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IS INNOVATE UK LETTING DOWN WALES?

As we all know, support for innovative businesses has been at the heart of the economic development strategies adopted by flourishing regions around the World.

In the UK, one of the success stories of the last five years has been the emergence of Silicon Roundabout as a centre for the fast growing digital start-up scene in the East End of London.

It has definitely made an impact with global firms such as Cisco, Facebook, Google, Intel and McKinsey investing into the area and many now seeing it as a real global ’hotspot’ for entrepreneurial firms, particularly in the fast expanding digital sector.

Some would say that by being based in the most prosperous region of the UK and one of the most attractive cities in the World, this is not unexpected.

However, what is surprising is that the organisation supporting this development (known as Tech City UK) is actually receiving £2.2m from the UK Government’s main technology agency - Innovate UK - to pay for “programmes policy informing and championing work”, with only a small amount of additional funding coming from corporate sponsorship. In addition, a further £2 million for the new TechNorth programme has been allocated in 2015-16 to support George Osborne’s Northern Powerhouse initiative.

So where is Wales in all of this and are we losing out as a nation?

It is worth noting that our three cities are increasingly being seen as growing centres for digital and technology-based firms but whilst there are some minor connections with Tech City UK, there seems to be very little support available to take this to the next level her in Wales.

Take, for example, the case of Cardiff Start. This is a growing community of startup founders, developers, creatives, students and others based in the capital city. Unlike Tech City UK, this is an entirely volunteer-run organisation led by a group of entrepreneur-founders who are trying to run their own businesses at the same time.

As you can imagine, not only will the time they can devote to such an initiative decline as their businesses grow, it is difficult to ensure that the so-called ecosystem can be taken to the next level with diminishing resources. In fact, a fraction of the public funding that goes to Tech City UK could ensure that their excellent work is continued over the next few years.

Personally, I see nothing wrong in supporting Tech City UK if similar backing was being provided elsewhere in the UK. Instead, most of their efforts seem to be on supporting the richest region whilst enterprise and innovation in the poorest parts of Britain is being stifled despite the best efforts in the sector.

Of course, some might say that it is not the role of the UK Government to support Wales and that it should be our Assembly who should be stepping up to the mark. Yet, that conveniently ignores the fact that Innovate UK is not devolved and it should therefore be directly funding innovation support here in Wales.

Unfortunately, the record of Innovate UK (and its predecessor the Technology Strategy Board) is poor when it comes to supporting Welsh innovation and technology despite having a clear remit to do so. If we examine the overall funding distributed by Innovate UK for the period 2004-2015, we see that Wales has received only £62 million out of a total expenditure of £3.7 billion (or 1.7 per cent of the total). As the graph below shows, in terms of funding per head of population, we have the lowest of all the UK regions.


However if this had been Barnetised (i.e. included as part of the funding that goes from the UK Treasury to the Welsh Government) then the total amount that Wales would have received over those twelve years for innovation would have been £189 million.

Certainly, serious questions to be asked as to why Wales has lost out on this support and what will be done to address this issue, especially given that we have amongst the lowest rates of research and development expenditure of any region and, as reports showed this week, are amongst the least inventive regions in the UK.

Indeed, the Catapult Technology Centre programme is one of the most important initiatives developed by Innovate UK and yet, as the map below shows, Wales does not yet have one of these centres. This is despite bids that have been generally acknowledged as being of  a high quality standard.



In fact, as Simon Gibson of Wesley Clover recently stated at an IWA conference that “A Catapult is an initiative out of Innovate UK – a centre of excellence for a certain discipline. Scotland has three, there’s loads of them scattered around the UK, most of them in and around the Home Counties. The complaint is that there’s nothing world-class going on in Wales.” 

This view of a "lack of quality" in Wales was again reiterated in this letter to the Western Mail earlier this month from Innovate UK's Deputy Director, which clearly seems to imply that the low level of funding is the fault of Welsh businesses for not submitting good enough proposals.

Therefore, as this is an issue that can be resolved by the UK Government, there is an onus on our MPs across Wales to raise this issue directly with Westminster as a matter of urgency. It is also critical that with a new constitutional settlement being drafted, that the Welsh Government should make absolutely sure that we make the most of what we already could, and should, be getting from non-devolved bodies such as Innovate UK.

Should this include a demand for Wales' share of innovation funding to be ring-fenced for use in this country? Possibly that could be the only option if those in charge of Innovate UK don't start taking this issue seriously enough which they clearly haven't recently and it may be something the Welsh Government may wish to pursue as part of the devolution settlement for Wales. Certainly, I would expect our business-friendly Secretary of State for Wales to ensure soon that we get the most from our relationship with the UK Government to boost the innovative capacity of our economy for years to come.

Indeed, I can only begin to imagine the impact that an additional £124 million of funding stream to support greater creativity, innovation and technology would have had on the businesses of Wales since 2004, especially if allied with the commercial nous and business drive of individuals such as Sir Terry Matthews and Sir Chris Evans.

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