Written Statement - Technium Update

Assembly Members will be aware that I issued a Written Statement on 18 November 2010 on the future of the Technium Network. Following an Oral Statement on 23 November I committed to updating Members before the end of this Assembly.

The network has been subject to a number of independent reviews, audits and scrutiny by the Economy and Transport Corporate Governance Committee. These resulted in recommendations being made to make improvements in areas such as governance, processes and management information/data.

The launch of Economic Renewal: a new direction in July 2010 brought a commitment to increase the amount of innovation and research and development (R&D) in Wales through the provision of specialist facilities, to include incubation centres. The policy also stated under-used business incubation capacity would be addressed. As the Welsh Assembly Government’s business incubation programme is primarily delivered through the Technium network, a commitment to undertake a review of all individual facilities was given and undertaken following which I announced that four of the Techniums would be retained but the other six would no longer be part of the network.

Since that date, the transition of the 6 buildings out of the network has been managed whilst working to ensure that a fit-for-purpose management, governance and financial arrangements are in place for the future Technium network going forward. We are supporting tenants exiting from the network to establish new business support relationships and relevant contacts for future advice, support and connections.

I said in November that the Techniums would not be closing overnight and individual tenants within the affected buildings would be supported throughout the process and any displaced tenants would receive all possible help to find alternative accommodation. Dialogue and engagement has taken place with all key stakeholders, partner organisations and tenants to deliver an exit from the network by 31 March 2011, for those Techniums where the Welsh Assembly Government has an interest in terms of ownership or a lease for the building. The Welsh Assembly Government owns the following Techniums - Performance Engineering, Sustainable Technologies, Aberystwyth and CAST and has a lease with Sony for Technium Sony@Digital.

Technium Pembrokeshire is owned by Pembrokeshire County Council and it is up to the owner to decide on an appropriate future use for the building. We have met with the Council to discuss the exit strategy and have provided written confirmation of their exit date of 18 July 2011 which reflects their notice period.

We have undertaken a review of relevant agreements and leases in place within the Technium network to identify any potential issues that would arise as a result of exiting from the network. The exit strategy has also been undertaken in compliance with any Welsh European Funding Office (WEFO) conditions and obligations.

The Welsh Assembly Government owns the Technium trade mark.  Relevant key stakeholders, organisations and tenants have been informed that certain buildings will be withdrawn from the network and from 31 March 2011 they should cease to use the Technium name in any corporate documentation. Any signage displaying the logo or branding on the Technium buildings will also be removed by 31 March 2011. The buildings have also been re-named and this is being communicated to tenants and relevant organisations.

I previously confirmed any displaced tenants who needed to secure alternative accommodation would be supported through this process.  I can confirm two tenants have specifically asked to be relocated within the Sony incubation suite and have been given appropriate support and guidance during the process to be able to relocate into alternative accommodation.

In terms of the longer term property solutions, discussions are currently ongoing with various organisations on future use and operation of each of the buildings. We have endeavoured to adopt an even handed and transparent process for the potential disposal of a building currently within the Welsh Assembly Government property portfolio where more than one organisation has expressed an interest in its future use. An options analysis will now be prepared and submitted to Ministers for decisions to be taken in respect of each individual building.

I also made a commitment that during the process of exiting the Techniums from the network, business continuity would be maintained and any disruption to the trade and business of the tenants would be minimised. One of the major concerns raised by tenants was the ongoing provision of ICT and telephony services in some of the buildings, as currently tenants utilise the Technium ICT and telephony service as part of the Technium offering. I can confirm we will ensure there is a comparable ICT and telephony service provided to those buildings affected by this and the existing provision will continue until this service is in place.  

We are also identifying and recording any costs and/or savings to the Welsh Assembly Government associated with the delivery of the exit strategy.

As part of the process of taking Techniums forward there has also been, at my request to the Permanent Secretary, a review of the status of implementation of the previous internal audit recommendations about the network. As part of my oral statement on 23 November last year I told Plenary, in good faith and based on what I had been clearly advised on several occasions, that I believed that of the 53 recommendations of the internal audit review, 52 had been implemented. I now understand that not to have been the case. The subsequent work has revealed action has been taken on 49 recommendations and that, of those, elements of implementation remain outstanding for 30 of them. There were also a further 6 recommendations which had Pan-Wales implications and action had been taken on all of these but some elements are outstanding for 4 of those recommendations. Responsibility for ensuring completion of the remaining actions, where they continue to be applicable, has been assigned to the Technium Transition Group. The Permanent Secretary has work in hand to establish how this situation arose and what steps need to be taken to prevent a recurrence.

Our key aim at all times must be supporting economic growth. The Techniums we are retaining will be part of this approach.  They will continue to provide incubation support for new, growing companies across Wales. Going forward, we will be implementing a new approach to managing the network so that it becomes a leading element of the innovation and R&D structure in Wales and provides a co-ordinated approach to ensure an element of consistency across the network. 

The Technium network is partly funded through a European Convergence Project and we are working with the Welsh European Funding Office and key stakeholders and partner organisations on a major re-evaluation of the existing business plan. We are working to a date of 1 July 2011 for the revised business plan to have been submitted and received approval. This will ensure alignment with the Economic Renewal Programme and that all key internal relationships with Innovation, Research and Development, Business Support, Finance and Skills are exploited. 

A more robust and effective governance framework for the network is being developed, comprising a new management structure with clear roles and accountability, and the capability to develop an appropriate relationship with those Techniums that are managed externally to WAG. An improved focus on monitoring and evaluation will also ensure that all agreed Project outputs and deliverables are achieved. A new operating model and set of consistent and transparent business processes is being developed and may be subject to change following external validation and further scrutiny by internal audit services. 

External validation and verification of the operating model and business processes will be provided by UK Business Incubation - the leading professional body for the development and support of business incubation environments that support high growth and technology centres. Welsh Assembly Government Internal Audit Services will also be integral to the development of the new operating model and will quality assure and test the governance framework and new processes. External scrutiny of the Technium programme going forward will also be addressed as part of the business plan and the use of Sector Panels in this will be explored.

I will ensure that regular audits are scheduled and undertaken by the Welsh Assembly Government and WEFO to ensure the full implementation of the revised business plan and to monitor progress against key performance indicators for the remainder of the Project lifespan.