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6 February 2017

Editorial: The future of science in a post-Brexit world

Westminster Higher Education Forum held a conference on Thursday inviting researchers, executives, legal experts and members of parliament to discuss the future of innovation in the UK.

Author: Thierry Heles, editor

Optimism is surely not the mood one would expect at a conference about the future of science and innovation funding in the UK following Brexit, considering the university sector is a net beneficiary from EU funding. Yet several speakers at Westminster Higher Education Forum’s event last Thursday at the Royal Society of Medicine were keen to point out that Brexit could be an opportunity.

Many of the speakers pointed to the Industrial Strategy Challenge Fund as a reason to be optimistic. The fund, announced by the government in November 2016, aims to capitalise on research strengths in areas including artificial intelligence and biotechnology. It is expected to provide £2bn ($2.5bn) in additional R&D investments per year by the end of the current parliament in 2020.

Faye Taylor, head of programs at University Alliance, an association of 20 institutions in Wales and England, was the first speaker of the day to pick up on the fund, although she also cautioned that the Brexit vote revealed clear tensions and divisions across society, leading to a narrative of a “disunited” kingdom.

Another reason to be optimistic, according to Taylor, were the examples of universities in Teesside and south Wales that have successfully attracted new businesses following the decline of the steel and coal mining industries in their regions.

Tim Hart, managing consultant at Oxford University’s knowledge transfer consultancy Isis Enterprise, meanwhile underlined the importance of the Newton fund, an initiative supplying a total of £735m in research funding between 2014 and 2021. Managed by the Department of Business, Energy and Industrial Strategy, the Newton fund is delivered through 15 UK partners in collaboration with 16 partner countries. 

Hart also pointed out that innovators and entrepreneurs like change, and the unique challenges posed by Brexit will undoubtedly lead to innovative projects – an idea supported by Rebecca Lumsden, head of science policy at trade organisation the Association of the British Pharmaceutical Industry. Lumsden emphasised that people had to look at the opportunities the changes would bring.

These opportunities might be plentiful – the UK is currently the third-largest biotech cluster in the world, despite relatively low budgets in the past. The minimal spend on research councils has brought in many global investments that Lumsden was confident would not simply disappear come March 2019, when the UK is expected to leave the EU officially.

Kevin Baughan, chief development officer at innovation agency Innovate UK, warned that businesses in the UK currently were not good at tapping into science research. This was a problem on several levels, he said, because technology fuels itself, constantly building on previous discoveries, and for the country to continue to thrive, knowledge transfer between universities and corporations needed to increase.

Baughan also underlined the importance of the Industrial Strategy Challenge Fund, but noted a strategic change closer to home – elsewhere earlier that morning, Mark Walport was announced as the first chief executive of UK Research and Innovation, a new organisation uniting Innovate UK, the Higher Education Funding Council for England and the country’s seven research councils.

Not all speakers shared the optimism, however. James Cross, a patent attorney and partner at law firm Maucher Jenkins, showed statistics indicating the UK is far behind other European nations in terms of patent filing.

There are factors that skew the number, Cross said, such as Sweden-based telecoms equipment manufacturer Ericsson being a prolific patent filer. Furthermore, research funded by a foreign company – as is the case often in the UK – counts towards that country’s number rather than the UK’s patents.

However, even taking those mitigating circumstances into account, the European Patent Office’s annual report from March 2016 showed the UK was lagging.

Initiatives such as Patent Box – a policy that offers a 10% reduction in corporation tax for income through patents – mainly benefit large multinationals rather than supporting innovation from startups. John Maguire, chief financial officer at Intelligent Energy, a fuel cell technology spinout of Loughborough University, agreed with this notion, claiming Patent Box was a byzantine and complex process that was of no use to early-stage companies not yet generating a profit.

The issue, Cross continued, is that UK policy does not actually address innovation, at least not in the form of patents. He was challenged by an audience member from Cambridge University’s tech transfer office Cambridge Enterprise, who called attention to the fact that British patents might be of higher quality due to the due diligence conducted by tech transfer offices before filing. Cross conceded that the quality of patents was difficult to ascertain, but the notion that other countries’ patents may not be of a similar quality was equally tough to prove.

The uselessness of Patent Box to startups and spinouts, said Lou-Davina Stouffs, research and program manager of Innovation Growth Lab at innovation charity Nesta, is not helped by the lack of evidence as to which policies work and which do not, an industry-wide problem in the UK.

The government’s innovation policy has generally not changed over the years, and where it has, there is no evidence for how it has improved matters.

Despite efforts in sectors such as fintech to create regulatory sandboxes that allow entrepreneurs to test new technologies, the results are not actually analysed so nobody knows how effective those sandboxes are and how they could be improved.

Martin Szomszor, consultant data scientist at research software producer Digital Science, similarly struck a cautious note. The EU, Szomszor said, was the most frequent research partner in the UK’s international network, and collaboration with Germany and France was increasing at a faster rate than cooperation with the US.

Proximity is an important factor for collaboration – being in neighbouring timezones makes communication a lot easier, and collaborations often follow after researchers meet each other at local conferences.

Szomszor also challenged the concept that the UK is paying more into the EU budget than it is getting out. While it was a numbers game and it would be mathematically impossible for each country to get out more than it puts in, the UK is a net beneficiary when it comes to research funding – the country receives €1.98bn ($2.1bn) more from the Horizon 2020 program than it contributes.

Indeed, he said, when it came to collaborations with countries such as Spain, Portugal or the Netherlands, these nations essentially paid the UK for research cooperation.

Simon Andrews, executive director at research organisation Fraunhofer UK, was one of the most outspoken opponents of the idea that the UK could rest on its laurels, beginning his talk by saying: “I am sick to the teeth of hearing that the UK is the world’s fifth-largest economy.”

The numbers often thrown around by so-called Brexiteers – those who voted in favour of leave – that the UK makes up 10% of the world economy and 30% of Europe are outdated by several decades, according to Andrews. In 2017, he said, the UK accounted for only 3% of the world economy and 17% of Europe's.

He also challenged the concept that innovation emerges only from universities, pointing to his own organisation but also corporate research and development. Building a successful ecosystem, Andrews said, took significantly longer than the UK had at its disposal once it activated Article 50 to begin exit negotiations. He said it took Germany 60 years to build an innovation-fostering environment and it would not be possible for the UK to solve that problem through a quick policy fix.

Andrews cited a recent example from publication MIT Tech Review, which investigated whether it would be possible to make the iPhone from scratch in the US. The answer, perhaps unsurprisingly, was no, it is not physically possible to do so because the US lacked some of the minerals required. Supply chains, Andrews concluded, were global, and there was no way around that.

Even more so, innovation is global and it is difficult to predict what kind of research will have the largest impact. When it comes to television sets, for example, chemicals and pharmaceutical firm Merck Group produces a crystal product while conglomerate 3M manufactures a film that redistributes light, meaning those two corporates have been making huge profits while TV manufacturers such as Samsung and Sharp are struggling to break even.

Programs such as Horizon 2020, in the end, are not just about accessing cash, they are also about embedding the UK in a global supply chain.

Priti Bansel-Branch, associate solicitor at law firm Shoosmiths, pointed to the importance of research commercialisation to drive the UK economy. Although she said some of her corporate clients preferred accessing British funding rather than EU funding because the process was faster, she also noted that regional investment funds throughout the UK would be important – omitting the fact, however, that many of these, such as Finance for Business North East, are currently majority funded by EU institutions.

Stephen Metcalfe, a member of parliament and chairman of the House of Commons’ science and technology committee, was one of three MPs in attendance – Victoria Borwick and Roberta Blackman-Woods also attended.

Metcalfe, who spoke at length about the work his committee has been doing, underlined several factors that resonated with the audience. It would be beneficial, he said, if the UK told researchers already living in the country that they could remain. He said EU researchers should in future be exempt from immigration controls, and he warned that getting Brexit wrong would hurt scientific progress.

Whether the conference optimism – which occasionally had the flavour of putting up a brave front – will be justified remains to be seen, but the red flags waved by some panellists and audience members should be reason for concern that, yes, Brexit could provide an opportunity, but it will also isolate the UK from countless opportunities it would have otherwise have been open to.

A survey of British businesses published today, which showed 58% of companies are already suffering a negative impact even before Article 50 has been triggered and are becoming increasingly worried about access to skilled workers, should serve as a big red flag.

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