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The Herald Scotland
10-06-2025
- Business
- The Herald Scotland
Can Scotland regain its status as an innovation nation?
About a third of the slowdown in growth is coming from the aforementioned lack of investment, but the rest is linked to something called "total factor productivity". Read more: On that first point, Scotland has for decades had very low levels of private investment, as has the UK which on this measure has been at the bottom of the G7 league table for many years. According to the Productivity Institute in Manchester, UK workers are operating with a third less capital - less software, fewer machines, a lack of R&D and organisational capacity, and so forth - than their counterparts in the US, Germany, France and the Netherlands. Give people fewer tools, and they'll produce less. Those figures were highlighted last week by economist Daniel Turner, head of research and analysis at the Centre for Progressive Policy, who noted that the difference is "particularly stark" in the case of France. "A worker has about half of the stuff with which to produce their outputs if they are based in the UK than if based in France," he said at the Creating the Jobs of Tomorrow conference in Glasgow. "But just fixing that problem of low investment will be nowhere near enough to reverse Scotland's slowdown in productivity because two-thirds of that gap comes from something called total factor productivity. Usually this is what economists attribute to ideas [and] innovation, bot the basic ideas from universities and also how we can make more effective use of production processes, how we design, and how we market our goods." Read more: So, Mr Turner asserted, there is no path for Scotland to return to a high productivity growth economy, and the higher incomes that come with that, without raising the level and quality of innovation across all industries. "This is as near as we get, if you can productivity, as near as we get to a panacea in economic policy because it makes all of the other economic trade-offs that we have to grapple with harder. If we don't fix this is will be harder to raise standards of living, to fund public services, and to create good jobs everywhere." Fortunately, it's not all doom and gloom. Scotland is among the best places in the UK to establish an innovation business, with the university spin-out rate per head of population the highest of any nation or region in the UK. In addition, half of the UK's most active angel investor networks are based north of the border. But each £1 spent on innovation in Scotland via the public sector and higher education generates just £1.46 in private sector research and development, which is about half the rate of the UK as a whole, roughly a third of that of the 38 countries that are members of the Organisation for Economic Co-operation and Development (OECD), and less than a fifth of returns in the US. The first step towards solving this, according to the conclusions from Mr Turner's latest research, is to set out a single Scottish industrial strategy backed by both the UK and Scottish governments. This should focus on a handful of globally significant clusters in sectors such as life sciences, green manufacturing and digital exports. Read more: "The absence of co-ordination, the absence of a shared set of goals over the past few decades has led to this proliferation in Scotland of different agencies, different strategies, different documents, which is not necessarily wrong in and of itself, but in practice what we hear from the business community in Scotland is it's created a bit of a spaghetti junction that people struggle to navigate and negotiate when it comes to accessing public support," Mr Turner said. He added: "As a result Scotland is smaller than the sum of its parts, I think, so there is an opportunity to consolidate, to coordinate, and to start to deliver some of that value for money that is lacking." These consolidated funds should then be directed into "growth zones", a physical campus for innovation investment in Scotland's main urban areas. These zones should be governed by new Scottish combined authorities that would be "clearly attached and to leading that process". "This is based on something like that successful Manchester model that you will be familiar with, and it's not a substitute to cooperation with Holyrood and Westminster - all of that needs to go hand-in-hand, and that's why you need the shared strategy - but it provides a single locus of someone who can go out and champion the growth zone in greater Glasgow, broker deals with multinational companies alongside the trade minister at UK level and in the Scottish Government, in order to bring in that flagship investment," Mr Turner explained. And finally, there should be no complacency in protecting the advantages Scotland already has with its strength in university spin-outs and early-stage angel investment. "At a moment of striated public finances, now is not the time to reduce funding for universities or especially the funding for applied research and innovation and spin-outs that universities have been developing over the past decade," Mr Turner said.
The Herald Scotland
07-06-2025
- Business
- The Herald Scotland
Former Volvo chief says individualism is holding Scotland back
"Rather than inspire new thinking, we have to some extent romanticised this," he told the Creating the Jobs of Tomorrow conference in Glasgow. "The constant recycling of these great achievements risks being akin to having a picture of Bonnie Prince Charlie on the side of a biscuit tin. "It is now time for the next chapter in Scottish innovation to be written," he added, noting that the means are available to develop a highly-skilled workforce that will dictate which countries fare best economically in the years to come. Read more: 'We need to educate young people not just in the technical tools and the business skills of tomorrow, but the basic building blocks of how to work effectively together to build a culture of shared prosperity," he said. "Individualism, digital nomads, scrolling as a form of entertainment [and] working from home has all torn the fabric in the cultural collaboration, and we need to amend this.' Originally a mechanical engineering apprentice at Tate & Lyle in Glasgow, Mr Rowan switched into the technology sector when he joined Digital Equipment Corporation in Ayr in 1986. He went on to hold chief operating officer roles at both BlackBerry and Dyson, and was chief executive of Dyson from 2017 to 2020. Despite all the current geopolitical turbulence and uncertainty, he said it remains his firm belief that "fantastic opportunities" lie ahead for companies and countries that find ways to invest in the key talents and technologies of the future. 'The combination of high computational silicon, artificial intelligence, low latency cloud connectivity and energy security will provide the foundations to accelerate growth and prosperity we have never seen before," Mr Rowan said. "I would go as far as to say that what happens in the next five years will define the industrial and the military landscape for the next 25 years.' Mr Rowan added that this constitutes a "potent cocktail" designed to Scotland's advantage that can enable a "new wave of prosperity for our country". 'To bring this vision alive, we need to be able to get our young talent to embrace these opportunities and engage in the journey, a journey that can create something long-lasting and future-proof for the next generation," he said, but added: "Many of our young people today are out of practice with what it takes to be successful on the global stage."
The Herald Scotland
07-06-2025
- Business
- The Herald Scotland
Lord Sainsbury: Give Glasgow greater devolved powers
"A major challenge which government faces if it wants to increase Scotland's rate of growth is a way to find and support such clusters," he said. "All the evidence from other countries suggests that the only way to effectively support clusters is to do so at a city region level. Read more: "I appreciate in Scotland, unlike in England, metro mayors have not yet been introduced, but if you want to support high-tech clusters, this is something I think you should seriously consider, with Greater Glasgow being given powers similar to those devolved to Greater Manchester and the West Midlands." Lord Sainsbury was speaking at the Creating the Jobs of Tomorrow conference organised by Glasgow Chamber of Commerce, where he was introduced to the stage by former Labour chancellor and prime minister Gordon Brown. Mr Brown said growth and productivity have been perennial problems in the UK and Scotland, with innovation the key to boosting performance. A new study by economist Dan Turner, head of research at the Centre for Progressive Policy, has suggested this could unlock the creation of hundreds of thousands of high-value jobs. "There are huge sources of innovation and inventiveness in Scotland, just as has been traditional in our history," he said. "The question is can we turn that into scalable companies that stay in Scotland, invest in Scotland, create jobs in Scotland, and Dan's study suggests we could create 300,000 jobs in the next 10 years. "That's 300,000 well-paying jobs, 120,000 in the new industries, the spin-offs in terms of the service sector another 180,000 - that is a possibility if we invest in the infrastructure, the skills, and the development necessary to achieve that." Lord David Sainsbury (Image: Nate Cleary) Lord Sainsbury is a Labour peer and served as minister for science and innovation under Mr Brown and his prime ministerial predecessor, Tony Blair, between 1998 and 2006. He was appointed a life peer in 1997. Lord Sainsbury said there are new opportunities for employment and growth in sectors such as quantum computing, artificial intelligence and biotechnology. "There are economists that will argue that it is investment that is the engine of economic growth, but we have to realise today that capital flows easily around the world, and it flows as it has always done, to where the best investment opportunities are created by innovation," Lord Sainsbury said. "You can sit in London today and you can invest in Silicon Valley, you can invest in practically any country - until recently you could even invest in Chinese venture capital - because that is what modern communication enables you to do. That is why investment is not the real driver of the economy, it's innovation." Among the other speakers was Michael Spence, who won the Nobel Prize in Economics in 2001 for his work in the analysis of markets with information imbalances. Read more: "There are two things that [people] associate with Adam Smith correctly," Mr Spence said. "One the 'invisible hand', which is the market system is a reasonably efficient tool for decentralising and allocating resources. "That actually is not the most important thing that Adam Smith said, but it's the one that neo-conservatives remember because they elevate market systems to the status of a religion, rather than a way of accomplishing economic and social goals. The most important one for our purposes is specialisation. "Adam Smith meant specialisation within an economy, when of course everything that David Sainsbury talked about in the global economy is just the Adam Smith insight writ large, and of course it is the ultimate source of growth. "Without specialisation you don't get scale of spread your activity over too much territory, and you don't get innovation. You get nothing if everybody has to do everything. "The fundamental message I want to deliver today is that's still true, and that growth is fundamentally about specialisation and structural change."
