Lord Vallance is priming to universities outside of London, Oxford and Cambridge to commercialise valuable research that could create the next QinetiQ

Lord Vallance of Balham, the science minister, has issued what the government says is the first guidance to public agencies to encourage them to commercialise valuable intellectual property.

He is also priming 27 universities outside of London, Oxford and Cambridge with £30 million of funding to help their academics get better at setting up companies to commercialise their ideas.

Vallance said he hoped that the guidance would lead to a revolution in public sector innovation, which could create valuable enterprises in the way that the spin out of the defence firm QinetiQ did from the Ministry of Defence under the last Labour government in 2001.

QinetiQ is now worth £2.3 billion and listed in the FTSE 250.

“I hope we have a system where we are never leaving something that could create value, a product that could benefit society, just resting on the shelf because no one knows what to do with it,” he said. “It will bring benefit to society and it will bring benefit back to the public sector as there will be some reward for that.”

Vallance said the government would not fund the commercialisation of these ideas, outside of its existing grant schemes, such as the commercialising knowledge assets fund, which provides grants of up to £250,000 to bodies such as the National Physical Laboratory and the British Antarctic Survey.

“The idea is to enable people to attract private sector funding to get these things going,” Vallance said. “It will require some government de-risking and what we know from where this happens around the world, many of these things will not work. That is not a failure — most things don’t work, but some of them do and that is what we need to keep going after.”

Vallance, a former head of research and development at GlaxoSmithKline, said the £30 million in new funding would help support the training of academics with the potential to commercialise their research.

“It is to try to increase the skills and capabilities in order to make spin-outs more likely. We know that some universities have got this absolutely sorted out and are good at it, others not so much. What we are doing here in four different areas is to have locally specific ways of increasing the ability, understanding and skillsets in academics to do spin-outs.”

Durham University will lead an £8 million initiative in the northeast of England, involving five universities, while Loughborough is leading one covering 15 universities in the Midlands. Two other initiatives are focused on life sciences in Merseyside and agricultural related technology in East Anglia.

The schemes are part of the government’s response to recommendations made by an independent review of Britain’s spin-out ecosystem undertaken in 2023 by Irene Tracey, the vice-chancellor of Oxford University, and Andrew Williamson, the managing partner of Cambridge Innovation Capital, a venture fund. This called on universities to lower and standardise the equity stakes they expected from new ventures formed by their academics, as well as more investment in the infrastructure to support academics to commercialise their scientific breakthroughs.

“We want to see a real opportunity for everybody doing research if they have an idea to have the right support to explore that as a startup and that isn’t the case at the moment,” said Vallance.

“I am really impressed when I go out to universities and meet people undertaking research and the number of them that are thinking, ‘Maybe I have a company here’ — you wouldn’t have seen that ten years ago. You might have seen it at Imperial [College London] or Cambridge, but not more broadly. What we need to do is ensure that the skills and facilities are available for people to do this.”

The previous government had supported public sector innovation initiatives through schemes such as the knowledge asset grant fund, which also awarded grants of up to £250,000. In total it awarded over £14 million to 140 projects from 44 government organisations.

The Labour government has closed this scheme, replacing it with the commercialising knowledge assets fund, which has similar aims.

A separate £14 million venture capital fund aimed at early stage spin-outs, called the UK Innovation and Science Seed Fund, is run by Future Planet Capital and works with the Government Office for Technology Transfer to encourage public sector labs to commercialise their ideas.