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Why did a £40m project to create 400 jobs end up creat 170

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dave

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Why did a £40m project to create 400 jobs end up creat 170

PostSat Mar 19, 2016 1:14 pm

he multi-million pound failure of Techniums and now HPC Wales to suitably help Welsh firms cannot be allowed to happen again

HPC Wales was set up to provide a high performance computing facility
High Performance Computing Wales (HPC Wales) was a £40m project established in 2011 to provide a world-class supercomputer facility in high performance computing.

Funded by £19m from European Structural Funds, £10m from the UK Government, and the balance from the Welsh Government, the private sector and universities, it seemed a laudable project given that analysis of large amounts of data is becoming more critical to scientific and commercial research.

Unfortunately, whilst HPC Wales did help some firms speed up innovation for commercial success, a report from BBC Wales last week showed it that had failed to reach key targets for job creation, supporting Welsh businesses and bringing in additional investment to Wales.

Whilst HPC Wales had set itself the aim of creating more than 400 jobs and supporting 550 firms, it only created 170 jobs and assisted 247 businesses. Despite eventually spending £33m, it generated a paltry £3.7m into the Welsh economy.

A case of déjà vu
Unfortunately, HPC Wales seems to be a case of déjà vu all over again. Like the failed Technium programme of incubator buildings that were funded to the tune of more than £100m by the public purse between 2002 and 2006, HPC Wales seems to be another grandiose project that did not reflect the real needs of business and delivered little to the Welsh economy.

Techniums were built across Wales but several found few occupiersTechniums were built across Wales but found few occupiers
Yes, Technium and HPC Wales looked good on paper and even better on powerpoint presentations to government officials. However, they merely continue the Welsh obsession with what Professor Kevin Morgan of Cardiff University memorably described as “cathedrals in the desert”, namely large publicly funded projects that singularly fail to achieve even modest targets to boost economic development and innovation.

Many will question why such funding is not being awarded directly to businesses, and entrepreneurs in Wales will wonder how a cost of £200,000 per job for both Techniums and HPC Wales could ever be justified in the real world.

As pointed out in my Access to Finance review for the Welsh Government, given the dearth of money available to businesses during 2011-15, one can only imagine what the impact could have been if the £33m spent by HPC Wales had instead been given as either grants or loans to high growth innovative firms in Wales with a track record of creating jobs and prosperity.

Women in the workplace
Given that the average cost per job for most grant schemes is around £12,000 per job, then over 3,000 jobs could have been supported if this scheme had been used more effectively elsewhere. I am sure many of those firms in the Wales Fast Growth 50 that I work with every week would have been delighted to receive such financial support to help expand their businesses.

That is not to say that universities shouldn’t be involved in supporting innovative firms, if business needs drive the aims of the project and full advantage is taken of the knowledge and expertise within academic institutions.

For example, at the University of the West of England, we are currently delivering the Innovation 4 Growth programme that is supporting businesses in the South West of England to develop innovative products, technologies, processes and services. Since 2014, £6.7m has been awarded to 81 businesses, resulting in 511 new jobs – three times as many jobs as HPC Wales for a fifth of the cost.

Triple helix approach
I have always been a strong advocate of the so-called triple helix approach where government, business and academia work together to support innovative businesses. Indeed, there are some examples in Wales, such as the recent tie up between Techhub, the DVLA and the University of Wales Trinity St Davids, that could bear real fruit in the future.

Yet it would seem that in the case of HPC Wales, government has supplied the money, academia has spent it and businesses have received little benefit.

Following the multi-million pound failure of Techniums and now HPC Wales to suitably help Welsh firms, this simply cannot be allowed to happen again at a time when public funding needs to be allocated efficiently to support the Welsh economy.

That is not to say Wales shouldn’t have invested in a high performance computer to support academic research, and there should be support for this in the future.

ferrariHPC Wales was like buying a Ferrari but keeping it locked in the garage
However, the main aim of HPC Wales was to support Welsh business and this it failed to do properly. It was essentially like buying a Ferrari but keeping it locked up in the garage for the majority of the year.

Implausible excuse
The management of the project suggested that this failure to hit targets was due to the economic downturn, although this excuse seems implausible given that HPC Wales operated during a period of sustained economic growth when record numbers of jobs were created elsewhere in the Welsh economy.

So was it because there was not enough demand from the pool of 230,000 firms in Wales, or did the HPC Wales team of advisers and consultants simply fail to persuade enough businesses that this amazing resource could be of value to their commercial interest?

To date, no proper explanation has been forthcoming and whilst the failure of HPC Wales to reach its targets may not be a matter for the Wales Audit Office, there must be a thorough appraisal by the Welsh Government into why, following the failure of the Techniums, another high profile project has spent tens of millions of pounds with little return to the Welsh economy.

More importantly, politicians at both ends of the M4 corridor must ensure that this never happens again if public funds are to be used wisely to support innovation and economic growth.

http://www.walesonline.co.uk/business/b ... s-11063721

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