Vice-Chancellor's Update

The REF and the Northern Powerhouse

Compass

Later this week universities across the UK will brace themselves for the results of the Research Excellence Framework (REF), the process of expert review of research across higher education carried out by the four main funding agencies and overseen by HEFCE. UK scholarship which is rightly esteemed all over the world for its quality, rigour and diversity (not to mention its impact and value compared to levels of investment) has been scrutinised in ways which will impact on future funding settlements.

But as we receive and consider what the assessors have to say, we in Sheffield have a particular interest in this process. What it is, and what it isn't.

The research assessment process was to a large degree shaped by Gareth Roberts, himself a Vice-Chancellor of Sheffield and someone determined that allocation of money should not pool uncritically around the traditional golden triangle of Oxbridge and London. As a scientist, he wanted to see an evidence base for decisions.

Some say that he created a monster. The REF is already subject to urging of greater redistribution and the arguments and robust defence are beginning even before publication. Even he saw the risks – as a scientist, he wrote of his concerns about what the process of measurement itself would mean for research, and also we have to be clear that the REF is not a process for assessing individuals but for evaluating the performance of the university as a whole, through its units of assessment.

But Gareth Roberts held that the UK needed more than its historic bastions of scholarship. He believed there was an Academic Powerhouse in the North.

Can Sheffield be part of a Northern Powerhouse?

Today we are once again hearing talk of devolution and the potential of unleashing the talents of the North. This time the focus is on new powers for cities which might complement the overwhelming concentration of economic strength in London. But universities are also at the heart of this debate.

Last week one of our past students, Andy Haldane, gave a lecture at the Royal Society to a group of high-profile London graduates, each successful in their field. Andy studied Accounting, Financial Management and Economics in Sheffield in the 80s and is now Chief Economist at the Bank of England. His subject was the crucial role of innovation in economic growth.

Amongst other things he used our very own Pro-Vice-Chancellor Research & Innovation Professor Richard Jones’ data to show how investment in innovation is now far too small to lift our economy. There is a critical failure of the market as company shares are bought and sold. These shares are now held for such a short period that they have to show a benefit over dramatically reduced timeframes. New initiatives that need modest start-up capital such as in IT are possible, but where large amounts of capital and keeping faith with investments is needed, ventures are often doomed from the start.

Andy Haldane's perspective was long-term and worthy of the excellent social scientist he is. Going back to the beginnings of the Industrial Revolution, he tracked how innovation had triggered vast social change. And he also took a broad international view. In 1990 for example, China's GDP was almost the same as that of Italy. The difference was that China invested 20 per cent of that product in future growth, Italy almost nothing. Today China produces the economic equivalent of an Italy every 18 months.

The great manufacturing enterprises of the North were built with long-term investment and innovation at their heart. Indeed the industrial revolution began not in the City of London's money markets, but in the North with Arkwright's first factory, the textile mills which crossed the Pennines, Sheffield steel and the social revolution of Manchester's Free Trade Hall.

As the UK considers its future in the light of a fragile global economy, the question of growth is taking the nation back to first principles. Thinking about these issues is the task of Social Scientists and why we founded SPERI.

Investing in ideas which deliver change

Andy's lecture described three sorts of capital which are needed for growth – social, human and physical. Traditionally, we have thought that universities invested in the first of these – in people, education, confidence, networks of assurance and entrepreneurial endeavour.

But increasingly the physical capital required for growth cannot only be finite resources in an over-crowded planet, but ideas too. The revolution we now need will require expertise and policy, new ways of thinking. Just as a high-carbon Industrial Revolution took on a new model of production, the low-carbon revolution and sustainable future we need while funding social wellbeing will require ideas and innovation only found in institutions freed from the demands of quarterly shareholder profit statements.

There are limits on what can be achieved by the market alone. It is only institutions such as universities and Government who can take a longer view which will push for and invest in the ways we truly need to grow and thrive.

Let me tell you how we are addressing this on all fronts. First and foremost, we need to develop the people who can think about the future economies and be taught about the technologies of tomorrow. That is the first way in which we build and prepare the capabilities we shall need in growing a manufacturing base – the critical skills of our students. This is why we are building the Diamond, to which HEFCE will add another £5 million. And we don't just need engineering masters of the kind we will develop on our main campus, we also need the technical apprentices trained in our research facilities to power companies who will translate that research into products.

Second, we need ideas – ideas about things that can be made that were never made before. We are not manufacturers or banks. We bring the fundamental research and breakthrough ideas which need all the science and technology we can bring to bear. We have colleagues who have given their lives to making new materials that are stronger, more energy efficient, conduct electricity better, can withstand high temperatures and be more easily machined.

Third, we need a new way of working with industry. Which is why the name AMRC trips off the tongues of those involved in innovation policy.

Over the last decade in Sheffield we have seen the beginnings of our own academic Industrial Revolution. Just as Arkwright built his demonstration factories which changed ideas of what was possible, the AMRC has been the 'skunk works' to UK academia's IBM, showing us how we might work in new ways. The fact that this has happened in Sheffield on the site of previous industrial decline should be a source of enormous pride. But it is now time for the whole University to embrace the possibility of what is inspiring government. We should grasp the potential of innovation which makes the Chief Economist at the Bank of England say, 'this is the future'.

Building a dream

Yet all this is not a Northern Powerhouse yet. So what comes next?

You can see what a real Northern Powerhouse looks like in the development plans, now being circulated amongst our Sheffield City Region colleagues, for an Innovation District to sit along the M1 corridor. The vision – endorsed and encouraged by the most senior colleagues in government and industry as well as our regional leaders – is to take the translation prowess of our catapult centres and couple them to a new private public partnership that actually makes all of the infrastructure elements we shall need as a country.

I have called this 'a new GE (General Electric) of Sheffield'. This is a term that another of our Alumni Jim O’Neill – the 'rock-star' economist who chaired the RSA City Growth Commission and essentially launched the Northern Powerhouse via devolution discussion – likes me to use, and he is urging us to move on what he sees is a global opportunity.

Under this approach, a university bonds with others to be part of a wider system where the whole organisation is able to take an idea fully to an order book. In some areas this already happens. In aerospace our premier UK engineering and manufacturing partner, Rolls Royce, has made the crucial move of building a new turbine factory on the Advanced Manufacturing Park and making world-beating single-crystal blades for the engines that power so many of the world's aircraft.

We now want to expand this success. We want to see this same type of partnership for civilian nuclear energy, high-speed trains and all aspects of the green economy. This means a new set of partners and it needs a new way for the Government to buy the things it needs for the country. If it does not acknowledge existing market failure and act in this way, it will pass up a golden opportunity to build a new manufacturing economy along with buying.

How could this be done? Can we really build a dream on this scale which will revolutionise our own opportunity for research, for wealth creation, for jobs for young people and apprentices, for the UK and for export?

In a panelled room in the Royal Society in London, the Chief Economist at the Bank of England told an invited audience that he saw the way forward in the approach of the AMRC in Sheffield and in the UK catapult system more generally. What must come next and what will truly generate growth is the manufacturing capability at scale that sits alongside the translator of the AMRC.

This kind of nationalised purpose delivered the 2012 Olympics. It is the approach used for large naval contracts. It enables a partnership of companies and organisations to build a complex entity to deliver an aim and to do so together.

How we might make this work will take our research and our University firmly out of the mythical Ivory Tower. The ideas which will transform our sustainable future will not only be found in Science and Engineering, they will need Medics and Social Scientists, Linguists and the reflective powers of our Historians, Politicians and yes – a new kind of Economist, able to think beyond the framework which led to the global financial crisis.

Seen like this, the REF is put into its proper context. Our University was founded by people who wanted to make a difference to the education, lives, economy and health of citizens. We have not forgotten that vision. In fact, we embrace it.

I hope you will now know, when you hear the term Northern Powerhouse, that you are already part of it and will be crucial in building it fully in the years ahead. And in REF terms, surely this is the mother of all impact statements.

Professor Sir Keith Burnett FRS
Vice-Chancellor

Note: Papers on Civic Capitalism and on The UK's Innovation Deficit and how to repair it are found on our SPERI website