Recommendations & Conclusions
4 items
14
Conclusion
Fifty-Sixth Report - Industrial Strateg…
Acknowledged
We were concerned that lengthy approval times, combined with changes in coinvestment requirements, could deter participation from some small and microsized companies.39 For example, we received written evidence from Tees Valley Combined Authority which told us that it had submitted three successful and sequential bids relating to industrial decarbonisation for …
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We were concerned that lengthy approval times, combined with changes in coinvestment requirements, could deter participation from some small and microsized companies.39 For example, we received written evidence from Tees Valley Combined Authority which told us that it had submitted three successful and sequential bids relating to industrial decarbonisation for funding from the Fund. It explained that it had started its bids in early 2018, however meaningful work on the project had yet to commence 32 Q 37, C&AG’s Report, para 15 33 Q 37 34 Q 37 35 Q 38, C&AG’s Report, paras 2.14, 2.16 36 C&AG’s Report, paras 2.18–2.19, Figures 1 and 6. Of the 236 projects with applications submitted in late 2018 of after, it took an average of over 31 weeks for funding to be offered. The shortest time between an application being submitted and funding offered was 16 weeks, and the longest took over a year at 53 weeks. 37 Q 42 38 Q 42 39 Q 59 and C&AG’s Report, para 2.19 Industrial Strategy Challenge Fund 13 due to “the on-going process associated with managing the funds”.40 Similarly, evidence from Universities Scotland indicated that lead times for the Fund’s project—“to build the consortium, complete the application, await assessment outcomes, and for funding to come through to universities”—were, in its opinion, far too long.41 UKRI acknowledged that a two year wait for funding was very frustrating for businesses wanting to get on with projects. UKRI and the Department told us that there was a trade-off between quality and speed, and that they were hoping in the future to be “equally high quality and a lot faster at the same time”.42
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Government response AI summary
The government acknowledges the impact of long approval processes and states that future challenge delivery models will consider a streamlined approach with simpler governance. It will also write to the Committee by October 2021 to detail plans for improving the speed of future funding approvals …
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HM Treasury
15
Conclusion
Fifty-Sixth Report - Industrial Strateg…
Acknowledged
Delays in getting new challenges approved have had a knock-on effect on UKRI’s ability to start spending. For example, in 2019–20, UKRI had underspent by £86 million, equivalent to 14% of its budget for the Fund the year. During 2020–21 UKRI agreed to re-profile £165 million from the current budget …
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Delays in getting new challenges approved have had a knock-on effect on UKRI’s ability to start spending. For example, in 2019–20, UKRI had underspent by £86 million, equivalent to 14% of its budget for the Fund the year. During 2020–21 UKRI agreed to re-profile £165 million from the current budget into future years for 20 challenges, mainly due to the impact of COVID-19. We asked UKRI about the extent to which any delays in distributing funding to projects will affect its ability to spend the Fund in its final years. UKRI said that the need to reprofile spending into future years created financial pressure in the later years of the programme. The NAO found that reprofiling funding could have an impact on planned activity, which in turn might impact on the amount of co-investment generated by partner organisations. It similarly found that additional pressure on future budgets could also come from the impact of COVID-19 on the level of activity undertaken on funded projects. UKRI told us that it would be easier to manage the risks from reprofiling budgets if it had a multi-year settlement. However, in the Spending Review 2020, the Fund was part of a one-year settlement.43
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Government response AI summary
The government acknowledges the impact of lengthy approval processes and states that future challenge delivery models will consider a streamlined approach with simpler governance. It will also write to the Committee by October 2021 to detail plans for improving the speed of future funding approvals …
Read full response →
HM Treasury
17
Conclusion
Fifty-Sixth Report - Industrial Strateg…
Acknowledged
One of the Fund’s five objectives is to increase collaboration between new small companies and those that are established. Analysis undertaken by the National Audit Office showed that UKRI had initially succeeded in attracting a range of different sized companies to participate in the Fund. However, in the third wave …
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One of the Fund’s five objectives is to increase collaboration between new small companies and those that are established. Analysis undertaken by the National Audit Office showed that UKRI had initially succeeded in attracting a range of different sized companies to participate in the Fund. However, in the third wave of funding, the proportion of projects awarded to companies classified as large (categorised as having more than 250 staff) increased from 20% in the second wave of funding to 29% in the third. This expansion has been at the expense of the proportion of micro (categorised as having under 10 staff) and small sized enterprises (categorised as having between 10 and 50 staff). Their proportion of projects awarded fell from 44% in the second wave to 31% in the third wave.47
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Government response AI summary
The government acknowledges the concern regarding SME engagement, stating UKRI is committed to increasing it. Lessons learned will inform the design of future Challenge-led funding, considering a more flexible approach to co-investment for SMEs, and the department will write to the Committee by October 2021 …
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HM Treasury
21
Conclusion
Fifty-Sixth Report - Industrial Strateg…
Acknowledged
UKRI recognised the need to think about R&D expenditure in terms of what it described as the ‘place part of the agenda’.58 Comparing the distribution of the Fund with what it described as normal R&D expenditure, UKRI asserted that it thought that investment through the Fund in London was “very …
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UKRI recognised the need to think about R&D expenditure in terms of what it described as the ‘place part of the agenda’.58 Comparing the distribution of the Fund with what it described as normal R&D expenditure, UKRI asserted that it thought that investment through the Fund in London was “very comparable” and that for the South East it was about “one third up”. UKRI considered that the level of investment received by the West Midlands was “over twice the level…you see normally”.59 It told us that this was due to the nature of some of the challenges on which the Fund focused, particularly mobility and the fact the UK’s advanced manufacturing base was located in the West Midlands.60 54 Q 41 55 C&AG’s Report, para 2.10 56 C&AG’s Report, para 2.10, HM Government, UK Research and Development Roadmap, Policy Paper, 1 July 2020 57 Q 44; C&AG’s Report paras 2.11–2.12, Figures 8 and 9 58 Q 46 59 Q 44 60 Qq 44, 46 16 Industrial Strategy Challenge Fund
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Government response AI summary
The government acknowledges the importance of R&D funding for the levelling-up agenda and commits to investigating the drivers of regional disparity in funding distribution. It will work to improve participation for future Challenge-led funding, publish a UK R&D Places Strategy in 2021, and write to …
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HM Treasury