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.