Select Committee on Science and Technology Fifth Report

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 Higher.

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[81]. 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.

HE perspectives

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 after qualification.

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 development strategy.

14.  In an introductory presentation, Dr Stephen Davies, Director of the Swansea Technium, made the following main points.

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 economy.

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 nearby.

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 million.

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.

HEFCW perspective

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

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