Committee of Public Accounts


Press Notice No. 31 of Session 2003-04, dated 24 June 2004


THIRTY-FIRST REPORT: CAMBRIDGE-MIT INSTITUTE (HC 502)

Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today welcomed the early successes of the Cambridge-MIT Institute but said that it was indefensible that the Treasury failed to consult the DTI at the outset of the project given the DTI's expertise in knowledge transfer and exploitation of research.

Mr Leigh was speaking as the Committee published its 31st Report of this Session, which examined the establishment of the Cambridge-MIT Institute (CMI), a partnership between Cambridge University and the Massachusetts Institute of Technology (MIT), set up in June 2000 as a limited company jointly owned and controlled by the two universities, supported by public funding. CMI aims to enhance the competitiveness, productivity and entrepreneurship of the UK economy by bringing together the expertise of these two leading research universities to undertake collaborative educational and research initiatives. The Treasury negotiated initially with MIT and then with MIT and Cambridge University. In November 1999 it announced a provisional figure of up to £68 million to fund CMI and handed over responsibility for taking the initiative forward to the Department of Trade and Industry (DTI). Most of the funding from government is spent on work by university researchers with industry to develop commercial products. Other funding is used to encourage enterprise and innovation in the next generation of scientific researchers. CMI has had some early successes in education and knowledge transfer. However, many of its achievements will not be known for some time.

The Committee found that in developing innovative initiatives, departments should capitalise on each other's expertise and liaise to ensure good project and risk management. The public sector needs to embrace innovation and entrepreneurship, while managing the risks effectively. Departments should identify gaps in their expertise and seek help from experienced colleagues in other departments. The Treasury should have informed the DTI (the lead department for knowledge transfer and exploitation of research) of its proposals for CMI at an earlier stage, enabling DTI to prepare for its later involvement and offer assistance on the early negotiations. 

Standard appraisal processes should be followed or departures from them justified and recorded. The Treasury expects departments to follow standard project appraisal guidance, but undertook no formal appraisal of CMI. Following all the standard guidance would not have been practical, but the Treasury should have formally considered whether elements could be used without creating undue bureaucracy and with a view to starting to build a business plan and to set realistic expectations for the progress of the initiative.

Departments should always set objectives - and for experimental projects these should be genuinely indicative, and subject to review and appropriate amendment. The Treasury and the DTI accepted the universities' view that specific objectives would have constrained CMI's freedom to experiment and generate new ideas. There was a concern that any objectives would have been immovable once set, rather than tools to help guide and track the initiative, which could be reviewed and amended. For innovative projects, departments should build trust with partners so that early indicative objectives can be set, and then altered as necessary.

The DTI was right to take a 'hands on' approach in its early relationship with CMI, given the absence of clear objectives and measures. However, such an approach needs to give way as soon as practicable to less detailed monitoring based on reporting against agreed objectives and plans.

Funding profiles and activity plans should reflect realistic spending and delivery expectations. Many of CMI's early problems stemmed from overoptimistic expectations about the time the initiative would take to set up and start operating. Setting up such initiatives needs to be properly planned, taking account of experience with similar initiatives, and time should be set aside for establishing appropriate governance arrangements and infrastructure.

A mid-term review can be valuable where an initiative has long-term and uncertain outcomes. On taking up post in January 2003, the current CMI Executive Directors decided to undertake a thorough review of CMI, which led to a detailed new strategy and objectives, and work to ensure that its projects fitted well with the objectives. Departments should consider planning periodic in-depth reviews of initiatives that are not easy to monitor on a routine basis.

CMI has important lessons for appraising, monitoring and evaluating innovative or experimental initiatives. Departments should draw on best practice to help develop innovation and entrepreneurship projects, including, where applicable, the Office of Government Commerce's Gateway Review and the self-assessment questionnaire in the NAO's Report. The DTI may, in future, also develop further guidance, based on the CMI experience.

The DTI should plan for long-term monitoring and evaluation of CMI's outcomes, including an assessment of the benefits to the UK, and to UK taxpayers. Some of CMI's very long-term outcomes could yield especially large benefits, and it is important to start planning how they will be assessed. The DTI should assign responsibility for monitoring CMI's intellectual property outputs, and promoting their exploitation to maximise the benefits for the UK and for UK taxpayers.

Much of the value of CMI may depend on its key activities being sustained for some time beyond the six-year funding period. There is currently no guarantee of public funding for CMI after 2006, and the DTI and CMI have started to work on the sustainability of specific activities. This work needs to be accorded a high priority to give sufficient time for all available options to be creatively explored and developed.

Mr Leigh said today:

"I welcome the early successes that the Cambridge-MIT Institute has had and hope that it realises its potential to bring major benefits for the UK economy and taxpayers in the longer term.

I do not wish to discourage the public sector from being flexible in order to bring innovative projects to fruition. Some elements of the unconventional approach in this case were sensible. But it is indefensible that the Treasury failed to consult the DTI at the outset given the DTI's expertise in knowledge transfer and exploitation of research. Nor is it right that Treasury did not undertake a formal project appraisal of CMI, something the Treasury would properly expect other departments to do for their projects.

The CMI experience provides important lessons for other departments' planning, monitoring and evaluation of innovative projects and they should take on board the recommendations in my Committee's Report."


Click here to view Report