Wales: Economy

Lord Aberdare Excerpts

Wednesday 7th November 2012 Lords Chamber

[Lord Aberdare]

My Lords, I put my name down to speak in this debate—on the securing of which I add my congratulations to the noble Lord, Lord German—with some trepidation, as I would not lay claim to any particular expertise in economic matters. However, I was encouraged to do so by the second part of the Question, about ensuring that the Welsh and UK Governments work closely together in the interests of the Welsh—and presumably UK—people; and by the fact that I recently met the Vice-Chancellor of Swansea University, Professor Richard Davies, who told me about a project at the university that in my view provides a test case for such co-operation. I shall focus on this project in my remarks.

Other noble Lords described the challenges facing the Welsh economy better than I could. They include a paucity of large global businesses and of business investment into Wales. Partly as a result, there is no infrastructure of dynamic, innovative smaller companies to provide the supply chains for those larger businesses, sometimes by forming high-tech clusters around large research universities. Evidence shows that links with world-class research and teaching are a major factor driving investment by large knowledge-driven companies. The UK Government have introduced technology innovation centres—sometimes described as “catapult centres”—to bridge the gap between universities and industry; but there do not appear to be plans for such centres to be based at any of the Welsh universities.

The Welsh economy still has a greater emphasis on arts and media, as well as on the public sector, than on science and technology. It is not clear to me that Wales attracts as large a proportion of UK research funding as one might hope. These are major challenges, and both the Welsh and UK Governments need to be engaged in a co-operative way to provide a favourable and supportive environment in which they can be met.

Swansea’s planned science and innovation campus seems to me exactly the right kind of project to address the goals of both Governments. Swansea already has a strong reputation for research excellence, and a track record of collaborating with businesses large and small, local and international. It has recognised strengths in engineering education—mentioned as an important area by the noble Lord, Lord Jones—and has developed an innovative and well established co-location model that intermingles academia, students, industry and research on the same site, and even in the same buildings, so that the university acts as a live research arm for industry.

The new campus will extend this model, capitalising on the university’s interactions with major international knowledge-economy companies, including Airbus UK, Alliance Boots, BAE Systems, BP, Huawei Technologies—I hope I pronounced that appropriately— IBM, Rolls-Royce and Tata Steel. As well as student facilities and residences, it will include an innovation hub, the laboratory space and facilities of which will be available to local SMEs. The hub will act as a centre for partnership activities involving direct undergraduate and postgraduate interaction with industry, for example in a project with Rolls-Royce to test materials for the aerospace and aero-engine industries.

The university already has a number of such projects, including one with Tata Steel to develop new coatings on steel and glass that are capable of generating, storing and releasing energy, with the result that the buildings could in effect become power stations. Another example is Wales’s premier purpose-built medical research facility, in partnership with the Welsh Government, Abertawe Bro Morgannwg University Health Board, IBM and others.

The new campus will combine an outstanding experience for students, a high-quality skills pipeline for industry and shared resources and facilities for research and innovation. The development will take place on a 25-hectare site in Swansea Bay that was formerly owned by BP. The value of the first phase of the project amounts to some £250 million. Much of the funding is already in place, including a £60 million loan from the European Investment Bank, £30 million from the Welsh Government—£15 million of which comes from European funds—and substantial support from industrial and private partners, as well as almost £12 million from BIS to build an energy safety research institute on the new campus.

Over a 10-year period, all development is expected to bring an economic impact of more than £3 billion and the creation of some 4,000 direct jobs plus an even larger number of indirect jobs. The construction process itself will generate more than £400 million of economic activity, the great majority of it within Wales. This is likely to become the largest knowledge economy project in the UK and one of the top five in Europe. The CBI in Wales has described the project as,

“an exemplar of how universities should work with industry, to enable the development and commercialisation of world-leading research”.

Of course, it is also fully consistent with the model suggested by the noble Lord, Lord German, for promoting the involvement of Welsh universities in research and development partnerships.

I agree with the CBI assessment. This is an outstanding example of the right kind of project to tackle the challenges facing the Welsh economy. It will be a transformational project for Wales, helping to address the deficiency in science and technology research in Wales and to drive economic regeneration and create employment opportunities as well as the skills to fill them, not least for engineers. But it is also an extremely important project for the UK as a whole in terms of attracting global business and investment, developing technology and innovation skills and enhancing our competitiveness in the knowledge economy.

My concluding question is exactly that posed by the title of the debate: how are the Welsh and UK Governments working together to maximise the benefits of this project and others like it that have been mentioned by other noble Lords? Is the project getting the support that it needs from the UK research councils and the UK Technology Strategy Board? Should there be one or more Catapult centres in Wales to foster projects linking universities and business? Is the project known to and being promoted by UK Trade and Investment and by the UK's diplomatic missions abroad? Is it recognised and supported as a significant contribution to the Government's growth agenda?

It would be good to see Her Majesty's Government and the Welsh Government closely aligned and ensuring that this exciting project realises its full potential in both countries. I look forward to hearing what the Minister has to say in what I understand will be her first response to a debate such as this from the Front Bench.