H.M. TREASURY NEWS RELEASE

HM Treasury News Release

136/99

27 August 1999

NEW PUSH TO COMMERCIALISE GOVERNMENT RESEARCH

Proposals for increasing the commercial exploitation of science conducted in Government laboratories are at the forefront of an independent report published today by the Government.

"Creating Knowledge, Creating Wealth" by John Baker of Medeva plc calls for commercial exploitation to be given a much higher profile in the Government's research establishments, but points out that industry also needs to take a closer interest in the commercial opportunities in Government laboratories.

Its key recommendations include:

* overcoming the Whitehall risk avoidance culture that inhibits entrepreneurial behaviour;

* giving Government laboratories greater financial and management freedoms;

* reforming civil service conduct rules so as to reward scientists for exploiting their work.

Financial Secretary Stephen Timms said:

"It is vital that the money we spend in Government laboratories creates not only new knowledge but also jobs and prosperity for Britain.

"We need to foster a more entrepreneurial spirit, building on the excellent work that is already going on in some of the laboratories.

"A useful start has already been made with the financial incentives the Treasury has given to Departments in its 'Wider Markets' guidance, but there is more to be done. I am grateful to John Baker for pointing the way forward in his report."

Science Minister Lord Sainsbury said:

"John Baker's excellent report will add much to our efforts to maximise the value that this country gets from our science base. I believe that innovation has to be the bedrock for the modern UK economy and that the scientific research done in Government laboratories has a great deal to contribute. He has recognised the importance of the knowledge transfer task.

"This is not about making money for the government but about maximising the contribution to the nation's jobs, prosperity and quality of life, without compromising the vital independent advice that these laboratories provide.

"These laboratories and the scientists who work in them are an important resource for Government. We recognise that to get the most out of this resource we have to be clear about our objectives and give appropriate incentives. These are all factors that we will take into account in considering our detailed response to this report."

John Baker, producer of the report said:

"I am delighted to have helped the Government identify ways of increasing the exploitation of research carried out in its laboratories . I saw much good practice during my study, but more could be done. Above all, Government has to recognise that commercialising research is not a risk-free business.

"If it wants to see the successes in terms of greater prosperity and quality of life - it needs a more mature attitude to risk-taking which tolerates the inevitable failures. That means the rules have to be changed - and be seen to change - so that laboratories and their scientists can manage risks and also be allowed to reap the rewards."

Public sector research establishments spend £2.2 billion a year on research for the Government, but the report says that they need to do more to turn their research discoveries into wealth creating products. It argues that fear of criticism by the National Audit Office and the Public Accounts committee inhibits commercialisation, and the civil service management code prevents many Government scientists from making money out of their inventions, even though society and the economy would benefit too.

The Government will publish a detailed response to the Baker report in the autumn.

NOTES FOR EDITORS

1. "Creating Knowledge, Creating Wealth" was commissioned in February 1999 by the then Financial Secretary to the Treasury, Barbara Roche, and Science Minister Lord Sainsbury following a commitment in the Competitiveness White Paper. It was produced by Chairman of Medeva plc John Baker.

2. In 1997/98 the gross expenditure on research and development in natural sciences and engineering performed within Public Sector Research Establishments (including Government departments, Research Council Institutes, the NHS, police forces and local authorities) was £2.2 billion.

3. The status of public sector research establishments (PSREs), in common with other Non-Departmental Government Bodies and Executive Agencies, is reviewed every five years. The majority of the PSREs considered in this study were last reviewed in 1996 (the so-called Prior Options review).