Funding applications
23. Mr U complains that Innovate UK rejected his applications for research funding and: • was not transparent about its out of scope process • failed to properly explain the decision to him • used a panel to consider his applications that did not have the required technical expertise • departed from the UK government and other accepted definitions of de-carbonisation in order to reject his funding application.
24. It is not our role to direct how Innovate UK considers applications for funding research, nor the criteria it uses. We can only consider whether this deviates from legislation and central government policy. Section 12 of the Parliamentary Commissioner Act 1967 specifically prevents the Ombudsman from questioning the merits of any decision taken without maladministration. This means that if a public body has acted in line with the law, national guidelines, and its own policies and guidance, we cannot criticise the way in which it has approached its decision-making.
25. With regards to Mr U’s concerns about transparency around the out of scope process, this refers to Innovate UK’s process of deciding whether an application for funding meets the aims of the project. We have also considered here how it communicated the reasons for its decision.
26. In line with our Principles of Good Administration, we expect public bodies to be open and accountable. To achieve this, public bodies should:
• be open and clear about policies and procedures and ensure any information or advice is clear, accurate, and complete • state the criteria and reasons for its decisions • act in accordance with the law and its own published policies and guidance.
27. The competition Mr U applied for was the ‘SBRI: Net Zero heat and power upgrades for demand reduction phase 1’ competition. This competition is still available online and outlines the scope criteria.
28. The function of the funding competition was to develop and test scalable service propositions to reduce carbon emissions from buildings, with the intention to commercialise the results afterwards.
29. The information around the scope of the funding also outlined the types of projects it would not fund via this particular funding stream. This included:
• applications that encourage incremental, near-term retrofits instead of substantive upgrade pathways • the use of proprietary monitoring standards or closed ecosystems that lock users into a specific technology solution.
30. One of the first steps of Innovate UK’s process is to review whether the application meets the scope of the project. This appears to be a reasonable approach to reviewing funding applications as it would not be a proportionate use of Innovate UK’s finite resources to undertake a detailed analysis of the project proposals, only to later discover the application did not meet the scope of the competition. To do this it undertakes a ‘scope sift’, which is where it reviews the ‘project and scope’ summary part of the application and checks whether the application meets the scope of the project.
31. When Innovate UK informed Mr U of the outcome of his applications on 13 January 2023, it did not include any reasons as to why his application was declined as out of scope. This appears to fall short of our Principles of Administration because Innovate UK did not inform Mr U of the reasons for its decision, nor the criteria used to make it.
32. Mr U contacted Innovate UK on 13 January and asked for more information about why his applications were out of scope. On 16 January Innovate UK provided a comprehensive overview of the criteria and reasons why it decided his applications were out of scope. It explained that his solar panel applications had not met the scope because each application focused on the same single technology (solar panels), which was excluded on the competition brief. It also explained the applications did not take a whole systems approach, and did not provide any indication of substantive heat and power reduction upgrade pathways. It added the applications also lacked broad portfolio analysis or evaluation of performance of appropriate measures.
33. Innovate UK also provided feedback on the fifth application, which related to the application for the new patented technology. It explained that the submission focused on the continued use of natural gas, which was in conflict of the stated aims of the competition, which was to target decarbonisation.
34. Innovate UK also explained the application was out of scope for the following reasons:
• the patent uses ‘existing connections to the gas network’ to ‘encourage incremental near-term retrofits’, rather than substantive upgrade pathways, which was specifically ruled out in the competition brief • the application failed to take a whole systems approach and did not provide any indication of substantive heat and power reduction upgrade pathways through fabric upgrades, broad portfolio analysis, or evaluation of performance of appropriate measures.
35. Innovate UK appears to have initially fallen short of providing sufficient explanation for its decision on 13 January; however, it also appears to have quickly rectified this on 16 January by providing a comprehensive overview of the decision against the competition’s criteria. In addition, when UKRI responded to Mr U’s complaint on 7 March it acknowledged it had not provided enough information in its first email. It Apologised for this and outlined service improvements to include sufficient details in out of scope decision emails in the future.
36. Overall, although there appears to have been an initial shortfall in the transparency around Innovate UK’s decision and out of scope process, it rectified this mistake quickly in an email three days later. This appears to be in line with our Principles of Good Administration, which say that public bodies should put mistakes right quickly and effectively. Public bodies can and do make mistakes, and where this happens we would not seek to criticise an organisation where it has taken appropriate and prompt action to put this right. Innovate UK appears to have clearly communicated the out of scope process and the reasons for its decision from 16 January and we have seen no indications of maladministration.
37. With regards to whether Innovate UK used a panel that lacked the required expertise to consider Mr U’s applications, there is no indication this happened. His applications were never progressed past the initial scope sift, and so were not presented to a panel. An independent technical expert was used during the review process but as there was no panel used in considering his applications.
38. Regarding whether Innovate UK departed from UK government, and other accepted, definitions of de-carbonisation in order to reject his funding application, we cannot see that this happened. His funding applications were not rejected on the basis of a disagreement about the definition of de-carbonisation, and there appear to have been number of reasons why his application was considered out of scope. Whilst decarbonisation was referenced as relating to the stated aims of the project, the reasons why his applications were considered out of scope were broader than this and included the fact the application covered at least two areas that were specifically excluded by the competition brief. These criteria did not relate to decarbonisation and so the decision did not hinge on a definition of decarbonisation.
Review process 39. Mr U complains that Innovate UK’s review process for funding applications is inadequate because the same team that made the original decision reviews the decision.
40. Our UK Central Government Complaint Standards say that, where possible, a colleague who has not been involved in the issues should look at the complaint.
41. Innovate UK does not have an appeal or review process for its funding applications; however, a review of the process for these applications does fall within the scope of UKRI’s complaints process. We consider the email correspondence between Mr U and Innovate UK, prior to the complaints process, formed part of Innovate UK explaining its decision. It was not until UKRI’s complaints process commenced that it undertook a review of the decision-making process. For this reason, we have focused our consideration on the complaints process.
42. Mr U raised a complaint with Innovate UK on 27 January. He complained that it had failed to explain how his complaints were out of scope and that an independent assessor had not reviewed his applications. He said he still did not understand why his applications were out of scope, and that it appeared the decision-making took place in secret and the aims of the assessment remained a secret.
43. This complaint was progressed via UKRI’s centralised complaints process. It issued a formal complaint response on 7 March. In its response it explained that an Innovate UK Complaints Team member, a person not involved in the original funding decision, and the Head of Innovation from Ofgem (a separate organisation) reviewed his complaint. This went above and beyond the requirement for a colleague not involved in the issues to look at the complaint by asking someone external to the organisation to also review the complaint.
44. UKRI appears to have acted in line with our UK Central Government Complaint Standards by asking two individuals not involved in the original consideration of his applications to review his complaint. Therefore, we have seen no indications of maladministration.
Funding scope 45. Mr U complains that Innovate UK has a funding scope that focuses almost exclusively on EVs and it has a policy to automatically decline any applications linked to fossil fuels. He says this is not in line with legislation and creates an impossibly narrow scope for innovation.
46. It is not our role to direct or make decisions about the areas of focus for Innovate UK’s research funding. We can broadly consider whether Innovate UK’s policies and processes align with relevant government guidance, but we cannot comment on its priorities for funding outside of this narrow remit. The UK Government’s UK Net Zero Research and Innovation Framework outlines the government’s current research aims in this area up to 2031.
47. Innovate UK should work in line with the current government’s goals and statements on the focus of innovation when allocating public funding. This framework commits to innovation in battery development in several areas. The part of this document that seems to relate to the funding stream Mr U applied for is on page 81, which outlines a challenge to innovate standardised, interoperable smart systems to integrate low carbon technologies and energy efficiency into buildings and provides examples of what this could look like.
48. The framework has a broad range of innovation challenges to work towards Net Zero that Innovate UK, as the UK’s Innovation funding agency, must carefully allocate funding to work towards.
49. We undertook a small-scale review of the current competitions being advertised by Innovate UK which relate to environmental innovation. We found a number of active funding streams that are inviting competition and have a goal of reducing emissions. These include:
• funding for innovation to reduce emissions in the use of plastics, which focuses on changing how waste is processed and how packaging is produced • innovation in the food industry focused on the use of robotics, AI, new proteins, vertical farming, integrated supply chains, autonomous growing systems, and precision agriculture • development of a low-cost nuclear power plant • innovation in finance and biodiversity • decarbonisation via zero emission technologies for maritime vessels, zero emission HGVs, decarbonising train operations and maintenance • developing sensors for environmental monitoring, and reducing the cost of these • development of carbon capture devices for large-scale emissions removal • industrial decarbonisation for net zero industrial clusters • a Faraday battery challenge which aims to develop batteries that are cost-effective, longer lasting, faster charging, and sustainable • innovation to electrify supply chains in a range of sectors including automotive, aerospace, energy, industry, marine and rail.
50. These funding streams appear to broadly align with the challenges set out in the government’s Net Zero Research and Innovation Framework and most of these do not exclusively focus on batteries or EVs.
51. In UKRI’s response to Mr U’s complaint, Innovate UK explained that it uses peer review and funding panels to decide on which proposals to fund and it does not have the budget to fund every innovation. It also explained that whilst Innovate UK has put substantial funding into battery technology via its Faraday battery challenge, it also has a broad range of funding opportunities that do not focus on batteries or EVs. Its investigating officer undertook a high-level review of the Net Zero funding streams and found that out of 4,000 projects only 300 used the term ‘battery’ in their title. It also explained that UKRI currently has over 140,000 funded projects and that battery and EV research only comprises a small fraction of this.
52. With regards to the specific funding stream Mr U applied for, the reason why this was declined was not because Innovate UK would only consider technologies linked to EVs or batteries. It was because the technology included retrofitting, which was specifically excluded, and because it relied on a single technology solution, which was also specifically excluded from the competition. There are/were other projects available that focused on the areas excluded from this project, for example industrial buildings were likely excluded because there is a separate funding stream for this area of focus. Mr U was signposted to other funding streams that may have been suitable for his patent, though we note he was not satisfied with the type of funding offered in this competition.
53. The evidence indicates that Innovate UK’s funding scope does not almost exclusively focus on EVs or batteries. Instead, it has a broad range of different funding streams that focus on the various aims outlined in the government’s Net Zero Research and Innovation Framework. Whilst Mr U may have valid concerns about the UK economy, and the UK government’s position on Net Zero and how to achieve these goals, this is not a matter that Innovate UK has the responsibility to address.
54. Regarding Innovate UK having a policy of automatically declining applications that use fossil fuels, we have seen no evidence that this is the case. Innovate UK has accepted that for this particular competition it should have included that the use of gas was excluded from the scope in the competition brief. It explained that this was because the use of fossil fuels was contrary to the aims of the project. It has committed to ensuring this is included in future projects that exclude the use of fossil fuels. This is not the same as a blanket policy of declining any application, across its thousands of projects, that are linked to fossil fuels.
55. We recognise Mr U vehemently disagrees with the UK government’s Net Zero approach, and he may have good reason to do so. However, this is not something Innovate UK has responsibility to challenge and it should be administering its funding competitions in line with the government’s position on Net Zero. It appears to have done this and there are no indications of maladministration.
Environmental concerns 56. Mr U complains that the focus on EVs in Innovate UK’s research is not environmentally sound due to the high levels of fossil fuels involved in their production.
57. It is not our role to consider or comment on how environmentally sound Innovate UK’s research directions are. Our role is to undertake a review of its administrative actions. This means we can only review whether Innovate UK has administered its duties in line with the relevant policies or guidance, as per our Principles of Good Administration. Whilst we can review the policies implemented by a public body, we can only consider whether or not they align with relevant government guidance.
58. Innovate UK’s research areas are guided by HM Government’s Net Zero Research and Innovation Framework. Whilst Mr U appears to be correct that high levels of emissions are involved in EV production, this does not in and of itself mean that Innovate UK has acted with maladministration. We have seen nothing to indicate that its funding streams depart significantly from the Net Zero Research and Innovation Framework. Therefore, there are no indications of maladministration.
Modern slavery 59. Mr U complains that both Innovate UK and UKRI are allowing UK government funding to be awarded to industries that routinely use child and slave labour, and this means they are not compliant with their responsibilities under modern slavery legislation.
60. The Modern Slavery Act 2015 places a duty on certain companies to prepare a slavery and human trafficking statement for each financial year. This statement should include the steps taken to tackle modern slavery in operations and global supply chains. Subsequent government guidance, such as the UK government modern slavery statement progress report, has made it clear that Ministerial Government Departments are also required, from 2021, to begin publishing annual modern slavery statements. UKRI is not a Ministerial department, though it is sponsored by one (the Department for Science, Innovation and Technology). This guidance also strongly advises that all organisations should publish a modern slavery statement, even if not captured under the Modern Slavery Act.
61. The Home Office has published a statutory, practical guide to ensuring transparency in supply chains. This guidance outlines that an annual human trafficking statement should include the steps the organisation has taken in the financial year to ensure slavery and human trafficking is not taking place in any part of the supply chain. This guidance is also clear that this does not mean an organisation must guarantee its supply chain is slavery free. Rather, this requirement is to outline the steps taken to prevent slavery in the supply chain. The guidance does not say what steps should or should not be taken, however, and is clear that this requirement is about transparency in supply chains. This means that an organisation could return a report that outlined no steps having been taken to prevent modern slavery, yet still be compliant with this legislation.
62. UKRI publishes an annual modern slavery statement, as recommended by the UK government. This is available to view via its website and its website also includes contact details for reporting modern slavery or human trafficking within UKRI’s supply chain. The most up to date statement available on UKRI’s website is for 2022/2023. This statement outlines that as part of its contracting processes, it specifically prohibits the use of forced labour and/or slavery. It adds that it expects its suppliers to hold their suppliers to the same high standards. This appears to be in line with government advice on publishing transparency in supply chains relating to modern slavery.
63. Mr U has provided extensive evidence of the existence of modern slavery within the materials industries linked to the production of EVs and EV batteries. This is understandably concerning, but this is not evidence that UKRI’s suppliers are definitely using slave labour. Further, UKRI is not required to guarantee that slavery does not occur within its supply chain. If Mr U has concerns about particular suppliers, he can alert UKRI to these concerns via the contact details provided on UKRI’s modern slavery statement page on its website.
64. UKRI appears to have complied with the UK government’s modern slavery statement, which strongly advises all organisations publish a modern slavery statement. We understand that Mr U feels very strongly about modern slavery, which is understandable given it is an abhorrent practice. That said, his view appears to be that UKRI should be ensuring the entire supply chain is free from slavery. Whilst an understandable ethical perspective, this does not align with the requirements of the Modern Slavery Act and the government’s published statements and guidance on the requirements of this Act. There is no requirement for public bodies to ensure the supply chain is free from slavery; rather, the legislation and guidance requires certain public bodies to demonstrate transparency in the steps taken to prevent modern slavery. The evidence indicates UKRI has done this, and there are no indications of maladministration.
Complaint handling 65. Mr U also complains that the scope of UKRI’s complaints process is too narrow and lacks the flexibility required to respond to complaints about innovative technologies.
66. Our UK Central Government Complaint Standards outline how government bodies should approach complaint handling. This includes ensuring the structures are in place for fair and robust complaint investigations.
67. UKRI has a comprehensive complaints policy that is published on its website. This clearly outlines that the complaints process is to address complaints that:
• it has not followed its processes and procedures • UKRI staff have been unhelpful or insensitive • it has delayed in responding to a request or query • dissatisfaction with data protection, environmental information, or Freedom of Information Act requests.
68. UKRI specifically excludes disagreement with decisions, comments, or feedback in funding decisions and will only consider whether the correct processes and procedures have been followed. This appears to be appropriate as the function of a complaints process is to identify administrative or service failings, not debate different perspectives on highly technical and diverse subjects. UKRI directs those with feedback about or who disagree with decisions or comments during the funding process to the body which made the decision.
69. Further, this approach includes scope to consider whether funding application decisions have followed the appropriate processes and procedures. This means that applicants can challenge decisions where they believe the correct processes were not followed.
70. With regards to there being a lack of flexibility that prevents UKRI to responding to complaints about innovative technologies, we do not consider this is the case. It is appropriate to scope the complaints process to considering complaints that either process has not been followed or the service from staff has fallen short. A complaints process is not the correct place for discussion and debate on the merits of innovative technologies.
71. In addition, UKRI did demonstrate flexibility in its complaint handling with Mr U by departing from its procedure to provide a more flexible response. It agreed to consider issues he had raised that did not fit this scope because it saw that there would be value in providing a response to these issues. We were encouraged to see this flexibility in practice and, in this sense, UKRI went above what we would have expected to see in order to provide a flexible response to Mr U’s complaint. Because of this we have seen no indications of maladministration.
72. We understand Mr U’s frustration at being unsuccessful in his funding applications, and at initially not receiving a detailed explanation for these decisions. We also recognise that environmental concerns and concerns about modern slavery are very emotive and important topics, and our decision does not detract from these serious concerns.