London, 22 Mar 2006

This discussion paper presents the next steps in taking forward the Government's Science and Innovation Investment Framework 2004-2014. Against the background of increasing global competition for knowledge intensive business activity, this paper presents next steps on five key policy areas: maximising the impact of public investment in science on the economy through increasing innovation; increasing Research Councils' effectiveness; supporting excellence in university research; supporting world-class health research; and increasing the supply of science, technology, engineering, and mathematics (STEM) skills.

The key elements are:

In order to provide a more coherent framework for health research and development (R&D), the Secretaries of State for Health and Trade and Industry will create a single, jointly held health research fund of at least £1 billion per annum. The Government will shortly appoint a leading independent individual to advise on the best institutional arrangements to deliver health R&D under this new structure. A consultation will be launched shortly in order to report on options in time for the 2006 Pre-Budget Report.

In order to maintain the UK's world-class university system, the Government is keen to ensure that excellent research of all types is rewarded, including user-focused and interdisciplinary research. Recognising some of the burdens imposed on universities by the existing Research Assessment Exercise (RAE), the Government has a firm presumption that after the 2008 RAE the system for assessing research quality and allocating "quality-related" (QR) research funding to universities from the Department for Education and Skills will be mainly metrics-based.

The Government will launch a consultation on its preferred option for a metrics-based system, publishing results in time for the 2006 Pre-Budget Report.

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The Government has set new ambitions to improve STEM skills, including to:

• achieve year on year increases in the number of young people taking A levels in physics, chemistry and mathematics;

• continually improve the number of pupils getting at least level 6 at the end of Key Stage 3 (11-14 year olds);

• continually improve the number of pupils achieving A*-B and A*-C grades in two science GCSEs; and

• step up recruitment, retraining and retention of physics, chemistry and mathematics specialist teachers.

To meet these ambitions, the Government announces a package of measures to improve the skills of science teachers, the quality of science lessons and increase progression to A level sciences, including new commitments to:

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• make science a priority in schools by including science in the School Accountability Framework;

• an entitlement from 2008 for all pupils achieving at least level 6 at Key Stage 3 to study three separate science GCSEs, to increase progression to, and attainment at, A level science;

• continue the drive to recruit science graduates into teaching via Employment Based Routes with new incentives to providers of £1,000 per recruit to attract more physics and chemistry teachers; and

• develop and pilot a Continuing Professional Development (CPD) programme, leading to an accredited diploma, to give existing science teachers without a physics and chemistry specialism the deep subject knowledge and pedagogy they need to teach these subjects effectively.

  The Government is consulting on further measures to maximise the impact of public investment in science on innovation, in particular:

  • how the UK can best support high-risk, high-impact research in novel fields of scientific enquiry;

  • how national and regional policies can work together more effectively to increase innovation and business-university collaboration; and

  • building on the work of the Lambert Review, how a wider spectrum of businessuniversity interaction can be encouraged, spreading best practice across different regions and sectors.

The Government is also consulting on how the Research Councils' effectiveness and economic impact can be further improved. In particular, whether the Government should merge the Council for the Central Laboratory of the Research Councils (CCLRC) with the large facilities operations conducted by the Particle Physics and Astronomy Research Council (PPARC) to create a Large Facilities Research Council, to improve the management of public investment in large research facilities. The Government is also inviting views on whether the funding arrangements for the physical sciences should be simplified in the wake of these changes.

Building on its success to date, the Government expects the Technology Strategy Board to play an increasing role in contributing to the development of the Government's innovation strategy across all important sectors of the UK economy. The Technology Strategy Board will have a wider remit to stimulate innovation in those areas which offer the greatest scope for boosting UK growth and productivity, and plans for it to operate at arms length from central government are being developed.

As part of its new five-year strategy and programme of organisational change, UK Trade and Investment (UKTI) will have an enhanced role in marketing the UK science base to business, implementing a new £9 million international R&D strategy to attract R&D investment to the UK and to promote Britain's innovative firms abroad.

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Following discussions with business, and in light of the recommendations of Sir George Cox's review of creativity in business, the Government intends to extend additional support through the R&D tax credit to companies with between 250 and 500 employees, subject to the outcome of state aid discussions with the European Commission.

Building on the priorities set out in the Science and Innovation Investment Framework 2004- 2014, the Government's objective is to create the best possible environment for science and innovation in the UK, enabling a world-class science base to connect with business, and creating the right mix of incentives and support mechanisms to grow new knowledgebased firms and take advantage of commercial opportunities arising from research. The measures presented in this document will make further progress towards achieving this objective.

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