Raising the standard: How Prince of Wales scholarships can lift Wales out of recession

The Prince of Wales Innovation Scholarships launched by the University of Wales will rival the awards offered by universities around the globe.

Think of Wales and you think of beautiful countryside, with mountains, sheep and a rugged coastline. You think lovely churches and chapels, rugby and slate quarries, not dynamic economic development. Now that could change if an ambitious £11.4m scheme launched by the University of Wales – the Prince of Wales Innovation Scholarships – works as it is designed to, and helps to propel the principality out of recession.

If it really takes off, it could turn Wales into a successful innovation cluster like Cambridge in England and Palo Alto in California. In any case, it could help to give the principality a solid base in research and development.

The idea behind the venture, which was launched formally by Prince Charles at a lunch at Clarence House last month, is to inject new ideas and energy into the Welsh economy. The postgraduate scholarships will rival the awards offered by American universities which are able thereby to recruit the best brains globally. The University of Wales is offering what it is claiming are the best financially supported PhD packages in the world, so watch out USA. The Welsh are coming.

Each student is to receive a stipend of £20,000 a year, as well as a research grant of £5,000 and get all their tuition fees paid.

Prince Charles, who is the chancellor of the University of Wales, was upbeat in lending his name to the scholarships. "It seems to me entirely fitting that an institution which was created through the determination and enthusiasm of the people of Wales should choose to work in the service of those people and I am proud, as the university's chancellor, to lend my support to the scholarships programme.

"It seeks to take the best of Wales to the world and bring the best of the world to Wales. The scholarships are, I think, a very practical and very exciting response to how higher education can help the Welsh economy in a time of crisis."

The aim is to recruit 100 of the world's best graduates between 2009 and 2012 and to put them in a Welsh company. So, the scheme is innovative, seeking to link industry and academia in an intimate way and on a substantial scale. The idea is that the students will use their brains and expertise to generate new products, processes, patents and services for the principality.

Each three-year scholarship will lead to a doctorate of the University of Wales, which is the second-largest degree-awarding body in the United Kingdom, validating degrees for the smaller universities in Wales such as Lampeter, Trinity College Carmarthen, University of Wales Institute Cardiff and Swansea Metropolitan University. The hope is that the awards will help to raise the Welsh economy to a new level – to make it "knowledge-based" in the jargon, rather than based on coal mining or heavy industry, and to attract new businesses to Wales.

The University of Wales has already been inundated with queries about the scheme from industry and universities around the world since announcing it in February, according to Marc Clement, the university's vice-chancellor. "The response has been overwhelmingly positive," he says. "We have already been in detailed discussions with some of the world's leading research universities, such as MIT [Massachusetts Institute of Technology], the University of California and Rice University [in Texas], on bringing some of their best students to Wales to support our businesses.

"We have also recently been to Japan to visit companies such as Hitachi, as well as half a dozen leading Japanese universities with a view to collaborating to develop the programme."

Funding for the scheme is coming from the European Union, the private sector and the University of Wales itself. The scholarships will be concentrated in eight key areas of the economy – energy, IT, environmental sciences, biosciences, health, creative industries, automotive and aerospace.

According to Professor Jeremy Stone, who chairs the industry project selection panel of the scholarship scheme, Wales remains largely stuck in the low-skill, low-wage spiral that makes the country vulnerable to the offshoring of jobs and the chill wind of economic storms. "As a nation, we are not immune to unhelpful introspection and isolationism, yet globalisation is our future and we ignore it at our peril," he told the Clarence House lunch gathering.

Professor Stone hopes the programme will act as a bridge between innovators and the markets they seek to serve. As a businessman, he welcomes the programme because it gave firms opportunities to take on students to help them create competitive advantage. "It's a chance for Wales to become a honeypot of innovation and realise the vision set for Wales by our leaders – to become a small, clever nation with which the world aspires to work."

For the University of Wales, the scheme is important because it adds lustre, bringing with it the Prince of Wales' imprimatur. For more than a century, the university was the principality's great national institution, containing all the institutions in Wales. But it was inward-looking and the bigger institutions felt they could do better on their own. So the universities of Aberwystwyth, Bangor, Swansea and Cardiff have broken away, leaving the smaller institutions behind.

The scholarships are an attempt to redefine the University of Wales and to give it new kudos following a poor report in 2004 from the Quality Assurance Agency.

"It is going to allow us to attract some of the best scholars into Wales – and we're getting some very high-powered business partners," says Professor Nigel Palastanga, pro vice-chancellor for quality at the university.

Professor Clement believes that the programme will substantially strengthen the university's performance in research. "The University of Wales is being reinvented by the changes that are happening to higher education in Wales," he says. "Our funding council is not able to fund postgraduate research students and there is clearly an underperformance in our sector in Wales in the context of the number of students undertaking postgraduate study."

But the dearth of postgraduates is particularly acute in the Stem subjects (science, technology, engineering and mathematics). "These statistics are very disappointing and worrying," says Clement.

The scholarships are an attempt to tackle that problem. To do it – to attract the best from all over the world – the University of Wales needed a brand, which was why it approached the Prince of Wales, who was happy to oblige.

Until now, the University of Wales's contribution to the Welsh nation has been academic. This development changes that. "This is probably the first time that an academic institution has given support to industry directly to work alongside higher education," says Professor Dylan Jones-Evans, director of research and innovation at the University of Wales. "I can't tell you if it's a world first, but I have not come across any other similar programme."

Swansea University spin-out company in scholarship talks

Allerna Therapeutics is a very small pharmaceutical company, with three employees. It has been going for just under two years and is working on a treatment for asthma.

A spin-out company from Swansea University, it has a small budget and a limited timescale to prove itself. "Every penny we spend has to add value to the business," says Dr Mike Kiernan, chief executive. "Five years ago, we patented the technology that we fully believe has the ability to knock out a whole myriad of symptoms of asthma.

"For us, the scholarship programme is an ideal opportunity to address two problems. One is we can't get the highly talented staff because they're not local – and we can't attract people from overseas, because we're a small start-up."

So the company, one of whose staff is pictured below, is thinking of taking on one of the Prince of Wales Innovation Scholars and is in early discussions with the university. The idea is it will part-fund the postgraduate in conjunction with the university, and the person recruited will do research into other uses for the drug – for example, the treatment of hay fever.

"We're small, high-tech, highly focused with a clear requirement for someone to come in and concentrate on one application that will add value downline," says Kiernan.

Wolfestone Translation Ltd is another small company which has been in existence for three years. It has expanded very rapidly. The firm has an office in Swansea and another in Germany, and will shortly be opening other offices in the USA and the Middle East. To achieve that, it needs bespoke project management software so that it can manage work online and communicate with its offices overseas.

"We would like two PhD students to work on developing the software for us because this doesn't exist at the moment," says Anna Bastek, director of the company.

"We want really good people, top students, and we want them in-house. We looked at outsourcing this work, but the costs were higher and they won't be on site and won't be able to communicate with us. If we have our own PhD students here, the whole thing will go much more smoothly."