Mike Hedges on the opportunities ahead for Swansea Bay City Region to carve its own ICT niche
The Welsh economy has consistently been just over 70%, in terms of wealth generated, of the British average and whilst this does not equate to standard of living because of lower living costs it is indicative of the strength of the Welsh economy. In 2012, according to ONS provisional data, headline gross value added (GVA) in Wales was £47.3 billion, making the Welsh economy the tenth largest of the UK’s twelve ahead of only Northern Ireland and the North East of England. By 2015 according to ONS Wales had dropped to last place with a GVA of just 71% of the UK average.
With very low unemployment in Wales then the reason for low GVA in Wales is the salaries, hourly rates and working hours of people working in Wales. According to OCN Wales has 4.37% of the United Kingdom working population so any OCN classification where we have less than that we are “underweight” and any with over 4.37% we are “overweight”.
The employment area where Wales is most underweight is Information and communications at 1.75% of the UK employment, other areas where Wales is under 3% are Mining and quarrying and, Finance and Insurance activities. Areas where Wales is above 5% include agriculture, forestry and fishing, manufacturing, Electricity, Gas, steam and air condition supply, Water supply, sewerage waste management and remediation activity , public administration and defence and, Human health and social work activities. As expected Wales is about average on things such as retail, construction and, accommodation and food services.
The major need is to rectify the lack of employment in the relatively high paying information and communication sector. Currently the Swansea Bay City Deal based upon the council areas of Neath Port Talbot, Swansea, Carmarthenshire and Pembrokeshire focuses on digital technology, health and well-being, energy and advanced manufacturing. ICT plans include Swansea city and waterfront digital district, centre of next generation digital services and technology centre, Digital infrastructure creative digital cluster and factory of the future. The above is intended to bring in almost £100 million of private investment into the city region. I believe that the City Deal is the right innovative proposal for our region and it will help diversify the economy of our region by supporting growth in innovative industries including ICT.
The European Union looked at the 34 best performing areas in ICT, activity analysing business activity, research and development and, innovation in the ICT sector. The most successful areas in Britain were Inner London East (3), Cambridgeshire (5), Oxfordshire (19), Edinburgh (20), Berkshire (26), Surrey (29) and Hampshire (31). These are all affluent parts of the South East of England except for Edinburgh.
Cambridge’s ‘Silicon Fen’
Silicon Fen is the British version of Silicon Valley and has been described as the second largest venture capital market in the world. It is estimated that over 250 active start-up companies were directly linked with the university and altogether they were estimated as worth over£5 billion. Silicon Fen was created in 1970s when a Science Park was formed by Trinity and other Cambridge colleges and it has become what is often referred to as the ‘Cambridge Phenomena’. Many of the world’s most influential and largest companies have offices or headquarters in Cambridge and this has created large scale high paid employment in the area. What Cambridge has achieved is a mix of inward investment and local start-up companies that have grown bringing employment and prosperity to the area.
With ICT a city or region does not have to be big to succeed. The study by the European commission that identified the top 34 ICT hubs also underlines the importance of smaller regions. For example, Darmstadt which is a city of 150,000 people ranks number seven.
We know that ICT development can take place anywhere, there is no geographical constraint and with the provision of super-fast connectivity in Wales, it means that Wales can compete. We also have excellent universities producing highly skilled and motivated graduates in ICT many of whom have historically moved away to find well paid work.
Our challenge is to emulate Cambridge and the other areas and provide a successful ICT hub, this is why the Swansea Bay city region is so important to us. With the average IT and telecommunications salary just under £50,000 a year this will increase the GVA in Wales and the Swansea Bay city region. Equally important is the starting salary which according to Ben Broughton, director of Premier Group Recruitment,” junior developers starting their first jobs after university typically earn £24,000 to £26,000 in London, and £21,000 to £23,000 in the southern England, Midlands or Manchester areas. For infrastructure support jobs (such as those working with desktops or networks), typical first jobs for graduates pay around £22,000 to £24,000 in London (approximately 10% higher if the job is in the finance sector), and £19,000 to £21,000 in southern England, the Midlands and Manchester.”
The challenge is to generate a “silicon cwm” based around Swansea Bay City Region to increase prosperity and move Wales up the GVA league table.
Another false analysis using GVA which overlooks the high percentage of economic ‘activity’ in the public sector in Wales.
Most of Wales is not competitive for ICT infrastructure nor does it have the necessary skills. The infrastructure is years behind the curve – around a decade in most areas. Bulgaria is much better! The skills are unlikely to be imported while education and the NHS are tanking and the official first language is not English. I regularly ask skilled people in England if they would come to Wales, with or without their kids, and the answer is invariably unprintable but it adds up to NO! I regularly ask skilled people who came to Wales (the North West mostly…) in years gone by and most of them just want to leave but they can no longer afford to – trapped by low house prices and an inability to borrow enough to get out with an equivalent quality of life. I knew well qualified economically active people who have taken a 5-figure hit to get out for the sake of their kids’ education. They’re not shy about telling people in England why either…
That Wales is becoming a no-go area for skilled people is borne out in other surveys – this one confirms that education has reached the tipping point into perpetual decline because teachers no longer see Wales as a viable destination –
http://www.walesonline.co.uk/news/education/teachers-increasingly-unwilling-move-welsh-12674223
The recruitment problems in the NHS have been retailed many times and private companies also have trouble persuading people to leave the future and England’s market-driven schooling. People who live in the relatively anglicised SE corner of Wales might not have noticed yet but the true horror of anti-competitiveness in the Fro is rapidly heading your way.
We have seen the ‘promised land’ in ICT before with mega-failures like the Technium Project with ~£125 million losses admitted, though proper cost centre accounting in the public centre would arguably double that. And nobody cares how much time, effort, and money the private sector has wasted on abortive schemes.
So Llafur and Plaid can dream on – Wales is finished until regime change. You will continue to spin your trivial ‘successes’, and pretend all the taxpayer funded failures don’t exist, but the truth is the world is passing Wales by.
Of course it is good and welcome to have ambitions for Swansea. However there is fundamental misunderstanding of the ‘wellsprings’ of technical/science innovation and how and why Silicon Valley/Fen succeed. No matter how many ‘big pipes’ feed into it, Silicon Cwm can never succeed because Dylan Thomas’ ugly lovely Swansea (less so Cardiff) is just somewhere (most) gifted people historically want to leave rather than stay. The words silk purse and sow’s ear spring to mind.
Nevertheless, that said, over many decades, it could happen if the current systemic problems at Swansea Universities are solved, the tidal barrage is built, risk capital and venture capital can be attracted, young people educated better, technical talent attracted, the housing stock and cultural facilities improved, the living environment cleaned up – I could go on. So I wish them all the best but am not holding my breath.
I do not understand why a reasonable proposition for the “silicon cwm” is dismissed by nay sayers, when thinking like this needs to be encouraged. Now especially, when the United Kingdom seems destined to leave the EU and go it alone.
The generatiors of this idea might look at other areas where the Silicon Valley phenomenon has gained traction. Barcelona comes to mind in this respect. Wales could learn a great deal if it developed a bi-lateral arrangement with Catalonia to discuss ideas like this.
And why not change the order of the words to “Cwm Silicon,” and be inspired by what Joseph Parry, composer and musician, achieved in his lifetime. The medium became the message.
Dear Bellwhether
Missing a couple of points in your assumptions.
1) if you don’t like Swansea you don’t have to live there. I have colleagues who happily travel from Cardiff. I travel from west to Swansea every day since I chose to live in an idyllic little village of the Towy Valley, Do not underestimate the sulerior quality of life west Wales has to offer.
2) There are some distinguished dedicated individuals who have built their careers working for Swansea Univeristy. Some of these have been involved in the Deal from the early concept stage. These people if you look at their CVs they chose to stay and contribute in the region. Some are not Welsh including myself and had many opportunities to go elsewhere.
So what you really should be asking is how you can replicate and expand this effort building on the current momentum and create a sustainable ecosystem that will continue to produce and retain human capital talent in the region. I think Swansea Bay City Region will be able to pull this off.
Annwyl DPL
I am not making assumptions, I am relying on facts (alternative facts!).
I am aware that there are still energetic and talented individuals living in ‘idyllic rural villages’ in and around Abertawe. I am Welsh, now choose to live in ‘rural’ (sic) Wales and have worked in high end tech in the US and I don’t see any of the ‘signs’ of a fruitful development of an entrepreneurial culture (particularly in ICT!) or what I think of as the ‘wellsprings of innovation’ in and around Swansea or most of Wales for that matter. Similarly, I don’t see signs of anything that would be particularly attractive to investors or tech people wanting somewhere to set up and work. Some of the scenery is nice and Gower is pleasant enough but most of your ‘idyllic villages’ (you’ll never leave!) don’t have good ‘connectivity’ either for internet or physical access or a ‘community’ of professionals and business/investor support such as are found in Silicon Valley or Cambridge.
However it can be done as evidenced by Research Triangle Park in N.Carolina which in 30 years went from a swamp to a major economic driver for N.Carolina. I haven’t heard of any Welsh politician even understanding or visiting this area with a view to adopting their highly successful model.
I stand to be enlightened and corrected.