Simplified and SME-friendly Horizon 2020 will be a boost to innovation

Labyrinthine procedures for obtaining EU research and innovation grants have long disadvantaged most small companies, which can’t afford the time or resources to apply. 

Horizon 2020, the EU’s new seven-year €70 billion research and innovation programme, aims to change that by simplifying the rules for small companies so many more get involved. 

That should make public spending on innovation much more effective, according to three MEPs who have been pivotal in steering through the Horizon 2020 legislation. They spoke at a Webcast conference from the European Parliament, organised by Science|Business, ahead of a final vote on the programme on 21 November.

“I’m happy about a lot of things… but if I had to choose one thing, it’s simplification of the rules,” said Maria da Graca Carvalho, MEP, a rapporteur on the industry, research and energy committee. “I provided 70 measures where government should simplify the rules and 95 per cent of them are included in the new programme.”

Previous efforts to get more SMEs involved in large European research projects through quotas failed, because small companies were forced to join large consortia, marginalising their input. The new Horizon 2020 programme includes a pilot scheme with a fast-track provision for SMEs and new participants that create smaller consortia with specific research goals. 

Under the new Horizon 2020 rules, the Commission will run permanently open calls for this scheme, with three or four cut-off points every year, and will be required to give applicants a funding response within six months. 

Also, for the first time, individual SMEs will be eligible to apply for funding on their own, without any partners, either academic or industrial.

“That will boost innovation. It’s not top down; it’s bottom up,” said Christian Ehler, MEP, who acted as rapporteur on the rules for the participation in and dissemination of Horizon 2020. The allocation of funds simply has to go faster. “We are in a competitive environment:  in Asia and the US, allocation is simply faster,” Ehler said.

James Elles, MEP, agreed that simplification is essential, but said the real test will come in the implementation of the new Horizon 2020 rules. Small businesses were “excoriating” in their critique of Framework Programme 7, the current R&D programme, highlighting how, despite Commission rhetoric, procedures were not simplified in the past. In some cases the impact of the bureaucracy was “horrifying,” Elles said.  

According to Elles, one SME that applied and received EU funding, “got something slightly wrong in the paperwork and had to hand back the money, which bankrupted the company.” Given examples like this, “We need to make sure the provisions are going to result in much simplified procedures – and we want to be sure European SMEs are not deterred or pushed to other parts of the globe,” said Elles.

Carvalho agreed, noting the Parliament will need to track whether SMEs are indeed finding it easier to apply for EU funding. “With simplification you need to follow up because bureaucracy grows – it never diminishes – especially with public organisations.  Someone has to keep controlling the simplification process because otherwise things tend to get too complex,” she said.

To the MEPs, the big disappointment of Horizon 2020 was the overall size of the research and innovation budget, which was cut from €80 billion down to €70 billion. The European Parliament had argued vehemently that the budget should be increased to €100 million, as research and innovation are key drivers of economic growth, and an investment in Europe’s future. 

“We messed up,” said Ehler, noting that EU leaders all agreed to spend three per cent of GDP on R&D by 2020 and then simply failed to deliver the spending in Horizon 2020. Instead, the EU will spend roughly two per cent, well below the level of R&D spending in the world’s most innovative countries. “And it’s not just us messing it up, but the private sector not investing sufficiently in R&D,” he added.  

On the plus side, Horizon 2020 created a bridge between structural funds and R&D, allowing a proportion of structural funds to be allocated for R&D. “But in practical terms, we would have needed another €100 billion in R&D investment over seven years to get close to the goal of spending three per cent of GDP,” Ehler said.

The question of whether EU member state governments will make any attempt to reach this figure hangs on EU election campaigns next year, Elles believes. If a number of MEPs take up the global research and innovation challenge as a major priority, it’s possible. Elles argued that Europe is not moving fast enough to build out vital digital infrastructures such as 4G mobile networks needed to compete with Asia. 

“How will we be competitive in a global system; how will we be competitive with our social model – this is the debate we should be having when we move into elections,” Elles said. “A new Commission has to come up with new priorities. I would like to see this as priority of next Commissioners.”