Press Release - The National Endowment for Science, Technology
and the Arts
25 February 2004
NESTA has established generally sound approaches to selecting
which projects to support and to managing its portfolio of awards,
and two of its three funding programmes have done well to generate
interest and applications. But, according to a report published
today by Sir John Bourn, head of the National Audit Office, it
needs to make the third programme more accessible, even out its
distribution of funds, particularly within England, and improve
measurement of its own operational efficiency.
Many of the projects which NESTA supports are inherently risky.
It is part of NESTA’s remit to take experimental and unusual
approaches which often have uncertain outcomes. There are several
ways in which NESTA actively manages the risk of projects failing –
for example, through providing mentor support – and these are
generally working well.
NESTA’s Invention and Innovation Programme and Learning
Programme have done well to generate interest and applications for
funding. However, the Fellowship Programme, which finds applicants
largely through a process of nomination, has been less successful
in reaching those who could be eligible, and some stakeholders have
reacted negatively to it. The report recommends that NESTA
accelerate its efforts to broaden the reach of this programme.
The report shows that, whilst Northern Ireland is still slightly
under-represented in terms of awards, NESTA is close to achieving
an equitable spread of awards between the four nations of the UK.
However, London has received nearly three times the number and
value of awards that would be expected for its population, whilst
many other English regions are noticeably under represented. NESTA
has taken some steps to address such discrepancies but more remains
to be done.
NESTA incurs significant costs over and above the actual awards
made to projects, but there is no performance indicator for an
appropriate level of programme support costs in relation to the
awards made. The report recommends that NESTA and the Department
for Culture, Media and Sport agree an appropriate ratio between
support costs and awards, in order to provide an indicator for
operational efficiency in this respect.
We found that NESTA’s approach to investing the interest from
its endowment was sound. However, the trend of falling interest
rates since NESTA’s inception severely reduced the level of these
returns from the endowment, and meant NESTA had to return to
Parliament for additional funds to maintain its levels of activity.
The Financial Directions originally issued to NESTA also imposed
restrictions on the investment instruments that it could use for
the endowment funds, which meant that NESTA was less able to
protect itself from the effects of falling interest rates in recent
years, and so reduced income further.
Sir John Bourn said today:
"In two out of three programmes NESTA has done well to
generate applications and it deserves credit for setting up sound
systems for selecting and managing its projects. However, NESTA
does need to achieve a more equitable regional distribution of
funds, to broaden the reach of the Fellowship Programme, and to
improve measurement of its own operational efficiency.
"There are also important lessons to be learned about
funding public bodies through an endowment, particularly the
management of risks associated with interest rate changes and the
endowment declining in real terms."
Notes for Editors
- The National Endowment for Science, Technology and the Arts
(NESTA) is a Non-Departmental Public Body sponsored by the
Department for Culture, Media and Sport. It was established by the
National Lottery Act 1998 with a remit to "support and promote
talent, innovation and creativity in the fields of science,
technology and the arts". NESTA does this primarily through
making awards to projects under three funding programmes –
Fellowships, Invention and Innovation, and Learning.
- At inception, the Secretary of State provided NESTA with an
endowment from the National Lottery Distribution Fund of £200
million, which generates the income to fund NESTA’s programmes. In
early 2003 NESTA was granted an additional £95 million; £50 million
to add to the endowment and £45 million for programme spending over
the following three years.
- NESTA had awarded £19.6 million to over 300 projects, out of a
total expenditure of £40.2 million up to March 2003 (the last
complete financial year). The balance is made up of programme
support costs such as staff and the provision of mentoring support
to awardees, non-award activities consistent with its broader
remit, and overheads.
- Press notices and reports are available from the date of
publication on the NAO website, which is now 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 which employs some 800 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 13/04
All enquiries to Mark Strathdene,
NAO Press Office: Tel: 020 77987183
Mobile: 07748 181693