PART 2 - GROWTH - GROWING BUSINESSES
The Scottish Government is committed to creating a supportive business environment as one of the critical factors for ensuring economic growth. The Scottish Government's growth strategy, as set out in the recently revised Economic Recovery Plan, stresses the importance of building up the sectors of the Scottish economy that have the potential to drive future growth. We are therefore working with public sector partners to:
- increase the number of highly successful, competitive businesses;
- provide targeted support to business to help them pursue opportunities outside Scotland and to develop internationally competitive firms;
- provide advice and information to new businesses in the creative industries sector; and
- support a broader approach to business innovation in Scotland, focusing on the link between Scotland's research base and business innovation, addressing low levels of business research and development.
We recognise the difficulties that those involved in the creative industries may have in securing finance. However, businesses in this sector are among those which will best support Scotland's economic recovery and growth.
We will continue to analyse the trends in lending and maintain our dialogue with banks and the business community to ensure that all viable business have appropriate access to finance in order to meet their needs and ensure a sustainable recovery for the Scottish economy.
Recognising that need, the East of Scotland Investment Fund project has been accelerated and fast tracked through the European Regional Development Fund ( ERDF). This means that companies in the east of Scotland will have the same opportunity to access local debt finance as companies in the west, south and highland areas of Scotland.
Implementing the Scottish Investment Bank
The Scottish Investment Bank ( SIB) will deliver finance to help those companies that can contribute most to Scotland's economic recovery and growth. We are considering the potential for additional resources to deliver a range of financial products to growing and exporting Scottish SMEs who are already established but which are finding it difficult to secure the funding they need from traditional sources.
Initial SIB activity will comprise Scottish Enterprise's three existing, mainly equity based, funds:
- the Scottish Venture,
- Co-investment and
- Seed Funds.
The three funds have a combined spending power of around £150 million, currently being invested alongside the private sector in a number of young, innovative and high growth potential Scottish SMEs. The funds can therefore benefit businesses in the digital media sub-sector of the creative industries, in particular, although they are less likely to make a significant impact in other sub-sectors.
Since 2003, when the Co-investment fund was introduced
- the number of Scottish Enterprise private sector investment partners (Business Angels and Venture Capital companies) has increased from 15 to over 80 partners working across the three funds;
- Around 75% of these partners are willing to invest in the digital media and enabling technologies ( DMET) sector in Scotland;
- Statistics show that 52% of all investments are in DMET (130 companies), compared to 22% in life sciences (55 companies) and 8% in energy including renewable (19 companies).
We are pursuing a range of potential opportunities to access additional resources for the SIB, including European funding and potential partnering in SIB activities by the private sector banking and investment community.
Ensuring businesses can access the right advice
The Scottish Government recognises the heightened importance of ensuring that the right advice is readily available to businesses. We need to ensure that the creative industries can access the support on offer from the enterprise agencies. They can currently be excluded because they do not qualify in terms of size, turnover and growth potential. As part of this, the Scottish Creative Industries Partnership is currently mapping the different types of financial support available across the public sector in order to ensure that advice to the creative industries, from any of the public sector agencies, is as clear and comprehensive as possible.
There are four different creative industries programmes currently being taken forward in Scotland under the European Union's INTERREGIVA Fund, which looks to promote projects between Northern Ireland, the border region of Ireland and Western Scotland. In addition, work relevant to the creative industries is currently being taken forward by three EU Directorates (Education and Culture, Enterprise and Industry and Research), It is important that additional opportunities for funding arising from these workstreams are identified, publicised and seized.
Relations with the UK Government
We work to build effective working relations with the UK Government to ensure that a Scottish perspective is taken into account in policies in reserved areas which affect our creative industries. Scotland's creative industries are entitled to their share of funding from the Strategic Investment Fund run by the Department for Business Innovation and Skills. We highlighted the strength of our computer industry in Dundee, and the University of Abertay was successful in securing an investment of £2.5 million to develop a unique new build facility to support games development. We will continue to ensure that our creative industries do not lose out and make sure that, where powers are reserved, the UK Government is aware of the Scottish perspective and takes it into account.
We will continue to press the UK Government to introduce tax incentives for computer games companies. We will also seek to work with the UK Government to ensure that the Scottish Digital Network, recommended by the Scottish Broadcasting Commission and unanimously supported by the Scottish Parliament, is established. The recent report by the Scottish Digital Network Panel 9 gave clear recommendations on how such a network could be funded, and we will seek to ensure that those recommendations are adopted by the UK Government.
Ensuring our businesses are supported in internationalisation
The Government has a key role in making links outside Scotland to ensure that others are aware of our creative industries, their potential and the impact that others' policies might have on them.
The creative industries already account for 6% of Scotland's total export sales to the UK and the rest of the world. We have the opportunity to expand our international trade and develop new sources of international demand, taking advantage of the increasing demand for creative content in English and a lower exchange rate which enables Scottish businesses to be more competitive in foreign markets.
Scottish Development International ( SDI) works closely with the GlobalScot network to provide contacts for Scottish creative industries companies. GlobalScot seeks to develop and expand Scotland's standing in the global business community by using the talents of leading Scots and people with an affinity for Scotland, to establish a worldwide network of individuals who are outstanding in their field. They can provide practical, professional assistance that businesses need to engage with the global market place. SDI supported 15 companies to attend the Games Development conference in San Francisco (the biggest games development conference in the world) and set up networking opportunities with 16 GlobalScots. These GlobalScot contacts are invaluable to businesses, since they help them to build on the links established at conferences and events. In February 2011, SDI led a delegation of 20 Scottish companies to the GSMA Mobile world conference in Barcelona, 10 helping them to highlight creative content and technological innovation to a global audience.
SDI is boosting its international activity to support more Scottish businesses to trade globally, to engage more broadly with Scottish businesses and to focus on helping those businesses understand the international market opportunities in their sector. This work, which is being taken forward in partnership with the Scottish Council for Development and Industry and the Chambers of Commerce, will help businesses to improve their competitiveness, expand into new markets (especially emerging economies) and increase their exports. It is accompanied by a renewed strategy to target inward investment opportunities in sectors, such as the creative industries, where Scotland has a strong global position.
SDI works in partnership with UK Trade International ( UKTI) to ensure that companies based in Scotland benefit from an integrated package of SDI and UKTI trade and investment services. UKTI has a network of international specialists through the UK and across the world. It brings together the work of the Foreign and Commonwealth Office and the Department for Business, Innovation and Skills. Through this partnership, companies based in Scotland benefit from UKTI's national trader services such as the Overseas Market Introduction Service, trade missions and trade fairs as well as from SDI support.
The rest of the public sector also has a role in supporting internationalisation. For example, Creative Scotland has a key role in the promotion of Scotland's film industry abroad, and Creative Scotland, Scottish Enterprise and HIE all contribute to helping businesses within the creative and cultural industries to market and promote themselves abroad. HIE, Scottish Enterprise, SDI and Creative Scotland frequently work together to ensure strong Scottish representation at key international showcases such as the South by Southwest music festival, the Tokyo and Toronto Book Fairs, London Fashion Week and the Toronto and London Film Festivals.
Marketing development of the Edinburgh Festivals
The Edinburgh Festivals are Scotland's world-leading cultural brand and collectively they attract audiences of four million and have an economic impact of £184 million, generating £61 for every £1 of public investment.
The 12 major festivals account for the delivery of over one-fifth of the city's total tourism income annually. These important contributors to Edinburgh's and Scotland's economies are supported by Scottish Enterprise ( SE) in a number of different ways. Supporting the general co-ordination and management of the festivals, SE provides input through representation on the Festivals Forum and working groups. SE contributed towards the 'Thundering Hooves' research on maintaining the global competitive edge of Edinburgh's Festivals, commissioned jointly with Event Scotland, Festivals Edinburgh, the City of Edinburgh Council, the Scottish Government and the Scottish Arts Council, and subsequent monitoring and evaluation work. SE also contributed £132,000 between 2008-2010 towards the development and implementation of a Festivals Joint Marketing Strategy and further support has been made available for 2011/12.
Creative Scotland (and through its predecessors Scottish Arts Council and Scottish Screen) is a key investor in the Edinburgh Festivals, through foundation, flexible and project funding.
Edinburgh's major festivals have continued to grow in numbers and in strength over the past 60 years. Since the creation of Festivals Edinburgh, the strategic body created by the directors of Edinburgh's 12 major festivals to take the lead on their joint strategic development and to look at over-arching areas of mutual interest, the Festivals have been working more closely than ever before and the scale and ambition of the work being achieved is unique in the world.
Building International Networks
The Government looks to build links to showcase Scotland's creative industries and to learn from others' approaches. For example, Scotland was one of the founder members of the Districts of Creativity. This organisation comprises 14 creative districts from across the world - stretching from the USA, through Europe and India to China (Baden Württemberg, Catalunya, Central Denmark, Flanders, Lombardia, Nord-Pas de Calais, Rhöne-Alps, Rio de Janeiro, Scotland, Tampere, Oklahoma, Karnataka, Shangai and Quingdao). It aims to promote the exchange of best practices and experiences in business, culture and education to advance a creative and entrepreneurial culture. Members also participate in programmes directed towards fostering innovation, entrepreneurial creativity, internationalisation and entrepreneurship.
Scotland is also involved in Creative Growth, a European funded project that will include groups looking at access to finance, incubators, science and industry and business networks. We believe that these sorts of networks and projects have the potential to reinforce Scotland's position on the creativity world map and we will continue to develop these opportunities.
Taking opportunities to showcase our industries
Scotland has world renowned creative industries and the Government is committed to showcasing these to as wide an audience as possible. For example, Scotland's digital skills will be on show for the 2014 Commonwealth Games. The Scottish Government is currently organising a competition to develop a video game for the 2014 Games. Scotland had an active presence in the UK Pavilion at the 2010 Shanghai Expo, and was represented at the World Creativity Forum in Oklahoma in November 2010. The World Creativity Forum included a showcase of the work of the Digital Design Studio - a highly successful collaboration between Historic Scotland and the Glasgow School of Art.
We also continue to ensure that Scottish culture is showcased as well and as widely as possible. For example, Scotland Week in Brussels in 2009 included the opening of the As Others See Us photographic exhibition at Scotland House, a policy seminar relating to Scotland's festivals and a performance of Midsummer which had previously appeared on the Edinburgh Fringe as a result of backing from the Scottish Government's Expo Fund. The Royal Scottish National Orchestra was supported by the Scottish Government's touring fund to perform in six European venues in five countries in February 2010.
Relations with the EU
The European Union, under the Spanish presidency, published a European Green Paper on Culture and Creativity 11 on 27 April 2010. The consultation, to which the Scottish Government responded 12, ran until 30 July 2010, and responses are still being considered. Key issues raised by the Green Paper were:
- new spaces for experimentation, innovation and entrepreneurship in the cultural and creative sector;
- better matching the skills needs of the creative and cultural industries;
- access to funding;
- the local and regional dimension;
- mobility and the circulation of cultural and creative works;
- cultural exchanges and international trade.
The Enterprise and Industry Directorate General is working on the establishment of a European Creative Industries Alliance to design better policies and to make strategic use of initiatives that support the creative industries .
This initiative was discussed at a creative industries event organised by the Scottish Government's EU Office on September 27 September 2010. This event, which included permanent representatives from 9 countries, was addressed by Fiona Hyslop, the Minister for Culture and External Affairs, who highlighted the strengths of Scotland's creative industries, and the similarities between Scottish policies for developing the creative industries and the themes outlined in the Green Paper on Culture and Creativity. In addition to a presentation by EU officials, it included sessions on Creative Scotland and creative industries policy in Flanders. It is an example of how the Scottish Government's EU office can raise the profile of Scotland's creative industries among EU policy-makers, and facilitate discussions about common areas of interest.
Using Scottish Government's international offices to support the creative industries
The Scottish Government has three offices overseas - in Beijing, Washington and Brussels. These will be used to champion the creative industries and showcase products. The work of the Scottish Government's EU Office in Brussels has already been noted in this paper.
Through the Framework for Innovation 13 published in 2009 we have focused our innovation support on improving links between businesses and the research base and encouraging more businesses to create more competitive products and services. We deliver additional advisory support through the new innovation support service with Scottish Enterprise and the partnership between Highlands and Islands and the Massachusetts Institute of Technology ( MIT) which will help business to implement innovative opportunities.
Scottish Government promotion of innovation
The Scottish Government has promoted innovation through schemes such as Proof of Concept which takes ideas from universities and other research establishments and helps them into the market place. It also funds the Innovators Counselling and Advisory Service Scotland ( ICASS). ICASS provides advice and support for creative people, such as inventors and innovators with new ideas on how to exploit them for economic impact. ICASS signposts innovators to advice on sales, marketing, company formation, access to capital, protection of intellectual property and other areas that are vital to starting up and profiting from new ideas.
Innovation Support Service
Following the publication of the Innovation for Scotland Framework and Growing Innovation, Scottish Enterprise has launched its Innovation Support Service. The Service is free, available to all businesses in Scotland so that they can gain access to impartial advice and guidance on innovation projects and activities. Scottish Enterprise is promoting the importance of innovation through its Winning Through Innovation events delivered across Scotland.
Research and development
We want the creative industries to benefit from the world class research and expertise within Scotland's universities and colleges. The Scottish Funding Council runs an innovation voucher scheme to support universities and colleges in collaborating with SMEs in Scotland.
The Institute of Capitalising on Creativity has been awarded a grant from the Economic Social and Research Council ( ESRC) of £1.5 million for research into the creative industries in Scotland. The grant, running between 2009 and 2013, will support PhD Students, Knowledge Transfer Partnerships and business research and consulting, including business vouchers. It is intended to ensure that Scotland has the capacity to sustain and enhance a vibrant creative industries sector and to develop sustained research which provides a strong knowledge base for the creative industries in Scotland. The Government is working to develop a Knowledge Transfer Partnership which looks at how creative practitioners can commercialise intellectual property, the business models needed to ensure maximum returns on that intellectual property, and how the public sector can shape its support to help businesses achieve that return.
Linking with the Technology Strategy Board
The Technology Strategy Board ( TSB) was established in 2008. It is a UK body aiming to stimulate technology enabled innovation in the areas which offer the greatest scope for boosting UK growth and productivity. It promotes, supports and invests in technology research, development and commercialisation for the benefit of business. It brings together people to solve problems and to make new advances.
We are working to strengthen links with the TSB to increase the opportunities for Scottish organisations to benefit from the programmes and initiatives sponsored by the TSB. The TSB launched a strategy for the sector in November 2009, and has established a Creative Industries Knowledge Transfer Network driving forward its strategies. In March 2010, we showcased what was on offer in Scotland and will build on these links to ensure that Scottish creative industries benefit from the resources, expertise and connections.
Working with the National Endowment for Science, Technology and the Arts ( NESTA)
The National Endowment for Science, Technology and the Arts is a UK organisation that fosters and provides expertise in innovation. Through a blend of practical programmes, investment in early stage companies and research, it looks at creative approaches to challenges. The Government works with NESTA on projects to raise awareness of innovation in the creative industries. We learn from its pilots and look to mainstream successful ones where funding can be found.
Innovative business support for the creative industries
Creative Scotland works in collaboration with many organisations both in Scotland and UK wide to support digital initiatives. It currently works closely with Scottish Enterprise and HIE to support the strategy for growth of the Scottish creative industries sector in collaboration with the Scottish Digital Media Industry Advisory Group and Interactive Scotland.
Developing the publishing sector in the Highlands and Islands
Background - Studies of the economic impact of Creative Industries in the Highlands and Islands have emphasised the value of the writing/publishing sector in the region. The industry is going through a period of change with technology offering the potential to review the role of the publisher and offering authors direct access to their readers. This offers business opportunities to current writers and publishers and new entrants to the sector.
What we have done - HIE, in partnership with Creative Scotland funds a development manager to support this sector. This post is housed within the arts development agency Highlands and Islands Arts.
What the impact has been - Along with one to one advice and a programme of workshops and networking events, the project established the "Work In Progress" critical reading service that covered the whole of Scotland. Providing detailed professional critiques of nearly 500 unpublished works in progress, it has produced notable local successes, including Janis MacKay (Caithness) whose book won the Kelpies Prize and a publishing contract with Floris Books. Lewis writer Billy Matheson went on (with mentoring from the Comedy Unit provided through the project) to have a Gaelic comedy series commissioned and broadcast on BBC Alba.
Creative Scotland's investment in digital collaboration is exemplified by the £1.5 million it contributed from its Innovation Fund to the Digital Media IP Fund, designed to maximise the creative, cultural and commercial opportunities presented by new and emerging technologies. This was created in partnership with Scottish Enterprise, who also invested £1.5million.
Starter for Six
NESTA piloted a 3 year programme, funded by Scottish Enterprise, supporting creative entrepreneurs across Scotland. After a successful evaluation, the Government worked to ensure that the approach continued. We were pleased that in targeting its Innovation Fund to help creative practitioners survive the recession, Creative Scotland was able to fund the project, which is delivered by the Cultural Enterprise Office. It provides tailored business support, including enterprise training, peer mentoring and grants of up to £10,000. By helping to turn creative ideas into successful business, the programme not only contributes to the success of the Scottish economy but also raises the awareness and profile of talented entrepreneurs in Scotland.
In 2010, 27 Scottish companies or entrepreneurs were awarded a share of £150,000 from the Starter for Six main programme, and a further 6 were awarded a share of £50,000 from the fast track programme. The products covered in the fast track programme (for ideas which were closer to commercial application than those in the main programme) included an e-health application, a new film distribution tool and the development of a newly created stringed musical instrument.
As part of its programme of work to support the games industry, NESTA has been piloting Gaming Mentoring, pairing well known and respected figures from the industry with emerging developers. This has enabled early stage developers to benefit from the experience of relevant business leaders who were able to provide invaluable advice on business growth. We are keen to build on the success of the programme. We believe that to be successful such a programme needs to run on a UK level.
The Scottish Chambers of Commerce, in partnership with HIE and Scottish Enterprise, delivers the Business Mentoring Scotland Programme, supported by Scottish Enterprise and European Social Fund ( ESF) funding. Businesses are matched with experienced business people who volunteer their time and are committed to sharing their skills, knowledge and experience. This enables individual entrepreneurs or business owners to develop their knowledge, leadership skill, competence and confidence to grow sustainable businesses. There are currently around 600 mentors across Scotland. A new initiative targeted at creative entrepreneurs could complement this programme to increase the pool of mentors and widen the delivery of the scheme.