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SP Paper 140

EE/S3/08/R5

5th Report, 2008 (Session 3)

Report on the Energy Technologies Institute

CONTENTS

Remit and membership

Report

Introduction
History
Objectives
Member organisations
The ETI’s work
Research funding
Background and timeline
The development of Scotland’s bid – key stages
The decision to form a Scottish consortium
The ETI’s decision-making process
The choice of Scottish ‘host’

Conclusions and Recommendations

Introduction
The single bid approach
The workings of the ETI
The choice of a Scottish site
The role of civil servants and ministers
Moving forward

Annexe A: Extract from the Minutes

Annexe B: Oral Evidence

Annexe C: List of Written Evidence

Remit and membership

Remit:

To consider and report on the Scottish economy, enterprise, energy, tourism and all other matters falling within the responsibility of the Cabinet Secretary for Finance and Sustainable Growth apart from those covered by the remits of the Transport, Infrastructure and Climate Change and the Local Government and Communities Committees.

Membership:

Brian Adam (Deputy Convener)1
Gavin Brown
Christopher Harvie
Marilyn Livingstone
Lewis Macdonald
Tavish Scott (Convener)
Dave Thompson
David Whitton

Committee Clerking Team:

Clerk to the Committee

Stephen Imrie

Senior Assistant Clerk

Katy Orr

Assistant Clerk

Gail Grant

Report on the Energy Technologies Institute

The Committee reports to the Parliament as follows—

Introduction

1. In the UK Government’s budget of March 2006, the then Chancellor of the Exchequer stated, “After discussions with some of the world's biggest energy companies, they have agreed to work in partnership to create, for Britain, a new energy and environmental research institute, and for it to become, for Britain, at the cutting edge of science and engineering.”2

2. This announcement marked the beginning of the establishment of what would become known as the Energy Technologies Institute (ETI). The then UK Department of Trade and Industry (DTI) announced that it was prepared to provide match-funding of up to £550 million, creating the potential for a £1 billion institute within 10 years.3

3. One feature of the ETI would be its role as a body that commissioned research from other public and private sector organisations rather than conducting this research itself. As such, its work would be managed by a newly created organisation consisting of around 50 personnel (the ETI). Where the ETI would be located would be decided through an UK-wide competition for prospective sites.

4. The competition was launched by the UK Government in January 2007, with research organisations across the UK invited to indicate interest in hosting the ETI, its chief executive and support staff.4 Initial submissions were evaluated against a set of high-level criteria by a Host Selection Group within the ETI representing the industrial and public sector funding partners. A shortlist of prospective hosts was drawn up and five bidders were invited to provide more detailed proposals.

5. This shortlist included a joint bid from a Scottish consortium consisting of the Universities of Strathclyde, Glasgow, Edinburgh, Aberdeen, St Andrews and Heriot-Watt: the Energy Technology Partnership (ETP). The ETP had been assisted in its bid by a variety of public sector bodies including the Scottish Government, Scottish Enterprise, the Scottish Higher and Further Education Council and the Scottish Science Advisory Committee (SSAC).

6. On 20 September 2007, the UK Government made an announcement on the proposed location for the ETI and the choice of its chief executive. Despite Scotland’s strong reputation for research in the energy field, our oil and gas interests in the north-east and the potential for renewable energy in Scotland, it was decided that the new centre would be based at Loughborough University, a member of a Midlands consortium, which also included Birmingham and Nottingham Universities. It was also announced that Dr David Clarke, formerly of Rolls Royce (one of the industrial partners co-funding the ETI) would be the ETI's new chief executive5.

7. This report explores why the consortium from Scotland was not successful in its bid to host the ETI, the lessons that can be learnt from the process and how public and private sector organisations in Scotland should now move forward to realise the opportunities offered by the new ETI in the coming years.

ABOUT THE ENERGY TECHNOLOGY INSTITUTE

History

8. As previously stated, the ETI is a joint public-private initiative by the UK Government to accelerate the development of secure, reliable and cost-effective low-carbon energy technologies towards commercial deployment. According to the UK Government, the institute will play a major role in technology developments internationally in support of the UK's energy policy and climate change goals.

9. The Energy Research Partnership, under the joint chairmanship of Paul Golby, Chief Executive of E.ON UK, and Sir David King, formerly the UK Government’s Chief Scientific Adviser and Head of the UK Government’s Office for Science, committed itself to raising substantial sums of private investment to meet the matched funding available from the UK Government. EDF Energy, Shell, BP and E.ON UK announced their intention to be involved and they were joined latterly by Caterpillar and Rolls Royce. In total, the budgets expected to be available to the ETI are substantial and in excess of £1 billion over the next decade.

Objectives

10. The UK Government’s four goals for energy policy are to:

  • put ourselves on a path to cut the UK’s CO2 emissions by some 60% by about 2050, with real progress by 2020;

  • maintain the reliability of energy supplies;

  • promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve our productivity; and

  • ensure that every home is adequately and affordably heated. 6

11. All of these goals are relevant to the work of the new institute, whose objectives are to:

  • increase the level of funding devoted to research and development (R&D) to meet the UK’s energy policy goals, both domestically and internationally;

  • deliver R&D that facilitates the rapid commercial deployment of cost effective, low carbon energy technologies. Exceptionally this may include small demonstration projects;

  • provide better strategic focus for commercially applicable energy related R&D in the UK;

  • connect and manage networks of the best scientists and engineers, both within the UK and overseas, to deliver focused energy R&D projects to accelerate eventual deployment; and

  • build R&D capacity in the UK in the relevant technical disciplines to deliver the UK’s energy policy goals. 7

Member organisations

12. The Energy Technologies Institute has been established as a unique 50:50 public-private partnership, funded equally by member companies and the UK Government. The following are listed on the ETI’s website as being members of the ETI:8

  • UK Government’s Department for Business, Enterprise and Regulatory Reform (BERR)

  • UK Government’s Department for Innovation, Universities and Skills

  • BP

  • Caterpillar

  • EDF Energy

  • E.ON

  • Rolls Royce

  • Shell

13. According to the Energy Technologies Institute, by bringing together the efforts and investments of both public and private sectors and by focusing on key energy challenges with a new level of scale and ambition, it has the potential to achieve step-change advances in the development of energy technologies.

The ETI’s work

14. The ETI’s planned work programme is already well-developed and consists of the following main areas:

Large Energy Supply
Objective: To develop technologies to improve efficiency of power generation and to develop sustainable approaches to reducing emissions from existing fossil fuel technologies.

Security of Supply
Objective: To develop a mix of energy technologies (excluding nuclear) to increase security and diversity of supply, consistent with helping to deliver the UK’s energy goals.

Demand Management
Objective: To increase substantially the efficiency of energy use on the demand side.

Transport
Objective: To develop sustainable transport fuels and transport management technologies.

Small Scale Supply
Objective: To develop new and emerging distributed energy supply options using smaller scale technologies that utilise locally available energy sources.

Infrastructure
Objective: To develop sustainable energy infrastructure and supply technologies.

Energy Poverty
Objective: To develop proven and sustainable energy solutions that can be deployed locally to break the current link between environmental harm and the economic and social development of the world’s poorest people.

Research Funding

15. As a general principle, the ETI will select, commission, fund, manage and undertake, where appropriate, the delivery of research programmes, with a significant proportion of funding focused on investment in a small number of key technology areas with the greatest promise for eventual deployment on the basis of their eventual contribution to low carbon, secure energy supplies. Competitive mechanisms (with appropriate peer review for quality and for commercial relevance) will be used to allocate funds to specific R&D projects.

16. The ETI envisages that research teams bidding for funding will be drawn from industry, large and small, and academia, and may include researchers from overseas. These collaborators will benefit from the opportunity to leverage their own investment in R&D in addition to that of the core fund, and have access to the institute’s infrastructure and network.

the selection process to host the energy technologies institute

Background and timeline

17. At the very outset of the process to establish the ETI, an announcement was made that there would be a competition open to all UK research organisations interested in hosting the ETI. A prospectus was published on 14 September 2006, detailing plans for the ETI, outlining the desire to attract private sector companies to be members of the ETI and fund its work and encouraging research organisations to bid to host the ETI.9 The prospectus for the ETI set out a proposed timeline for the selection process and the establishment of the new institution:

  • Expressions of interest from additional core industry partners by end November 2006;

  • Identification of Institute Director (its chief executive) by end 2006;

  • Finalising structure and organisation of the Institute by end January 2007;

  • Identification of key academic centres during 2007;

  • Institute legally established and fully operational by 2008. 10

18. In the letter of invitation (dated 12 January 2007) to prospective bidders, the Office of the Chief Scientific Adviser to HM Government and that of the Director General for Science and Innovation indicated that, initially, the Director of the ETI (the chief executive) would require suitable office space and access to information resources, laboratory and meetings spaces, conference facilities and catering facilities etc.11 The letter also indicated that the ETI would need space to expand.

19. The same letter suggested that the intention was to have appointed the Director of the ETI and chosen which research organisation would host the ETI by Easter 2007. To meet this timetable, research organisations interested in hosting the ETI were asked to provide initial information; in effect, ‘expressions of interest’ were being sought.

20. The information requested initially consisted of material from the research organisation covering:12

  1. World class reputation in one or more of the priority theme areas identified for the ETI;

  2. Scope for developing the required facilities;

  3. Range of complementary expertise over most relevant sectors;

  4. High level of energy R&D funding in integrated programme;

  5. Strong existing industrial relationships, with good collaborative working and networking track record locally, nationally and internationally;

  6. Commitment to developing into a high profile hub to reinforce ETI as the focus for energy technology activity in the UK;

  7. Clear commitment to and involvement in appropriate skills development e.g. through related teaching initiatives;

  8. Strong senior management involvement, leadership and drive, with proven strength in depth.

21. Particular emphasis was placed on information covering categories i, ii, vi and viii above.13 Thus, a clear steer was being given by the ETI that two key factors were likely to dominate the selection process, namely the reputation of the research organisation and its leadership and, secondly, the facilities on offer from the host organisation and the potential to expand on these as the ETI grew.

22. The ETI’s shadow board – which had been tasked by the UK Government with making the decision on the choice of site to host the ETI – stated that it was important that the process used to take such decisions should be “open and transparent”.14

23. Each research organisation or consortium of organisations was asked to prepare a short (3 sides of A4) ‘expression of interest’ for submission to the ETI, whose staff also indicated that they would be happy to discuss the process informally with interested parties. In addition, the then DTI announced there would be an open information event to attract the participation not only of possible core industry partners but also by those interested in collaborating in the work of the Institute or hosting it.15

24. In May 2007 - a slight slippage in the original timetable - the then UK Trade and Industry Secretary, Alistair Darling, made an announcement that five consortia of research organisations had been selected as potential hosts for the ETI.16 These were:

  • Midland Consortium - University of Nottingham with Loughborough and Birmingham;

  • North East Consortium - University of Newcastle with Durham, Northumbria, NaREC (New and Renewable Energy Centre) and the Centre for Process Innovation (CPI);

  • North West Consortium - University of Manchester with Lancaster, Liverpool and NWDA (North West Development Agency);

  • Sheffield University (Advanced Manufacturing Park);

  • Energy Technology Partnership from Scotland – Universities of Strathclyde, Glasgow, Edinburgh, Aberdeen, St Andrews and Heriot-Watt

25. According to the Trade and Industry Secretary, “bids [had been] assessed by representatives of the funding organisations on the basis of energy research capability, reputation and culture; space, facilities and accessibility; and commitment to the ETI”.17

26. It was confirmed in the same DTI news release that the initial submissions were considered against a set of high-level criteria by the ETI’s Host Selection Group representing the industrial and public sector funding partners. The result of these deliberations was the agreement to a shortlist of organisations that would be invited to work-up detailed proposals for consideration by the ETI’s shadow board.

27. The Committee understands that the composition of the Host Selection Group was as follows:

  • Allan Jones, Head of Research and Development, E.ON (chair of the Host Selection Group)

  • Paul Garnham, interim Chief Operating Officer for the ETI

  • Representatives of the six commercial companies involved in the ETI (E.ON, EDF, Caterpillar, Rolls Royce, BP and Shell)

  • A representative of the Office of Gas and Electricity Markets

  • A representative of the then Department of Trade and Industry

  • A representative of the Engineering and Physical Sciences Research Council (EPSRC)

  • A representative of the Technology Strategy Board (TSB).

28. Of the above, nine were voting members (6 commercial and 3 public sector).18

29. The Committee understands that the ETI’s interim shadow board consisted of:

  • Paul Garnham, Shell (interim Chief Operating Officer of the ETI)

  • Sir Robert Margetts (chair of the Board)

  • Representatives of BP, Shell, E.ON, EDF, Caterpillar and Rolls Royce

  • The Director of the ETI (Dr Clarke upon his appointment)

30. Finally, the then UK Trade and Industry Secretary announced that the next stage of the selection process would be for representatives of the funding organisations to visit each of those consortia that had been short-listed and to make a final recommendation to the ETI Board by the early Autumn (of 2007).

31. According to Dr Alison Wall, Joint Head for Energy and Climate Change at the UK’s Engineering and Physical Sciences Research Council (EPSRC) - one of the bodies involved with the ETI - the ETI’s team then began a series of visits to each of the five consortia. The purpose of these visits was “to explain to them what our vision for the ETI was and what we were looking for”.19

32. Dr Wall stated that once the series of visits had been concluded, the host selection sub-group developed “a much more detailed set of criteria” using the same sorts of headings as in the past, but “including much more detail”.20 Dr Wall’s view was that all the five bidders that were selected were “strong on reputation and culture”, and, therefore, the ETI “set out more details about the buildings that were required”.21

33. The next stage of the process was for the five short-listed consortia to prepare further written submissions for the ETI in light of its “more detailed set of criteria”. In late June/early July 2007, further information was released which, according to Scottish Government officials who were involved in assisting the Scottish consortium with its bid the ETI, “became slightly more precise about, for example, what [the ETI] was looking for in respect of the building.”22

34. Consequently, according to the same Scottish Government officials, “by the time the final bid was submitted, we were required to identify a single location for the director's office.”23 The process by which the Scottish consortium selected a location within Scotland for its site for the ETI is discussed in the section below.

35. In mid-August 2007, the ETI team held an assessment meeting to review progress with the bids that had been solicited and to “[feed] back some detailed questions.”24 By late August 2007, bids were submitted to the ETI and three of the five consortia were then invited to make a presentation on their bid. The Scottish consortium was one of the three consortia involved in these presentations.

36. The presentations by the three consortia, including the group from Scotland, were made to the ETI’s shadow board, meeting in London. The ETI’s shadow board, in a role agreed by the UK Government, took the decision on the location of the ETI. Consequently, an announcement was made on 20 September 2007 that the new centre would be based at Loughborough University, a member of a Midlands consortium. It was also announced that Dr David Clarke, formerly of Rolls Royce (one of the industrial partners co-funding the ETI) would be the ETI's new chief executive.25

The development of Scotland’s bid – key stages

The choice of a Scottish consortium

37. As indicated above, only one consortium from Scotland – the Energy Technology Partnership – submitted an expression of interest, which was subsequently chosen by the ETI to bid to host the new institution. At the outset, however, there were a range of universities in Scotland that were interested, separately, in being involved with the ETI. The question arises, therefore, as to why the Scottish universities decided to come together to bid collectively as the ETP and not pursue separate bids. This is covered in the following section of this report.

38. At this stage, according to Scottish Government officials, “there was a lot of interest in Scotland and a lot of people were going to the information day” organised by the then UK DTI.26 The same officials stated that as a result of the information day, they organised a separate meeting for interested parties in Scotland and that “[at] that meeting, which the Scottish Executive facilitated, it was proposed that, rather than having a number of separate interests in involvement in the ETI, it would be worth while to work as a consortium and put in an expression of interest.”27

39. Subsequently, a Scottish consortium coalesced around the idea of a shared bid with ‘membership’, based on the minutes of various planning meetings, consisting of:

  • Professor Jim McDonald, University of Strathclyde;

  • Professors Paul Mitchell, Albert Rodger and Stephen Logan, University of Aberdeen;

  • Professor Robin Wallace, University of Edinburgh;

  • Professors Denis Hall and Patrick Corbett, Heriot Watt University;

  • Professor Peter Robertson, Robert Gordon University;

  • Professor John Irvine, St. Andrew’s University.

40. This academic grouping was supported in its work by a range of representatives from the Scottish Government and its agencies with membership, again based on the minutes of planning meetings, consisting of:

  • Jane Morgan (Deputy Director and Head of Energy and Telecommunications) and colleagues, the Scottish Government;

  • Paul Lewis (Managing Director – Industries) and Brian Nixon (Director, Energy) and colleagues, Scottish Enterprise/Scottish Development International;

  • Elaine Hanton, Head of Renewables, Highlands and Islands Enterprise;

  • Professor David Gani, Director of Research Policy and Strategy, Scottish Further and Higher Education Funding Council;

  • Roger Gill, Energy ITI;

  • Graham Wren and colleagues, Scottish Science Advisory Committee.

41. Also present at various stages when consortium meetings were held were Rita Stephen, representing Aberdeen City and Shire Economic Forum, Abigail Tierney and colleagues, representing Aberdeen City Council, and Professor Andrew Miller of the Royal Society of Edinburgh.

Role of public sector bodies

42. As the section above makes clear, the Scottish bid was ultimately developed by a consortium of Scottish universities with four public sector bodies in a broadly supporting role, i.e. the bid that was finally made was not in the name of the Scottish Government or any of its non-departmental public bodies (NDPBs) but by the academic consortium itself.

43. Critically, in terms of this report, officials from the Scottish Government ‘facilitated’ the key planning meetings. These meetings included the crucial one during which the decision on the proposed location for the Scottish bid was made. The planning meetings to develop the Scottish bid were mostly chaired by Jane Morgan of the Scottish Government, or one of her colleagues.28

44. The key time period, for the purposes of this report, is the period May to August 2007. According to the evidence received by the Committee, as indicated above, after the Scottish consortium (ETP) had been selected to bid following the expressions of interest stage, it became apparent (in May 2007) that a decision would need to be taken on which location within Scotland – primarily Aberdeen, Glasgow or Edinburgh – would be chosen as Scotland’s preferred location for the ETI.29

The choice of Glasgow as host

45. The decision-making process within Scotland that ultimately selected Glasgow as the preferred location for the ETI is one of the central issues examined by the Committee in this report. What follows is a description of the timetable and the process used.

46. In terms of the timetable and the decisions taken, when the Scottish consortium submitted its expression of interest in February 2007, no specific location had yet been identified as the proposed site of the ETI within Scotland. By July of that year however, Glasgow, and specifically the University of Strathclyde, had been chosen, with Professor Jim McDonald of the University of Strathclyde leading the bid.

47. According to Jane Morgan of the Scottish Government, in the period February to May 2007, “[we] posited the possibility of three different locations: Glasgow, Edinburgh and Aberdeen. Partly, we did not feel in a position to make a choice at that stage, as it was not clear enough what the ETI was looking for.”30 Ms Morgan indicated to the Committee that the final decision to select Glasgow was taken by public sector officials on 13 July 2007.

48. The eventual decision on the proposed host city was the result of a process that, according to most of the evidence received, had been agreed by all involved in the Scottish consortium. Specifically, because of the obvious competing interests of each of the Scottish universities involved in the bid in hosting the ETI, it has been suggested to the Committee that the universities involved asked the four public sector bodies to review each possible location against the same criteria that the ETI itself would use and to decide which of the three – Aberdeen, Edinburgh of Glasgow – would go forward as the proposed host for the ETI.31 This report looks in more detail at this decision-making process in the section that follows.

KEY ISSUES

49. In any competitive process, such as that organised by the UK Government to select a host for its new institution, there is always a chance of failure. Ultimately, this is what happened to Scotland’s bid to host the ETI. However, given Scotland’s world-class reputation in many of the spheres of interest covered by the new energy technologies institute – oil and gas, renewable energy etc. – it is fair to say that there remains a degree of surprise that the Scottish bid failed. This section sets out why, in the Committee’s opinion, the bid was unsuccessful and what lessons need to be learned.

50. To aid the reader to follow the timeline of the decision-making process set out in subsequent sections of this report, Figure 1 below sets out the key dates:

Figure 1: The timeline

Date Event
March 2006 Chancellor of the Exchequer outlines ETI proposal in the budget speech
14 September 2006 Prospectus for the ETI published
October 2006 DTI holds an information day on the ETI for interested parties
17 October 2006 Scottish ETP consortium agrees to make a joint bid
12 January 2007 UK Government launches formal competition for hosts
February 2007 ETP consortium submits expression of interest (with no specific host site proposed)
May 2007 Host Selection Group in the ETI shortlists five consortia, including the Scottish bid from the ETP
25 May 2007 Agreement reached as to the role of the four public sector bodies in Scotland to decide on the proposed host within Scotland’s bid
12 June 2007 Three competing Scottish cities make presentations to the visiting ETI hub selection committee staff
6 July 2007 ETI publishes final selection criteria
13 July 2007 Scottish Government, Scottish Enterprise, Scottish Funding Council and Scottish Science Advisory Committee officials select Glasgow as the city to be Scotland’s proposed host
16 August 2007 Host Selection Group in the ETI reduce the shortlist from five to three consortia, still including the Scottish bid
6 September 2007 ETP consortium makes its final presentation to the ETI’s shadow board
20 September 2007 Announcement made that the Midlands consortium was successful with Loughborough University chosen as the host for the ETI and Dr David Clarke its Chief Executive/Director

The decision to form a Scottish consortium

51. Prior to the Scottish Government-facilitated meeting in October 2006, a range of organisations were reportedly interested, separately, in being the host of the soon to be established ETI. This is not to say that co-operation between universities active in the energy field did not already exist. Professor Jim McDonald of the University of Strathclyde told the Committee that “there was a pre-existing set of academic partnerships that pre-dated the ETI concept.”32

52. At some level, therefore, the spirit of co-operation and the necessary personal relationships already existed amongst many of the partners who would ultimately be involved in the single bid from Scotland to host the ETI. It has been suggested to the Committee, however, that it was open to any organisation to make its own bid to host the ETI and not to feel obliged to be part of a consortium from Scotland. Assurances were given to the Committee by a key member of the ETI’s team, Dr Wall of the UK’s Engineering and Physical Sciences Research Council, that “[if] there had been a separate bid, we would have treated it in exactly the same way as the other bids.”33

53. According to Professor McDonald, “there was never any disharmony within the energy technology partnership, which bodes well for our ability to build on the research, deployment and demonstration capabilities in Scotland.”34 His view was supported by Professor Logan of the University of Aberdeen who indicated that “[to] re-emphasise Jim McDonald's point, there was no disharmony among the academics. The relationships were pre-formed, i.e. they existed before the ETI came along.”35

54. Similarly, according to Jane Morgan, Deputy Director and Head of Energy and Telecommunications in the Scottish Government, the individual universities involved in coming together as a consortium to put together a single bid were “willing partners, because at all times they had the opportunity to do something different.”36 This view is presented in the minutes of the ETP consortium meeting of 17 October 2006, which state that—

  • “Attendees agreed that it was essential to present Scotland's capability in the round, whilst still bringing out the strengths of particular institutions. A joint "bid" should be drawn up, underlining the strength of Scotland's universities, energy industry, economic development agencies and local government and Executive policy.”37

55. According to Professor Anne Glover, Chief Scientific Adviser for Scotland, in a letter issued in January 2007, the principle of a single partnership approach had “the full support of Ministers” in the then Scottish Executive.38

56. In the evidence received by the Committee, there appears to be little, if any, disagreement on the principle of a single Scottish bid despite the obvious desire by the competing universities to host the ETI if the bid was successful, at least during the early part of 2007. This may, however, reflect a reluctance to be drawn into a public discussion on this subject.

57. However, although the Committee recognises the obvious benefits of a single bid from Scotland to host the ETI, we do not necessarily suggest that this approach should be the norm when responding to any opportunity of this nature in the future. Very careful consideration needs to be given as to whether the advantages of such an approach outweigh the problems that can arise and which did arise in the case of the ETI bid.

The ETI’s decision-making process

58. At the outset, the UK Government and the various public sector organisations agreed to place decision-making in the hands of a series of public-private groupings rather than have the relevant UK ministers take the key decisions, such as on the location of the ETI and the appointment of its senior staff. It is likely that this decision reflected the fact that the ETI as a body would be a public-private partnership funded by both the public sector and private sector companies. The two key groupings involved in decisions about the host site for the ETI, as identified above, were the host selection sub-group, which made the decision (in May 2007) to short-list five consortia at the expression of interest stage, and the ETI’s shadow board, which took the final decision on the choice of host for the ETI in September 2007.

59. From the evidence received by the Committee, the initial call for expressions of interest appears to have been open and transparent, with all research organisations across the UK invited to participate if interested in hosting the ETI. The UK Government made public its invitation and set out the criteria that would be used to make an initial assessment and also gave a clear steer on the relative importance of the individual criterion.39

60. The Committee understands that the list of organisations that could host the ETI was reduced to a shortlist of five consortia, one of which was the ETP bid from Scotland, by the host selection sub-group within the ETI.

61. Once the five potential bidders had been identified in May 2007, a further and more detailed set of criteria and information was issued by the ETI’s team. To quote Dr Wall of the EPSRC, the new criteria “[used] the same sorts of headings, but including much more detail.”40 In particular, the demands relating to the accommodation were elaborated in more depth.

62. Whilst this ‘refinement’ of the criteria did have the benefit of being done in an open and transparent way, it was, however, a substantial shift in the amount of detail that had originally been required by the ETI, particularly in relation to accommodation for the ETI, as well as a shift away from the focus on reputation and research capability. It is open to question whether this ‘refinement’ of the criteria unduly affected the viability of the Scottish bid in any way. It is also unclear whether the weighting of the various criteria were affected in terms of whether issues such as accommodation became more important than, for example, research capability. However, in respect of the choice of suitable accommodation within Scotland for the ETI, this ‘refinement’ was critical; this is explored in more detail below.

63. Shortly after the expression of interest stage in May 2007, members of the ETI team made a series of visits to potential bidders. At that stage, the Scottish consortium had not yet selected Glasgow as the preferred choice to host the ETI within Scotland.

64. During the first visit by the ETI team, its members visited Edinburgh. Dr Wall of the EPSRC confirmed that no visit to any of the other potential sites in Scotland was made during this initial visit to Scotland.41 Dr Wall also indicated that these visits were not intended to evaluate facilities, but to engage with the bidding teams.42

65. Once the Scottish consortium had chosen Glasgow as its preferred location, the ETI team made a subsequent visit to this city.43 It was confirmed to the Committee, however, that no visit was made to Aberdeen at any stage in the process despite all three cities in Scotland (Glasgow, Edinburgh and Aberdeen) being involved in the Scottish bid.44 According to Dr Clarke of the ETI team, who went on to become its chief executive, “each of the bidders showed us the specific sites that they were offering”.45

66. In addition to whether the visits made by the ETI team within Scotland were sufficient, the Committee also heard concerns about the process followed whereby the relative importance given by the ETI to the building that would host the ETI increased markedly after May 2007. At the outset, the ETI team were open about the importance of the facilities that were required to host the ETI and how these would need to be able to be developed as the ETI expanded. However, the Committee notes that, from May 2007, the emphasis on the relative importance of the building changed significantly, perhaps in part as the ETI itself became clearer about what was required and perhaps, as it became necessary, to ask potential bidders for further, more detailed information.

67. The Committee notes the comments from those involved in the Scottish bid, such as Paul Lewis of Scottish Enterprise, that this refinement of the criteria in relation to the building requirements did not necessarily represent a ‘changing of the goalposts’ at the last minute. He told the Committee that “the goalposts did not move, but there was a lot more detail on the specific requirements of the ETI.”46

68. Similarly, Professor McDonald of the University of Strathclyde told the Committee that the “published ETI criteria always included a requirement for a high-quality building that would house the director [the chief executive] and the directorate. That had never been anything other than well understood. After we had gone through the expression of interest process, subsequent, much tighter, specifications were released against the building.”47

69. As far as the Committee understands, and as confirmed by the evidence given to the Committee, both the bids from Aberdeen and from Glasgow to be the preferred host of the ETI were based on providing an initial building that would act as the interim headquarters for the ETI and then a proposal for the construction of a new building. In Glasgow, this would be based in the city’s science site.48 In Aberdeen, this would be a new building - the energy futures centre - which the city’s council, along with Scottish Enterprise, intended to build on the beachfront.49

70. The Committee understands that these were the only two options available to the Scottish consortium as no suitable building in Edinburgh was available to act as the host for the ETI. Therefore, both the options open to Scotland involved an interim building following by the construction of a new building. As Professor David Gani of the Scottish Further and Higher Education Council told the Committee, “the issues about the building seemed to me to be identical in Aberdeen and in the part of Glasgow to which the University of Strathclyde is close.”50

71. Consequently, the finalised Scottish bid proposed an interim building with a further proposal to construct a new building to host the ETI. The critical decision to offer an interim and then a new building does appear to have been one of the main reasons why the Scottish bid failed to win the competition to host the ETI.

72. In evidence to the Committee, Dr Clarke, now chief executive of the ETI, told the Committee that—

“… we considered four areas of criteria. Bear in mind that all the bids were viable as an HQ for ETI. We had to select which was the optimum option for ETI. The Scottish bid contained a proposal involving an interim building—which was acceptable—and a longer-term option using an as yet unbuilt building. Compared with some of the other bids, the Scottish proposal was a higher-risk option.”51

73. Although his colleague, Dr Wall of the ESPRC, explained that Scotland’s failed bid “did not all hang on the building,”52 Dr Clarke did elaborate on his comments in relation to risk by indicating that—

“ETI is a brand new organisation. It is working to a brand new funding model, which has not been tried before, involving 50 per cent public sector funding and 50 per cent private sector funding in a single pot, managed by a separate entity, ETI. We are looking to invest in an area of technology development—the demonstration of low-carbon energy technologies—that has largely not been addressed in a highly integrated way before or in such a way as to facilitate the very rapid pull-through of capability into commercial application. Given that context, the last thing I want, quite bluntly, is to have building risk, organisational risk or management problems around me. I do not want those issues.”53

74. Of key concern to Dr Clarke were the “management issues” that could arise when the ETI would be required to transfer from the interim accommodation to the new building. He said that the key issue for the Scottish bid—

“was [the] risk to do with having a building to meet our requirements in the future. If, at some point in the future, the new building came into being, we would have to transfer staff and so on. I appreciate that the move would be over a very short distance, but it all introduces management issues.”54

75. The relative importance given to the accommodation and facilities seems to have come as a surprise to some involved in the Scottish bid insofar as they were disappointed that the Scottish bid seemed to have failed on this issue alone. Professor McDonald, of the University of Strathclyde, told the Committee that—

“[we] were surprised and disappointed. The original criteria majored on research capabilities and international standing, so it is disappointing that, ultimately, bricks and mortar were an issue.”55

76. Although Paul Lewis of Scottish Enterprise informed the Committee of the steps taken by the Scottish consortium to “de-risk” the Scottish bid from the accommodation perspective, these efforts were ultimately unsuccessful.56 Professor McDonald told the Committee that—

“The Scottish bid made a magnificent attempt to de-risk what we thought were the issues being flagged to us. Clearly I am biased, but I thought that, after the questions had been responded to, the Scottish bid had improved and we had an irresistible offering. I was proved wrong. We made every attempt to ensure that ETI criteria were established.”57

77. As noted above, the issues of the proposed accommodation for the ETI took on greater significance as the decision-making process progressed. The first critical meeting that the ETI held to decide a further shortlisting of the five competing bids took place on 16 August 2007. The outcome of this assessment was that the bids from the Energy Technologies Partnership from Scotland, the North East consortium and the Midlands consortium were the strongest and they were invited back to make presentations on the 6 September 2007.

78. According to the note provided by Dr Wall,58 on the 6 September, the bidders were asked to present an overview of their proposal and to address specific and generic questions, some of which they had been advance notice of. They were also asked to fill in a financial template to help the sub-group compare the costs. The interim financial director for the ETI, Stuart Moore, joined this meeting to help assess the financial information. Each session concluded with an open discussion.

79. Sir Rob Margetts and Sir Keith O’Nions joined the meeting after the presentations to hear the comparison of bids. The final recommendation was reached through a show of hands for the members’ first and second choices, followed by a discussion of the issues which influenced the choices. According to Dr Wall, the voting was as follows:59

  • Midlands: 7

  • North East: 2

  • Scotland: 1

80. The Committee would like to record its surprise at the use of a ‘show of hands’ as a methodology for establishing the first and second choices of those participating in the selection of the location for an institution which was expected to have a budget of £1 billion.

81. In the concluding paragraphs of the additional information provided by Dr Wall it states—

“On balance, the host selection group strongly recommend that ETI be hosted by the Midlands Consortium, subject to further contractual negotiations. This provides an existing building available for immediate occupation. The building shares the Loughborough University campus with related teaching, research and energy technology demonstration and has good transport connections. ETI should take up the option of the building being enhanced to BREEAM [Building Research Establishment Environmental Assessment Method] excellent standard within 9 months unless this building work would be too disruptive for the initial occupants.”60

82. Additionally, in the assessment of the Midland’s consortium bid by the ETI staff it states in relation to office accommodation that the proposal had a—

“Good standard existing building, but not outstanding; good conference facilities on site; offer to bring up to BREEAM excellent rating is highly desirable; consider the option to move to a new state-of-the art building.”61

83. What is confusing to the Committee in these statements is that it is clear that despite the comments made by Dr Clarke to the Committee that the key issue for the Scottish bid “was [the] risk to do with having a building to meet our requirements in the future”,62 there appear to be similar, if not identical, issues with the bid from the Midlands consortium which, as the preceding paragraphs show, also involves a temporary building followed by a refurbishment or an option of moving to a new state-of-the-art building.

84. It is not at all clear to the Committee why, in Dr Clarke’s view, there are significant “management risks” associated with the Scottish bid (involving temporary accommodation and then a move to a new building) but not apparently in any other bid and, in particular, with that of the winning consortium, which also appears to have been based on interim accommodation to be followed by a major refurbishment or a move to a new building.

85. The Committee believes that it would have been far better for all concerned for the ETI to have been open at the outset of the process (i.e. in January 2007) and not just after the expression of interest stage in May 2007, as to their requirements. We believe this shift in emphasis on the nature of the accommodation and facilities required to host the ETI seriously affected the Scottish consortium’s bid.

86. The Committee is surprised to note that there appears to be similar risks associated with building issues within the successful bid as there were with the Scottish bid which failed. We were given no evidence as to why the perceived risks were higher in the Scottish case, possibly to the ultimate detriment of the Scottish bid.

The choice of Scottish ‘host’

87. The next key issue for the Committee was the decision taken by the four public sector bodies involved in ’facilitating’ the work of the Scottish consortium to choose Glasgow, and specifically the University of Strathclyde, as the preferred site to host the ETI.

88. As indicated above, this critical decision was taken by representatives of the Scottish Government, Scottish Enterprise, the Scottish Further and Higher Education Funding Council and the Scottish Science Advisory Council, having apparently been asked by the Scottish universities involved in the bid to assess their competing claims to act as the host.

89. It has been suggested to the Committee that the various universities involved were all content with this approach. At the planning meeting of 25 May 2007, attended by representatives of the Strathclyde, Edinburgh, Heriot Watt and Aberdeen Universities, it is reported that clear agreement was reached by all as to the process to be followed. The minutes of this meeting state—

“It was agreed that only 3 cities should be considered for the Institute (these were Aberdeen, Edinburgh, Glasgow) - and that within each city only one location should be offered for the ETI hub. Each of the universities would produce a bid document, no more than 2 pages in length, which set out the case for the Institute being based in their city - using the criteria set out by DTI.”63

90. In response to a suggestion that the preparation of the presentation had unduly favoured Glasgow, Jane Morgan told the Committee that—

“On 12 June the ETI panel visited to present their intentions and to hear about the Scottish bid. At that stage a hub location had not been selected. Brief information was presented on all three locations but it was not the purpose of the day to make any selection. I did read in the press, I think in late July, suggestions that Glasgow had presented more material than others. I have not checked to see if this was the case but as noted this information did not form the basis of any decision and even if this were true could not have created any advantage or disadvantage.”64

91. Subsequent minutes of planning meetings of the ETP consortium in Scotland after June 2007 record the various exchanges of documents and requests for information, culminating in a decision on 13 July 2007 by the four public sector representatives to select Glasgow as the preferred host. This key meeting was chaired by Richard Bellingham from the Scottish Government, a colleague of Jane Morgan, as the latter and her superior, Graeme Dickson, were out of the country on this date. It is understood that in addition to Mr Bellingham of the Scottish Government, Professor Gani of the Scottish Funding Council, Tom Lamb of Scottish Enterprise and Graham Wren of the Scottish Science Advisory Committee also participated.

92. According to Professor Gani of the Scottish Funding Council, during the meeting on 12 July the group of officials did not focus on whether Glasgow or Aberdeen could offer better facilities but “decided on other criteria associated with research prominence, depth, critical mass and subject coverage for interdisciplinary work that Glasgow was the preferable city for the location of the energy technologies institute hub.”65 He suggested that this was because the same building-related issues in Glasgow or Aberdeen “needed to be addressed at the Glasgow site and the Aberdeen site.”66

93. According to a letter from the Cabinet Secretary for Finance and Sustainable Growth to Aberdeen City Council (dated 23 July 2007)—

“The scoring [at the meeting of 13 July 2007] was based on the evidence supplied by the three locations. Each criterion was discussed by the panel and a common score agreed. […] As no weightings had been identified by the UK ETI no weightings were applied in the scoring process.”67

94. He further stated that—

“All the universities agreed this process, and were shown the final selection criteria (immediately these were received from the UK ETI selection panel on 6 July). The universities were also shown the scoring sheet used by the panel. No objections of any sort were raised.”68

95. In statements issued to the press at the time, the reaction from some was vociferous. For example, Kate Dean, the leader of Aberdeen City Council said "[we] believe the process has been flawed and we cannot believe they have overlooked Aberdeen.”69

96. In evidence provided to the Committee by Graeme Dickson, then Director for Enterprise, Energy and Tourism in the Scottish Government and Jane Morgan’s direct superior, the suggestion is made that the deciding factor between Glasgow and Aberdeen was, in the view of public sector officials, the better research capability of the former. In a letter to the Committee (dated 17 December 2007), Mr Dickson states—

“Glasgow scored highly on research while Glasgow and Aberdeen’s offerings on accommodation had strong similarities, although Glasgow’s proposed permanent location was located nearer to academic staff that [sic] that of Aberdeen.”70

97. The Committee is conscious of the limited and contrasting nature of much of the evidence received in relation to the decision-making process to select Glasgow as the site for the ETI if Scotland had been successful in its bid. Without further information, it is impossible for the Committee to reconcile the competing views. What the matter emphasises to the Committee is the far from open and transparent process followed during this critical period. We find this surprising given that the ETI was such an important prize for Scotland to win.

The role of ministers and civil servants

98. The decision-making process for the ETI bid within Scotland and the respective roles played by previous and current ministers, civil servants and other public sector officials and representatives of the universities is undoubtedly a complex one.

99. However, there are essentially two distinct periods when this inter-relationship between politicians, officials and independent employees of universities is critical. The first was prior to the May 2007 elections to the Scottish Parliament, when decisions needed to be taken on what process would be followed to decide which of the three cities in Scotland would be chosen to host the ETI if Scotland’s bid was ultimately successful. The second was after the elections, when decisions were taken in line with the process previously agreed to. This raises the question as to the extent to which Scottish ministers in the current or former administrations were actively involved in taking, or at least ratifying, those decisions.

100. According to a letter from Graeme Dickson of the Scottish Government to the Committee, there was no dissent at the planning meetings held in October/November 2006 to the notion that a joint expression of interest to host the ETI be prepared by a single consortium of Scottish organisations.71 Furthermore, he suggests that “[those] present [at the planning meetings] also asked that Jane Morgan [of the Scottish Government] continue to chair meetings which would oversee the development of this expression of interest.”72 He also suggested that the then Scottish Executive ministers “were informed of the proposed single expression of interest.”73

101. This begs the question as to what advice the then ministers were given as to the decision-making process that should be used within Scotland to decide on our proposed host city for the ETI and what role, if any, the Scottish ministers would, or could, have in this process.

The former Scottish Executive

102. In evidence to the Committee, the former Deputy First Minister, Nicol Stephen MSP, told members that on the issue of a single consortium, he had been told that “the advice I consistently received from civil servants was that a single Scottish bid would be stronger than - and preferable to - multiple, competing Scottish bids.”74

103. However, on the issue of whether or not he, as the relevant minister in the previous administration, had explicitly highlighted his preferred choice of location for the ETI hub to civil servants, he told the Committee that—

“My view was always that Aberdeen had the strongest case for becoming the hub or headquarters of the Energy Technology Institute. I made this view known to civil servants responsible for developing Scotland's bid. I was urged not to make this view public as it would have almost certainly ended any prospect of a joint Scottish bid.”75

104. As evidence, he cites an email that the then officials in his private ministerial office sent to policy officials in December 2006 which states—

“The Deputy First Minister [Nicol Stephen MSP] has now seen your note and commented that he thinks we MUST (his emphasis) start to develop a full proposal lMMEDIATELY (again his emphasis) based on the Director/HQ being in Aberdeen.”76

105. Furthermore, he suggests that in the period around February 2007, he asked for a “steer on the issue” and indicates that his information at the time was that the UK Government favoured Aberdeen as the preferred site but could not be seen to favour Scotland and hence make their views public.77

106. Mr Stephen then suggests that “Despite this, a compromise position was agreed between the partners. This involved submitting an expression of interest document which made reference to three potential hub locations - Aberdeen, Edinburgh and Glasgow. This was agreed - without further reference to me - to prevent the Scottish bid splintering into rival submissions. The expression of interest document, lodged by the Scottish partners on 14 February 2007, stated that the hub location should be chosen by the Director of the new Institute.”78

107. Finally, Mr Stephen notes that his ministerial involvement then ended as the Scottish election held in May 2007 loomed.79

108. The Committee notes the evidence from the former Deputy First Minister and Minister for Enterprise – Nicol Stephen MSP – and his clarification that the relevant Scottish ministers were clear on their preferences for the host but were advised by civil servants not to make this public for fear of disintegration of the single bid approach. This makes the view that all the universities involved were willing partners and fully signed up to a single bid highly questionable. It also raises the question as to why the ministerial direction was not acted upon.

The new Scottish Government

109. Following the May 2007 election, according to Mr Dickson of the Scottish Government—

“New Ministers were made aware of Scotland’s short-listing in May 2007. We set out the process to date and that the ETI would now require that one location be put forward for the main hub office. We further informed [the new] Ministers that a range of consortium partners favoured a transparent process for comparing the merits of each location and that the Executive had no direct locus for intervention. We also sought agreement to Jane Morgan continuing to chair consortium meetings.”80

110. This view is confirmed in a letter from Jim Mather, the Minister for Enterprise, Energy and Tourism in the new administration, in which he indicates that the Scottish ministers in the SNP Government “inherited a process which had been sanctioned by our predecessors and [which] enjoyed the confidence of the university members of the consortium.”81. In those circumstances, he suggests that the Scottish ministers “did not determine the potential location of the hub.”82, 83

111. While the new Scottish ministers may not themselves have determined (i.e. decided on) the potential location of the hub, they certainly referred in public to the subject. In a speech to the All-Energy Conference held in Aberdeen on 23 May 2007, the new Energy Minister, Jim Mather, stated—

“ …. I want to acknowledge again the huge expertise we have here in Scotland, particularly here in Aberdeen, which we see as the logical centre for new energy technologies. Our industrial and academic expertise has been reflected in the proposal put together for the proposed Energy Technology Institute, in which Scotland set out how people would work together in a consortium.

“In doing so, you set the agenda for proposals from different regions of England. Scotland is now on the short list and I am sure that this city will make an excellent case for hosting such a centre for research and development.

“Especially as, the oil and gas industry, with its base in Aberdeen, has been and will continue to be vital to Scotland's economy.”84

112. In evidence to the Committee, Jane Morgan of the Scottish Government told members that during the crucial period from the expression of interest stage (May) to the final bid (July)—

“Ministers were not directly involved, although obviously we reported to them periodically—for example on the fact that the bodies wished to act as a consortium and on the submission of the expression of interest. Ministers did not meet the consortium until the final stages of the process, just before submission of the final bid.”85

113. While there was evidence on the public position of ministers on the ETI, the Committee also wrote to Jim Mather to invite him to provide the Committee with any additional evidence he might wish on the interaction between the Scottish ministers and civil servants. This allowed him the opportunity to highlight his views or those of any ministerial colleague on the internal decision-making process used to choose the location that should be proposed to host the ETI.86 The Minister’s reply merely referred the Committee to his previous letter of 19 February 2008 on the ETI.87

114. The Committee is disappointed that the Minister was unable to provide the Committee with more detail on the interaction between the Scottish ministers and civil servants on the internal decision-making process to choose the location that should be proposed to host the ETI.88, 89

The civil service

115. From what the Committee has been able to establish therefore, prior to the elections in May 2007, the then Scottish ministers did gave their consent to the process that would be used to take decisions in Scotland. However, when giving their consent, this did not necessarily imply agreeing that civil servants and other public sector officials would be actively involved in their own right in selecting which of the three cities in Scotland would be proposed as the host for the ETI. This is because at this point in time, no such decision needed to be taken. In evidence to the Committee, Jane Morgan stated—

“An expression of interest in line with the requirements put in place by the UK was submitted in February, on a consortium basis. There was no requirement at that stage to posit where we were suggesting the director's office should be located. In May, we heard that we had been shortlisted and it was immediately clear that, by the time the final bid was submitted, we were required to identify a single location for the director's office.90

116. However, it is also clear that the previous Deputy First Minister and Minister for Enterprise - Nicol Stephen - made his views abundantly clear on his preferred location (Aberdeen) as witnessed in the email sent to civil servants in December 2006.

117. Upon their election, the new Scottish ministers were apparently made aware of Scotland’s short-listing as one of the five consortia selected by the ETI to host the institute. According to Scottish Government officials, the new ministers were briefed on the process to date and told that the ETI team now required a decision to be made on the one, single location to be put forward by Scotland to host the institute. Critically, the advice given by the civil servants to ministers would appear to have been that the academic partners in the ETP consortium favoured a transparent process for comparing the merits of each location.

118. In a letter to the Committee, Sir John Elvidge told the Committee that in light of the evidence available to him, he felt that “civil servants sought to ensure that Ministers were kept up to date with our developing understanding of these processes and procedures and, once a potential consortium of Scottish higher education institutions had emerged, with the decision making process proposed by the Scottish consortium to determine which location should be offered in their bid as the location for the ETI hub.”91

119. In the context of the advice given to ministers by civil servants, it would appear that the latter assumed that the selection of the location could be made without any formal consultation of ministers as to their preferences. In the absence of any direct instruction to the contrary, during the period from May to July 2007 civil servants pursued the process that had been previously sanctioned.

120. The Committee accepts that whilst there may have been an agreement prior to the election from ministers in the previous administration as to the process to be followed, this was taken well in advance of the need to decide which of the three cities would front Scotland’s ETI bid and how this would be done. After the election, the Committee is disappointed that the new ministers were not better informed by the civil service as to what limitations would ultimately be placed on them as a result of the previous decisions taken on the process to be followed.

CONCLUSIONS AND RECOMMENDATIONS

Introduction

121. In March 2006, the UK Government launched a process to set up the Energy Technologies Institute (ETI), define its objectives, choose its chief executive and, through an UK-wide competition, choose the site for its headquarters or the hub. The ETI would be a public-private partnership with some of the UK’s leading industrial companies and, within a decade, become a £1 billion operation with around 50 high-value jobs based at the hub. As such, and in light of Scotland’s key role in the energy sector, the prize of hosting the ETI’s headquarters was an important one.

122. As our report shows, various Scottish organisations from the academic and public sectors coalesced to develop a single bid to host the ETI and which was successful through all but the final stage of the competition with a consortium from the Midlands and with Loughborough University ultimately chosen as the location for the ETI. To say Scottish organisations were surprised is an understatement and our inquiry has sought to answer the question why the Scottish bid was unsuccessful.

123. The Committee is conscious that in choosing to investigate the circumstances of the failed Scottish bid we risked raising uncomfortable issues that could potentially be damaging for the reputation of Scottish organisations. This is especially important in light of the desire, which we fully support, for Scotland to benefit from the research commissioned by the new ETI. However, not to have sought to understand the process would have been a dereliction of duty and would not enable lessons to be learnt.

The single bid approach

124. The Committee understands the attractions of a single Scottish bid to host the ETI involving as many of the relevant organisations as possible. However, the formation of such a bid needed to involve partners that were willing to work together irrespective of which would be chosen as the specific site proposed from Scotland. It is not clear that this was the case in light of the evidence from former ministers in the Scottish Executive.

125. The Committee recommends that the development of a single bid for projects of this nature in the future should not necessarily be the norm and that all parties must enter into such a co-operative agreement with their eyes open and with a willingness to be involved regardless of developments. Additionally, a crystal clear decision-making process and profile of decision-makers – authorised at the highest levels, including ministerial – is required.

The workings of the ETI

126. In relation to the period May to July 2007, the Committee has some concerns on the process followed in the ETI. The Committee finds it regrettable that the assessment criteria that would be used by ETI staff to mark competing proposals changed significantly during this period and, in particular, far more emphasis was placed on the physical accommodation for the ETI. We believe that this seriously undermined the Scottish bid and it would have been preferable for the ETI to be open right from the outset as to the detailed nature of all the requirements, including the building needed to host the ETI.

127. Furthermore, we find the evidence presented to us that the Scottish bid was a higher risk due to its proposal for a temporary building followed by a move to a new building highly questionable. As the evidence presented to us shows, the winning bid from Loughborough University is also based on a good standard existing building, but not outstanding, and has the option of a move to a new state-of-the-art building.

128. The Committee echoes the comments of Professor Jim McDonald of the University of Strathclyde – a leading member of the Scottish partnership – that it is disappointing that the decisions came down to bricks and mortar and not research reputation and international standing.

129. Our criticisms are something that the Committee recommends the Scottish Government may wish to raise with the UK Government and/or that members of the UK Parliament may wish to raise from this point forward.

The choice of a Scottish site

130. The Committee notes the contrasting evidence received on whether the formation of a single Scottish bid and the decision-making process that followed to choose a site was open, transparent, fair and harmonious. It has been impossible for the Committee to reconcile the different views received and this is highly regrettable. We believe that our work has been stymied by the lack of detailed paperwork and this is symptomatic of lax record-keeping. We find this surprising in light of the value of winning the right to host the £1 billion ETI. The Committee recommends that the Scottish administration reviews the arrangements that were used and learns the appropriate lessons for the future in terms of a clear audit trail.

The role of civil servants and ministers

131. The Committee notes the evidence from the former Deputy First Minister and Minister for Enterprise – Nicol Stephen MSP – and his clarification that the relevant Scottish ministers were clear on their preferences for the host (Aberdeen) but were advised by civil servants not to make this public for fear of disintegration of the single bid. This makes the view that all the universities involved were willing partners and fully signed up to a single bid highly questionable. It also raises the question as to why the ministerial direction was not acted upon.

132. The Committee is disappointed that the current Minister was unable to provide the Committee with more detail on the interaction between the Scottish ministers and civil servants on the internal decision-making process to choose the location that should be proposed to host the ETI.92

133. The Committee is disturbed by the evidence received regarding the particular period from February to July 2007 of the process. We accept that whilst there may have been an agreement prior to the election from previous ministers to the process to be followed, this was taken well in advance of the need to decide which of the three cities would front Scotland’s ETI bid and how this would be done. After the election, the Committee is disappointed that the new ministers were not better informed as to what limitations would ultimately be placed on them as a result of the decisions taken on the process that would be followed and whether any options were presented to them that would have given ministers a far greater decision-making role in the process.

134. We recommend that the Permanent Secretary instigates a “lessons learned” review, reports his findings to the Committee on completion and implements any recommendations in time for any future opportunities of this nature.

Moving forward

135. The establishment of the ETI by the UK Government is a very welcome and important initiative. Despite the efforts by a Scottish consortium to win the competition to host the headquarters we were unsuccessful. This is regrettable but the Committee believes it is now time to move on. We fully support the efforts of Scottish organisations, many of which were involved in the bid, to compete for research commissioned by the newly established ETI and we will play our role in helping them and are confident that the Scottish Government will do likewise. The Committee welcomes the continuation of the Energy Technology Partnership as a means of promoting co-operative working and ensuring that Scottish universities submit bids for some of the individual projects to be financed by the ETI.

136. Scotland’s proud heritage and current role in energy matters – from the development of the steam engine to the oil and gas fields offshore – and our current research and commercial capabilities in new and renewable technologies leads us to be confident that we will be successful in winning a significant share of the opportunities offered by the ETI’s work programme.

137. We encourage all universities and research bodies in Scotland to consider bidding for the research commissioned by the ETI. Winning bids for this research is the real prize. In this respect, the Committee will keep under review how well Scotland performs and how much research is won by Scottish institutions.

Annexe A: EXTRACT FROM THE MINUTES

8th Meeting, 2007 (Session 3), Wednesday 21 November

The establishment of an Energy Technologies Institute and the opportunities for Scotland: The Committee will take evidence, in a roundtable discussion, from—

Graeme Dickson, Director, Enterprise, Energy and Tourism, and Jane Morgan, Head, Energy and Telecommunications, Scottish Government;

and then from—

Dr David Clarke, Chief Executive designate, Energy Technologies Institute;

Dr Alison Wall, Joint Head, Energy and Climate Change, Engineering and Physical Sciences Research Council Lead, Research Councils’ Energy Programme;

and then from—

Professor Jim McDonald, Deputy Principal, University of Strathclyde;

Professor Stephen Logan, Senior Vice-Principal, University of Aberdeen;

Professor David Gani, Director of Research Policy and Strategy, Scottish Further and Higher Education Funding Council;

Paul Lewis, Managing Director, Industries, and Simon Puttock, Senior Manager - Strategy and Planning for Energy, Scottish Enterprise.

1st Meeting, 2008 (Session 3), Wednesday 16 January

1. Decisions on taking business in private: The Committee considered and agreed to take 4 in private.

4. The establishment of an Energy Technologies Institute and the opportunities for Scotland: The Committee considered a draft report

3rd Meeting, 2008 (Session 3), Wednesday 20 February

1. Decision on taking business in private: The Committee agreed to take item 3 in private.

3. The establishment of an Energy Technologies Institute and the opportunities for Scotland: The Committee considered additional evidence.

14th Meeting, 2008 (Session 3), Wednesday 11 June

1. Decision on taking items in private: The Committee considered and agreed to take item 4 in private.

4. Energy Technologies Institute: The Committee discussed further evidence.

15th Meeting, 2008 (Session 3), Wednesday 25 June

1. Decisions on taking items in private: The Committee decided and agreed to take items 7 and 8 in private.

8. Energy Technologies Institute inquiry: The Committee discussed and made changes to the report, and after a series of divisions, agreed the report.

ANNEXE B: ORAL EVIDENCE

8th Meeting, 2007 (Session 3), Wednesday 21 November

ANNEXE C: LIST OF WRITTEN EVIDENCE

MINUTES OF THE ETI CONSORTIUM MEETING, 17 OCTOBER 2006

Energy Technologies Institute meeting - 17 October 2006

Attendees:

Jane Morgan, Energy Policy, Scottish Executive
Richard Bellingham, Energy Policy, Scottish Executive
Jessie Laurie Energy Policy, Scottish Executive
Andy Bishop, Office of the Chief Scientific Adviser, Scottish Executive
Brian Nixon, Scottish Enterprise
Janet Brown, Scottish Enterprise
Elaine Hanton, Highlands and Islands Enterprise
David Gani, Scottish Funding Council
Marc Rands, Scottish Science Advisory Committee (SSAC)
Roger Gill, Energy ITI
Professor Jim McDonald, University of Strathclyde
Professor Stephen Logan, University of Aberdeen
Professor Robin Wallace, University of Edinburgh
Rita Stephen, Aberdeen City and Shire Economic Forum
Janusz Michalski Energy Policy, Scottish Executive

Apologies:

Professor Richard McGookin, Heriot-Watt University
Professor Patrick Corbett, Heriot Watt University
Professor John Maxwell Irvine, RSE Energy Enquiry
Professor Peter Robertson, Robert Gordon University
Professor Andrew Miller, RSE Energy Enquiry

Key points from the meeting

  • Richard Bellingham confirmed the timescales for establishing the Energy Technologies Institute (ETI). DTI were seeking additional expressions of interest from the private sector by the end of November. The Director and Board of the new Institute would be appointed in January 2007. A long-list of candidate locations for the hub would be presented to the Director and Board in March 2007, the selection of the hub’s location would take place over Summer 2007. Hub selection would depend to .a large extent on whether the Director was an academic (likely to stay at his/her own institution) or an industrialist (likely to be taken into an. institution). A Director may be chosen from outside the UK. It would be beneficial to make contact with those responsible for headhunting suitable candidates to alert them to any possible candidates in Scotland. There was also the question as to whether there were candidates that should be suggested for a seat on the board of the ETI.

Action: Richard Bellingham to seek details of headhunters from PT!

Action: Richard Bellingham to seek details of board composition and appointment process.

  • Attendees agreed that it was essential to present Scotland’s capability in the round, whilst still bringing out the strengths of particular institutions. A joint “bid” should be drawn up, underlining the strength of Scotland’s universities, energy industry, economic development agencies and local government and Executive policy. Other regions of the UK were planning to take a regional approach, including the North East and the Midlands.

  • Attendees agreed that the hub and spokes model was two-dimensional and unhelpful. A better approach might be to have a “co-ordinated centre”, a collaboration of several different institutions including institutions in other parts of the UK. It was important to remember that the centre would have to work with institutions across the UK and show that we are alert to and welcoming of this. As well as demonstrating Scotland’s capability, it would be necessary to underline existing and potential links between Scottish universities and other institutions in the UK.

  • Attendees agreed that the joint bid should put the case for Scotland hosting the Director without specifying a particular location. In describing Scotland’s capability, the bid would list locations that might be suitable to host the Director. The bid would also make the case for drawing to Scotland a significant proportion of the ETI’s research funding.

  • Several attendees reported that they had held initial discussions on the ETI with other institutions and industry players. It would be also important to consult with various trade associations, and to involve industry representatives in future meetings.

  • Attendees agreed that it would be necessary to move quickly to forge strategic links with other leading institutions in England, but that an agreed vision was needed first. It would also be necessary to manage and agree which institutions should be approached (and by whom). It would similarly to attract support from the private sector, and to manage how these approaches are made.

  • Attendees agreed that the next step was to produce a high level vision document which would represent the agreed position and facilitate future engagement with industry etc. This should be based on SSAC’s paper, Centre of Scientific Excellence in Energy, and run to 3/4 pages only. Jim McDonald offered to produce a draft document, with input from the other universities and Scottish Enterprise.

Action: Jim McDonald to circulate a draft vision document by 27 October. Richard Bellingham to circulate the SSAC paper, Centre of Scientific Excellence in Energy, to all attendees.

  • Attendees agreed that the high level vision document would form the basis of the joint bid, supplemented with detailed annexes on Scotland’s capabilities. Although there was no formal bidding process, it would be necessary to submit this “bid” (at least at a high level) to the DTI by the end of November in order to influence decisions on the structure of the ETI.

Action: Universities and other parties to provide material that could feature in the bid document to Richard Bellingham.

  • Attendees agreed that it would be helpful to agree possible dates for future meetings. There were offers to host the meetings in other locations — such as Aberdeen.

Action: Richard Bellingham to circulate a list of potential dates for future meetings.

LETTER FROM PROFESSOR ANNE GLOVER, 16 JANUARY 2007

I am writing to all Principals in Scottish Higher Education Institutions in connection with the recent letter from Sir David King and Sir Keith O'Nions inviting submissions by 16 February from bodies wishing to host or contribute to the Energy Technologies Institute.

My purpose in writing is to ask that key stakeholders in Scotland continue to work together, as they are doing now, to formulate a combined response on behalf of all interests in Scotland.

As you may be aware, the Scottish Executive, under the chair of Jane Morgan, Head of Energy Policy Division, has been facilitating discussion on Scotland's contribution to the ETI with a group of the key stakeholders, including representatives from universities, industry and public agencies and other interested bodies (full list attached). The group has met regularly since September to collaborate on Scotland's approach to this, and is next due to meet on 18 January.

These discussions have proved extremely fruitful and productive. There has been a remarkably strong consensus in this group that Scotland's best chances of securing a leading role in the ETI, whether this be as the hub or through strong participation in its work, is for a collective response to be prepared on behalf of Scotland. The group has been working on a submission setting out Scotland's extensive existing capacities in terms of research, development, demonstration and natural energy resources. The document will also emphasise Scotland's strengths and aptitudes in collaborative work, with partners in the UK and internationally.

This partnership approach, which also has the full support of Ministers, will make a much stronger overall case than would a host of disjointed bids from separate interests within Scotland. DTI are aware of the joined-up approach being taken in Scotland and expect to receive a single document from the Scottish consortium. The good progress made by the partners so far means that the submission is close to being finalised.

May I therefore reiterate our strong view that Scotland's best interests (and indeed the interests of individual stakeholders) are best served by this collective approach.

Yours sincerely

PROFESSOR ANNE GLOVER
Chief Scientific Adviser

Encs: Energy Technologies Institute Working Group membership list

MINUTES OF THE ETI CONSORTIUM MEETING, 25 MAY 2007

Energy Technology Institute — Scottish Consortium

Meeting Note: 25 May 2007

Present: Jane Morgan (Scottish Executive), Graham Wren (SSAC), Brian Nixon (Scottish Enterprise), Robin Wallace (University of Edinburgh), Tomb Lamb (SDI), Elaine Hanton (HlE), Jim McDonald (Strathclyde University), Richard Bellingham (Scottish Executive), Sam Anderson (Scottish Executive), David Gani (SFC), Patrick Corbett (Herriot Watt University), Stuart Fancey (SFC), Steve Logan (Aberdeen University), Paul Mitchell, (Aberdeen University)

Item 1

The meeting reviewed the other bids shortlisted by DTI. It was understood that DTI had favoured bids that showed cohesion; Regional Development Agency support; engagement with community, and engagement with industry. The apparent strengths of the other 4 short listed consortia were as follows:

• The North West - strong RDA support and strong leadership

• The North East —strong RDA support, possible political support

• The Midlands — Strong links with E.ON and good financial support through RDA

• Sheffield — support from Boeing, and innovation facilities.

Item 2

Those present reported hearing different views on whether the Scottish consortium should continue to offer multiple locations or seek identify a preferred location. The meeting agreed that it would be useful to clarify which feedback was correct.

Action Point 1 (Jim McDonald, R Bellingham, others) - to obtain clarification from their sources (in writing), whether single or multiple sites were preferred by the ETI review panel.

It was agreed that only 3 cities should be considered for the Institute (these were Aberdeen, Edinburgh, Glasgow) — and that within each city only one location should be offered for the ETI hub. Each of the universities would produce a bid document, no more than 2 pages in length, which set out the case for the Institute being based in theft city using the criteria set out by DTI in their letter to Brian Nixon; some characterisation of the locations (perhaps based on external perceptions); and the objectives for the ETI summarised in the DTI shortlisting news release (attached for convenience)

Action Point 2 (universities) — produce a 2 page bid document, by noon Friday 1 June 2007, setting out a case for the El to be based in their city.

The bid documents would be considered by a review panel consisting of:

• Jane Morgan

• David Gani

• Graham Wren;

• Brian Nixon/Torn Lamb

It was agreed that the panel would consider the bids and come to view on a ranking of the locations. This view would b fed back to the Scottish consortium. Depending on feedback received from DTI and others this view might be fed back to the selection. visit during their visit on the 12 June.

Action Point 3 (Review Panel) — review bid documents and come to decision on ranking.

AOB

The consortium agreed to meet in Glasgow on 5 or 6 June to prepare for the visit on 12 June.

Action Point 5 (Richard Bellingham) — arrange consortium meeting in Glasgow, for 5 or 6 June.

The meeting agreed that a plan for the 12 June visit should be prepared for discussion at the next consortium group meeting. A location for the visit needed to be identified and agreed.

Action Point 6 (Richard Bellingham/Stuart Fancey) — to develop a plan for the visit on 12 June.

Scottish Executive

ANNEX A - CRITERIA FOR ROST CITY BID DOCUMENTS

Reputation and Culture:

• World class reputation for R&D across a range of themes

• Track record of exploitation

• Integrated approach to R&D

• Recognised track record of skills and development

• Strong existing industrial and academic relationships, with sustained collaborative working and network track record

• External perception

Space, Facilities and Location

• Immediately have suitable accommodation for the ETI core management team

• The ability to expand to provide a suite of office/conference facilities commensurate with the developing needs and aspirations of the ETI; a showcase for the ETI

• Demonstrate a commitment towards a reduced carbon footprint, demonstrating leadership in low carbon energy

• Good communications and access

• Secure IT and site access

Commitment to ETI — (assumed as a given)

Value for Money - (identify different funding packages and operating costs)

ETI objectives —as set out in DTI News Release

• Accelerate the deployment of new low-carbon energy technologies, including

•the efficient production and use of energy, in support of the UK energy and climate change goals

• Provide strategic focus in the UK for low carbon energy R&D

• Increase the level of funding in the UK for low carbon energy R&D

• Promote international technology collaboration

• Increase UK R&D capacity

• Promote people, skills and knowledge sharing

LETTER FROM JANE MORGAN TO TAVISH SCOTT MSP, 25 MARCH 2008

Thank you for your letter of 3 March. I will answer your questions in the order posed. However I would like to note that I have not seen the evidence submitted to you by Aberdeen City Council.

1. Graham Wren represented the Scottish Science Advisory Council at meetings held to take forward the Scottish bid for the ETI hub. When it became evident that the Scottish bid need to propose a main location for the hub, the university representatives unanimously agreed that their proposals should be assessed by the national bodies involved, ie Scottish Funding Council, Scottish Enterprise, Scottish Government and SSAC. I did not propose or “approve” the involvement of Graham Wren but I did make sure that all involved were content. I was not aware during his involvement of any suggestion of inappropriate links or behaviour.

I was not aware until your letter of any suggestions that help had only been offered to two universities. I understand from Graham that this is incorrect and that he specifically offered help to all three locations but only two pursued this. He has shown me written documentation to that effect.

2. Graham Wren was expected to play a full part in the meeting on 12 July and did so. He was not there as an observer. Tom Lamb represented Scottish Enterprise and also took part. The project manager from Scottish Enterprise, who had recently been appointed to help prepare the bid document, was present to organise the day. It was not intended that he take part in the assessment of proposals and he did not do so.

3. On 12 June the ETI panel visited to present their intentions and to hear about the Scottish bid. At that stage a hub location had not been selected. Brief information was presented on all three locations but it was not the purpose of the day to make any selection. I did read in the press, I think in late July, suggestions that Glasgow had presented more material than others. I have not checked to see if this was the case but as noted this information did not form the basis of any decision and even if this were true could not have created any advantage or disadvantage. (I should also note that the presentation for 12 June was put together by a team and that referring to Jim McDonald as project manager is not correct.)

There were two stages at which the locations were compared. They were compared in early June but were given feedback and were not ranked. As noted in my previous letter, the 3 locations only finalised their proposal after receipt from the ETI in early July of the final criteria. It was the July submissions, and not anything preceding that, which were marked and ranked.

I hope this information is helpful.

JANE MORGAN

LETTER FROM JOHN SWINNEY MSP TO ABIGAIL TIERNEY, 23 JULY 2007

Thank you for your letter of 17 July.

I, and my Ministerial colleagues, fully recognise Aberdeen's hugely significant links with the UK oil and gas industry. Those links helped the Scottish consortium's proposal reach the short-listing stage. One of the major strengths of the Scottish bid has been its ability to demonstrate close co-operation in research across the academic community and beyond, coupled with Scotland's long established energy industry, much of which is concentrated in the North East. I would hope that close cooperation will continue to be a strength that maximises the chances of the ETI hub coming to Scotland. The real competition for the hub is not within Scotland but from the institutions shortlisted from elsewhere in the UK.

You asked for details of the assessment process. To answer your specific questions:

  • the Scottish consortium, which comprises Aberdeen, Edinburgh, Glasgow, Heriot-Watt, Robert Gordon, St Andrews and Strathclyde Universities, is university led but its work has been facilitated by officials from the Scottish Executive, Scottish Enterprise, and the Scottish Funding Council. In February the consortium submitted a bid offering an all Scotland approach and "three excellent locations" - Aberdeen, Edinburgh, Glasgow - for consideration as the ETI hub;

  • The 'hub' will effectively accommodate the Director's office, initially of 5 people. The real value of the ETI will be in the commissioning of research from academic institutions throughout the country. The Scottish consortium's bid was shortlisted in May and in June the UK ETI panel indicated that that the final bid must include a preferred location for the hub;

  • The consortium agreed a process whereby Aberdeen, Glasgow and Edinburgh would be assessed for the hub against the criteria drawn up by the UK ETI, by a panel of officials from those organisations which have responsibilities covering all three cities - namely, Scottish Enterprise/Scottish Development International; the Scottish Funding Council; the Scottish Science Advisory Committee. At the consortium's request, a Scottish Executive official was asked to chair the panel (as had been the case in previous meetings). The consortium's aim was to have an objective and transparent process that would allow them to submit the best possible case to the UK competition for the ETI hub being located in Scotland. The decision to use the same criteria that will be used in the final selection was to maximise the chances of success;

  • Attached are the UK selection criteria that were applied to the selection process. The scoring was based on the evidence supplied by the three locations. Each criterion was discussed by the panel and a common score agreed. It would not be in the interests of the Scottish bid to provide details of how the different locations scored as this could be used by the other shortlisted bids in the UK competition to their advantage. The information is being made available to the university members of the consortium. As no weightings had been identified by the UK ETI no weightings were applied in the scoring process;

  • All the universities agreed this process, and were shown the final selection criteria (immediately these were received from the UK ETI selection panel on 6 July). The universities were also shown the scoring sheet used by the panel. No objections of any sort were raised.

In May Scottish Ministers inherited a process that had been sanctioned by our predecessors and enjoyed the confidence of the university members of the Scottish consortium. In these circumstances Ministers did not determine the potential location for the hub, and indeed were only informed of the decision the day after it had been made - although we have supported efforts to maximise the prospects of success for Scotland and thus will continue to support the bid in the final stage.

Whatever misgivings some people may have about the outcome, having reviewed the relevant information, there is no substantive evidence that the decision was arrived at other than through a fair process that was supported by the universities involved.

However, it is crucial that all concerned work together to maximise the benefits that the ETI could bring to Scotland - including Aberdeen. I understand it has always been the consortium's intention that Aberdeen would have an important contribution to make to the ETI hub and my officials have been in contact with consortium members to ensure that this is now better understood. I am pleased therefore to be able to confirm that, as part of the final bid, while the consortium will propose Glasgow as the location of the hub, it will also identify Aberdeen as the location for an office of the ETI hub, charged with particular responsibility for liaison with the oil and gas industry and hydrocarbon development. This, together with the Energy Intermediary Technology Institute already located in the city should ensure that Aberdeen continues to playa vital role in promoting Scotland's energy industry and maximise the Scottish chances of success in the ETI hub competition to come.

I hope this response answers the questions you have raised.

JOHN SWINNEY

LETTER FROM GRAEME DICKSON TO TAVISH SCOTT MSP, 17 DECEMBER 2007

Thank you for your letter of 30 November following your Committee’s taking of evidence on the Energy Technologies Institute. In answering the questions you pose I have avoided repeating too much of the information already provided in oral evidence.

On the first of your bullet points, I attach papers from the consortium’s meetings. In addition to the meetings recorded there was a further meeting on 2 June. Prior to that the three potential locations had produced statements of their capability in the event that the ETI wished the consortium to have identified a specific location for the main hub office by the time of their visit on 12 June. Oral feedback was given on 2 June but a preferred location was not identified at that stage as it had become apparent that this was not immediately necessary.

Issue of the final criteria was originally expected at end June but was delayed by a week to 6 July. The three locations then prepared statements in the light of these and presented these to the neutral panel on 12 July. Meetings after 12 July to discuss the preparation of the final bid document were not minuted by Scottish Government officials. Rather the project manager provided by Scottish Enterprise for the July-September period pursued specific action points.

You then asked for a statement setting out the role of my Directorate and the role that Ministers had in relation to the bid.

As we explained at the Committee hearing, the then Scottish Executive called together those whom we knew to be interested in the ETI in October 2006. At that first meeting it was suggested by attendees that a joint expression of interest be submitted and there was agreement to this. Those present also asked that Jane Morgan continue to chair meetings which would oversee the development of this expression of interest. Ministers were

informed of the proposed single expression of interest. While expressions of interest for hosting the hub had not at that time been solicited, DTI and EPSRC, on behalf of the ETI, did then seek bids for submission in February 2007. In January the Chief Scientific Adviser wrote to universities commending the consortium approach (letter attached). The Scottish consortium’s bid was one of five short-listed in May 2007. It had offered three potential locations for the hub. During this time Ministers were advised by e-mail and orally of the consortium and its intended actions.

New Ministers were made aware of Scotland’s short-listing in May 2007. We set out the process to date and that the ETI would now require that one location be put forward for the main hub office. We further informed Ministers that a range of consortium partners favoured a transparent process for comparing the merits of each location and that the Executive had no direct locus for intervention. We also sought agreement to Jane Morgan continuing to chair consortium meetings. Mr Swinney’s letter to Abigail Tierney, Corporate Director of Aberdeen Council of 23 July (attached), and which was released to the press, explains the process from that time on. It may be that your Committee were not aware of this letter when we gave evidence.

Your final point asked about the key stages in process leading to the decision to propose Glasgow. Again this is covered in Mr Swinney’s letter. The evidence you heard from witnesses explained that the ETI criteria were used and that these were not weighted. (Alison Wall of EPSRC was to provide you with the full criteria.) You also asked about accommodation. As the ETI representatives commented at the Committee, the ETI elaborated on its requirements when issuing criteria on 6 July. These were reflected in the statements put to the neutral panel by Aberdeen, Edinburgh and Glasgow. Glasgow scored highly on research while Glasgow and Aberdeen’s offerings on accommodation had strong similarities, although Glasgow’s proposed permanent location was located nearer to academic staff that that of Aberdeen. Once Glasgow had been chosen, the consortium partners discussed how to make the bid as strong as possible. Intensive work was undertaken on the bid document by all academic partners, the Scottish Funding Council and Scottish Enterprise. As Paul Lewis and others explained at Committee, the consortium revised its proposal for interim accommodation and the new option was visited by the ETI panel. In relation to the new build for a permanent home, Scottish Enterprise proposed an accommodation package which in their view reduced risk to the minimum possible given formal procurement requirements. In effect Scottish Enterprise agreed to underwrite building development.

I hope this information assists your Committee.

Yours sincerely

GRAEME DICKSON

LETTER FROM NICOL STEPHEN MSP TO TAVISH SCOTT MSP, 20 MARCH 2008

I refer to your recent letter requesting information relating to the Energy Technology Institute during my time as Deputy First Minister and Minster for Enterprise and Lifelong Learning. It has taken me longer than I would have wished to access the relevant ministerial documents and this has been the reason for the delay in responding.

The advice I consistently received from civil servants was that a single Scottish bid would be stronger than – and preferable to – multiple, competing Scottish bids.

My view was always that Aberdeen had the strongest case for becoming the hub or headquarters of the Energy Technology Institute. I made this view known to civil servants responsible for developing Scotland’s bid. I was urged not to make this view public as it would have almost certainly ended any prospect of a joint Scottish bid.

In December 2006 my office issued an e-mail to civil servants which stated:

“The Deputy First Minister has now seen your note and commented that he thinks we MUST (his emphasis) start to develop a full proposal IMMEDIATELY (again his emphasis) based on the Director/HQ being Aberdeen.”

All the partners in the ETI bid agree that a joint Scottish approach would be preferable. There were however clear tensions. As the February deadline for the initial expression of interest approached I was asked for a steer on the issue. The information I had received from UK Government sources was that the best prospect of success would be if Aberdeen was put forward as the hub location. This was because UK Ministers could not be seen to favour Scotland. The best prospects of success would be if Aberdeen was selected because it was clearly a major headquarters for the energy industry and the location likely to be most favoured by the ETI representatives. Other Scottish locations had research strengths but not the same scale of energy industry presence.

Despite this, a compromise position was agreed between the partners. This involved submitting an expression of interest document which made reference to three potential hub locations – Aberdeen, Edinburgh and Glasgow. This was agreed – without further reference to me – to prevent the Scottish bit splintering into rival submissions. The expression of interest document, lodged by the Scottish partners on 14 February 2007, stated that the hub location should be chosen by the Director of the new Institute.

Civil servants were well aware that if the UK Government or the ETI board had requested a single Scottish location for the ETI hub to be selected, Ministers would have chosen Aberdeen. At the point at which my Ministerial involvement in this issue ended, as far as I am aware no such request for a single hub location had been made.

I hope that this information is helpful to your enquiry.

Kind regards,

NICOL STEPHEN

LETTER FROM JIM MATHER MSP TO TAVISH SCOTT MSP, 19 FEBRUARY 2008

Thank you for your letter of 24 January about the Energy Technologies Institute.

You ask about the decision to form a single Scottish Consortium, decisions as to the role of public sector bodies in choosing the hub location and the process by which Glasgow was chosen. I think that previous correspondence has already provided the information you now seek. I refer in particular to John Swinney’s letter to Abigail Tierney of 23 July 2007, Graeme Dickson’s letter to you of 17 December and Jane Morgan’s letter to Stephen Imrie of 1 February.

In particular I would draw your attention to John Swinney’s letter to Abigail Tierney where he states, ‘In May Scottish Ministers inherited a process which had been sanctioned by our predecessors and enjoyed the confidence of the university members of the consortium. In these circumstances Ministers did not determine the potential location of the hub…”.

I hope this now clarifies matters for your Committee.

JIM MATHER

LETTER FROM TAVISH SCOTT MSP TO JIM MATHER MSP, 30 APRIL 2008

I know that you are aware that the Committee has been investigating the handling of the bid from a Scottish consortium to host the Energy Technologies Institute. I am also aware that this is an issue on which you have previously sent correspondence to the Committee for which we are grateful.

However, in recent weeks, further evidence has been received from the relevant minister in the previous administration detailing his specific correspondence with civil servants on the location of the ETI should the Scottish bid have been successful.

Whilst I am aware of the speech that you made in Aberdeen in the early part of your new role, I am writing to you to afford you the opportunity of providing the Committee with any additional evidence on the interaction between the Scottish ministers and civil servants, which would highlight your own views or those of any ministerial colleague on the internal decision-making process to choose the location that should be proposed to host the ETI.

As we are keen to finalise this inquiry before the summer recess, a speedy reply would be gratefully received.

Yours sincerely,

TAVISH SCOTT MSP
Convener

LETTER FROM JIM MATHER MSP TO TAVISH SCOTT MSP, 22 MAY 2008

Thank you for your letter of 30 April about the Energy Technologies Institute.

As you note I have previously written to you on this subject and have nothing further to add to that.

Yours sincerely

JIM MATHER

LETTER FROM SIR JOHN ELVIDGE TO TAVISH SCOTT MSP 3 APRIL 2008

Thank you for your letter of 3 March about the Committee’s current inquiry into the Scottish bid for the Energy Technologies Institute (ETI).

You ask for my view on the issue of whether Ministers, both before and after the May 2007 election, were adequately briefed and fully informed about the decision making process to be used and their role in this matter, “in the light of the evidence received by the Committee”. You will understand that the only such evidence which is available to me is the transcript of oral evidence, and your and your clerk’s correspondence with Ministers and civil servants.

The decision making processes used and the procedures followed by ETI in making the decision were matters for the ETI itself and I have no separate locus from that of Ministers in commenting on their merits. I consider that civil servants sought to ensure that Ministers were kept up to date with our developing understanding of these processes and procedures and, once a potential consortium of Scottish higher education institutions had emerged, with the decision making process proposed by the Scottish consortium to determine which location should be offered in their bid as the location for the ETI hub.

I hope that this is helpful to the Committee.

JOHN ELVIDGE


Footnotes:

1 Resigned from the Committee as of 26 June 2008.

2 UK Department for Business, Enterprise and Regulatory Reform News Release. Available at: http://www.berr.gov.uk/dius/science/science-funding/eti/index.html. [Accessed 24 June 2008]

3 UK Department for Business, Enterprise and Regulatory Reform News Release. Available at: http://www.berr.gov.uk/dius/science/science-funding/eti/index.html.

4 UK Department for Business, Enterprise and Regulatory Reform News Release. Available at: http://www.berr.gov.uk/dius/science/science-funding/eti/index.html.

5 Energy Technologies Institute News Release, 20 September 2007. Available at: http://www.energytechnologies.co.uk/news/new-home-announced/ [Accessed 24 June 2008]

6 UK Department of Trade and Industry. (2006) Our Energy Challenge: Securing clean, affordable energy for the long term, Department for Trade and Industry. Available at http://www.berr.gov.uk/energy/review/consultation/index.html [Accessed 25 June 2008]

7 UK Department of Trade and Industry. (2006) Energy Technologies Institute, Prospectus, Department of Trade and Industry. Available at http://www.berr.gov.uk/files/file34011.doc [Accessed 27 June 2008]

8 Energy Technologies Institute web site. Available at http://www.energytechnologies.co.uk/about-us/member-organisations/ [Accessed 27 June 2008]

9 UK Department of Trade and Industry. (2006) Energy Technologies Institute, Prospectus, Department of Trade and Industry. Available at http://www.berr.gov.uk/files/file34011.doc [Accessed 27 June 2008]

10 UK Department of Trade and Industry. (2006) Energy Technologies Institute, Prospectus, Department of Trade and Industry. Available at http://www.berr.gov.uk/files/file34011.doc

11 DTI. Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc [Accessed 27 June 2008]

12 DTI. Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc

13 DTI. Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community, Annexe A dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc

14 DTI.Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc

15 DTI.Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc

16 UK Department of Trade and Industry News Release. 2007 Home in sight for energy technologies institute, Reference P/2007/92. Available at: http://www.energytechnologies.co.uk/news/home-in-sight-for-energy-technologies-institute/ [Accessed 27 June 2008]

17 UK Department of Trade and Industry News Release. 2007 Home in sight for energy technologies institute, Reference P/2007/92 Available at: http://www.energytechnologies.co.uk/news/home-in-sight-for-energy-technologies-institute/

18 “Selection of the host site for the headquarters of the Energy Technologies Institute”, Annex 1, note provided by Dr Wall of the EPSRC, Ref EC/2007/09/03, dated 14 September 2007.

19Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C252.

20 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C252.

21 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C252.

22 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C243.

23 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C241.

24 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C258.

25 UK Department for Business, Enterprise and Regulatory Reform News Release dated 20 September 2007. Available at: http://www.berr.gov.uk/dius/science/science-funding/eti/index.html [Accessed 27 July 2008]

26 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C240.

27 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C240.

28 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C243.

29 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C241.

30 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C241.

31 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C242.

32 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C262.

33 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C256.

34 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C265.

35 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C265.

36 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C244.

37 Minutes of the ETI consortium meeting, 17 October 2006. Provided to the Committee by the Scottish Government.

38 Scottish Executive. Letter from Professor Anne Glover on the ETI, dated 16 January 2007.

39 DTI. Letter from Professor Sir David King and Professor Keith O’Nions FRS to UK Vice-Chancellors, ETI stakeholder community dated 12 January 2007. Available at: http://www.berr.gov.uk/files/file36860.doc [Accessed 27 June 2008]

40 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C252.

41 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C255.

42 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C255.

43 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C256.

44 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C256.

45 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C256.

46 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C271.

47 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C266.

48 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C267.

49 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C270.

50 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C268.

51 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C257.

52 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C257.

53 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C257.

54 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C258.

55 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C269.

56 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C267.

57 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C266.

58 EPSRC. Note from Dr Wall on the Selection of the host site for the headquarters of the Energy Technologies Institute, Ref EC/2007/09/03 dated 14 September 2007.

59 Dr Wall email to the Committee dated 15 January 2008.

60 EPSRC. Note from Dr Wall on the Selection of the host site for the headquarters of the Energy Technologies Institute, Ref EC/2007/09/03 dated 14 September 2007.

61 EPSRC. Note from Dr Wall on the Selection of the host site for the headquarters of the Energy Technologies Institute, Ref EC/2007/09/03 dated 14 September 2007. Table 1, page 3.

62 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C258.

63 ETI consortium meeting. Minutes, 5 May 2007.

64 Scottish Government. Letter from Jane Morgan to the Convener of the Economy, Energy and Tourism Committee dated 25 March 2008.

65 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C268.

66 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C268.

67 Scottish Government. Letter from John Swinney MSP to Abigail Tierney of Aberdeen City Council dated 23 July 2007.

68 Scottish Government. Letter from John Swinney MSP to Abigail Tierney of Aberdeen City Council dated 23 July 2007.

69 The Herald. Anger as Glasgow looks likely choice for energy research hub dated 17 July 2007.

70 Letter from Graeme Dickson to the Convener of the Economy, Energy and Tourism Committee dated 17 December 2007.

71 Letter from Graeme Dickson to the Convener of the Economy, Energy and Tourism Committee dated 17 December 2007.

72 Letter from Graeme Dickson to the Convener of the Economy, Energy and Tourism Committee dated 17 December 2007.

73 Letter from Graeme Dickson to the Convener of the Economy, Energy and Tourism Committee dated 17 December 2007.

74 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

75 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

76 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

77 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

78 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

79 Letter from Nicol Stephen MSP to the Convener of the Economy, Energy and Tourism Committee dated 20 March 2008.

80 Letter from Graeme Dickson to the Convener of the Economy, Energy and Tourism Committee dated 17 December 2007.

81 Letter from Jim Mather MSP to the Convener of the Economy, Energy and Tourism Committee dated 19 February 2008.

82 Letter from Jim Mather MSP to the Convener of the Economy, Energy and Tourism Committee dated 19 February 2008.

83 A proposal to amend this paragraph was rejected following a division. The result was: For 3 (Brian Adam, Christopher Harvie, Dave Thompson), Against 5 (Gavin Brown, Marilyn Livingstone, Lewis Macdonald, Tavish Scott, David Whitton), Abstentions 0.

84 Speech by Jim Mather MSP, A vision for the future of energy in Scotland, All Energy Conference, Aberdeen, May 23, 2007. http://www.scotland.gov.uk/News/This-Week/Speeches/energyvision

85 Speech by Jim Mather MSP, A vision for the future of energy in Scotland, All Energy Conference, Aberdeen, May 23, 2007. http://www.scotland.gov.uk/News/This-Week/Speeches/energyvision

86 Letter from Tavish Scott MSP to Jim Mather MSP dated 30 April 2008.

87 Letter from Jim Mather MSP to Tavish Scott MSP dated 22 May 2008.

88 This paragraph was agreed to by division. The result was: For 4 (Marilyn Livingstone, Lewis Macdonald, Tavish Scott, David Whitton), Against 4 (Gavin Brown, Brian Adam, Christopher Harvie, Dave Thompson), Abstentions 0. The Convener exercised his casting vote in support of this paragraph.

89 A subsequent paragraph was removed by division. The result was: For 3 (Marilyn Livingstone, Lewis Macdonald, David Whitton), Against 5 (Tavish Scott, Gavin Brown, Brian Adam, Christopher Harvie, Dave Thompson), Abstentions 0.

90 Scottish Parliament Economy, Energy and Tourism Committee. Official Report, 21 November 2007, C241.

91 Letter from Sir John Elvidge, Permanent Secretary in the Scottish Government to the Convener of the Economy, Energy and Tourism Committee dated 3 April 2008.

92 This paragraph was agreed to by division. The result was: For 4 (Marilyn Livingstone, Lewis Macdonald, Tavish Scott, David Whitton), Against 4 (Gavin Brown, Brian Adam, Christopher Harvie, Dave Thompson), Abstentions 0. The Convener exercised his casting vote in support of this paragraph.