Scotland has exciting, innovative businesses and world class universities. However, our growth rates are not yet what they need to be.
As we face increasing technological change Scotland should be, to quote the First Minister, the “inventor and the producer of innovations that will shape the future, not just the consumer”.
With this challenge in mind, leaders in the university and business community have come together to see how we can respond to this challenge, harnessing the UK and Scottish Governments’ policies for industrial success. With the biggest boost in UK government investment in Research & Development (R&D) for generations, now is the ideal time for bigger, more strategic partnerships to unlock that investment and ensure Scotland punches above its weight in R&D. We are working together to ensure the people and knowledge in our organisations can drive inclusive economic growth in Scotland.
Businesses investing in R&D
Innovative businesses are good for the economy – we know that businesses that consistently invest in R&D are 13 per cent more productive than firms that don’t invest in R&D. R&D is so important because it creates good jobs, new products, processes.
Services arising from R&D improve our quality of life and it can create wholly new industries. The Scottish Government has set a target of doubling business spend on R&D by 2025. It’s a challenge but there are opportunities to realise it.
Business and university collaboration
Universities have three core missions: research, education and knowledge exchange. Every one of those benefits from business engagement, and benefits businesses. Scotland has a world-leading university sector and we have some fantastic innovative businesses. There are so many examples of great work between the two to innovate, including through R&D, continuing professional development and consultancy. We know that businesses really want access to university talent to bring new ideas and hard work to their businesses and we work together to make sure our graduates have the skills to go into the world of work. We know there are lots of examples of great work but we want to go further to create an ambitious partnership that has a broad and strategic vision for the benefit of Scotland.
There are huge opportunities for businesses and universities working together
The UK government is investing hugely in more R&D with a total boost of £4.7bn from 2017 to 2020/21. This is the biggest increase in government investment in R&D since records began in the 1970s. We also know that the economic returns to public R&D are 20 per cent, so for every £100 spent the economy expands by £120. Making sure we are focussed on getting investment into Scotland will ensure our economy benefits.
The Industrial Strategy Challenge Fund (ISCF) is UK funding to tackle specific industrial challenges, wave one is worth £1 billion and wave two is worth £725 million of government investment alone and there is a third wave to come. These are huge sums of money designed to help businesses and universities collaborate to drive economic growth. We’re pleased to see work across our enterprise and skills agencies to collaborate to help Scottish businesses to maximise these opportunities. We hope businesses reading this will see the potential for growth and really engage with the ISCF.
We are ambitious
Scotland can – indeed must – become world-leading. Currently our business investment in R&D is in the bottom quartile of OECD rankings. We have some brilliantly innovative SMEs but our medium and large businesses lag behind (compared to EU average figures). So there’s a lot to do to meet Scottish Government’s target, but now is the time for ambition.
Our immediate focus is on areas where we think Scotland has the people, businesses, and ideas to be world-leading and that can benefit the whole of Scotland for example. ‘Blue Economy’ which is the sustainable use of ocean resources. We know that currently business R&D investment is concentrated in urban areas, with two thirds spent in four local authorities (Edinburgh, Glasgow, Aberdeen and West Lothian) but we see these areas such as this having the potential to spread business innovation much more widely to support inclusive growth.
We want to create the vision as well as the plan to realise it, working together with government and agencies, to deliver inclusive, innovation-led growth in Scotland.
Professor Richard A Williams, Principal of Heriot-Watt University and Bob Keiller, Chairman of Scottish Enterprise