs capacity to capitalise on the excellence of its science base. One option to fill this gap would be to expand and re-define the role of the Technology Strategy Board.

Box 3 While the MRC is the main funder of medical research, there is significant cross over with the BBSRC. However the BBSRC continues its policy of excluding applications related to disease and therapeutic research.This causes important and highly translatable opportunities to fall between two stools.Almost all science operates by perturbing the equilibrium and observing outcome, in human biology this generally equates to studying mechanisms of disease.The best way to understand health is to study disease. Similarly, the artificial demarcation between BBSRC and MRC frequently separates research from its natural test-beds and partnerships. For example, chemoinformatics, bioinformatics and network biology are vital core technologies for drug design and discovery yet these are not typically funded by the MRC as they are seen as too fundamental and as big-data platform technologies that belong to the BBSRC camp. Thus, these technologies are impeded from properly articulating with some of their most practical beneficiaries (the Biotech and Pharma industries).

Placing bets: the role of Government in stimulating private investment

22 The so-called valley of death in UK research policy has historically been the relative weakness in translating scientific and technological discovery into profitable application.With notable exceptions, such as pharmaceuticals and aerospace, there has been a lack of pull from industry on the science base. Attempts to replace this by push from the science base, though laudable, cannot be of a scale adequate to make up for the deficit.We suggest that some of the answers lie in the Governments own hands. 23 We suggest that sustained commitment by Government to develop business strengths that build on science and technology capacity and that are well-aligned to national needs is the way forward. It should do so by setting out high level priorities that give private companies the confidence to invest for the long term. Long term objectives and targets for energy and green technologies are obvious examples of the potential for such market signals. Other tools to stimulate activity include the use of public procurement (where the US SBIR scheme is an obvious model), taxation policies and regulation, including planning regulations. 24 Such a context then defines the role for missiondriven research in which Government sets a very high level direction but allows flexibility in how this is achieved.There are numerous examples of where such an approach has brought great success, such as the space industry in France, wind technology in Denmark and IT in the USA. 25 As referenced in our response to the IUSS Committee in April 2009, the Council for Science and Technology has suggested a process through which technology bets could be placed5.They should be in areas where the UK has world-leading capacity; which have large actual or potential growing global markets (in excess of 100 billion); where the UK has the businesses, structures and people able to take developments to market; where there are strong, positive societal benefits; where technology risks are low and where government is able to intervene, not merely or necessarily through funding, but also through regulation.

The role of Government Intermediary bodies

20 We see the direct responsibilities of Government as twofold. Firstly to ensure that there are intermediary processes able to drive thematic programmes of research that deliver on specific policy objectives. Much of this was undertaken through Departmental research and through Research Institutes such as the Hadley Centre, although we believe that this worldleading facility has been recently under threat because of cuts in the research budget of the sponsoring Department. Government needs seriously to consider how policy-related research can be better stimulated and exploited. It has recently suggested that the advice capacity of universities should be much better used but slicker mechanisms to define and procure policy advice are necessary to replace current ad hoc and inefficient contracting processes. 21 Secondly we need intermediary functions to stimulate the take up of pre-commercial opportunities that have been created through fundamental research.There is no substantial equivalent in the UK of bodies to drive pre-commercial opportunities derived from fundamental research, although Research Councils
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Strategic decision making for technology policy. Council for Science and Technology, November, 2007.

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Making choices?
26 In the model we have set out above, choices are not made at the fundamental science end of the research continuum (other than through the excellence of the research proposal), where they risk vacating areas that might become crucial because of unexpected future discoveries (we believe that in a modern multi-disciplinary world critical diversity is as important as critical mass).They are made at the applications end of the continuum through the identification of major priorities as in paragraphs 22-25 above. 27 Such an approach is also one in which it is in companies interests to engage with the science base, as happens for instance with Rolls-Royce Aerospace through their University Technology Centres.That engagement is crucially important if greater and more diversely articulated links are to be created between industry and the science base, and because it is in the self-interest of industry to create them, they are likely to be much more effective than those driven from the science base and from Research Councils. 28 It is also important to recognise that scientists decisions about what to study are not only questions of scientific tractability but also related to the perceived importance of an issue. Given the potential of the environment that we have attempted to sketch out, there is likely to be considerable convergence between the ideas of priority at both ends of the research continuum. Indeed, evidence from the Netherlands indicates that the fields of blue skies applications usually overlap strongly with the thrust of directed research programmes, except that the former tend to be more creative in their approach, in not being so constrained by prior assumptions. 29 A further advantage of this suggested approach is that it has the potential to move away from the zero-sum game which assumes that the balance between basic and applied research must be struck or changed within Research Council funding to adapt to new political realities. Incentivisation by Government of private investment provides a crucial additional element of funding. 30 We also see no reason to revisit the widely misunderstood Haldane Principle, that the science community, rather than government or administrators, should choose what research should be funded on the basis of excellence, whilst another, neglected aspect of Haldane's recommendations should be observed, that Government has the responsibility to identify high level priorities. In our model this translates into a means of ensuring interaction between the two ends of the research continuum.

A national academy function?

31 We have been impressed by the functioning of the US National Academies that were chartered by Congress in 1863 to advise Government on matters of science and technology.Whereas UK Government and Devolved Administrations have their science strategy bodies (e.g. CST for UK Government; SSAC for the Scottish Government) these bodies cannot call on the vast range of expertise that are available to UK academies (the Royal Society, the Royal Academy of Engineering, the Academy of Medical Sciences, the Royal Society of Edinburgh).The House of Lords Committee might consider whether there are ways of more formally utilising the strengths of these bodies on major strategic issues.

The role of charities

32 Major charities have traditionally provided the lions share of funding in several strategic areas, for example on infection and immunity (the Wellcome Trust), cancer research (Cancer UK) and cardiovascular research (British Heart Foundation). In these areas charities contributions have been significantly bigger than that of the MRC.The current financial downturn has significantly affected charities and we are already facing major funding crises in areas of strategic importance for national wealth creation. This must be taken into account by policymakers when considering government funding priorities.

UK in Europe
33 An element that has been missing from debates on policy for science is that of Europe. In the last few years there have been serious attempts to reinvigorate the concept of a European Research Area, which could provide a platform from which national research efforts could exert greater leverage. It is important that the UK engages more effectively with the European dimension to maximise the benefits that it has the potential to offer member states.

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Additional Information
In responding to this consultation the Society would like to draw attention to the following Royal Society of Edinburgh responses which are relevant to this subject:

The Royal Society of Edinburghs submission to the House of Commons Science and Technology Committees Inquiry into UK Science and Europe: Value for Money (January 2003) The Royal Society of Edinburghs submission to the House of Commons Science and Technology Committees Inquiry into the international policies and activities of the Research Councils (April 2007) The Royal Society of Edinburghs submission to the European Commissions Green Paper, The European Research Area: New Perspectives (August 2007) The Royal Society of Edinburghs submission to the UK Parliaments IUSS Committee, Putting Science and Engineering at the Heart of Government Policy (January 2009) The Royal Society of Edinburghs submission to the UK Parliaments IUSS Committee, Supplementary Evidence for Science and Engineering at the Heart of Government Policy (April 2009).

Consultations Officer, Ms Susan Bishop (evidenceadvice@royalsoced.org.uk). Responses are published on the RSE website (www.royalsoced.org.uk).
Advice paper (Royal Society of Edinburgh) ISSN 2040-2694

The Royal Society of Edinburgh (RSE) is Scotlands National Academy. It is an independent body with a multidisciplinary fellowship of men and women of international standing which makes it uniquely placed to offer informed, independent comment on matters of national interest. The Royal Society of Edinburgh, Scotland's National Academy, is Scottish Charity No. SC000470
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