5. Cost and funding

5.1 This Section deals with the cost of the programme and its funding. We estimate that the total cost over five years will be some £350m (see Table 6) and that Government should contribute roughly two-thirds of this, certainly at the outset of the programme. Industrial work should be funded 90 per cent by Government, where very wide dissemination of the results is required. Other industrial work should receive 50 percent funding. The overall ratio of Government funding for the programme in industry would be roughly 60 per cent.

Table 6: AIT Programme Total cost (£M'82)

Breakdown of Education funding is Software: 10; MMI: 3; IKBS: 7

5.2 Although we look to Government to fund the major share of the programme, it will be industry which must raise the much larger funds needed to translate the results of the programme into marketable products. If this investment is taken into account, then Government's contribution becomes relatively small as a proportion of the total cost, though there is a need for continuing Government support for product development through support for innovation programmes (including MAP, MISP, PPRDS and other schemes), to ensure full exploitation of the programme. The AIT programme must not be funded by cutting back on these schemes. In fact, as emphasised in Section 1, it is vital that they be maintained and extended to ensure effective commercial exploitation of the programme.

5.3 The programme involves a redirection of existing activities and completely new ones. It is not possible to measure accurately the current scale of activity in the areas with which we are concerned, or to quantify its cost and establish sources of funding. However, we estimate that the programme as a whole implies roughly doubling the current total effort. There is also a redistribution in the relative contributions of the various providers of funds. Again, it is not possible to quantify this, but it clearly involves Government bearing a larger share of the burden than at present, in order to generate a significantly higher level of total activity and an improved gearing of the national effort by means of collaboration. The justification for this is spelt out in Section 3.

5.4 One of our priorities has been to devise means whereby the various Government agencies concerned with IT may support a coherent programme. The three agencies principally involved are the DOI, the Ministry of Defence (MOD) and the Science and Engineering Research Council (SERC). We recommend that the programme be funded jointly by these bodies. A large part of the programme, particularly in the VLSI Sector, is of direct relevance to the MOD and is capable of meeting much of the Ministry's VHPIC requirements. The programme also includes a substantial amount of research to be conducted in academic establishments. This should be funded by SERC. In the next Section we outline how the MOD, SERC, and DOI also, should be involved in the management of the programme.

5.5 In addition to academic research, the programme contains education and training items. These are reviewed in Section 7, and are crucial to the whole programme. These should be funded by earmarking through the established UGC mechanism, where SERC funding is not applicable, and through the relevant channels for the polytechnics. We look to the DES to ensure that this is achieved. Table 7 isolates the total cost of the programme related to the academic sector, including research, education and the provision of infrastructure. (These academic costs are included in the total costs in Table 6.) Table 7 does not include overhead costs for academic research nor the cost of work sub-contracted by industry. It should be possible to achieve a more rapid build up of academic work than for the rest of the programme. This is particularly important in the case of IKBS, where it is necessary to start an immediate programme to build up the stocks of skilled manpower.

Table 7: AIT Programme academic costs Years 0-5

5.6 We assume that there will be a period of planning and negotiations with contractors, before the programme goes live, which might well be on 1 April, 1983. Some expenditure can take place in the current financial year. This is shown under Year 0 in Table 6. Year 1 does not start until this preliminary work has been completed and the programme has been effectively launched. We have presented costs for five years only. Collaborative activity will still be required beyond this five year period, particularly in IKBS and MMI, although useful results will emerge much earlier. The IKBS programme includes a number of longer term objectives for which a further five year programme will be needed. We estimate that this will cost roughly £42m.