An innovation fund, what happened last time?

The Dutch cabinet wants to spend hundreds of millions of euros on innovation. During a recent visit to the Summa College in Eindhoven, minister of Education, Culture and Science (OCW) Ingrid van Engelshoven said that TU/e should keep a sharp eye on that innovation fund as a possible source of extra revenues. Such a fund has been set up before, and things didn’t quite work out. It was cancelled after a few years.

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Nothing substantial was said about it during Prince’s Day, but the cabinet will soon put forward its plans for a new ‘investment fund.’ The Rutte III cabinet wants to strengthen the Dutch economy with an investment of several billion euros for knowledge, innovation and infrastructure. OCW minister Ingrid van Engelshoven recently stated that the board of TU/e, which had previously complained about a shortage of resources, should by all means focus on this upcoming fund.

“If they had read the budget memorandum carefully before, and followed the debates in the House of Representatives, they would have been aware of an upcoming large fund aimed at securing prosperity. It will contain billions of euros, which the university can also claim,” Van Engelshoven said during a visit to the Summa College on September the 21st.

A day earlier, President of the Executive Board Robert-Jan Smits and rector Frank Baaijens had expressed their complaints in newspaper Eindhovens Dagblad about the meagre capital injection for (technical) universities, which they said would allow them to only partially cancel the ceiling on student intake numbers for six programs.

The idea of setting up such a fund is not new. Indeed, there was one before, not that long ago – but it was quickly cancelled. What happened again?

Natural gas

The gas taps in Groningen will soon be turned off, but the gas bubble served as a source of income for the entire country for decades. Natural gas brought in several billions of guilders and euros. Sometimes, even more money came in than expected.

That is why the government implemented the Economic Structure Enhancement (FES) fund in 1995. It was a savings account for windfall gains generated by natural gas. The money was invested in infrastructure projects, such as the high-speed railway running between Schiphol Airport and Belgium.

Ten year later, in 2005, the government decided to use the money for other purposes as well, such as the knowledge economy. During a five-year period, almost three billion euros from this FES fund was spent.


But it’s practically impossible to explain how the money was distributed. Several ad hoc consortiums of business companies and knowledge institutions were established; a ‘committee of experts,’ was set up; the Netherlands Bureau for Economic Policy Analysis (CPB) had to evaluate applications, the cabinet made decisions on topics and priorities; departments submitted applications independently. It became one big tangle.

The whole course of events was judged negatively in a damning report, which even used the word ‘horse-trading’ to describe the situation. Government department officials had become too influential, the report said. Opportunism, dissatisfaction, distrust and suspicion, rules that weren’t “properly followed” – harsh words were spoken.

And the entire application circus was expensive as well. It sometimes cost hundreds of thousands of euros to evaluate a project of a few million euros. “Unacceptable,” said the evaluation committee led by professor Rien Meijerink, former chairman of the Association of Universities in the Netherlands (VSNU).

The politicians were prepared for the criticism and had seen it coming for some time, and so, the fund was cancelled by the Rutte I cabinet, even before this damning report was presented. That was 2010. The thinking was that it would be better to spend the money on tax advantages for companies with research and development efforts.

Lesson learned?

Politicians are keen to stimulate useful research from which the business industry can benefit as well. Sometimes they use the term is ‘key areas,’ sometimes ‘top sectors,’ but politicians continue to search for ways to bring the business industry and knowledge institutions together.

The most recent effort is the Dutch National Research Agenda (NWA), which was launched a few years ago. In 2015, everyone (citizens, companies, institutions) was allowed to submit questions to the scientific community. This resulted in a kind of ‘roadmap’ with several major topics: clean energy, a resilient society, health, et cetera. And yes, money will be spent on that as well.

Will the investment fund really be different, or will it (as far as science and innovation are concerned) continue along the same lines as the National Research Agenda? More importantly: will politicians be able to resist the temptation to determine for themselves which topics are important?

French and Greek

That’s far from certain. VVD minister Eric Wiebes of Economic Affairs has some strong ideas. French and Greek lessons in school don’t seem that important to him, he recently said. “Is that how we are going to beat the Chinese twenty years from now?”

Still, he would prefer it if independent experts decided on this matter. “We have to ensure that politicians don’t come up with a colorful new idea every week. As a politician, you need to know your limits.”

Prime Minister Mark Rutte, who used to be state secretary for education, sees another pitfall. “You have to prevent lobbyists and hobbyists from running with the money,” he said during the annual general debate. “You have to be sure that these aren’t regular and structural projects, and that they actually generate profit.”

That is why he wants a decision-making process “that evaluates this very rigorously.” The committee of experts will probably not make a comeback. But how things will proceed instead, remains to be seen.

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