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There is a definite whiff of change in the air. You can smell it if
you talk to any industrialist about the White Paper on science and technology
being prepared by William Waldegrave, the science minister. The pressure
to make the right choices this time is intense because the White Paper
will probably set the scene for at least the next decade, and underpin
the success or otherwise of British industry in creating wealth well into
the next century.

But as well as the right choices, industrialists want the right machinery
in place to handle change. They are still unsure which government agency,
or collection of agencies, will best meet their needs: many developed a
distrust of the Department of Trade and Industry during the 1980s, when
the DTI withdrew active support for manufacturing industry in favour of
‘market forces’. In a report last year called Competing with the World’s
Best, the Confederation of British Industry condemned this stance, saying
the DTI ‘often appears ineffective in promoting the interests of manufacturing’.
There has, however, been widespread approval in industry for the creation
last May of a new Office of Science and Technology headed by the government’s
chief scientific adviser, Bill Stewart. The government created the OST in
the hope that it would act as a fulcrum for science and technology policy.
Like many industrialists, the chairman of the Engineering Council, John
Fairclough (himself a former chief scientific adviser to the government
and a past chairman of IBM UK’s research laboratories) welcomed the arrival
of the OST. But, he warned, ‘it’s only a start’.

Yet industry itself sees few problems with Britain’s science base.
‘We must get it straight that the problem is not university science and
technology,’ says Alan Rudge, the director of research and development at
British Telecom. ‘The real problem is to do with industrial research and
innovation – about creating wealth-creating technologies.’ The British government
spends about £5 billion on research and development each year, of
which £2.2 billion is spent on military R&D.

Britain’s industrialists say too few ideas and technologies are translated
into commercial products and processes. ‘The British pride themselves on
doing lots of science and getting lots of Nobel prizes,’ says John Parnaby,
managing director of Lucas Applied Technology. ‘That’s because historically
we’ve developed into a science culture. If you do as the Germans do, or
as the Japanese do, which is to concentrate on engineering, you get an applications
culture.’ Parnaby thinks Britain could overcome the problem if it developed
an ‘engineering culture’ to complement what he sees as an overdominant science
culture. In Germany and Japan, he says, the science culture is overshadowed
by an infrastructure of well-trained engineers who can quickly convert technology
into applications.

Industry is more keenly aware of this than anyone, and wants a much
bigger say in how public money is spent on applied research. This is likely
to ruffle feathers in the science community, which traditionally sees itself
as the custodian of funding for both pure and applied research.

Some industrialists think that the DTI should administer the money
for all applied research in the civil sector. At the moment, the department
controls just £300 million of the £1.09 billion spent by
civil departments such as the Ministry of Agriculture, Fisheries and Food
on their own research establishments. The rest of the civil research budget,
£1.68 billion, divides into two parts: £851 million administered
by the research councils, and £835 million by the Universities Funding
Council for infrastructure. Others in industry want the whole issue of R&D
funding thought through from scratch. Many favour the idea of a body such
as the OST at the very top of the government machine: it would have a large
budget and allocate all government funds for research according to priorities
agreed with all departments.

For its part, the DTI is trying to foster industry’s confidence. A
reorganisation in May strengthened the science and technology section by
adding experienced specialists from industry. The department now promises
to be more ‘proactive’ in supporting industry’s needs. ‘From our point of
view, the most important consideration is how the science base helps to
generate wealth-creating industry,’ says a DTI spokesman.

One of the department’s most controversial ideas is to split the machinery
for funding pure and applied research – without necessarily splitting the
work – and encourage industrialists to help decide where the money goes.
At the moment, the issue is fudged. Researchers seeking funds do not categorise
their work as ‘pure’ or ‘applied’, they simply indicate its potential for
exploitation. The DTI wants applications for funds sharpened. ‘We should
be clear why we fund a project, and that falls into two distinct regimes
– pushing knowledge forward, and nurturing exploitation,’ says the spokesman.
This need not mean two separate pots of money – one for applied and one
for pure – but it would definitely mean two types of criteria. ‘Science
would be judged for its scientific excellence, and application work would
be judged on the grounds of potential exploitation in a real commercial
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Such moves have already been mooted by David Phillips, head of the Advisory
Board for the Research Councils. At April’s annual meeting of the Institute
for Biology in Southampton, he suggested that ‘we should think more about
industry setting the agenda’. The board is made up entirely of academics
and advises the government how to spend its science budget.

The DTI also wants industry to have a bigger say in planning strategic
research. At present, it has virtually none. The department says industrialists
could help to define the strategically important technologies, such as semiconductors,
silicon devices, materials and biotechnology, and narrower themes, such
as neural networks and superconductivity. Academics and industrialists could
then agree priorities for technologies that met the criteria of scientific
excellence and the potential for commercial exploitation.

INFIGHTING AND CRITICS

But the problem remains of which department – or group of departments
– should dispense the money. Following a spate of Whitehall infighting,
some departments have hinted that the DTI is not properly organised to take
on the role of funding all applied research. Rumours have circulated at
the research councils that the DTI wants to break up the research council
system, and that they are fighting the proposal vigorously (This Week, 17
October). The critics of the DTI say that there is too much overlap between
applied and fundamental research to split them completely, and that a simpler
solution – which would also ease the distinction between pure and applied
research – would be to split the Science and Engineering Research Council
into two. ‘It’s far too big anyway,’ said a senior Whitehall source. The
DTI simply dismisses the allegations as nonsense.

Industrialists are unimpressed with the idea, and with the infighting.
‘There could be some mileage in the DTI having more responsibility for engineering
research,’ says Parnaby of Lucas. ‘But the key is the view from above, and
the analysis of where the money goes. Then, according to a strategic plan,
‘UK Ltd’ would be doing all the jobs it should be doing right across the
chain from discovery to exploitation.’ Richard Sykes, director of R&D
at Glaxo agrees that top-level oversight is needed, and thinks the OST should
do it. ‘Someone has to set the strategy,’ he says. ‘I would have thought
that they should have some control over the money as well, otherwise it
doesn’t make sense.’ He is also disappointed by the tug of war between government
departments which should be trying to revitalise the country’s wealth-creating
capacity. ‘They have got to pull together,’ he says.

Fairclough thinks that some form of ‘dual key’ approach might satisfy
everyone in Whitehall. This would mean that every project approved by a
government department would have to go to Waldegrave for rubber-stamping.
An alternative, says Fairclough, would be for Waldegrave to have some extra
funds available which he could dispense to departments for emergency programmes,
rather as happened in 1990 when government departments investigated BSE.

Another suggestion from industry is for the creation of a body entirely
outside government, which would receive a budget specifically for applied
research. Some industrialists may back this idea because it would circumvent
the DTI. This approach has the backing of the Association of Independent
Research Organisations, made up of nongovernmental independent research
groups and contractors. It suggests an industrial research and technology
council, independent but able to liaise with the ABRC ‘for the better harmonisation
of fundamental and applied research’. The council would audit the money
spent.

But scientists in pure research should not worry if industry gets a
greater say in applied research. A major reason why companies invest in
Britain is the strength of its pure science, which supplies them with high-quality
graduates and postgraduates. Providing this remains the case, according
to Sykes at Glaxo, the company’s research departments, which employ 4000
people, will continue. But he warns that pharmaceuticals companies, especially
those from the US, would be the first to pull out if the base is weakened
in any way.

Still, many British companies – especially small to medium-sized enterprises
based on engineering and physics – are not good at selecting and exploiting
winning ideas from academia. A significant stumbling block is the financial
risk involved. ‘There’s a lack of discussion and communication between companies,’
says Bob Whelan, the chief executive of the Centre for Exploitation of Science
and Technology (CEST), an independent think-tank funded by government and
industry. ‘We are not very good team players as an industrialised society’.
Companies isolate themselves with excuses about commercial confidentiality,
but the government could help by copying Japan, where the Ministry of International
Trade and Industry (MITI) forces companies to collaborate – only later encouraging
them to compete.

By directing applied research more carefully, British industrialists
hope to steer government funding towards generic technologies, such as smart
materials or plasma technologies, that they know will be valuable to small
firms. One idea gaining ground among professional institutions is for the
research chiefs of industries to draw up shopping lists of the technologies
they need from engineering faculties in universities, or from intermediaries
such as independent contract research organisations. ‘The problem is that
the exploiters – that is, industries – are not challenging the science community
to look into things that are relevant,’ says Fairclough.

Whelan agrees. ‘Basic science is important to industry, but we must
do much more to get industry to articulate and develop the demand for technologies
– not necessarily science – that it’s going to need in the future,’ he says.
‘In areas where interaction works well, such as the pharmaceuticals and
chemicals industries, everyone has a clear idea of what’s required. Having
lots of R&D in companies helps them to understand their technology base.
In areas where effort is lower, or patchy, it’s increasingly difficult
for them to see where the enabling technologies are.’

ENCOURAGING DEBATE

The DTI and the professional engineering institutions are encouraging
debate on what technologies each industrial sector needs. The Institution
of Mechanical Engineers has set up an Engineering Research Forum to help
develop ‘coherent R&D funding policies and actions’. The problem, says
the institution, is the complexity of the technology manufacturing companies
must offer. For chemicals or pharmaceuticals companies, where the principal
discovery is a formula or formulation, the ‘technology’ is only important
at the production stage. ‘In a manufacturing industry, you might need as
many as a hundred different technologies rolled into one to make a successful
product, and that’s what makes it difficult to interact with the science
base,’ says a spokesman for the institution. He adds that other factors,
such as interest rates and technologically illiterate top management, exacerbate
the problem.

SMILING ON FRAUNHOFER

Another government-funded initiative is the setting up of the Faraday
centres to mimic the role played in Germany by the powerful Fraunhofer Institutes,
which are funded mainly by the government and the regional states. The
institutes are sited on or near university campuses and help shuttle people
and ideas between academia and industry, acting as a nursery for high-powered,
technologically literate business people. Staff seldom spend longer than
five or six years at the institutes, so they are dynamic places, churning
out people who join industry or start small technology companies.

The Fraunhofers impress Parnaby: ‘Engineering postdocs in Britain largely
come from science faculties, so they tend to spend their time on a very
narrow topic in a small group. Engineers are trained differently in Germany.
They work as members of staff of the Fraunhofers – they are not called engineering
postdocs. They are trained in project management, have budgets to control
and can hire undergraduates to work for them. I liken it to medical training
in Britain, which is necessarily a mixture of theory and practice because
no one would let these people loose on the ward with theory only.’

But Parnaby remains sceptical about Britain’s efforts so far. The six
Faraday centres already established are based around independent contract
research associations, which have traditional attitudes and little staff
turnover. ‘In Fraunhofers, no one stays there permanently, so there’s a
fresh wind blowing through them all the time. You won’t reproduce that
at research associations which have permanent staff who already have their
own culture.’

Whatever the problems of funding research and teaching, most industrialists
agree that quality rather than quantity is the important thing. They say
the best quality graduates and postgraduates usually come from universities
that combine research and teaching, so it would be a mistake for Waldegrave
to split the two. ‘Research and teaching should go together,’ says Peter
Doyle, the research director for ICI, Britain’s biggest spender on R&D.
‘The best teaching is usually where leading-edge research is taking place.’

But will there be universities where there is teaching but no research?
And if there are, will they come about as part of a general push for establishing
centres of excellence in universities? This is a live issue for Waldegrave,
and has generated much debate in industry. ‘I think we’ll see a clearer
stratification of universities, with more directed research,’ says Doyle.
However, he adds, ‘not all bright young scientists emerge from the big universities.
That’s where responsive funding is critical. If you put all the money in
the centres, you will deprive the stars of the future in small universities.’

Others have no doubt that centres of excellence are the way to go.
‘You must have one or two centres of really world-class expertise in each
topic,’ says David Grant, director of technology at GEC. ‘When I look at
sourcing technology, I look more and more on a global basis. Therefore,
if I can’t see centres in Britain of international status and standing,
then I will look elsewhere.’

But industrialists are keen to reassure scientists who worry that huge
chunks of the £3 billion spent annually on civil R&D by the government
will be sucked from pure into applied research. If anything, the pure science
base will be more secure: industry leaders want scientists to engage in
fundamental research, not applied research, and so will tell Waldegrave
to let scientists get on with what they do best. This should provide a welcome
relief to those who have struggled to win government funding for blue-skies
research. No longer would they have to put a false commercial slant on their
applications to satisfy the ‘value for money’ criteria applied throughout
the 1980s. ‘Universities have got better at getting money, but they’ve tended
to do it for the sake of getting money, not to form intellectual partnerships
with industry, and that’s wrong,’ says Fairclough. ‘Collaboration, if it
exists at all, should be about forming an intellectual partnership.’