Quantum-Technologies-Innovation-Centre-Full-Business-Case

West of England Investment Board Full Business Case Quantum Technologies Innovation Centre+ a disruptive technology centre to deliver economic growth 1 Version 1.0 Originated Reviewe

West of England Investment Board

Full Business Case

Quantum Technologies Innovation Centre+

a disruptive technology centre to deliver economic

growth

1 Version 1.0 Originated Reviewed Authorised Date

This page is intentionally blank

Table of Contents

Executive Summary 3

1 Strategic Case for Investment 5

1.1 Promoter and Delivery Arrangement 5

1.2 The University’s Temple Quarter Enterprise Campus 6

1.3 The Strategic Case for QTIC+ 9

1.4 State Aid Considerations 18

1.5 Equality and Diversity Impact Assessment 18

1.6 Environmental Sustainability Considerations 19

2 Economic Case 20

2.1 Economic Appraisal Summary 20

3 Financial Case 24

3.1 Scheme Capital Costs 24

3.2 QTIC+ Spend Profile and Funding Sources 25

3.3 QTIC+ Operational Costs 26

4 Commercial Case 27

4.1 Procurement 27

4.2 Operation and Financial Viability 29

5 Management Case 34

5.1 Project Governance and Delivery 34

5.2 Programme Plan 40

5.3 Engagement and Consultation 42

5.4 Risks, Constraints and Dependencies 44

5.5 Project Assurance 45

5.6 Monitoring and Evaluation 46

6 Annexes 48

This page is intentionally blank

We have learnt from the pilot phase of QTIC at 1 Cathedral Square that there is even greater opportunity in future disruptive technologies and being prepared for them will enable the region to capitalise on its advantages The aim of this project is to augment QTIC with additional scale and new facilities co-located in the University of Bristol’s new Temple Quarter Enterprise Campus (TQEC) CM1 facility to establish QTIC+, enabling the region to become the go-to place for the development, commercialisation and growth of businesses harnessing the advantages of quantum and other future disruptive technologies such as Artificial Intelligence; Digital, Human Computer Interactions and novel computing architectures and their application in to real world scenarios

We are requesting £15,000,000 from the Local Growth Fund (Growth Deal Round 3) together with

£20,000,000 from EDF fund supported by contributions from the University (£35,452,743) and support from industrial partners for capital and equipment to establish these state-of-the-art facilities Together they will:

1 Anchor and accelerate the future global quantum and other future disruptive technology supply chains within the West of England region

2 Support the design and development of new approaches to business, product and service creation and market accessibility

3 Support new businesses; creating hundreds of new jobs across a span of competencies; opportunities for wealth creation and a more prosperous city region

We have engaged with several key companies and initial testing of the proposition has been met with universal acclaim

Co-location of these activities within the university’s new Temple Quarter Enterprise Campus will ensure that academic researchers, social scientists, industrial technologists, students, entrepreneurs, users and other stakeholder communities are brought together under the same roof to develop new businesses, products and services and explore yet unthought-of applications for quantum and other disruptive technologies and bring them to bear in a commercial context

Presently there is a global search for the “killer-app” for quantum and other future disruptive technologies, and we believe it will be found through broad collaborations between multiple communities, not just in physics and engineering labs, meaning QTIC+ is perfectly poised to be at this nexus of technological development and commercial exploitation

The QTIC+ strongly complements this approach initiated for quantum technologies but broadens out the support for a wide range of other disruptive technological approaches by providing additional facilities, a Design Factory and Maker Spaces, as well as additional enterprise space, offering better value for money afforded by the economies of scale

5-year QTIC

GVA

10-year QTIC GVA

These facilities will also benefit from the wider Temple Quarter Enterprise Campus environment (Unit

DX, EngineShed, SetSquared…); sharing of the construction risks as well as aligning with the West of England Combined Authority and LEP and Bristol City Council plans for the development of the Temple Quarter Enterprise Zone TQEC will be fully functional and open for business in financial year 2022/23

For further information please contact mustafa.rampuri@bristol.ac.uk or 07814 287 614

Note for the reader:

The Full Business Case for this project has been developed using the Treasury’s 5 Case Model; comprising of strategic, economic, financial, commercial and management cases However, to simplify the proposal, provide clarity for review, reduce duplication and enable us to clearly and concisely present and manage potential risks and issues, we are presenting the cases for QTIC+ as an enhancement to the original QTIC FBC which is appended and referenced for supporting evidence and details

1 Strategic Case for Investment

1.1 Promoter and Delivery Arrangement

The University of Bristol is one of the most popular and successful universities in the UK and was ranked within the top 45 universities in the world in the QS World University rankings 2018 and is at the cutting edge of global research We have made innovations in areas ranging from cot death

In total, the University contributed £721.2 million to the West of England LEP’s GDP in 2014/15 This is equivalent to

2.3 percent of local economic output Of this, the University supported a £521.1 million contribution directly and through secondary channels and its additional students and their visitors support a further £200.1 million contribution to GDP

In 2014/15, the University of Bristol made a total tax contribution of £161.4 million to the UK Exchequer.1 This could fund 30 percent of the annual running costs of the University Hospitals Bristol NHS Trust

The University has had a reputation for innovation since its

founding in 1876 Our research tackles some of the world’s

most pressing issues in areas as diverse as infection and

immunity, human rights, climate change, and cryptography

and information security

The University currently has 55 Fellows of the Royal Society

and 20 of the British Academy – a remarkable achievement

for a relatively small institution

We aim to bring together the best minds in individual fields

and encourage researchers from different disciplines and

institutions to work together to find lasting solutions to

society’s pressing problems

We are involved in numerous international research collaborations and integrate practical experience

in our curriculum, so that students work on real-life projects in partnership with business, government and community sectors

1 Oxford Economics Report – Impact of UoB on the WoE LEP

£721.2 m

Gross value added supported

by the University of Bristol

and its students in 2014/15

This is equivalent to 2.3

percent of the economic

output of the West of England

LEP

13,300 jobs

Supported by the University of Bristol and its students in the West of England LEP in

2014/15

This is equivalent to one in every 49 jobs in the local area

The Research Excellence Framework 2014 ranked Bristol among the UK’s top research universities Our research output is shown to have top quality and major impact on society and the economy, according to this assessment of research conducted at every UK university REF2014 has decided how around £2 billion in research funding is allocated each year from 2015 to 2022

Thirty-six per cent of the University’s research received the top 4* rating, defined by HEFCE as ‘world leading’ Eighteen of the University’s 31 submissions are in the Russell Group top ten by 4* impact including submissions from across all six faculties, underlining the range of the impact of the

University’s research across a wide range of disciplines The Times Higher Education rated Bristol as

5th in the UK for research intensity, just ahead of Oxford

The University of Bristol was the leading recipient of engineering and physical sciences Centres for Doctoral training in the 2019 national competition The 10 Centres (as many as Oxford and Cambridge together) will attract over £50m of public funding matched by industry Of these 6 will be based in TQEC or work closely with the QTIC+ and other technology R&D on the campus

1.2 The University’s Temple Quarter Enterprise Campus

The University of Bristol is proposing a major new facility, radically different from a conventional university, designed from the ground up to be suited to the needs of the 21st Century TQEC will be a major generator of the skilled graduates, underpinning technologies, and innovative applications needed for the modern knowledge economy of digital goods and services

Initially, it will house researchers with world class specialisms in core technologies such as data analytics, cybersecurity, communications and networks, and in applications areas including digital health, smart cities, transport and autonomous systems, and creative technologies Over time, these will evolve to remain at the leading edge of digital innovation However, uniquely these groups will

be alongside world leading management, innovation, entrepreneurship and social science researchers together these establishing a formidable group with the sociotechnical knowledge and skill sets to help unlock new enterprises Funding of over £300m for the main TQEC building and site has been secured from multiple sources, including philanthropy, industry, government and private borrowing Staff and students of the University will be co-located with, and work alongside, partners from a variety of relevant industries, community organisations and policy makers The activities of students, staff, and industry partners will be focused on challenge-based research and education, co-created, co-developed and co-delivered by the University and its corporate and local collaborators, developing graduates with sought-after skills in technology research and development in a commercial context,

in innovation, and in entrepreneurship In doing so it will help to support the talent pipeline essential for emergent new businesses

The new campus will be at the core of the Bristol and Bath technology cluster, and it will have strong and supporting links with specialist digital centres regionally, nationally and internationally It will drive digital innovation in new ways and will build on the work of the Catapult centres and other incubation centres But by co-locating industry partners, research and education in the campus to develop innovations beyond TRL level 3 it will offer a very different approach Its educational model will take a challenge-based approach with close involvement of industry in co-producing the curriculum to ensure it remains at the forefront of future economic needs – very different from the traditional university model

The Quantum Technology Innovation Centre+ incorporating the Design Factory, Design Maker Space, and other enhanced facilities de-risks the strategic case for investment by ensuring that from its creation it has ready access to several broad application areas in health care technologies, internet of things, cyber security, robotics and more This enhanced configuration maximises the opportunities for new products, services, businesses and jobs to be created that harness the advantages provided

by quantum technologies, and the novel additional facilities strongly complements this approach to new future disruptive technologies, further broadening out the support for a wide range of other technological approaches – Digital, AI, Human Computer Interactions and Robotics, as well as community lead social enterprises looking to develop and prototype new products and services These facilities will be world leading hubs for the development, application and commercialisation of novel technologies, products and services

Figure 1: The Proposed Temple Quarter Enterprise Campus Development

The TQEC site development is strategically important to the university’s aspirations in research, teaching and innovation The following are driving the need for change and the scope of the programme:

• A need to secure the University's future growth and evolution for the next 20-30 years There are significant plans for growth in teaching and research which cannot be delivered by the existing infrastructure and systems on the Clifton campus

• The University ambition to be globally renowned both for the quality of our teaching and learning environment, for the excellence and breadth of our research and scholarship and for the strength of the partnerships that underpin them

• The University ambition to develop a unique collaboration with its city, Bristol City Council, Regional and National Government, industry and philanthropic partners, and the local business community that will build on the city's enviable reputation for high-tech and digital innovation

• The need to re-imagine the University as an organisation that is completely porous with our partners, enabling students, researchers and people from all walks of life to move seamlessly between the city, the academy and the workplace, feeding the talent pipeline and creating opportunities

• An ambition held jointly by the University the city and the region, to offer increased opportunity, inclusivity and access to previously difficult to reach communities and individuals

in Bristol and beyond

In addition to these explicit change drivers, the following influencing activities have also been carefully considered:

• The UK Industrial Strategy, offering opportunity through new models for place-based skills development and innovation in partnership with regional and international partners

• The development of the University’s Digital Workspace, which will influence how Temple Quarter is used and signposted

• The University Strategy targets increasing numbers of international students Catering for their specific educational and accommodation needs will be an integral part of the programme

The facilities will be built within the University’s Temple Quarter Enterprise Campus, close to national transport links and important enterprise development infrastructure To achieve this proposal investment of £35m is required through Combined Authority and Local Enterprise Partnership Funding The Combined Authority and LEP can further support this proposal indirectly through provision of access to apprenticeships; support the development of business networks, enterprise and private investment opportunities and new businesses emerging from the facility in conjunction with the world leading SETSquared Centre based at Engine Shed

The site is a challenging one that has consequently remained undeveloped for over 2 decades Current (April 2019) knowledge of the site indicates a series of challenges to its development and significant risks and costs in bringing the site into public and University use And it is appropriate for this risk to

be shared by the University and its partners These risks and costs are significantly higher than those known at the time of the original QTIC bid submission Good progress has been made in strategic partnership with Network Rail, WECA, BCC, and Homes England in developing plans for the wider Temple Quarter Enterprise Zone and St Philips area, including planned use of the Housing Infrastructure Fund to enable construction of an Eastern Entrance to Temple Meads station from the University campus

The University has considerable experience in delivering large scale complex construction and development projects having spent £0.6bn in recent years on new and existing buildings, particularly where co-investors have specific requirements to meet spend profiles An example of this was with the National Composites Centre (NCC), where the University had to design, build and deliver a facility

in 2 years to meet the spend profile set by the funders for both phases 1 and 2 of its development In addition, the NCC as an operating entity had to be created These ambitions were successfully achieved and the NCC continues to thrive, now employing over 350 staff and with over £100m of capital assets deployed to support UK national innovation objectives as a key part of the High Value Manufacturing Catapult based on the Bristol and Bath Science Park as its anchor and launch tenant

1.3 The Strategic Case for QTIC+

1.3.1 Background and Partnerships

This enhanced proposal focuses on the development, application and commercialisation of quantum and other novel and future disruptive technologies We have an opportunity to establish a state-of-the-art innovation centre which will anchor future global Deep-Technology supply chains in the West

of England region We also see an opportunity to build on this investment and use our knowledge, experience and facilities for developing the sector to support the evolution of a whole host of other disruptive technologies

Bristol is a world leading hub for quantum photonics, quantum computing and quantum computer software for modelling and simulation and is a hub for innovation and entrepreneurship in the emerging quantum sector This success is borne of our experience that addressing complex global challenges though innovations in products and services requires a holistic approach; comprehensive stakeholder engagement; and trans-disciplinary teams to truly exploit emerging and disruptive technologies for societal improvement

In these interrelated areas the University of Bristol has a depth and breadth of capability that is unrivalled in the UK; bringing together the physical sciences, engineering, social sciences and arts/humanities This includes world leading groups researching new technologies (e.g synthetic biology, composites, robotics and communications); others focussing on new design tools and methods, new manufacturing processes and innovative business models that embrace alternative organisation forms; and teaching departments that include cutting-edge expertise in design thinking, systems thinking, systems engineering, consumer behaviour and technology management Our researcher communities span the breadth of the university, from engineering to management to anthropology, which when coupled with the leading research facilities, place the University of Bristol

at the forefront of challenge-led and interdisciplinary design-led thinking and practice

1.3.2 QTIC+ Project Description

The Aim of this project is to establish QTIC+, a Quantum and Disruptive Technologies Innovation Centre, co-located in the University of Bristol’s new Temple Quarter Enterprise Campus as part of its CM1 facility

Building on our strengths in Quantum, Design, Computer Science, Electronic and Electrical

Engineering, Social Sciences, Law and Management we plan to establish a unique Innovation Facility that leverages the existing regional capabilities including the Silicon South West and Cyber Clusters; a growing entrepreneur population; available skilled people and provide a national resource that will attract further investment The Innovation Centre will require investment to establish and equip its facilities including revenue funding to resource it The proposal will deliver economic growth and wealth creation by building an innovation environment where a significant cluster of new high growth,

high technology quantum and other disruptive technology businesses can flourish, enabling the

creation of 1,000’s of new jobs and a highly skilled workforce over the next 10 years

QTIC+ will be the internationally recognised centre for the engineering and commercialisation of novel technologies such as Quantum Computing, Machine Learning, Human Computer Interaction, Virtual Reality, Cyber Tech… It will enable the design, development and prototyping of devices for secure

communications, new sensors and ultra-powerful computers and other to be defined applications of technologies It will be independent, building on the internationally leading industrial and academic capabilities in the Bristol region It will host companies from across any sector to co-create new products and exploit the advantages of quantum and other future disruptive technologies, as well as servicing the needs of some of the UK’s largest exporters (and investors in R&D) who need to develop their technology portfolios and skills.

The core offerings provided by the facility are:

1 Creating capacity: Shared facilities, offices, Design-Thinking space, fabrication, basic-

prototyping and maker facilities, test and measurement laboratories, design tools and access

to specialist equipment and sophisticated rapid-prototyping equipment, sophisticated laboratories, lowering the risk barrier for all industries to engage with and invest in design lead technology product and service development

2 Talent for business: Provide novel up-skilling for students, new entrepreneurs, existing

businesses and policy makers, increasing the potential deal-flow and connecting with appropriately skilled people from diverse backgrounds

3 Match-Fit: Support small and large businesses readiness and preparation to sustainably grow,

take on and run with the opportunity presented by QTIC+, which will include support for new

market development and appraisal, public engagement, policy and legal issues, financial modelling, securing finance, and IP advice Provided in collaboration with SetSquared and the Engine Shed

4 Access to Finance: Host and run events that promote the activities of the engaged businesses,

e.g investor showcase event, pitching to angels and other forms of investments, building new connections within and between different stakeholder groups and market sectors

5 Make it real: Provide and coordinate world class professional services supporting adoption,

bringing expertise to those businesses struggling with the tough concept-to-market challenges, applying simulation and emulation tools, enabling businesses to flourish more rapidly, ensuring early to market successes for UK businesses

6 World class thought leadership and scholarship in Design-led business and management for

practice and policy impact together with the Centre for Innovation and Entrepreneurship and their partners

The Centre will be a hot house for collaborative technology development and will provide offices, meeting and conferencing centre spaces for businesses to start-up, co-locate and network It will

provide an end-to-end capability for systems engineering, design, systems integration, manufacture and exploitation of ultra-high-fidelity integrated quantum and classical photonic systems including

technology development, knowledge transfer and skills development across the whole product development life cycle It will be the cornerstone of the University’s aspiration for the Temple Quarter Enterprise Campus and will help link disruptive technologies to application areas such as connected mobility, inclusive learning, digital healthcare and more

Importantly, the facility is not just about products but also services and product-service systems, business processes and systems (socio-technical) This means that the facility can support many sectors and meet the regional innovation needs of start-ups and mature organisations alike, accelerated though locating the facility at the heart of Temple Quarter Enterprise Zone By providing capacity for businesses to start-up, co-locate and network within an open innovation design, ideation,

incubation, development, fabrication and testing facility, we will empower our students, staff and partners of any scale and from any sector to learn, develop and co-create new products and services Finally, hosting these diverse activities within TQEC will create a vibrant talent ecosystem which co-produces an evolving range of exceptional, innovative learning opportunities for a broad range of

individuals, groups and communities to access at every stage of their learning lives The QTIC+ will

support the University of Bristol in renewing its mission as a global civic institution The TQEC campus

is designed to bring a range of kinds of expertise into constant dialogue with researchers and students This informs the aspiration to co-locate enterprise partners on site but will also lead to the creation of

‘the Bristol Rooms’, a space for co-working for civic partners and community infrastructure organisations Other civic spaces in the building include the Story Exchange, a circular room that is designed to seat 30-40 people in a circle and enable conversations from different perspectives The University is also planning a programme of activity called Twilight Temple Quarter, which will bring a range of communities to the campus in evenings, weekends and university holidays to take part in lifelong learning programmes, events, festivals and research activities

This ethos will ensure the Design Factory within QTIC+ is accessible to a wide range of people, with new relationships brokered through the Bristol Rooms and the space utilised to maximum benefit in twilight hours; e.g evening access to supported open hackspace for design and make skills development/ 3D printing / workshops on coding The Design Factory could also be used to support delivery of executive education, community-facing and continuing professional development, flexible undergraduate courses, student/community engagement activities, and activities organised by the Bristol Doctoral College, providing training opportunities for PhD students

Figure 2: QTIC+ facilities

The QTIC+ could also be used for partner-led events, including workshops offered by local festivals and events such as Bristol Festival of Ideas, training offered by key infrastructure partners (e.g Voscur, Locality, Black South West Network) to third-sector organisations, and other educational offerings by other partner providers under Learning City umbrella focus There may also be opportunities for a range of providers to offer courses that aligns with TQEC’s mission using the QTIC+ facilities and bring

QTIC+

Total Facility 8471 m

Lab Space

Enterprise Space

Design Factory Workshop

Design Maker Spaces Facilities

a diverse range of individuals and communities to the campus This activity could be coordinated under the banner of Bristol Learning City, in which the University is a key partner Crucially, because relationships with external partners will be embedded at TQEC – through the Bristol Rooms and more widely – such provision will be ongoing and will enable groups and communities to benefit fully from the facilities available, bringing ideas from concept to fruition, as well as participating in taster or outreach activities

The new physical innovation environment, structured around the Design Process Loop (Fig.3) and will

house state of the art capability for ideation through short-loop prototyping to product development:

1 Conceptualisation: Design Maker Space enables architectures, design and simulation of new

quantum and future disruptive technology concepts to be created, modelled and fine-tuned

2 Turning product concepts in to reality: The Design Factory Workshop will be a unique regional

facility providing the space, the tools and the people to provide a step-change in regional capability to rapidly develop and bring to market / implement new products, services and systems The facility will, via its academic, city and industrial collaborations, provide its users with the toolsets, skillsets and mindsets that are necessary for success Such collective provisions have to date only been created and made available within a specifically engineered facility by elite universities in the world, such as the Center for Design Research at Stanford University

3 Scale-up: a suite of laboratories for further technology development; product testing and

evaluation allows businesses to scale from the bench to the market

4 Partner co-location: the Enterprise Space will enable business to be resident within the

innovation centre, enabling full utilisation of the facilities, tools and accessing skilled staff and other businesses to help bring new products to market

5 Showcasing: other Facilities will be available to partners to hold conferences, seminars, meetings

and events to showcase to potential customers, investors and supply chain partners their offerings

Figure 3: Design Process Loop

Further details on the Labs, Design Factory and Design Maker Space specifications and methodologies can be found in Annex B

1.3.3 Programme Structure

We have structured the programme in two phases:

• Phase 1 will be to establish a pilot QTIC+ facility within the University whilst the TQEC building

is established – this small-scale incubator facility will be located at 1 Cathedral Square (BS1)

and will be used to develop, trial and refine the facility’s operational and business models

• Phase 2 will be decanting the pilot activities into the new CM1 building at Temple Quarter

The full facility will house all the high value laboratory assets, a full-scale design Factory and

enable the growth to capacity for 300 people

Importantly the QTIC+ and TQEC activities are coupled to offer the best value for money for the investment This also helps to share risk, but in the unlikely event that the TQEC activity is delayed then the QTIC facility can still be ongoing Risk mitigation options have been described in more detail

in the Risk section of the Management Case

The budget requirement reflects pro-rata the design, planning and build programme activities for the TQEC and includes the initial payments for land procurement, remediation and site development, design and construction related costs, which are at the risk of the University and reflected in the public match being brought forward There is no dependency between the private match and the construction programme, hence private match is budgeted in the later years of the programme Further detail can be found in the Finance Case

Capital £70.5m (£35m WECA and LEP and £35.5m Public Match)

Funding is requested to build QTIC+, a state-of-the-art quantum and disruptive technologies design and development facility this includes a contribution to the costs of acquisition and remediation of the land, site development, the costs of construction and of equipping the specialist facilities The facility will include a Design Factory, Design Maker Space, Ideation Lab, design simulation and modelling suite, QT architectures, design and simulation suite; quantum optics labs; systems integration labs; facilities for characterisation of devices; chip-scale device labs; cryogenic labs; quantum secure networks lab It will also offer the ability to scale-up using sophisticated laboratories and rapid-prototyping facilities; a suite of laboratories for technology development; a packaging, integration and assembly centre; city scale dark-fibre network access point; classical and super-conducting control electronics development suites; test, evaluation and validation facility It will also provide offices, meeting rooms, a conferencing facility, board room, showcasing facilities and informal interaction spaces

Public Match £35.5m

The University of Bristol as part of its Temple Quarter Enterprise Campus development will align

£35.5m of contribution to this project to provide the land remediation, construction related costs, fees, design costs, planning costs and non-recoverable VAT As well as providing access to universal and complimentary facilities that are supportive of both the Quantum Technologies and future disruptive technologies activities such as teaching rooms, teaching labs and large-scale lecture

theatres; an enhanced incubation facility for new businesses combined with specialist training tools

Revenue Funding

The operation of QTIC+ is independent of UK or EU grant funding and will function based on income from its user community Presently there are several potential other revenue sources, these include partner investment, fees and direct funding from industrial users, Innovate-UK catapult and Collaborative R+D funding, EPSRC programme funding, EC H2020 FET programme funding, €1bn EC Quantum Technology Flagship programme (a 10year technology acceleration programme) to support quantum technology innovation to commercialisation Further details in the Financial Case section

1.3.4 Project Objectives and Case for Change

QTIC+ aims to help establish and anchor a global supply chain for quantum and future disruptive technologies in the region by creating an Innovation Centre that lowers the barriers to entry for businesses Systems integration primes such as Airbus and Boeing want to engage with the Centre to ensure they can help create a robust supply chain in which they can acquire technologies and skills to

integrate in to their platforms rather than make next generation devices themselves The facilities will lower the barriers to entry for businesses This will result in a large number of new jobs and small

businesses; the latter would not be able to afford the equipment and facilities by themselves to develop products and so will benefit from public investment in the centre – both as an entrepreneurial hub to support new business creation and because it will have the tools, facilities and skilled engineers and business specialists to help these emergent businesses establish

We anticipate the QTIC+ will generate high value jobs in new areas of product and service innovation and will help to draw people and investment to the region, resulting in significant indirect and induced job creation

The core QTIC+ objectives are:

1 Establishing Bristol and the West of England as the global centre for next-generation design-lead businesses: encapsulating all stages of the product lifecycle from research, ideation, modelling, design, product design and development, new services, manufacturing, and commercialisation and disposal Inc Quantum and other future disruptive technologies

2 Addressing current market failure by lowering costs (barriers to entry) to businesses

in developing design-lead approaches for Quantum and other future disruptive technologies

3 Closing the current skills gap so that Bristol and the WofE have a sufficient pool of skilled resource to develop successful next generation technology and service businesses

4 Developing sufficient critical mass to attract significant inward investment from businesses

5 Increasing community engagement in design-lead next-generation business activity so the potential wider longer-term benefits are understood to help inclusive growth

6 Developing Bristol’s reputation as a centre for design leadership so that significant leveraged research funding is attracted to the region

7 Developing a truly collaborative environment between academia and business to increase knowledge exchange, leading to increased commercial opportunities

Creating an environment where the research community and businesses will identify market opportunities and work towards solutions

8 Developing a facility that supports economic growth in the region and opportunities for a range on new jobs including high-skilled, high-value job creation

9 Acting as a catalyst for wider regeneration activity in the TQEZ and the St Philips Marsh area

10 Providing high-specification space that allows new and/or small businesses to develop and grow whilst harnessing design-lead approaches

11 Creating a financially sustainable model in the long-term based on drawing in private sector income

12 Delivering value for money on public investment at minimised risk

1.3.5 Strategic Fit

A detailed analysis of strategic fit against the Central Government, European Commission, Local Government, LEP and University of Bristol Strategy has been undertaken and can be found in Annex

B This analysis provides 3 characterisations2

The following table gives a summary of strategic fit against relevant strategy and policy documents

2

✓✓✓ = Very positive impact/ Strongly aligns with all objectives

✓✓= Positive impact/ supports most objectives

✓ = Good impact/meets some objectives

Digital Economy Bill, 2016 ✓

1.3.6 Rationale for Public Intervention

The market failures (or market inefficiencies) that QTIC+ will help to address have been detailed in the Economics Case Market failure principally exists due to high barriers to entry into this market and the risk & uncertainty associated with R&D/R&T activity Specifically, these include:

• The high costs and time to undertake iterative product development for future disruptive

technologies that addresses a rapidly changing market By developing the QTIC+ as an open innovation design-lead environment, where industry will have access to specialist skills, start-of-the-art equipment and facilities that would normally be out of reach of most businesses, these cost barriers can be addressed

• A skills gap exists where an engineering solution necessitates broad expertise in design-lead

approaches to rapidly optimise the solutions And in deep technology development in highly specialised areas such as quantum

• The University of Bristol is leading in quantum, disruptive technology and design-led approaches but requires industrial co-location with companies to embed this into practical

engineered solutions, helping them gain access to market

• There is implicit risk and uncertainty regarding the potential returns on all R&D activity The risk averse nature of many businesses, sometimes driven by short-term focus of their

investors, means that a sub-optimal level of research can be undertaken It has been noted

in the Modern Industrial Strategy that the proportion of UK expenditure devoted to R&D

remains below that of most of its competitors, this approach will help meet the 2.4% of GDP target for R+D spend

• There remains a ‘valley of death’ in the innovation lifecycle, where businesses that have a

great idea for a product or service, but simply cannot maintain development activity through

to commercialisation due to a lack of finance The business does not have the revenue income

to devote back into the business, and it is difficult to attract the sufficient scale of capital

from other avenues (i.e debt/equity finance) due to uncertainty and risk of return This is likely to be the case for hardware businesses

• Nationally there is a lack of capability for end-to-end design lead approaches There are

organisations that can do a simulation or build a model or make a prototype, but there is where that has all the capabilities available in one place

no-• Rapidly changing market conditions driven by political and economic uncertainties will need

new approaches to be developed

Systems integrators, such as defence and aerospace primes Airbus and Boeing, are looking to acquire quantum and other disruptive technologies and integrate them into their platforms and products, but they do not want to manufacture these devices themselves This will necessarily result in the emergence of small supply chain businesses that can design, develop, manufacture and distribute quantum technologies devices However, the costs of bringing these highly disruptive technologies to market are likely to be beyond the means of any one company and requires a public and private sector intervention to provide the necessary capability aggregated into a single centre and, thereby, lowering the barriers to entry (including the R&T, R&D and skills development surrounding quantum technologies)

1.3.7 Options Appraisal

The short-listed options that have been considered through the development of the business case represent potential mechanisms to help towards achieving the overall objective of establishing Bristol

as the global centre for quantum technologies The shortlisted options are:

1 ‘Do nothing’ – continue with current arrangements of leading-edge quantum-related research taking place at the University of Bristol, but with no mechanism to increase industrial collaboration and close the capability gap at Technology Readiness Level 5 stage

2 Develop existing space at the University of Bristol to establish a QTIC+, on a smaller scale due

to physical constraints and availability of suitable land issues

3 Use & redevelop an existing building (based on long-term lease arrangement) in an alternative location within Bristol, ideally located near the city centre, establishing a QTIC+ on a smaller scale

4 Build and develop a purpose-built facility in a city centre location that will allow research and product development to co-exist This has two further elements, or sub-options:

4a) To develop a separate QTIC+ facility, located at the new University campus at Temple

Quarter 4b) To develop QTIC+ as an integral part of the main CM1 academic building on the

Temple Quarter Enterprise Campus, a key facility that will form the cornerstone of the new campus

Option 4b has been selected since this meets all the critical success factors and core objectives, a full appraisal of each option has been undertaken and the selection process described in the Economics Case

1.4 State Aid Considerations

The University of Bristol is seeking specialist State aid advice from VWV LLP in relation to the revised application for £35m grant funding for QTIC+, to include innovation space, a design factory and specialist laboratories

The University of Bristol recognises its duty to comply with State aid regulations and to ensure that State aid is not flowed down to users of the facility, its partners/investors and contractors

The proposals for QTIC+ are still to be finalised, including the approach to State aid to ensure that it will be State aid compliant

However, it is anticipated that the project will be structured around the following principles:

• No aid basis: The University of Bristol will not be in receipt of State aid where, in accordance with the RDI Framework / Notion of State aid, the QTIC+ facilities are used for non-economic activities such as independent research, the transfer of know-how and collaborative research and development (CR&D)

• To the extent that the University of Bristol will be carrying out economic activities, it will seek

to rely upon the provisions of the General Block Exemption Regulation (GBER), in particular Article 26 (investment aid for research infrastructure)

The University of Bristol will actively manage QTIC+ to ensure that indirect State aid does flow down

to any end user as follows:

• There will be no aid to undertakings that participate in CR&D projects structured under the RDI Framework;

• Where specific activity does not constitute CR&D, end users will be required to pay market or alternatively may rely on GBER or the de minimis regulation;

• Design and build contractors and consultants will be procured in compliance with EU procurement law This will ensure that they are not compensated above market rates and therefore are not in receipt of State aid;

• Partners/investors will provide cash and in-kind investments They will not receive a selective advantage from their contributions

1.5 Equality and Diversity Impact Assessment

The University of Bristol is committed to creating and sustaining a positive and supportive working environment for our staff and an excellent teaching and learning experience for our students, where staff are equally valued and respected, and students are encouraged to thrive academically As a provider of employment and education, we value the diversity of our staff and students We are committed to providing a fair, equitable and mutually supportive learning and working environment for our students and staff, and this is reflected in the core values of the University as set out in our Vision and Strategy:

Diversity - We view the diversity of our staff, students and alumni as a great asset

Equity - We believe in the equitable treatment of all

Full details can be found in Annex A

1.6 Environmental Sustainability Considerations

Sustainability is part of everything we do: our research, our curricula, our buildings and the student experience We have a long history of sustainability action,

winning numerous awards

Moving forward, we will continue to embed sustainability in our teaching, build multidisciplinary communities of expert researchers and manage our spaces responsibly for all to enjoy Working and researching together, we can build a greener, more sustainable future

We use BREEAM as our framework to drive forward the sustainability agenda in all our building and refurbishment projects since it is one of the most established accredited assessment tools in terms of measuring how 'environmental' a new building is As a point of reference all our new builds are at least BREEAM Excellent, including the National Composites Centre and the Life Sciences Building on Tyndall Avenue

Full Details can be found in Annex A

3 http://www.bris.ac.uk/cabot/

2 Economic Case

The economic data presented here is based on the same approach as adopted for the Quantum Technology Innovation Centre (QTIC) proposal, adapted to reflect the scale and specific activity of the new proposals under the project concept of QTIC+ Despite the indicative nature of the project we are confident that this approach provides a firm basis upon which to estimate the economic benefits delivered by the larger QTIC+ proposal

The economic assessment for the Quantum Technology Innovation Centre+ (QTIC+) has been produced for the University of Bristol by Moor Economics Ltd, chiefly by Shane Vallance, Economic Consultant The assessment is based on authoritative data, methodological and research sources, and the expertise and experience in regional economics and development of the author It is compiled from information and intelligence available up to the end March 2019

See full economic analysis in Annex B

2.1 Economic Appraisal Summary

This study of economic impact (the economic case) considers several steps to assess and appraise the central option for the proposed establishment of a QTIC+ at the Temple Quarter Enterprise Campus

at the Enterprise Zone in central Bristol On a quantitative basis, the analysis strongly supports the development of a purpose-built QTIC+ within the University of Bristol’s Temple Quarter Enterprise Campus – representing the preferred option for the University

QTIC+ has the potential to deliver the greatest benefits for the WofE economy, thus providing the strongest ‘returns’ against proposed investment from the Local Growth Deal and support from the West of England Combine Authority The estimated impact of the project is set out in the following tables

This encapsulates the short-term direct impact of the construction phase, and the direct benefits of the operational activity of QTIC+ (representing the majority of the benefit stream given the potential

to sustain a significant number of jobs in the development) There is also an implicit consideration of the wider positive spill-over effects of publicly backed research activity

The project also has the potential to support further indirect impacts through ‘multiplier effects’ in the local economy, and these are also set as wider benefits These are partially ‘offset’ by consideration of the additionality of the project, recognising that some of the benefits may have been delivered through other means/avenues This follows normal practice in economic impact assessments

This quantitative approach does not attempt to quantify other, but important, factors For example, the role of the development as a catalyst for the wider regeneration of the Temple Quarter, or its potential influence in helping to attract and retain important businesses in the WofE LEP area, are not necessarily reflected

The method used in estimating the economic impact has been based on an ‘employment density’ approach, utilising the space breakdowns within the project design to understand the potential number of jobs that could be supported4 This approach was adopted and accepted as part of the original QTIC business case

Table 1: Gross Impact – QTIC+

Gross impact Discounted 5-year (2026/27) QTIC+ return

(Gross Value Added)

Gross impact Discounted 10-year (2031/32) QTIC+ return

(Gross Value Added)

Even on this relatively narrow measurement of potential benefits to be delivered by the project, on a gross basis we estimate the QTIC+ project could generate a benefit: cost ratio of 6.5 over a 10-year period when set against potential local investment support through Growth Deal and the West of England Combined Authority, or 5.3 on a net additional basis (see table below) This includes the significant short-term stimulus provided by the construction of a significant capital development Presenting this in a different way, capturing the estimates as ‘net additional’, impact still shows the potential for QTIC+ to deliver significant economic returns to the local economy The net additional impact of the project has been informed by available benchmarks5

Table 2: Net Additional Impact - QTIC+

Net additional impact

Discounted 5-year (2026/27) QTIC+ return

(Gross Value Added)

Net additional impact Discounted 10-year (2031/32) QTIC+ return

(Gross Value Added)

QTIC+ will also play an important role in maintaining and enhancing the competitiveness of existing strengths of the WofE LEP economy, thus safeguarding jobs in the future Recent evidence has confirmed that Bristol & Bath have internationally important presence in sectors such as digital technologies and high value engineering, which will benefit directly from a stronger design presence within the region

The potential co-location of QTIC+ within/alongside the Temple Quarter Enterprise Campus is expected to produce synergies and strengthen the ability for knowledge transfer and commercial

4 ‘Employment density guide – 3 rd Edition’ – Homes and Community Agency, 2015

5 ‘Research to improve the assessment of additionality’ – BIS Occasional Paper No.1, 2009

application Consequently, locating QTIC+ within the Temple Quarter Enterprise Campus will further strengthen Bristol’s position across a range of technology, product and service sectors

QTIC+ is also expected to attract significant levels of inward investment into the local economy Whilst the scale of inward investment opportunities is uncertain at this stage, the expectation is that this will develop over time and become an important component of the overall benefits QTIC+ will help to deliver

The establishment QTIC+ within the Temple Quarter Enterprise Campus could also have important catalytic impacts This wider Temple Quarter regeneration project potentially has the transformational capacity to further enhance Bristol city centre as a hotbed of entrepreneurial and business activity The location of QTIC+, enhanced through collocation with other strong regional capabilities, should be attractive to private industrial investors

A further level of detail is provided in the following table This illustrates the estimated benefits provided by QTIC+ both including and excluding the short-term impact of the construction phase of the development This is useful because it highlights that on an ongoing operational basis, QTIC+ still has the potential to deliver significant net returns against the local funding support

It is useful to understand a few points for appropriate interpretation of the estimates:

• The estimated number of jobs supported by each ‘space type’ has been derived using recognised employment density benchmarks However, the enterprise/office component will

be designed on a ‘high density’ model, and therefore expected to support a greater number

of jobs6

• Occupancy of the space is expected to build over time, reaching full occupancy by Year 4 (2025/26) – see section on sensitivity analysis in the appendices to understand the implication

of a slower build-up of occupancy over time

• We do not include any job estimates for the facilities element (e.g café/restaurant) even though this will also support jobs

Finally, the build-up of net returns against local investment support will be a gradual process and will depend on the assumptions that underpin the modelling of estimates (e.g occupancy, high-value employment, secondary impacts etc.) being achieved

During the construction phase, there is the potential to generate a significant short-term stimulus to the local economy given that the overall project cost of circa £70mn will sustain a considerable amount

of construction jobs The benefit flow from the construction element – particularly when set against the proposed local investment support of £35mn – could result in a ‘positive net return’ being returned relatively quickly The strength of this positive return will again depend on a number of factors, not least the strength of local supply chain effects (e.g use of local sub-contractors) through the construction phase

6 Effectively an assumption of 7m 2 per job – a higher density than the range of 10m 2 -13m 2 contained in the benchmarks

Table 3: Estimated Impact - QTIC+ (inc and exc construction impact)

Estimated Impact – including and excluding short-term construction impact Area m2

(GIA)

Area (NUA)

(BCR against WECA & Growth Deal funding) – Yr

5 (2026/27) – (Benefit: Cost ratio) - gross

Cumulative GVA (BCR against WECA & Growth Deal funding) –

Yr 10 (2031/32) – (Benefit: Cost ratio) - gross

Cumulative GVA (BCR against WECA and Growth Deal funding) – Yr 10 (2031/32) – net additional

Table 4: Benefit: Cost ratio – Local Growth Deal and WECA investment (not whole project cost)

Yr 1 22/23

Yr 2 23/24

Yr 3 24/25

Yr 4 25/26

Yr 5 26/27

Yr 6 27/28

Yr 7 28/29

Yr 8 29/30

Yr 9 30/31

Yr 10 31/32