Threat to UK's research millions from overseas

March 5, 2004

Fears are growing that at least one major UK-based company is poised to pull the plug on the millions it pours into university research, threatening chancellor Gordon Brown's vision for a modern hi-tech economy.

The Times Higher has learnt that a senior Whitehall figure has been warned privately by a top executive at a blue-chip corporation that its research funding could be moved out of the UK to universities overseas.

The move would send a disastrous signal to the rest of industry, according to the Whitehall source, who feared it would be interpreted as a vote of no confidence in higher education in the UK.

The Confederation of British Industry agreed that the question of where to invest in research was registering on the corporate radar in a way it did not five years ago.

Tim Bradshaw, senior policy adviser at the CBI, said: "In terms of anecdotal evidence, there are a number of companies where it is already finely balanced between doing research with UK with universities, doing it inhouse or doing it abroad."

Industry's concerns centre on the complexity of negotiations with universities over intellectual property rights and the level of public subsidy in the UK compared with higher state support available elsewhere in the European Union.

The danger of losing a blue-chip collaborator to overseas universities appears not to be lost on Mr Brown.

"Science" and "innovation" have become the chancellor's buzzwords this year, featuring in two set-piece speeches in January and February.

Both industry and universities are looking to the budget, due on March 17, for an indication of the chancellor's thinking about the Treasury's summer spending review. It is hoped that Mr Brown will put his money where his mouth is. He said in January that he was committed to making "a long-term plan for science funding over the next decade a central feature of our 2004 spending review". Even so, universities and industry will have to wait until 2005-06 for any new money.

The key question is: will companies wait that long?

Mr Brown appears to have been trying to forestall any multinational moves by hinting there may be more Treasury incentives to come. He has been making a habit of pointing to the fruits of the 2002 spending review. This delivered a £1.25 billion collaboration between the Treasury and the Wellcome Trust to "renovate" Britain's university science base.

But it remains to be seen whether Mr Brown's approach is affected by his rumoured "disappointment" with a joint venture between Cambridge University and the Massachusetts Institute of Technology set up to spread the US expertise in enterprise to British universities. This project was pump-primed with £65 million from the Treasury in 2000.

Nevertheless, the CBI's analysis of multinational opinion on research chimes with the conclusions of Richard Lambert, former editor of the Financial Times , who published his report on industry-higher education links in December. The report was commissioned by Mr Brown.

Mr Lambert holds up British-based global corporations as "role models for the majority of companies that at present have no links with universities".

But he also warns: "Home country is no longer the automatic first choice for their research and development investment."

The problem, according to Mr Lambert's report, is less a matter of encouraging universities to exploit their emerging ideas commercially and more a matter of encouraging demand within industry for higher education research.

While the financial benefit to universities from collaboration with industry remains small, companies are ploughing millions into UK research departments.

Defence company BAE Systems spends up to £7 million a year on collaboration with higher education, while pharmaceutical company Astra Zeneca has spent £50 million over the past five years. Both companies have spread their investment across a number of universities.

Mr Lambert concludes: "Government will have to do more to support business-university collaboration."

And he says: "Business will have to learn how to exploit the innovative ideas that are being developed in the university sector."

For the Treasury, that may mean reviewing the corporate tax credits for R&D, although Lambert's report recommends "better marketing" by the government of the existing tax breaks rather than new incentives.

It also remains to be seen whether Mr Brown will give a larger role to regional development agencies in funding industry-higher education collaborative projects - putting a new emphasis on geography as much as research rating and reputation.

For their part, universities trumpet the "outstanding performance and value for money" of the research they can offer - but are quick to warn that "proper resources" are needed if British research is to compete globally.

"Across the majority of disciplines, the UK's research productivity and quality remain second only to the US, and its share in citations is still increasing," a spokesman for Universities UK said. "Of course, in an increasingly competitive global market we cannot afford to be complacent and it is vital that UK higher education is properly resourced for its research and knowledge-transfer activities."

'The funding schemes in the UK are not necessarily conducive to UK business and academics'

Some of the largest corporate collaborators with UK universities said they were proud of their long-standing links with higher education in the UK. But they raised concerns about the cost and complexity of collaboration in Britain - and the benefits that could be reaped by working overseas.

- Defence company BAE Systems invests up to £7 million a year in university research.

John Murphy, head of the company's university partnerships and chairman of the Confederation of British Industry's industry-university group, said: "The funding schemes in the UK are not necessarily conducive to UK business and academics, and it seems that there's more encouragement for UK academics to work in Europe outside the UK.

"If you look at European funding schemes, they will fully fund universities and part-fund industry. In the UK, industries fully fund themselves and have to part-fund universities."

Dr Murphy added: "In the UK, we do have some of the best academics. They do keep abreast of what's going on around the globe.

"But if you go to, say, Germany, France, Australia, Sweden and the US, they also have some very bright academics.

"There's little doubt that companies can get their research done elsewhere.

So it comes down to smaller factors rather than bigger factors - such as the locality and the language and, primarily, historic allegiances."

- Chris Dalton of Astra Zeneca said the company had spent £50 million over the past five years on university research.

But he added: "There are concerns that in UK universities the price of collaboration is increasing relative to other markets."

- Unilever - which spends £11 million on UK university research a year and £195 million in total on research and development - has scientists working in 11 time zones, with research laboratories in the US, Europe, India and China.

Dominic Tildesley, Unilever's chief scientist at the Port Sunlight R&D facility, said: "Research costs in the UK are comparable to those in the Netherlands, Germany and France. These costs generally reflect staff salaries and depreciation on buildings and scientific equipment.

"Costs per well-qualified, scientific full-time equivalent are lower in India and China and significantly higher in the US."

He added: "We are more concerned about clarity in the elements that make up the cost of working with UK universities. Universities charge salary and equipment costs and add a blanket overhead, which is often a percentage of the staff costs.

"These overheads vary from university to university and the variance would seem to be greater than the difference in quality of research on offer."

So could a British blue-chip move its research funding overseas?

"I would be surprised if it came to that - but practically it could do," Dr Murphy said.

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