The Department for Transport (DfT) has strengthened how it supports the use of new science and technology in the transport sector, such as maritime decarbonisation and sustainable aviation fuel – but it must establish a clearer risk appetite to guide its investment decisions and provide better support to see innovative concepts through to widespread practical use, according to a new National Audit Office (NAO) report.

DfT views innovation as key to tackling some of the challenges facing the transport sector today. It plans to spend approximately £1.1 billion on innovation activities between 2022-23 and 2029-30 across various work programmes and transport modes, 72% of which relates to decarbonisation programmes.

One example is DfT’s support for the uptake of sustainable aviation fuel, which is produced from a range of sustainable waste materials and can be blended with standard jet fuel for use in existing jet engines, leading to lower greenhouse gas emissions.

But the new report by the independent public spending watchdog finds that DfT does not have a strong process for prioritising its innovation funding to support its three departmental priorities. In comparison, DfT’s three highest-spending arm’s-length bodies, Network Rail, National Highways and HS2 Ltd, have clearer processes for prioritising and managing their respective portfolios. DfT also has limited strategic oversight of its innovation activity, leading to potential missed opportunities for coordination across different modes of transport.

Effective innovation requires actively seeking well-managed risk taking, as the path to achieving desired outcomes is not necessarily clear or known. However, DfT has not set out a clear risk appetite to guide its decisions to invest in innovation. Doing so would help it decide what level and types of risk to take in its projects and manage high-risk activity.

The NAO recommends that DfT:

• strengthens how it prioritises its funding across the innovation outcomes it is seeking
• defines, embeds and uses its risk appetite for innovation activity
• decides how it can more actively manage its innovation activities within the department
• assesses the effectiveness of its interventions through more thematic monitoring and evaluation
• puts in place more effective coordination of innovation activity with, and between, its arm’s length bodies
• identifies ways to address any barriers to the adoption of the innovations it funds

Gareth Davies, head of the NAO, said:

“DfT has taken positive steps to raise the profile of innovation within the department and widen the type of interventions it makes in this area.

“To achieve good value for money, DfT should better define how its innovation activity can help deliver its priorities – including clarifying how much risk it is willing to take – as well as collect the data it needs to manage and assess this activity.”

Commenting on the report, Max Sugarman, Chief Executive of ITS UK, said:

“It is positive to see many of the issues raised by ITS UK members, at our the workshop with the NAO, highlighted within today’s report. In particular, Recommendation 14 contains a number of concerns raised by industry, including around a culture of risk aversion, procurement processes and intellectual property rights.

“One issue that we particularly hear members speak about is the challenge of how we move beyond trials and pilots to commercial deployment. Pilots and trials are critical – they help transport authorities test new solutions and can give technology suppliers that first step into the market.  However, members often tell us of the difficulties they face moving beyond trials, and that they often feel there is less support as they look to commercialise their products and services.

“This is a key issue if we are to ensure the transport sector is a dynamic and open environment for innovation, and an industry where companies can scale up and grow. We hope that the NAO’s report provides a much-needed call to action for the sector.”

(Picture: NAO)