One of the key aims of the first Objective 1 programme for Wales, when it was launched in 2000, was the development of a “high quality, job-creating, innovative and knowledge-driven economy”. To achieve this, one of the key actions was to be the exploitation of new technologies to develop new industries and improve the competitiveness of existing ones.
To date, over £128 million has been earmarked in European grants to directly support innovation and R&D within West Wales and the Valleys and, through this money, support the development of high technology businesses, support research and co-operation between business, colleges and universities and improve training in higher level skills.
During the last six years, the main beneficiary from this funding has been the higher education sector in Wales, which has received over £62 million of aid for various projects. In addition, the Welsh Development Agency (prior to its demise) received over £45 million of support.
However, half of this WDA funding was allocated towards the Technium initiative, which has attracted European grants to the value of £31 million. This means that a quarter of the entire Objective 1 funding for innovation has been spent on a set of incubator buildings, a number of which still remain largely empty.
Perhaps the biggest surprise of all in analysing this data is that, despite the political message that the private sector is important in developing innovation in Wales, less than 5 per cent of the innovation funds within the Objective 1 programme – or five projects - have gone to projects developed by the private sector.
Some policy-makers may well argue that as the majority of R&D is carried out within universities in Wales, then it is only right that nearly half of the entire Objective 1 innovation fund should go to this sector. However, this actually flies in the face of the real facts about innovation within Welsh economy, with statistics showing that businesses are responsible for 55 per cent of the total R&D spend in Wales, with higher education accounting for only 36 per cent.
Whilst some will argue that the best way for firms to access innovation support under the Objective 1 programme is through different intermediary organisations, it is noticeable that less than 20 per cent of the WDA’s initiatives funded by Europe has gone directly to support the development of technology within small firms.
Yet again, the rhetoric about innovation being important to the Welsh economy does not match the reality of getting support out to businesses in Wales, and it will be interesting if priorities will change in the near future.
This evidence is supported by the actual outputs from the Objective 1 spending, which shows that the various innovation initiatives are failing to reach the targets set in the original strategy. For example, whilst 3,000 new jobs were forecast to be created in high technology sectors as a result of the programme, only 723 were actually in place as of the end of January 2006.
Similarly, under the skills and training measure, only 970 companies had been helped, as opposed to the forecast 3,108 and only 12 per cent of the forecast target for the number of employees helped had been reached. Most worryingly, only 175 new firms had been created within high tech sectors via these different programmes, whereas the target was for over 2,000 new high technology start-ups in the original programme strategy.
Certainly, one of the key lessons to be learnt from the current Objective 1 programme is that there needs to be far greater engagement with the private sector in any future innovation strategy for the new convergence funds that will run from 2007-2013. Without a greater innovation performance by the business sector, the ability of Objective 1 areas of Wales to take a leap in performance will not materialise. Given this, it is crucial that the new programme of European funding should engage far more with private businesses in Wales to improve R&D performance and the overall innovation potential of our nation.
To date, over £128 million has been earmarked in European grants to directly support innovation and R&D within West Wales and the Valleys and, through this money, support the development of high technology businesses, support research and co-operation between business, colleges and universities and improve training in higher level skills.
During the last six years, the main beneficiary from this funding has been the higher education sector in Wales, which has received over £62 million of aid for various projects. In addition, the Welsh Development Agency (prior to its demise) received over £45 million of support.
However, half of this WDA funding was allocated towards the Technium initiative, which has attracted European grants to the value of £31 million. This means that a quarter of the entire Objective 1 funding for innovation has been spent on a set of incubator buildings, a number of which still remain largely empty.
Perhaps the biggest surprise of all in analysing this data is that, despite the political message that the private sector is important in developing innovation in Wales, less than 5 per cent of the innovation funds within the Objective 1 programme – or five projects - have gone to projects developed by the private sector.
Some policy-makers may well argue that as the majority of R&D is carried out within universities in Wales, then it is only right that nearly half of the entire Objective 1 innovation fund should go to this sector. However, this actually flies in the face of the real facts about innovation within Welsh economy, with statistics showing that businesses are responsible for 55 per cent of the total R&D spend in Wales, with higher education accounting for only 36 per cent.
Whilst some will argue that the best way for firms to access innovation support under the Objective 1 programme is through different intermediary organisations, it is noticeable that less than 20 per cent of the WDA’s initiatives funded by Europe has gone directly to support the development of technology within small firms.
Yet again, the rhetoric about innovation being important to the Welsh economy does not match the reality of getting support out to businesses in Wales, and it will be interesting if priorities will change in the near future.
This evidence is supported by the actual outputs from the Objective 1 spending, which shows that the various innovation initiatives are failing to reach the targets set in the original strategy. For example, whilst 3,000 new jobs were forecast to be created in high technology sectors as a result of the programme, only 723 were actually in place as of the end of January 2006.
Similarly, under the skills and training measure, only 970 companies had been helped, as opposed to the forecast 3,108 and only 12 per cent of the forecast target for the number of employees helped had been reached. Most worryingly, only 175 new firms had been created within high tech sectors via these different programmes, whereas the target was for over 2,000 new high technology start-ups in the original programme strategy.
Certainly, one of the key lessons to be learnt from the current Objective 1 programme is that there needs to be far greater engagement with the private sector in any future innovation strategy for the new convergence funds that will run from 2007-2013. Without a greater innovation performance by the business sector, the ability of Objective 1 areas of Wales to take a leap in performance will not materialise. Given this, it is crucial that the new programme of European funding should engage far more with private businesses in Wales to improve R&D performance and the overall innovation potential of our nation.
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