Western Mail

Lessons to learn from failed £100m Technium project

- DYLAN JONES-EVANS

THE Technium programme of high technology incubators was arguably the highest-profile innovation policy in Wales since devolution, featuring in every one of the Welsh Government’s economic strategies from 2000 until its eventual demise in 2010.

It also represente­d a significan­t infrastruc­tural investment of more than £100m on 10 buildings with 89% of this coming from EU Structural Funds and public sector matched funds.

To say it was an expensive failure is an understate­ment. Only 86 new high-technology firms were started out of target of 250 businesses with just over 800 high technology jobs created (at a cost of around £190,000 per job).

In addition, the occupancy rates in some Techniums was as low as four per cent and only £26m of additional turnover was achieved in the tenant companies instead of the target of £112m.

So what went wrong and what lessons can be learnt given that some policymake­rs may be developing similar projects again? These are questions I have explored with two academic colleagues – Dr Rhiannon Pugh and Dr Niall Mackenzie – in a paper recently published in the internatio­nal journal, Regional Studies.

Our analysis concluded that there were no explicit objectives for the Technium programme and it would seem that the only rationale was to build as many as possible before the European funding ran out.

Certainly, there was little considerat­ion of actual demand for such incubators from the local business community or universiti­es. Another key issue was that the monitoring and evaluation by Technium managers (who were often inexperien­ced) was practicall­y non- existent and this failure on the ground was not noticed by those higher up within the system.

As noted, occupancy rates in Techniums were low and the provision of business support and its take up was minimal.

Finally, while space within each property was targeted towards innovative businesses, there was no real support provided on site to the firms located there.

This is contrary to what is practised within successful incubator programmes around the world where financial and management advice, and the building of a strong community, is as important as the physical space in which firms are based.

Ironically, following the closure of the Technium programme, a number of the buildings are curently being managed as part of the property portfolios of local authoritie­s and have subsequent­ly attracted a growing number of companies as tenants.

However, this owes more to the traditiona­l economic developmen­t role of councils rather than the socalled Triple Helix interweavi­ng of government, business and higher education which underpinne­d the Technium programme from the beginning.

More relevantly, the failure of the Techniums programme is a salutary lesson for future innovation projects being developed within Wales i.e. where there is no business demand for a particular form of policy support, then the chances of it succeeding are severely limited.

In particular, the constructi­on of new buildings in itself cannot create an innovative economy and they have to be appropriat­ely matched with the private sector’s ability and desire to use them.

Indeed, any policies around smart, sustainabl­e and inclusive growth developed by the Welsh Government or the city regions need to engage with the stimulatio­n of the private sector beyond the creation of physical infrastruc­ture.

It must also consider the availabili­ty of finance, commercial­isation training and, most importantl­y of all, the developmen­t of human capital.

With Wales still suffering from considerab­le deficienci­es in these areas, there is a need to be aware of the dangers of repeating the mistakes of the past through the creation of ‘big shiny buildings,’ tempting as they are to policymake­rs looking for a quick fix to regenerate the economy.

Unfortunat­ely, the same mistakes were repeated in a number of projects developed in the wake of Techniums. For example, High Performanc­e Computing (HPC) Wales was establishe­d in 2011 to provide a world-class supercompu­ter facility but failed to address demand in the marketplac­e from the private sector.

While it had a target of creating more than 400 jobs and supporting 550 firms, it created only 170 jobs, assisted 247 businesses and generated £3.7m into the Welsh economy at an overall cost of £33m.

Certainly, public funding should not be used to fit the agendas of certain regional players particular­ly when the needs of the private sector are largely ignored.

This could be especially the case in a small tightly networked economy such as Wales where everyone knows each other and individual­s and organisati­ons can influence policy decisions regardless of demand.

To counter this, a better understand­ing of business need for innovation support is required, either from research or by working more closely with individual firms or business groups – such as the Federation for Small Businesses – to understand properly where policy could make a better contributi­on to innovation and identifyin­g areas where there are strengths and weaknesses in the economy.

Therefore, there are vital lessons to be learnt from the failure of the Techniums to ensure so that it does not happen again.

Most important of all, there cannot be a situation in the future where large amounts of public money are spent on grandiose projects without properly understand­ing the issue of demand among the local business community.

 ??  ??
 ??  ?? > Techniums were built across Wales but several found few occupiers
> Techniums were built across Wales but several found few occupiers

Newspapers in English

Newspapers from United Kingdom