Report on Investing in research: an action plan for Europe

November 12, 2003

Brussels, 11 Nov 2003

FINAL A5-0389/2003 5 November 2003
REPORT on Investing in research: an action plan for Europe
Full text

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EXPLANATORY STATEMENT

Introduction

1. In its communication entitled 'Investing in research: an action plan for Europe' the Commission has put forward a package of measures on ways of enabling the EU to raise its research expenditure to 3% of gross domestic product (GDP), on the understanding that one third is to be accounted for by public funds and two thirds provided by the private sector. According to the Commission's calculations, as set out in the communication, the EU spends, all told, a meagre 1.9% of its GDP on research, whereas the US spends about 2.7% and Japan 3%. In absolute terms, the US spends €125 bn a year more on research than the EU, which has a larger population!

2. There are also considerable differences within Europe. Some Member States thus have high research budgets, but there are unfortunately far too many others with low research budgets. Similarly, in some regions the concentration of research activity is exceptionally high, whereas others have virtually no scientific institutes.

3. To enable the EU to catch up quickly, research expenditure is to rise by 8% a year, entailing a 6% increase in public funding and a 9% increase in business funding. If that imperative were to be applied to the research framework programme (FP), the budget for FP7 would total approximately €30 bn for the whole period, taking enlargement into account, an increase of more than €10 bn compared with FP6. If Parliament endorses the Commission's goal, as the rapporteur hopes that it will, that attitude must be reflected in the budgetary procedure. If we wish to be taken seriously, we must therefore urge the Council to raise the next FP budget by the necessary amount.

4. The budget needs to be increased not least because ten new Member States will probably soon be joining the EU and will later be followed by others. The applicant countries all spend less in percentage terms on research than the average for the EU as presently constituted. Yet even if they were to raise their expenditure, they would still be dependent on additional help from the EU.

5. In view of the EU's growing global responsibility, international research cooperation should also be intensified. Research is to an ever greater extent becoming a tool of international cooperation, that is to say, foreign policy. By ratifying the Kyoto Protocol Europe has entered into a major commitment that will be impossible to meet unless there are technological advances. Furthermore, because it is playing a more active role on the international stage, for instance in the WTO or at the G-8 summits, the EU is being called upon to assume new tasks, for which the scientific and technical ground has to be prepared. The decommissioning of weapons of mass destruction and the clearance of millions of landmines, as well as the new threat posed by international terrorism since September 11, imply a need for security research in the broadest sense.

6. What is surprising is that public R & D expenditure, expressed as a percentage of GDP, is roughly equal in Japan, the US, and the EU. On the other hand, European industry spends much less on research and development than its US and Japanese counterparts. More often than not there are no highly innovative small and medium-sized enterprises, which in the US in particular have frequently been and still are powerhouses of innovation. Such firms must consequently be made a focus of special attention.

Tentative assessment of the Commission proposal

7. The list of measures being proposed leaves little room for improvement and covers all areas. The real problem, therefore, is not so much that further ideas are needed to fill the gaps in the proposal, but rather lies in its rapid implementation. Since the strategy that was set out at the Lisbon and Barcelona Councils in 2000 and 2002, the policies of the EU and the Member States have not been galvanised to live up to these ambitions. On the contrary, many scientists trained at a high cost are currently waiting in vain for a job. What is more, European firms are increasingly expanding their research capacity outside the EU. According to the Commission, approximately 40% of European private investment in research finds its way to non-European countries, first and foremost the United States.

8. American companies are admittedly likewise investing in European research, and the picture is thus not entirely gloomy. Nevertheless, when all is said and done, European innovation policy lacks vim - an observation, incidentally, which we have repeatedly been making with remarkable regularity over the past 25 years.

9. If Europe could resolve to increase its research expenditure on the scale mentioned above, its economic growth would rise by 0.5%. From 2010, 40 000 new jobs would be created every year. Even if the Commission says nothing about the funding for the seventh research framework programme, perhaps because it considers it too early to do so, Parliament should nonetheless specify a figure. We should earmark 7% of the European budget for research.

10. We should also, however, respond to a proposal which the European scientific community has been putting forward for many years, namely to set up a 'European Research Council' (ERC) to reinforce European funding for basic research in Europe. The ERC could form an academic complement to the FP, which is oriented more towards applied and industrial research. To gauge the scale of its funding, the American National Institutes of Health (NIH) offer an obvious point of comparison. Their funding totals $ bn a year. If the ERC served to increase the involvement of scientists in programme planning, this would be particularly welcome. In future, therefore, basic research should be provided with both a national and a European component. Compared with the US, Europe has a lot of catching up to do. In the US, for example, the 2003 budget of the National Science Foundation has been raised by a massive 10%!

11. Another question to be considered at some stage is whether the current multiplicity of European research activities such as Eureka, COST, and the European Research Fund, the successor to the European Coal and Steel Community, do not need to be reorganised. The same applies to the coexistence of joint research involving several Member States and EU research. One possible arrangement might be for the EU, in agreement with the Member States, to lay down an overall framework and a common source of funding, whereas the large European research establishments in which different countries worked together would implement their programmes on a self-governing basis.

12. The idea of a European Research Foundation, proposed by the rapporteur in an earlier document and endorsed by Parliament, but rejected by the Council, should be revived. It would have the great advantage of securing private capital at European level for research purposes. The foundation concept has proved very successful at national level, and there seems to be no reason why the miracle could not be reproduced at European level. That said, it would first be necessary to create an appropriate European legal form.

13. The key question, however, is how industry, in particular highly innovative SMEs, can be persuaded to devote more resources to research and development. The ideas on tax incentives should be considered especially carefully. A lower tax burden, linked to a research obligation, is always a boon, for, in the final analysis, it is the high costs which deter firms from investing in the future. Tax concessions for research, incidentally, involve less red tape than project support. The disadvantage, on the other hand, is that they are difficult to restrict to individual sectors and are not targetable, but instead apply to all research areas equally.

In principle, firms could conceivably be required to pay a charge if they failed to invest sufficiently in research. Having said that, carrots are invariably more effective than sticks.

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30. The Commission communication is an important building block in the edifice of a European knowledge-based society. It deserves to be discussed and in a few places enlarged upon. Above all it has to be implemented. This communication should lead to practical measures being taken not only in the Member States but also in the EU, as soon as possible. The yardstick of the EU's determination to take its recommendations seriously will be the next FP. Parliament should call for the portion of the EU budget earmarked for research to be raised to 7% and boost the next FP accordingly. The above figure should be made the central issue in the discussion with the Council. In addition, Parliament should declare basic research a European task and accept the idea of a European Research Foundation, for which, of course, it would have to provide the necessary funding.

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Committee on Industry, External Trade, Research and Energy - Rapporteur: Rolf Linkohr - by Antonio Mussa - by Antonio Mussa, Cristiana Muscardini, Mauro Nobilia, Adriana Poli Bortone, Franz Turchi, Nello Musumeci, Mariotto Segni, Giuseppe Nisticò, Mario Mantovani, Vitaliano Gemelli, Antonio Di Pietro, Giovanni Procacci, Raffaele Lombardo, Generoso Andria, Maurizio Turco and Mario Borghezio - by Salvador Garriga Polledo - Draftsman: Angelika Niebler

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