SMART SPECIALISATION THE GOVERNMENT PERSPECTIVE - Cardiff University - 28 June 2012

BACKDROP - CHALLENGING TIMES  Economic landscape : recession & Eurozone crisis  EU budget focus on driving high end growth & maximising impact  Concentration of investment on top drivers of growth  UK National Reform Plan targets  Stronger performance management & accountability  More flexibility to align EU funds (regional, social, rural and fisheries)

EU ‘COMMON STRATEGIC FRAMEWORK’ INVESTMENT THEMES 1.Innovation and R&D 2.ICT: Improving access; quality and usage 3.SMEs: Improving competitiveness, incl. in the agricultural and aquaculture sectors 4.Shift to low carbon economy 5.Climate change adaptation and risk management 6.Environmental protection & resource efficiency 7.Sustainable transport and unblocking key networks 8.Employment and labour mobility 9.Social inclusion and fighting poverty 10.Education, skills and lifelong learning 11.Improving institutional capacity for efficient public administration

UK CHALLENGES FOR STRUCTURAL FUNDS  Increasing R&D spend & ‘localising’ national investment plans (TSB)  Improving access to finance for SMEs  More renewable energy use  NEETS / youth unemployment  Higher level skills  Financing through ‘financial instruments’ (more loans / fewer grants)

‘LESS DEVELOPED’ REGIONS  GDP/head below 75% EU27 average  75%-85% EU co-financing available for wider range of activities  Safety net” of 2/3 of previous allocation for regions moving ‘up’ and out of this category  At least 25% spend must be from European Social Fund  Likely to be West Wales and the Valleys + Cornwall and Scilly Isles

‘TRANSITION’ REGIONS  GDP/head between 75% and 90% of EU27 average  60% EU co-financing  Safety net” of 2/3 of previous allocation for regions moving ‘upwards’ into this category  At least 40% spend must be from European Social Fund, of which 70% of each programme must focus on only 4 priorities, with 20% earmarked for tackling social exclusion at national level  80% ERDF to focus on only 3 priorities  Likely to include : – Devon – Lincolnshire – East Yorkshire & N. Lincolnshire – Shropshire & Staffordshire – South Yorkshire – Merseyside – Lancashire – Tees Valley & Durham – Highlands & Islands – Cumbria – Northern Ireland

MORE DEVELOPED’ REGIONS  GDP/head more than 90% EU27 average  50% EU co-financing  At least 52% spend must be from European Social Fund, of which 80% of each programme must focus on only 4 priorities  At least 20% ESF to focus on social exclusion at national level  80% ERDF to focus on only 3 priorities:  Innovation  SME competitiveness  Low carbon and energy efficiency (at least 20%)

SMART SPECIALISATION: WHAT WE NEED VS WHAT WE WANT UK strategy for stimulating R&D excellence Proven track record of world beating innovation  Smart specialisation as a ‘precondition’ for receiving UK ERDF....does not apply...but  We want....Locally transparent and locally engaged innovation / R&D investment decisions.  We want....National innovation investment woven into local investment plans

NATIONAL LEVERS: TECHNOLOGY STRATEGY Technology Strategy Board (UK national innovation agency) works with top companies in R&D to:  Accelerate ‘the journey between concept and commercialisation’  Connect the innovation landscape  Turn Government procurement into innovation driver & business opportunity  Invest in priority areas based on potential to generate sustainable UK economic growth

TSB DELIVERS THROUGH....  Technology & Innovation (Catapult) Centres  Demonstrator Projects : Innovation Platforms (eg. Low Carbon Vehicles)  Support for networking & collaboration (incl. Knowledge Transfer Networks)  Support for SMEs (Grant for R&D, Knowledge Transfer Partnerships, Eurostars)  Procurement : driving innovation through government procurement

LOCAL LEVERS?  Universities  Private sector R&D  Social / business innovation? ?SMART SPECIALISATION: How do we deliver local impact from a partnership between national & local investment in innovation ?  Need to avoid cathedrals in the desert + sub- optimal fragmentation

KEY QUESTIONS  What will shift the economic game?  How will the difference be measured?  How much & when?  Fuzzy boundaries?: o Different partnerships for different issues? o Different geographies for different issues?  Leadership? Governance?