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National Audit Office Press Notice

Commercialisation Activities by Public Sector Research Establishments

9 November 1999

The NAO has announced today that, in line with its encouragement of worthwhile innovation in the public sector, it will support well thought through risk taking and experimentation in the exploitation of research by public sector research establishments.

Mr John Baker's report "Creating Knowledge, Creating Wealth" welcomed the statement of the Public Audit Forum, which includes the National Audit Office, that they do not want fear of the risk of change to stifle worthwhile innovation designed to lead to improvements. Commercialisation is still of course in a formative stage and in the typical case the establishment is likely to be developing a range of deals, each of which will incur some cost and some risk. As recognised in Mr Baker's report the National Audit Office, in line with the statement of the Public Audit Forum on the implications for audit of the Modernising Government Agenda, will:

• adopt an open-minded and supportive approach to innovation (including the use of techniques tried elsewhere), examining how the innovation has worked in practice and the extent to which value for money has been achieved;

• in the process, support well thought through risk-taking and experimentation; and,
• consistent with their independent role, provide advice and encouragement to management implementing Modernising Government initiatives by drawing on their audit work in this area, seeking to identify and promote good practice so that experience can be shared and risks minimised.

In these ways we believe auditors can support and encourage worthwhile change, while providing independent scrutiny and assurance and fulfilling effectively their statutory and professional responsibilities.

When examining commercialisation activities in public sector research establishments, and in keeping with this approach, the National Audit Office will be addressing in particular:

• whether the establishments concerned have adequate procedures in place for identifying and developing research outputs with commercial potential;
• the extent to which opportunities are identified and explored;
• the quality of risk management: assessing the extent to which the establishments have proper risk management systems and adequately assess risks against potential benefits; and,
• the lessons that can be learned for public sector research establishments as a whole.

Notes for Editors

Public sector research establishments are public bodies which carry out research in pursuit of Government objectives. They are sponsored either by Government departments or by the UK Research Councils.

Mr Baker, Chairman of Medeva, published his report into "Creating Knowledge Creating Wealth" in August 1999. This investigated the commercialisation of research in the public sector research establishments focusing on issues of good practice, barriers to successful commercialisation, culture, management and the relationship with the sponsor body. It also made recommendations for increasing the rate at which their research is successfully commercialised, consistent with other Government objectives for the establishments.

In the pre-budget report published today the Government welcomes the report, accepts the thrust of its recommendations and expects to publish a detailed implementation plan in the New Year.

Press notices and reports are available from the date of publication on the NAO website at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 750 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Press Notice 62/99
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