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Investing in innovation and the industries of the future
The Government Economic Strategy highlights the key contribution of innovation to delivering the Purpose: innovation drives improvements in productivity and, through creating new products, processes and services, creates new jobs and encourages greater economic participation, two of the crucial components of increased economic growth. It also recognises the critical role of a supportive business environment as one of the drivers of growth.
Research and innovation are just as important during a period of economic downturn. Evidence from previous recessions suggests that R&D spending during a recession is often one of the first areas to be cut by the private sector. However, when financial pressures are greater and margins tighter, successful businesses are the ones that find smarter, more efficient and effective ways to improve productivity, expand market share and increase profits. Surviving an economic downturn and placing ourselves in the best possible position to benefit from the upturn will not be achieved by simply doing more of the same. Innovation is about seeing and seizing new opportunities.
The long-term innovation challenge facing Scotland was set out in the Government Economic Strategy: we have clear strengths and competitive advantages in many areas of research, particularly in our universities and colleges; but relatively low levels of demand for innovation, especially among our home-grown businesses. The need to act in this area has been reinforced by New Horizons, 9 the report of the Joint Future Thinking Taskforce on Universities in November 2008, which identified a shared responsibility for universities and the business sector to improve knowledge transfer and innovation. We are determined to bring about a step-change in the aspirations and culture of business towards research and innovation. The Government and its agencies will work in partnership with businesses to enable them to become more demanding and intelligent customers of innovation support, embracing all the different forms of innovation beyond just the science and technology-based. Such an approach will be crucial to long-run business survival and our ability to take full advantage of the economic recovery when it comes.
In the context of responding to the downturn, businesses have been supported at each stage through an integrated business innovation service provided by the enterprise agencies. This has included the following key elements.
- We are promoting the opportunities for, and value of, innovation to business. Through the 'Now's The Time To Ask' campaign of Scottish Enterprise, over 750 delegates have attended 'Winning Through Innovation' events to help more Scottish businesses investigate the benefits of an increased demand for, and use of, innovation. This has resulted in an increasing use of the innovation services of the enterprise agencies.
- We are increasing the incentives for businesses to use and pursue innovation. Funding is already available through the extensive range of support for businesses pursuing research and innovation. For example, in the last year Scottish Enterprise's R&D grant programme has levered over £100 million of private sector investment into research projects. Highlands and Islands Enterprise, through its partnership with MIT, is helping businesses to identify and implement innovative opportunities. In addition, in December, we launched the £10 million Saltire Prize, the largest innovation prize for marine renewables in the world, while the Scottish Funding Council has introduced an innovation voucher scheme to meet the costs of research collaboration between higher education institutions and Scottish SMEs.
- We are supporting research and innovation collaboration. Support for collaboration between businesses and key suppliers of R&D and innovation is key. One example is Interface, a national programme supported by the Scottish Funding Council which match-makes businesses with research resources in Scotland's universities and research centres. Another good example of collaboration in action in the public sector is the ICT Forum.
Investing in innovation through the ICT Forum The Scottish Government has worked with public sector agencies and private sector companies to create the ICT Forum which looks at how Scotland can use ICT more innovatively to improve productivity and help increase economic growth. The Forum brings together the Scottish Government, Scottish Enterprise, the Scottish Funding Council, Highlands and Islands Enterprise, Strathclyde University and private sector organisations such as BT, Oracle, Sun Microsystems, Cisco, Microsoft, Thus and ScotlandIS to collaborate on four main areas of work. - Creating culture change. The Forum's aim is to raise awareness of the importance of skilful exploitation of ICT to Scotland's economic success which will be achieved by a number of actions, including: creation of a library of exemplar material demonstrating how growth can be achieved from skilled exploitation of ICT; promotion of the economic benefits of skilled exploitation to individuals, senior managers and finance directors through the press, business seminars and exemplar events; and development of a flexible working campaign and a collaboration project to raise visibility of ICT and the benefits it can bring.
- Educating for skilled exploitation. The Forum has developed a strategic relationship with e-skills UK, the Sector Skills Council, and Learning and Teaching Scotland which has resulted in: progressing a Business IT Guide and video; looking at curricular material for 11-14 year olds; and drawing up a strategic approach over time to join together the numerous initiatives that exist in this area. At the business level, the Forum will develop and promote to companies the skills required to use ICT more effectively to improve their productivity and compete globally. Particular emphasis will be on the key sectors identified in the Government Economic Strategy.
- Vibrant competitive supply side. Scottish Enterprise has already established an ICT Industry Advisory Group ( IAG), working with industry and key stakeholders to create a strategy for the industry. The Forum will work with the industry and others to progress this and will discuss its own proposals with the IAG to ensure strategic fit going forward.
- Benchmarking. The Scottish Government has completed a macro study of Scotland comparing its performance internationally. This will provide the foundations for the specific actions to be undertaken by the Forum, as well as identifying where further work can be useful, including on SME benchmarking.
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Research and innovation are critical to the emerging industries which will drive future Scottish economic growth. As recognised in the Government Economic Strategy, some industries have the capacity to provide major contributions to strengthening Scotland's international comparative advantage and improving its productivity performance. This is not about government picking winners, but creating the environment that will accelerate growth sectors and firms wherever they are in the economy. Irrespective of the recession, it is essential that the investment and support needed to drive their competitiveness is provided now.
For example, in tourism, VisitScotland, the enterprise agencies and the industry are working together on a national tourism investment plan designed to maximise tourism's employment-generating potential through greater alignment with the Scottish Government's plans for developing transport infrastructure. Another good example of the Scottish Government's concerted action to support key industries is renewable energy.
Investing in the renewable energy industry Energy is one of the key sectors where action is being taken now by the Scottish Government through the downturn. Since May 2007, the Scottish Government has approved 22 renewable energy developments, and major investment projects are underway throughout Scotland, bringing jobs to communities and supply-chain opportunities for Scottish companies. For example, Europe's largest operating onshore windfarm, at Whitelee south of Glasgow, was opened by the First Minister on 20 May. During its initial construction Whitelee employed over 500 people and brought investment of £300 million to the Scottish economy. Its planned extension will create 300 jobs. There are longer-term opportunities for Scotland to cement its position as the UK's renewable energy powerhouse. Our Renewables Action Plan, to be published this summer, will chart the course and actions needed to meet our 2020 renewables targets and maximise the economic benefit for the whole of Scotland. There have already been over 100 expressions of interest in the Saltire Prize, our worldwide innovation prize designed to accelerate the commercial deployment of wave and tidal energy. It is not only in renewable energy that Scotland is leading the way. A major study by the Scottish Centre for Carbon Storage, the Scottish Government and a consortium of some 18 industry bodies has shown that Scottish coastal waters contain some of the best storage sites for carbon in Europe. In launching the report on 1 May, the First Minister stressed that Scotland has the ability to develop a strong industry in carbon transport and storage and create a worldwide export industry based in Scotland. Estimates suggest that this industry could employ some 10,000 people by 2020. |
We are taking action to support specific industries as well as to create the opportunities for all potential growth businesses to thrive. In recent months, these include the following measures.
- We are working with business to increase the competitiveness of our key sectors. We are setting up Industry Advisory Boards with representatives of the private sector for all the key sectors and action plans are being developed to support their competitiveness. This will be aided by the industry-led Technology Advisory Group, which has been established to produce a clear strategy for the development of the enabling technologies that underpin Scotland's key sectors.
- We are maximising the opportunities and impact of Homecoming 2009 so that it can provide an important stimulus to our tourism industry. Over 300 events are taking place across Scotland as part of Homecoming and we are aiming to generate an additional £44 million in revenue, bring 100,000 additional visitors to Scotland and support over 1,000 jobs, all of which will help the long-term growth of the Scottish tourism industry.
- We are addressing the problems faced by growing businesses in getting access to finance. Many practical steps have been taken to address this including our enterprise agencies helping many businesses prepare themselves to seek funding by increasing and improving their 'Investor Ready' programmes. Another key measure taken recently by the Scottish Government was the announcement of a Scottish Investment Bank.
Investing in business growth through a Scottish Investment Bank On 21 April, the First Minister announced that the Scottish Government will work towards the establishment of a Scottish Investment Bank in support of business growth. The Bank will initially comprise of support offered through Scottish Enterprise's existing interventions aimed at innovative, high-growth potential businesses: the Scottish Venture Fund; Scottish Co-investment Fund; and Scottish Seed Fund. In total, this currently amounts to a combined spending power of £150 million. The Scottish Investment Bank will be developed to enhance the range of financial support available to growth businesses. The Scottish Government is working with Scottish Enterprise and Highlands and Islands Enterprise to identify what other resources might be available to the Scottish Investment Bank, including the potential to secure significant additional funds from the European Investment Bank through the use of JEREMIE, a European initiative to facilitate access to finance for SMEs. Discussions are also ongoing with our social partners, including the STUC and Local Authorities, as these proposals develop. |
Our support for business in the downturn has been active for some time and is already bringing real and immediate benefits to companies across Scotland. A good example of how such action can make a difference is Scottish Enterprise's 'Now's The Time To Ask' campaign.
Making a difference with 'Now's The Time To Ask' From January to April 2009, Scottish Enterprise conducted a successful integrated marketing campaign - 'Now's The Time To Ask'. The objective of the campaign was to help Scottish businesses, particularly new growth companies, find the support they need during these challenging times. Via a series of communications, notably the website, www.nowsthetimetoask.co.uk, companies were invited to come forward with their questions, find out about how Scottish Enterprise and other public sector organisations could help them adjust to the downturn, create greater efficiencies and innovate and adapt to achieve long-term growth. As a result of the campaign, 1,390 businesses were helped by receiving answers to questions that were important to them. In addition, more than 2,500 people booked to attend a range of events dealing with issues of interest in the economic downturn. The themes of these events included innovation, tackling financial issues, sales and marketing, leadership, business efficiency and inspiring action for the future. These events have already been making a difference, including: nearly 100 delegates learning about new business opportunities through 'Compete for 2012 Olympic Games'; follow-up support in areas such as Sustainable Development; participation in the Scottish Manufacturing Advisory Service and Mentoring scheme; 15 delegates following up with the Environmental Management Initiative; 15 delegates looking for 'Graduates for Business'; and seven delegates looking for support on Lean Management Thinking. Similarly, Highlands and Islands Enterprise has been running a series of Virtual Conferences dealing with challenges relating to the recession. These have been accessible via the internet by businesses throughout the Highlands and Islands. Each of the three events to date have been attended by up to 300 businesses and downloaded by thousands more. |
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