MAXIMISING BENEFIT TO WALES FROM THE NEW
EUROPEAN PROGRAMMES 2014-2020
INTRODUCTION
[1] European programmes have been used in Wales to help build research and innovation (R&I) capacity
in priority areas, and there is an important window of opportunity as two major new funding
programmes are being developed for the period 2014-2020. The launch of Horizon 2020 (H2020) will
give organisations in Wales the opportunity to compete for considerable EU funding for R&I; a new
round of structural funds is also due to start in 2014, and this places an increased emphasis on R&I, as a
means of driving regional economies and attracting inward investment. All this has been highlighted in
the Welsh Government’s recently launched Innovation Wales review document.
[2] The main aim of this paper is to discuss the importance to Wales of participating in the EU’s H2020
programme, and using structural funds judiciously to maximize the economic benefits to Wales from this
international programme, alongside investments already in train, via for example the Ser Cymru
programme. This paper sets out five key recommendations that will help to achieve this aim.
STRUCTURAL FUNDS 2014 – 2020
Achieving economic transformation in Wales
[3] The Consultation Documents ‘Wales and the EU: Partnership for Jobs and Growth, 2014 – 2020, is an
important document which will have far reaching consequences for the future prosperity of Wales. The
document contains detailed analysis, a broad range of plans and ambitious targets. There were similar
plans for the current Structural Funding Programme, due to finish in 2013, and it is relevant to ask what
lessons can be learnt now that the outcomes of the current programme are beginning to emerge. It can
be argued that one of the reasons for the apparent failure of the existing and past programmes to lift
the economy of Wales is coupled to the absence of large transformational projects. Views have been
expressed that the ‘transformation of the Welsh economy from a low value, low employment economy
to a high value, full employment economy can only be secured through a new ‘whole system’ approach
to research and development [R&D], knowledge exchange and innovation’. Not least given the scale of
competition, this needs to be focused on areas where Wales has the best potential and comparative
advantage.
[4] It is clear that past Structural Funding has brought many benefits to Wales and Higher Education
Institutions have played a central role in a range of high level training schemes and in projects to
improve infrastructure in Wales. The funding of major capital projects, such as Pontio in Bangor and the
ILS and Science Campus in Swansea, is providing an excellent base for future high level training and for
improved University - Business interaction. Wales has been proactive in developing schemes to enable
expertise in the HEIs to benefit local industries; programmes such as A4B, and HEFCW’s Innovation and
Engagement fund have had far reaching effects. Devolution has enabled Wales to respond rapidly to
new opportunities and the small size of the country has enabled partners to work together to develop
successful projects such as SPECIFIC and ASTUTE. It is therefore little wonder that Wales punches well
above its weight in the UK league tables of University-Business interaction.
[5] Whereas past Structural Funding schemes have supported the commercialisation of research, and
the training of people in research, they have not been applied directly to support research projects
which underpin the generation of new knowledge. Recent surveys have shown that the quality of
research in Universities in Wales compares with the best in the world but there is insufficient capacity,
particularly in some of the most important sectors of economic development. This is highlighted in
Science for Wales and the recently introduced Ser Cymru scheme is directed at addressing this
deficiency in the so-called Grand Challenge areas. Funding has been made available to attract ‘Research
Stars’ and their teams to Wales, and to establish National Research Networks complementing those
research collaborations already established successfully by HEFCW. Following the appointment of the
Chief Scientific Adviser for Wales, and the reconfiguration of research in the Universities to form
collaborative multidisciplinary groups with critical mass, it is clear that Wales is now well placed for a
transformational change driven by research, innovation and knowledge transfer.
[6] Innovation Wales, which will help to guide R&I interventions in the new structural funds programme
recognises that we are not enjoying the economic benefits we might have expected from structural
funding to date. Moreover, it identifies that Wales is characterised as an ‘innovation follower’, i.e. that
we are not tending to develop new products and processes. In the new programme, a ‘smart
specialisation approach’ will focus large scale interventions on creating real critical mass in areas where
we are already have capability and can see significant opportunities. However, current indications are
that only some 13% of the budget from the current round has been invested in ‘knowledge
infrastructure’. In order to support transformational change in Wales in future, it is clear that there
needs to be a far greater scale of investment to support the building the capacity for R&I excellence
throughout the new structural funds priorities, and particularly in the priority dedicated to supporting
R&I activity.
Recommendation 1: Ensure that the scale of investment available from Structural Funds for Research
and Innovation is large enough to enable transformational change.
Building capacity and excellence
[7] The consultation on Structural Funding, 2014 – 2020 explicitly recognises the importance of research
in Wales. It refers to the opportunities to establish world-class centres of excellence through which to
commercialise new and emerging technologies, thus attracting top class researchers to Wales. There is
explicit reference to building research capacity, both physical and people related, with a focus on areas
with potential for developing world-class excellence, as identified in Science for Wales, such as the life
sciences, advanced engineering and low carbon energy. The Ser Cymru programme and the National
Research Networks will considerably strengthen these areas.
[8] It is suggested in the Consultation documents that ‘basic research where there is little opportunity of
commercial exploitation’ would not be funded and neither would ‘projects without links to industry or
business involvement’. This is understandable and there certainly are areas of ‘blue sky’ research that
fall into this category. We believe, however, that these potential restrictions need to be considered with
great care since there are countless examples of cutting edge research which only become of real
importance to industry many years down the line. If Wales is to be amongst the world leaders in
applicable research it is vital that we build our capacity for excellence in ‘basic research in applicable
areas’, such as the Grand Challenge areas defined in Science for Wales and the Key Enabling
Technologies [KETs] defined by the EU. We would argue that such research should be eligible for
Structural Funding even though there might be instances where some projects have little apparent
industrial or business involvement at the time, but could have significant potential in the longer term.
[9] Examples from England where structural funds are used to support aspects of fundamental research
which have long term industrial application include Nottingham University’s aeronautics research with
Rolls Royce and Manchester University’s Graphene Research Centre.
Recommendation 2: Ensure a level of flexibility so that Structural Funds include support for the
building of capacity and excellence in basic research in applicable areas.
Alignment with HORIZON 2020
[11] The Consultation document refers to the H2020 programme, which will succeed the EU R&D
framework programmes, the most recent being FP7. The UK has been particularly successful in gaining
grants for R&D from FP7, but Wales’ share relative to the UK has been somewhat disappointing. It is
clear, however, that the University sector in Wales has taken the initiative to improve performance: it
has strategically refocused the work of its office in Brussels, appointed specialist European officers in
Wales and formed four research priority groups to drive the effort to maximise capture of FP7 and
H2020 funding. Together with the reconfigured research scene in Wales, this represents a build-up of
momentum on which we must capitalise. It is proposed that around €80 billion will be available through
H2020, some 40% more than that available through the current FP7 programme. However, this
programme will be much more competitive than its predecessor.
[12] The draft regulations of both the new structural funds programme and H2020 programme allows
the same project to be funded by different funding streams. This underlines the European Commission’s
commitment to developing scalable transformative R&I projects.
[13] We are convinced of the importance to Wales of being fully engaged with the H2020 programme
and of using structural funding judiciously to maximise the potential economic benefits to Wales from
this international programme, but would call for a far more strategic approach to ensure that
opportunities for Wales are fully embraced. Alignment with the EU KETs is essential as is input into the
programmes as they are being developed.
[14] The current proposals for H2020 indicate that the European Research Council (ERC) which focuses
on prestigious grants for excellent research is set to increase its budget by 70%. It is vital that academic
research groups in Wales have the people and the equipment to put in successful bids for ‘blue-chip’
grants from the ERC. Again, Wales needs a clear strategy and Structural Funds could be profitably used
to enhance capacity and to facilitate top quality bids. Innovation Wales recognises that R&D generates
important economic activity in its own right. Indeed, Aberystwyth University hosts the Institute for
Biological, Environmental and Research Sciences (IBERS), which produces almost £60m for the economy,
supports 700 jobs, and has well established links with major businesses.
[15] Universities in Wales have traditionally worked well with companies in Wales and in the UK and
there are many examples of excellent joint projects with industries in Europe. The leading European
companies will only link with research groups in Wales if those groups bring something new and
valuable to the joint project. Previous experience shows that, more often than not, University groups
are included because of their strength in basic research in an area of interest to the companies.
[16] It is likely that H2020 will encourage University and Industry groups in Europe not only to work
together but also to collaborate with industry anywhere in the world provided it brings benefits to
Europe. This presents an excellent opportunity for leading groups in Wales to work with leading
international companies. The development of such relationships is crucial and can lead to all kinds of
benefits such as the potential for inward investment and the gaining of leading edge knowledge and
new thinking which, through the good University-SME interactions in Wales, can stimulate the
development of supply chains and bring new opportunities to our smaller Welsh companies. We need
more joint projects with international companies and we need a strategy to make progress towards this
goal.
Recommendation 3: Consider the use of Structural Funds to assist in the process of establishing
partnerships with leading international companies and research groups to increase capacity to
develop successful bids to Horizon 2020.
AN ALL WALES STRATEGY
[17] It is clear that Wales has much to gain from active participation in the Horizon 2020 programme of
the EU. It has many of the elements in place to gain funding for R&I which can provide a huge boost to
the economy of Wales. In the past Wales has adopted a scatter-gun approach in applying for EU
Framework funding with institutions essentially ‘doing their own thing’. In Horizon 2020, certainly,
individual institutions should be encouraged and assisted to seek opportunities as they see fit but beside
this, there really needs to be a coherent Welsh strategy. This strategy should target potential
collaborative companies and put mechanisms in place to build relationships with those companies well
ahead of the calls for proposals. The strategy should ensure that research groups in Wales have the
people and the facilities to be able to enter into large collaborative bids in our areas of strength. It
would build on the excellent Ser Cymru base and the Networks formed within Wales.
[18] The synergy between Horizon 2020 and the EU Structural funding programme is clear.
Underpinning a Welsh strategy for Horizon 2020 should be a priority in the proposals for use of EU
Structural Funds for 2014 – 2020 as it would form one of the pillars for transformational change. It
would help to develop clear mechanisms to enable the articulation of Structural Funds with H2020, and
potentially with other external funding sources. This will in turn provide an incentive for large scale
businesses to become involved in structural funding projects (linked to H2020).
[19] The formation of such a strategy requires input from Welsh Government, Higher Education Wales,
the Universities, Ser Cymru Network Directors, HEFCW and key individuals from industry. We believe
there is an urgent requirement for these groups to talk and we suggest that these high level discussions
are initiated through the office of the Chief Scientific Adviser for Wales. This will necessitate particularly
close engagement with the Welsh Government’s new H2020 Unit/ WEFO, which has recently come
under the jurisdiction of Minister Hutt. This will help to build synergy with the Ser Cymru programme,
and the objectives of Science for Wales, while at the same time, maximising benefits to the Welsh
economy.
Recommendation 4: Develop clear mechanisms to enable the articulation of Structural Funds with
Horizon 2020 (and potentially with other external funding sources). This will in turn attract large scale
businesses to projects which are linked to structural funding.
Recommendation 5: As a matter of urgency, and through the office of the Chief Scientific Adviser of
Wales, establish a group involving representatives of Welsh Government (DBETS, WEFO), Higher
Education Wales, HEFCW and key individuals from industry to develop robust delivery mechanisms for
Structural Funding R&I programmes, including their articulation with Horizon 2020 and other EU
programmes.