Chancellor Gordon Brown committed £65 million to a partnership involving Cambridge University without allowing for competing bids from other universities and with no proper risk assessment, targets or objectives, Parliament's public spending watchdog reported this week.
The National Audit Office report on the Cambridge-MIT Institute (CMI), a partnership between Cambridge and the Massachusetts Institute of Technology, confirms that the initial terms of the project were almost entirely dictated by MIT, and that early management was so weak that the government considered pulling the plug on the project.
But the report concludes that, although "the majority of CMI's impacts will not be evident until long after public funding ends in 2006" and although there are questions about the institute's survival beyond its public support, the CMI is on track for success.
"The CMI has the potential to generate considerable impacts," said Sir John Bourne, the NAO comptroller and auditor-general. "Many of these will be long term and are intrinsically difficult to measure. After a challenging start, I am pleased that the CMI (has) been taking steps designed to maximise long-term success."
The partnership was set up in November 1999 to "enhance the competitiveness, productivity and entrepreneurship of the UK economy", but was plagued by difficulties from the outset.
MIT dictated the terms, threatening that it could take its expertise elsewhere. It insisted it would work with Cambridge only, preventing the Treasury from opening up the money to competition. Its demands for urgency discouraged the Treasury from seeking expertise from the Department of Trade and Industry, which was left to negotiate the detail of the deal after it had been publicly announced.
The NAO said the Treasury was right not to follow its standard economic appraisal arrangements as the plan was unique, but added: "It would have been possible and valuable to have undertaken some formal appraisal of the initiative at this first stage."
When the DTI took over negotiations, it was hampered by its exclusion from earlier talks, and by MIT's "reluctance to agree to a precise specification" of work, fearing it would inhibit innovation.
In July 2001, the DTI demanded remedial action after an external review found the CMI was failing to meet the terms of the deal. It agreed to continue funding only after a second review found that progress was being made to address the management shortcomings.
Michael Kelly, executive director of the CMI at Cambridge, said: "Many people outside the CMI have underestimated the scale of the challenge involved in getting the partnership off the ground. I am pleased that the report acknowledges that the CMI is now starting to deliver good results."
- The CMI spent £ million of its £65.1 million of public funding over six years by November 2003
- Of the £16 million the CMI was required to attract from private-sector sponsorship, it has so far received £5.3 million and has secured a further £5 million, according to the NAO. The CMI said it had raised £12 million and was on track to meet the target.