The Industrial Strategy Challenge Fund

Public Accounts Committee Closed Inquiry
Opened: 1 Feb 2021 Closed: 28 Jun 2021 Parliament page
The Industrial Strategy Challenge Fund (ISCF) awards support for research and development projects under the four themes of the government’s Industrial Strategy: clean growth, the ageing society, the future of mobility and artificial intelligence & the data economy. It constitutes a significant part of a government commitment to spend £4.7 … Read more
9 Recommendations
12 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 6 events
23 Nov
2021
Correspondence
10 Sep
2021
Correspondence
2 Sep
2021
Report published
30 Apr
2021
Report published
22 Mar
2021
Correspondence
4 Mar
2021
Oral evidence
Oral evidence sessions 1 session
4 Mar 2021
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Industrial Strategy Challenge Fund
Jo Shanmugalingam · Department for Business, Energy and Industrial Strategy Professor Dame Ottoline Leyser DBE FRS · UK Research and Innovation (UKRI) Sarah Munby · Department for Business, Energy and Industrial Strategy
Title HC No. Published Items Response
Fifty-Sixth Report - Industrial Strategy Challenge Fund HC 941 30 Apr 2021 21 Responded
Recommendations & Conclusions
21 results
2 Recommendation Not Addressed
Fifty-Sixth Report - Industrial St…
We are not convinced that UKRI’s and the Department’s approach to intellectual property generated by...
We are not convinced that UKRI’s and the Department’s approach to intellectual property generated by the Fund adequately protects taxpayers’ interests. Taxpayer funding invested through the Fund creates a ‘bridge’ between pure research investment and commercial development. There will potentially … Read more
Government Response
The government's response addresses unrelated issues concerning the identification of clinically extremely vulnerable people and NHS data strategy, completely failing to address the recommendation for UKRI to re-examine its intellectual property approach for the Fund.
HM Treasury
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3 Recommendation Not Addressed
Fifty-Sixth Report - Industrial St…
The Department has not yet made clear how it will make sure the UK will...
The Department has not yet made clear how it will make sure the UK will meet the target to spend 2.4% of its GDP on R&D by 2027. The government has a target to 6 Industrial Strategy Challenge Fund increase … Read more
Government Response
The government response discusses local variation in the Shielded Patient List and future analysis, which is unrelated to the recommendation about the UK's R&D spending target.
HM Treasury
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5 Recommendation Accepted
Fifty-Sixth Report - Industrial St…
UKRI is not doing enough to make sure the Fund is attracting successful bids from...
UKRI is not doing enough to make sure the Fund is attracting successful bids from across the country. Funding awarded by the Fund is distributed unevenly across the regions of the United Kingdom. By October 2020, just over 63% of … Read more
Government Response
The government accepts the recommendation and commits to investigating the drivers behind regional disparity in the Fund's distribution, seeking to improve participation across the UK, and will write to the Committee by October 2021 detailing the inhibiting factors and steps to attract more interest.
HM Treasury
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6 Recommendation Not Addressed
Fifty-Sixth Report - Industrial St…
The elongated time taken by the Department and UKRI to provide funding to successful bidders...
The elongated time taken by the Department and UKRI to provide funding to successful bidders risks putting off businesses from applying for the programme. It took UKRI, the Department and HM Treasury 72 weeks to select and approve the challenges … Read more
Government Response
The government's response provides only introductory text and lists relevant reports, failing to address the recommendation for the Department, HM Treasury, and UKRI to outline plans for speeding up approval times for challenges and projects.
HM Treasury
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7 Recommendation Deferred
Fifty-Sixth Report - Industrial St…
Powers currently delegated by the Department and HM Treasury to UKRI do not strike the...
Powers currently delegated by the Department and HM Treasury to UKRI do not strike the right balance between the governance necessary to support efficient decision making and unnecessary bureaucracy. The Department and HM Treasury set the governance arrangements for UKRI’s … Read more
Government Response
The government disagrees with the specific recommendation but accepts the need to address the issues raised, stating that these will be considered and addressed as part of the forthcoming Spending Review 2021.
HM Treasury
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1 Conclusion Accepted
Fifty-Sixth Report - Industrial St…
On the basis of a Report by the Comptroller and Auditor General, we took evidence...
On the basis of a Report by the Comptroller and Auditor General, we took evidence from the Department for Business, Energy & Industrial Strategy (the Department) and UK Research and Innovation (UKRI) about the management of the Industrial Strategy Challenge … Read more
Government Response
The government accepts the importance of demonstrating outcomes and impact for the Industrial Strategy Challenge Fund and commits to writing to the Committee by October 2021 to outline the expected short, medium, and long-term impact of existing challenges, focusing on jobs and economic benefits.
HM Treasury
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4 Conclusion Not Addressed
Fifty-Sixth Report - Industrial St…
The Department has five objectives for the Fund, to: • increase UK businesses’ investment in...
The Department has five objectives for the Fund, to: • increase UK businesses’ investment in R&D, while also improving R&D capability, capacity and technology adoption; • increase multi- and inter-disciplinary research; • increase engagement between academia and industry on targeted … Read more
Government Response
The government response does not address the committee's item regarding the objectives of the Industrial Strategy Challenge Fund, instead discussing the delivery of shielding support to clinically extremely vulnerable individuals.
HM Treasury
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8 Recommendation Accepted
Fifty-Sixth Report - Industrial St…
We asked the Department and UKRI why it had not ensured that the taxpayer benefited...
We asked the Department and UKRI why it had not ensured that the taxpayer benefited from any intellectual property generated as a result of successful commercial development paid for by the Fund.19 The Department told us that securing intellectual property … Read more
Government Response
The government accepts the recommendation, committing to review its current approach to intellectual property (IP) with UKRI, consider the committee's concerns, and report back by July 2021, to ensure the taxpayer benefits from commercially successful IP.
HM Treasury
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9 Conclusion Rejected
Fifty-Sixth Report - Industrial St…
The government has a target to increase the UK’s public and private investment in R&D...
The government has a target to increase the UK’s public and private investment in R&D to 2.4% of gross domestic product by 2027. The Fund contributes to this target.24 In 2018, the most recent year for which data are available, … Read more
Government Response
The government explicitly rejects the implied recommendation to aim above the 2.4% GDP target for R&D investment. They reaffirm their commitment to achieving the 2.4% target by 2027 through increased public investment and a forthcoming innovation strategy to leverage private sector funds.
HM Treasury
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10 Recommendation Rejected
Fifty-Sixth Report - Industrial St…
In 2019, the Department announced that to achieve government’s target of 2.4% both public and...
In 2019, the Department announced that to achieve government’s target of 2.4% both public and private R&D investment would need to rise to around £60 billion.26We asked witnesses how, and by when, it was going to increase funding to meet … Read more
Government Response
The government disagrees with the recommendation to detail how and when funding will increase to meet the 2.4% R&D target, stating it has already committed to raising public investment and is developing an innovation strategy, with further plans to be set out in Spending Review 2021.
HM Treasury
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11 Conclusion Rejected
Fifty-Sixth Report - Industrial St…
UKRI considered that meeting the target as very challenging but also described it as plausible...
UKRI considered that meeting the target as very challenging but also described it as plausible if it could, for example, maintain the momentum the Fund had generated around private investment. It asserted that having an ambitious target was important “otherwise, … Read more
Government Response
The government disagrees with the Committee's implied concern regarding the feasibility of the R&D spending target, stating its commitment to increasing R&D investment to 2.4% of GDP and outlining ongoing efforts, including a forthcoming innovation strategy, to achieve this goal.
HM Treasury
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12 Conclusion Accepted
Fifty-Sixth Report - Industrial St…
In the third and most recent wave of funding that started in 2019–20, it took...
In the third and most recent wave of funding that started in 2019–20, it took UKRI, the Department and HM Treasury 72 weeks to select and approve challenges.32 We asked the Department and UKRI why it took them over a … Read more
Government Response
The government accepts the need for a faster challenge approval process, committing to consider a more streamlined approach and simpler governance for future challenges. It will write to the Committee by October 2021 outlining plans to improve approval speed.
HM Treasury
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13 Conclusion Accepted
Fifty-Sixth Report - Industrial St…
The Department told us that part of the reason for the delays in approving challenges,...
The Department told us that part of the reason for the delays in approving challenges, and ultimately projects, lay with drawn-out approval processes.34 The Department and HM Treasury are responsible for approving business cases for challenges. The Department told us … Read more
Government Response
The government agrees to consider a more streamlined approach for selecting and approving challenges, with a simpler governance structure, for future challenge delivery. They also note established UKRI programmes improving project application and approval processes, and will update the Committee by October 2021 on plans to speed up approvals.
HM Treasury
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14 Conclusion Acknowledged
Fifty-Sixth Report - Industrial St…
We were concerned that lengthy approval times, combined with changes in coinvestment requirements, could deter...
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 … Read more
Government Response
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 and update on existing improvement programmes.
HM Treasury
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15 Conclusion Acknowledged
Fifty-Sixth Report - Industrial St…
Delays in getting new challenges approved have had a knock-on effect on UKRI’s ability to...
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 … Read more
Government Response
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 and update on existing improvement programmes.
HM Treasury
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16 Recommendation Accepted
Fifty-Sixth Report - Industrial St…
Lack of staffing capacity within UKRI may also have impacted the time taken to approve...
Lack of staffing capacity within UKRI may also have impacted the time taken to approve bids. At the start of Waves 2 and 3, UKRI faced significant challenges recruiting staff to oversee and manage the challenge programmes. Of the 186 … Read more
Government Response
The government agrees with the recommendation to address staffing capacity issues impacting bid approvals, aiming for an October 2021 implementation date. They will consider a streamlined approach for future challenges and existing UKRI improvement programmes are underway, with a commitment to update the Committee on progress by October 2021.
HM Treasury
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17 Conclusion Acknowledged
Fifty-Sixth Report - Industrial St…
One of the Fund’s five objectives is to increase collaboration between new small companies and...
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 … Read more
Government Response
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 outlining how these learnings will be embedded.
HM Treasury
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18 Recommendation Accepted
Fifty-Sixth Report - Industrial St…
There are several reasons why the proportion of smaller businesses receiving funding could have fallen...
There are several reasons why the proportion of smaller businesses receiving funding could have fallen including the increase in UKRI’s requirements for coinvestment from participants for wave 3 funding. UKRI increased the co-investment requirement from industry in wave 3, responding … Read more
Government Response
The government agrees with the recommendation to increase SME engagement and will implement a more flexible approach to co-investment requirements for SMEs and emerging industries, outlining learnings by October 2021.
HM Treasury
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19 Conclusion Accepted
Fifty-Sixth Report - Industrial St…
Other factors that may have influenced the reduced participation of smaller businesses include insufficient communication...
Other factors that may have influenced the reduced participation of smaller businesses include insufficient communication about the Fund reaching SMEs, limited capacity within SMEs to participate in collaborative bids, and the lengthy approvals processes for funding.51 We received written evidence … Read more
Government Response
The government agrees to increase engagement with SMEs, noting that lessons from current challenges are informing future designs. This will include considering a more flexible approach to co-investment requirements for SMEs and they will write to the Committee by October 2021 to outline these learnings and their embedding into future funding.
HM Treasury
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20 Conclusion Accepted
Fifty-Sixth Report - Industrial St…
Whilst UKRI does not have an explicit objective to consider the regional balance in its...
Whilst UKRI does not have an explicit objective to consider the regional balance in its funding awards, the 2017 Industrial Strategy did include a focus on ‘prosperous communities’ across the UK.55 The government’s 2020 Roadmap for R&D expenditure sets out … Read more
Government Response
The government agrees, committing to investigate the drivers of regional disparity in ISCF funding and to improve participation across all parts of the UK for future Challenge-led funding. They will publish a UK R&D Places Strategy and write to the Committee by October 2021 with details on regional participation and embedded learning.
HM Treasury
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21 Conclusion Acknowledged
Fifty-Sixth Report - Industrial St…
UKRI recognised the need to think about R&D expenditure in terms of what it described...
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 … Read more
Government Response
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 the Committee by October 2021 on how learnings will be embedded into future delivery.
HM Treasury
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Government Response AI assessment · 21 of 9 classified
Accepted 9
Acknowledged 4
Deferred 1
Not Addressed 4
Rejected 3
Total 9 recs + 12 conclusions
Correspondence 3 letters
23 Nov 2021 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re Fifty-Sixth Report of Session 2019-21: Industrial Strategy Challenge Fund (ISCF), 3 November 2021
Parliament page
10 Sep 2021 Correspondence from Sarah Munby, Permanent Under-Secretary of State, Department for Business, Energy and Industrial Strategy, re Fifty-Sixth Report of Session 2019-21: Industrial Strategy Challenge Fund (ISCF), dated 29 July 2021
Parliament page
22 Mar 2021 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy and Industrial Strategy, re Response to the Committee regarding 04 March Industrial Strategy Challenge Fund Public Account Committee hearing, dated 18 March 2021
Parliament page