Appendix 7: VISIT TO WALES
1. Members of the Sub-Committee visited Wales
on 17 February 2003 to see as for the visit to Scotland
(Appendix 5) how the Welsh Development Agency (WDA) and
its partners handled the challenges being faced by the more recently
established English RDAs.
2. The visiting party comprised Lord Patel (Chairman),
Baroness Finlay of Llandaff, Lord Freeman, Lord Methuen, Lord
Oxburgh, Lord Thomas of Macclesfield, Lord Wade of Chorlton and
Lord Winston. They were supported by the Specialist Adviser to
the Inquiry (Dr. Marilyn Wedgwood), the Clerk (Mr Roger Morgan).
Assistant Clerk (Mr Gordon Baker) and the Specialist Assistant
to the Select Committee (Dr Jonathan Radcliffe).
3. The party was welcomed to the Agency's Cardiff
Headquarters by Mr Roger Jones, the WDA's Chairman. In sketching
out the territory covered in greater detail by the following presentations,
he emphasised in particular WDA's role as a facilitator and the
importance of the Agency's private sector lead in being able to
mobilise the various partnerships.
The policy context
4. Mr Richard Rossington, the Head of the Innovation
Branch of the Welsh Assembly's Economic Development Department,
outlined the policy framework for sustainable economic development.
This was set out in the Assembly's strategy documents
for the economy, A Winning Wales (which laid emphasis on
entrepreneurship, innovation and HE) and, for education, Reaching
5. The Assembly, WDA and the HE Funding Council
for Wales (HEFCW) had collaborated in producing the Assembly's
consultation document Wales for Innovation. This identified
five key areas for action: communicating what could be achieved
through more innovation; developing more high growth potential
businesses; better equipping people to innovate; simpler, more
effective business innovation support; and maximising the economic
development potential of Welsh universities and colleges.
6. Following wide consultation, the final version
of this document was due to be published in early March 2003.
WDA would be responsible for delivering most of the action plans,
through partnerships with Assembly Government Departments and
Agencies and Welsh-based businesses, universities and colleges,
local authorities, community organisations and trades unions.
7. The WDA Board was appointed by the Assembly's
Minister for Economic Development. It was private sector-led and
WDA staff were not civil servants. The Assembly set the WDA's
annual targets and approved its triennial corporate plan. The
plan for 2003-6 was currently being considered. WDA reported twice
yearly to the Assembly's Economic Development Committee and was
also monitored by the National Audit Office. The WDA's budget
for 2002/3 was £345.5 million.
Welsh Development Agency
8. Mr Gareth Hall, WDA's Executive Director for
Strategy Development, and Dr Virginia Chambers, WDA's Development
Director for Technology and Innovation, gave presentations on
the Agency's role in promoting and applying SET.
They made the following main points.
a. Only successful businesses could create prosperity.
WDA's role was to identify potential strengths and help to create
the conditions which could maximise that potential.
b. SET was seen as vital to the transformation
of the Welsh economy. As traditional industries had declined,
WDA had attracted new technology-based industries to Wales. But
not enough of those had generated high-value employment or enhanced
Welsh research capacity significantly.
c. It was important to raise the level of Welsh
corporate R&D spending. However, most Welsh companies were
fairly small (only 23 were listed on the Stock Exchange) and could
not afford to commit large sums. More external direct investment,
ideally with a substantial Welsh-based R&D content, was therefore
desirable. Similarly, although more should be made of Welsh academic
research capacity, external expertise and facilities were still
indispensable to future growth.
d. WDA-managed funding for innovation included
Smart Wales innovation grants and a Technology Exploitation Grant.
WDA had set up a venture capital company, Finance Wales plc. This
channelled EU funds and helped to put together syndicated private
sector loans. The Wales Innovation Relay Centre, jointly funded
by the European Commission and WDA, provided a technical information
exchange network with links to similar centres throughout the
EU. WDA Innovation and Technology Counsellors advised SMEs on
product development and funding.
e. WDA's Centres of Excellence Programme funded
commercial managers in 20 Welsh institutions earmarked for high
research standards and commercial potential. University liaison
officers provided advice on commercialisation of IP. Specific
sector support included the Wales Gene Park (see paragraph 11
below), the Wales Bioscience Programme, the Baglan Energy Park
and the proposed St Athan Aerospace Park. Regular Sectoral fora
brought together industry leaders and their suppliers to exchange
ideas, identify mutual interests and stimulate business opportunities.
f. Technium Centres high technology innovation
incubators were an important new initiative. The concept
had shown its value in the successful Swansea Technium Centre
(see paragraph 12 below). £150 million had now been committed,
mainly from EU funds, to expand from the Swansea hub in key subject
areas across Wales.
g. Collaboration with neighbouring English RDAs
was growing where there were common interests (for example, with
NWDA on aerospace development).
h. Performance measurement needed to be improved.
Success could not be judged satisfactorily by simple measures
such as GDP or job creation. WDA was working with Cardiff Business
School to develop not only more useful measures but also the data
sources to support them.
9. Dr David Grant, Vice Chancellor of the University
of Wales, Cardiff, noted that his research-led institution (a
member of the Russell Group) contributed to the regeneration of
Wales in many direct and indirect ways. Research income had doubled
in the last four years, over 60% of it from private sector sources.
Graduate and post-graduate numbers were also up. A good proportion
of these came from outside Wales, and many wanted to stay in Wales
10. WDA had been and would continue to be a valuable
partner in developing the opportunities. It helped the university
to place research students with industry and to form strategic
partnerships with business. It supported specific university-based
projects, such as the Cardiff Institute for Tissue Repair and
high performance computer centres. It had also been instrumental
in setting up the Cardiff University Innovation Network, a well-regarded
and much valued information exchange which now had over 800 business
and academic members.
Wales Gene Park
11. Professor Martin Evans, Director of the Cardiff
School of Biosciences and Professor of Mammalian Genetics at the
University of Wales, Cardiff, spoke about the Wales Gene Park.
In addition to the physical regeneration of part of Cardiff Bay,
this would have valuable business and UK-wide scientific consequentials.
WDA had helped with seed-corn funding and lobbied Whitehall for
UK Government support. It was now considering a feasibility study
for the proposed second phase, which would include more scope
for spin-off activities. Collaboration with other Welsh universities
and the NHS was important to the project.
Swansea Technium Centre
12. After a buffet lunch hosted by the WDA's
Chief Executive, Mr Graham Hawker, and providing opportunities
for informal discussions with a cross-section of Welsh businessmen
and academics, the visiting party travelled to the Technium Centre
in Swansea. Members were welcomed by Mr Alan Gray, Business Development
Director of WDA's South West Division, who outlined the points
covered in more detail by the presentations noted below.
13. Mr Andrew Davies AM, the Welsh Assembly Minister
for Economic Development, also welcomed the Sub-Committee's visit.
He noted that Swansea had been the premier city in the industrial
revolution the first city where more than half had earned
their living from industry. Post coal and steel, a massive restructuring
of the Welsh economy was needed. WDA had been a vital tool in
developing means of exploiting Welsh talent in Wales. The Technium
concept was a good illustration of the Agency's innovation. The
roll out of Technium Centres was now at the centre of Welsh economic
14. In an introductory presentation, Dr Stephen
Davies, Director of the Swansea Technium, made the following main
a. The Technium concept was to provide comprehensive
infrastructure and support services in strategic locations for
embryonic high-technology business ventures aimed at the knowledge-based
b. It had been the brain-child of University
of Wales, Swansea and the WDA. The Agency had also acquired and
developed the Swansea site. Being in a regeneration area, 50%
of the initial funding had been obtained from the EU. WDA had
provided 40%, and the rest had come from private sector investors.
c. WDA managed the site and provided administrative
support and business advice to 20 short-term tenants. These were
mainly start-up and spin-off enterprises that were expected to
move on as their business grew.
d. WDA involvement, staunch university commitment
and links to its Centre of Excellence, and support from the local
authority and Welsh business had all been critical to the success
of the venture. It had already attracted the interest of large
corporate investors who were considering locating new premises
e. Construction of Technium II was under way
on adjoining site, and the network would be expanded in 20 locations
throughout Wales in key cluster-related subjects such as energy,
bio, digital, auto and media.
Technium sectoral activities
15. Mr Ian Maxwell, WDA Optoelectronics Sector
Manager, illustrated the general concept by considering optoelectronics
which WDA had identified as one of the priority growth sectors
for the Welsh economy. The sector already employed over 5,000
people in Wales and had a turnover last year of over £522
16. The OpTIC Technium was being built near the
North Wales cluster where 40% of UK optoelectronics capacity was
located. It would cost nearly £15 million, around £8
million of which was coming from the WDA, and provide incubation
facilities for up to 24 small companies.
17. Although the venture was driven by industry,
rather than universities, it was linked to the establishment of
a Chair in Optoelectronics Materials. WDA had set up the Welsh
Optoelectronics Forum to help sustain the project and consolidate
Welsh expertise in this field.
18. Mr Roger Carter, Head of Economic Development
of the Higher Education Funding Council for Wales (HEFCW), outlined
the support for HE and research in Wales. Among the main points
he made were the following.
a. HEFCW and the National Council for Education
and Training in Wales worked together under the brand Education
and Learning Wales (ELWa) which, supported by a single secretariat,
effectively gave Wales a single post-16 funding body.
b. Funding for Third Leg outreach from Welsh
HE to the Welsh economy and society was only 1.5% of HEFCW's recurrent
funding in 2002-03. However, this was set to grow around priorities
to be agreed by ELWa and WDA, and was augmented by a £5m
Knowledge Exploitation Fund, equivalent to the English HEIF.
c. This was part of a joint determination to
improve industry/HE links. By developing HE around centres of
excellence, shared aims were that the amount of private sector
finance for research and the number of profitable spin-off companies
should both be doubled by 2010.
d. Welsh society and the economy would also benefit
from plans to increase participation in HE, not least by developing
seamless progression routes.
Technium client case-study
19. Finally, Mr Brian Docherty described the
benefits of the Technium concept. His company, Small Planet Technology,
was a start-up company specialising in telecommunications products.
It had been based at the Swansea Technium since March 2001.
20. Technium gave entrepreneurs a high-quality
supportive environment to develop technology-based products and
processes. The support services on site (including excellent internet
and other telecommunications) saved small companies enormous time,
frustration and overhead costs. The networking opportunities were
also useful, as were the Technium links that encouraged undergraduate
and graduate placements.
21. Members endorsed the Chairman's thanks to
the WDA and all those involved in the various sessions for a valuable
insight on Welsh practice. This would be of great assistance as
the Sub-Committee considered the situation in England
81 WDA subsequently submitted written evidence to the
Inquiry (see page 341 of Volume II). Back