A new UK research funding agency

The creation of UKRI has established a more coherent framework for the organisation of Government funding for research and innovation. There are reasons to think that UKRI, following its initial period of being established, could benefit from refreshing its processes and ways of working, specifically to reduce bureaucracy, increase agility and make it easier for external organisations to engage with it in research involving translation and commercialisation of discoveries. The question is whether such changes would make redundant the role of an ARPA-like agency. We consider on balance that even in a better functioning system, there can be a role for a body that sits outside and operates in a different way to the established mechanisms, with a different culture and which is able to operate free of some of the structures that are necessary for the dominant research funding institution.

It is strange that more than a year after its inclusion in two successive Queen’s Speeches, the Government has not clearly articulated the need for, or intended remit of, the proposed agency. To date, it seems to be a brand in search of a product. That said, evidence that we have taken does provide a case for an ARPA-like institution and in this Report we set out the guidance that our witnesses have given. We note that it is unusual that, having proposed a new body, it has been left to others to fill in the gaps as to its intended function and form. (Paragraph 45) UK ARPA’s form, function and place in the system

Questions about UK ARPA’s remit, organisation and governance would be made much more straightforward if the agency was established to serve a clear ‘client’— most likely a Government department, as is the case with US DARPA, which serves the Department of Defense. Potential candidates could include the Department of Health and Social Care (for a life sciences-focussed agency), the Department for Business, Energy and Industrial Strategy (for a Clean Energy/Net Zero mission) or the Ministry of Defence.

The Government must, in its response to this Report, clearly define UK ARPA’s purpose. This will, necessarily, be tied to and shaped by a specific client the Government identifies for ARPA.

UK ARPA can play an important role in the research and innovation system by pursuing goal-oriented research, driven by societal need, with the potential to produce lasting, transformational changes. UK ARPA should focus on ‘mission- based’ or ‘challenge-led’ research’, which has the potential to make transformative changes with implications for the economy and wider society.

It is clear that the new funding agency should embrace risk—and be prepared for some of its projects to fail. Further, this should be combined with a long-term outlook, with research programmes spanning 10–15 years. Currently, it appears that funding is only guaranteed for the agency’s first five years, which could limit its scope for making truly transformational breakthroughs. If the Government wants UK ARPA 46 A new UK research funding agency to pursue research programmes with the potential to have transformational effects on society—and its proposals suggest that it does—UK ARPA must, firstly, fund research that would be considered too risky by the existing research and innovation system and be prepared for some programmes to fail. Secondly, the Government must accept that these projects will take a long time, potentially 10–15 years, to ‘bear fruit’. The Government must meet this ambition with long-term funding for the agency and the programmes it will fund.

It is clear that UK ARPA’s proposed budget limits it to pursuing one or two central missions—any more than this would risk spreading its budget too thin, thus undermining its effectiveness. Given the size of UK ARPA’s proposed budget we recommend that the new agency focuses on no more than two strategically important missions. This will increase the agency’s chances of delivering on its stated aims of making breakthroughs with transformative implications for the economy and wider society.

The Government must think carefully about what the new agency’s focus might be before recruiting a director. It should consider the potential areas of focus recommended in the written and oral evidence submitted to this inquiry. It could also consider aligning UK ARPA’s focus with other identified priorities and reviews, for example the Industrial Strategy, Net Zero or the Integrated Review of Security, Defence, Development and Foreign Policy. Clarity in this regard will ensure that the agency is led by the best person possible who can, in turn, help to refine and shape the organisation’s focus.

The Haldane principle should not apply to how UK ARPA’s overall focus is determined. Ministers should play a role in shaping ARPA’s initial focus.

US DARPA and its ‘clones’ have shown the advantages of having a small, lean organisation with limited bureaucracy. Nevertheless, we think that the ultimate form and structure of the organisation should be shaped by and evolve with its appointed director.

We welcome the Government’s commitment to give UK ARPA independence over both operational and strategic matters. With that said, there will still be a need for appropriate Government oversight of the organisation’s operations—given that £800 million of public money has been allocated to it—but UK ARPA will require bespoke Government scrutiny arrangements to operate effectively. The Government should set out, drawing on precedents such as scrutiny of the Security Services by the Intelligence and Security Committee, how this oversight will work in practice.

The pool of potential candidates for director should not necessarily be restricted to expert scientists. The Government should be open minded on who the new agency’s director might be, should not disregard anyone at this early stage, and should be open to appointing an individual with a bold vision, creativity and drive.

UK ARPA should have a distinct and flexible organisational structure. The Government should seek to create an environment characterised by a high degree of autonomy and limited bureaucracy. The Government should explain how it intends to establish and foster this culture in the new agency. (Paragraph 86) A new UK research funding agency 47

It is clear that the agency’s director will play a crucial role in defining its culture. The new director must therefore be committed to creating a culture that empowers and emboldens UK ARPA’s employees. Depending on how closely the Government wants UK ARPA to replicate US DARPA, it should consider appointing a director with first-hand experience, or at least a good understanding, of DARPA in the US.

UK ARPA’s director should play a key role in the recruitment of its personnel. Programme managers should be ambitious ‘disruptors’, from a range of backgrounds, who are impact oriented, focused on the advancement of science and have CEO- like qualities. Attracting these people will require sufficient remuneration. The Government should explain how UK ARPA’s programme managers can be appointed outside normal pay restrictions in order to ensure that they are sufficiently remunerated.

We recognise that there could be advantages to establishing the new UK research funding agency inside UKRI: it would be quicker; facilitate its communication and collaboration with the existing research and innovation system; and reduce the risk of threatening the coherence of funding and research brought by UKRI. However, we note concerns that UK ARPA might not be able to operate effectively and with sufficient freedom if it was situated inside UKRI’s framework, for example, being unable to pursue ‘novel and contentious’ activities without case-by-case Ministerial approval. On balance, we agree with these concerns. To be effective, the new UK research funding agency must be able to operate independently and pursue ‘novel and contentious’ research without case-by-case Ministerial approval. If this is not possible within UKRI then there is merit in the Government establishing UK ARPA as a separate entity. Therefore, the Government must clarify whether it intends to establish UK ARPA as a separate body or an agency within UKRI. In doing so, it should be clear about whether this will require primary or secondary legislation and the likely timescales involved.

The vehicle used to establish UK ARPA (i.e. legislation) must allow for clear lines of communication between it, UKRI and the wider system. This could be established through a memorandum of understanding (MoU) that both parties agree to. It should ensure that UK ARPA has the power—and, where appropriate, the duty— to cooperate and share information with UKRI to ensure that the two bodies work together effectively, and vice versa. What is deemed appropriate in this context must be weighed against UK ARPA’s requirement for operational independence, which will necessitate bespoke oversight arrangements, including possibly less formal co- ordination with existing parts of the system than what is customary. (Paragraph 101) Learning opportunities for the UK research and innovation system

We welcome the multi-year funding settlement for UKRI set out in the November 2020 Spending Review, which not only provides much-needed certainty to UKRI and the wider research community, but it should also help UKRI support public and private sector contributions to the post-coronavirus pandemic recovery. We urge the 48 A new UK research funding agency Government to maintain multi-year funding settlements for science and encourage it to build on this through additional multi-year settlements in future Budgets and Spending Reviews to aid the UK’s post-pandemic recovery.

While the Government is thinking about the best way to establish a new UK research funding agency and acting on its pledge to reduce unnecessary bureaucracy in the UK research and innovation system, it is a good time for it to reflect on the bureaucratic constraints that apply to the funding bodies operating under the UKRI framework. It is right that UKRI is held accountable for the public money it spends, but the temptation to micromanage it must be considered alongside its need to operate in an agile and efficient way—for example regarding decisions on which projects should be started or stopped—and its potential, through the coordination of interdisciplinary research and innovation efforts, to strategically tackle the large- scale national challenges facing the UK. The Government’s policy paper on reducing the bureaucratic burden in research is a step in the right direction.

The Government should carry out a review, commencing before the end of the next financial year (i.e. 2021–2022), to explore how UKRI can operate with fewer bureaucratic constraints and more freedom and flexibility in how it allocates funds, while ensuring that it is held accountable for its expenditure. Specifically, it should consider (i) the implications of modifying or removing UKRI’s requirement to seek Ministerial approval, on a case-by-case basis, for anything deemed ‘novel’ or ‘contentious’, (ii) the extent to which the Industrial Strategy Challenge Fund’s ‘challenge directors’ have been unnecessarily hampered by bureaucratic constraints in their work and whether this can be addressed, (iii) UKRI’s capacity to tackle the UK’s strategic challenges through its coordination of public and private sector research and innovation, and finally (iv) how effectively UKRI facilitates interdisciplinary research and the scope for improving it.

There is scope for improvements with respect to equality, diversity, inclusion and accessibility in the current research and innovation system, as illustrated by the 2014–15 to 2018–19 data from UKRI. The system benefits from having people with different ideas, different backgrounds and different characteristics working together. We therefore welcome UKRI’s commitment to expanding its equality, diversity, inclusion and accessibility data collection and analysis capabilities. UKRI should set out, in the Government’s Response to this Report, when it will publish its equality strategy. The strategy should outline how UKRI intends to improve the effectiveness of its equality, diversity, inclusion and accessibility processes and policies and how the effects will be measured and demonstrated. (Paragraph 120) A new UK research funding agency 49