Select Committee on Science and Technology Fifth Report


1.  To help understand the issues arising from the Inquiry into the recently established RDAs in England, members of the Sub-Committee visited Scotland on 6 and 7 February 2003 to see how essentially the same matters were handled by the longer established Scottish Enterprise[66] and its partners.

2.  The visiting party comprised Lord Patel (Chairman of the Inquiry), Lord Freeman, Lord Methuen, Lord Mitchell, Lord Oxburgh and Lord Thomas of Macclesfield. They were supported by the Specialist Adviser to the Inquiry (Dr Marilyn Wedgwood), Clerk (Mr Roger Morgan) and Assistant Clerk (Mr Gordon Baker).

Scottish Enterprise

3.  The party was welcomed to the headquarters of Scottish Enterprise in Glasgow by Mr Charles Woods, Senior Director, Knowledge Management, and Dr Janet Brown, Director of Competitive Business, Science and Commercialisation Initiatives. They explained that Scottish Enterprise was formed in 1991 by merging the former Scottish Development and Training Agencies. Its remit covered lowland mainland Scotland, and 93% of the population. (The remainder was the responsibility of Highlands and Islands Enterprise.) Many of Scottish Enterprise's skills responsibilities — and it had recently taken over responsibility for the Scottish careers service — were exercised through 12 wholly-owned Local Enterprise Companies.

4.  The general direction of Scottish Enterprise's strategy was set by the Scottish Executive via the Department of Enterprise, Transport and Lifelong Learning. The agency worked closely with Scottish business, academic institutions, local councils and the Scottish Higher Education Funding Council (SHEFC). It acted mainly as a catalyst and facilitator for long-term structural change by helping to create an atmosphere conducive to higher-value investment and fostering working partnerships to maximise Scottish resources and talents.

5.  80% of Scottish Enterprise's annual budget of some £500 million came from the Scottish Executive. Although EU funding had been of great benefit in developing and regenerating Scotland over the years, and was being actively pursued in Brussels, it currently provided less than £20 million of the total annual budget. Although difficult to quantify, the agency aimed to leverage substantial funding from other sources.

6.  Key problems for Scotland and the agency included the decline of traditional industries, population migration, graduate retention, an ageing workforce, shortage of modern skills, and the need for urban regeneration and improved communications. Although Scotland had excellent universities and strong research, this was not matched by the industrial base. To help counter this, the agency pursued cluster development programmes focussed on biotechnology, optoelectronics, microelectronics, energy, food and drink, forestry products, tourism and creative media.

7.  A complementary and new initiative was the establishment of Intermediate Technology Institutes (ITIs) focused in the three areas of energy, life sciences and communications/digital media markets where Scotland had acknowledged strengths. Run in collaboration with industry and academic institutions, these would be hubs for commissioning and supporting pre-competitive research in anticipation of future market opportunities.

8.  Other significant Scottish Enterprise initiatives related to science, technology and innovation included:

a.  a £30 million Proof of Concept Fund to support early-stage R&D and underpin its rapid commercialisation;

b.  Enterprise Fellowships, run jointly with the Royal Society of Edinburgh (RSE), to back up to 80 academics in forming spin-out companies;

c.  Project ATLAS to improve digital connectivity and other e-business links throughout Scotland; and

d.  a portfolio of funding schemes to encourage innovation by SMEs.

Scottish Executive

9.  Mr Andy Bishop and Mr Tom Tumilty, of the Science and Higher Education Research Team in the Scottish Executive's Department for Enterprise, Transport and Lifelong Learning, briefed the visiting party on the Scottish strategy for science. The first milestone had been the Executive's January 2001 A Science Strategy for Scotland, developed over two years, with the assistance of a professional advisory group. This now provided the general framework for SET matters.

10.  To help fill out that framework, the Executive had established the Scottish Science Advisory Committee in May 2002. To underline the Committee's independence, it operated under the auspices of the RSE. The Committee's challenging remit for its first year was to advise on what the science priorities should be in Scotland.

11.  Not all science responsibilities had been devolved to the Executive: the Research Councils still operated on a UK-wide basis. In addition to the Executive's explicit science programmes, significant contributions to scientific development in Scotland also came from education policies and from spending by other bodies such as the NHS and the Scottish Agriculture and Fisheries Agencies. To help monitor all these interrelationships, senior officials met regularly in a cross-cutting science group.

The Alba Centre

12.  On the afternoon of 6 February, the party visited the Alba Centre at Livingston. Members were welcomed by the Director, Neil Francis. He explained that the Centre had been established in the late 1990s on land purchased by the Scottish Executive and was run as a joint venture campus with a commercial developer. Strategically located close to leading universities and high technology companies in "Silicon Glen", it was intended to generate a critical mass of electronic design specialists and facilities with the vision of developing Scotland as a world centre of microelectronic product design and technology.

13.  Among the Centre's core activities were the Virtual Component Exchange, the Scottish Embedded Software Centre and a microelectronic test centre which were providing advanced design, product development and IP services to companies within Scotland and beyond. The Centre was also an incubation centre: Convergent Technologies had been recently set up there as a joint venture between Scottish Enterprise and Medical Marketing International to commercialise parallel biotechnology and electronics research.

14.  Another key component of the Centre was the Institute for System Level Integration (ISLI). The Chairman of the ISLI Board, Ron Dunn, explained that this was a joint venture between Scottish Enterprise and four Scottish universities (Edinburgh, Glasgow, Strathclyde and Heriot-Watt). The initial emphasis had been on providing professional development through MSc courses in system level integration, an engineering doctorate in electronic design and professional development courses in systems integration and semiconductor engineering for full-time, part-time and distance-learning students. Courses were run in partnership with industry. The doctoral students were all sponsored by companies, not all of which were Scottish-based, and spent half of their time doing research for those companies. 75% of the MSc students were from overseas.

15.  Alongside these courses, ISLI was also building up its information, test and research services — all of which were helping establish its international reputation. ISLI recognised the need to broaden the base of its activities yet further, and welcomed the opportunities flowing from the recommendation for a UK-wide institute for System-on-Chip design arising from the Select Committee's recent Inquiry into innovations in microprocessing[67].

Royal Society of Edinburgh

16.  The RSE hosted a dinner on 6 February to enable the party to meet Fellows of the Society and members of the Scottish Science Advisory Committee. In welcoming members of the visiting party, the RSE's Vice-President[68], Professor Andy Walker, noted that RSE membership was not (like the Royal Society of London) limited to scientists but was drawn from those pre-eminent in all aspects of Scottish life. The RSE was therefore well-placed to observe the interface between science and the economy[69].

17.  During a round-table discussion, the following main points were made.

a.  It was useful that the Scottish Executive had a single Department covering enterprise and HE, but there was a long way to go before there was an integrated strategy. The Scottish Science Advisory Committee was still in its early days, and had not yet addressed the relationship between the science base and the economy.

b.  The different horizons of development agencies on the one hand and universities and research institutes on the other meant that they were not natural bedfellows. Mechanisms were needed to encourage joint working. One opportunity arose from the absence of a strong pull on the science base from Scottish industry, although it was not yet clear whether the ambitious new Intermediate Technology Institutes would deliver all that was expected.

c.  The Scottish Enterprise Proof of Concept scheme was seen as valuable in helping ideas get to the stage of securing IPR (the management of which, as elsewhere in the UK, was not without complications) and the next stage of funding.

d.  Turning to schemes operated by RSE with Scottish Enterprise funding, the Enterprise Fellowships were valued as helping to generate a greater enterprise culture. However, these did not cover overheads and, although prestigious, thus required subsidy by the universities. The Technology Ventures scheme was also valued.

e.  Although Scottish Enterprise and its predecessors stretched back over much longer than their English counterparts, the initial aim had been to attract inward investment. Experience of stimulating home-grown enterprise was rather less. It was important for Scottish Enterprise and the Executive to recognise fully that innovation involved real risk and was, in any case, hampered by bureaucracy which should be kept to the absolute minimum.

f.  It was also important to recognise the Executive's and the development agency's roles in stimulating the science base through education and training at all levels.

HE perspectives

18.  In the first of three meetings held at the RSE on 7 February, Professor John Archer, Principal and Vice-Chancellor of Heriot-Watt University and Convenor of the Universities Scotland Research and Commercialisation Committee made the following main points.

a.  Scottish universities had emphasised the importance of being embedded within the wider UK research community. Dual funding from the UK Research Councils and the Scottish Executive should continue.

b.  Scottish companies only spent half the UK average on R&D. Some multinationals spent too little on research in Scotland and, through the Technology Ventures scheme and otherwise, should be encouraged to do more.

c.  The Proof of Concept Fund was particularly valuable in bridging the gap between early research and the stage when the results were likely to attract commercial funding. But venture capitalists still tended to be too risk averse, and market uncertainties were extending the proof of concept threshold.

d.  The ITIs were a potentially significant initiative, particularly if they could attract EU funding. However, it was not clear how they would work and, particularly, how research agendas would be tailored to market needs and national priorities.

e.  The performance indicators set for Scottish Enterprise tended set too much store by numerical targets (e.g. numbers of jobs or start-up companies created), rather than assessing the value of activities.

f.  Scottish university knowledge transfer offices were improving their capacity to identify and support research with commercial potential, but IP management was a particularly critical area.

19.  Members then met Professor David Gani, SHEFC's Director of Research Strategy and Policy. He made the following main points.

a.  Scottish Enterprise had improved its capacity to evaluate projects and had developed potentially valuable initiatives, such as the Enterprise Fellowship Scheme and the Proof of Concept Fund. But the latter did not cover university overheads which could be a serious obstacle to developing successful R & D.

b.  University research should be the engine of economic growth. Smaller universities should consider more pooling of research expertise within and beyond Scotland.

c.  SHEFC had some scope for helping to develop the Third Leg (commercialisation of university expertise), but not all research had economic potential and good academics were not necessarily commercially-minded. Tensions over the relative priority to be given to research, teaching and commercialisation were difficult to resolve.

d.  Universities should try to develop best practice guidelines for managing IP. Development agencies could help to stimulate this.

e.  The new ITIs were intended to bridge perceived gaps between Scottish HE and commercial activity. They should be able to provide useful research that smaller companies could not afford. However, it was too soon to say whether the Institutes were being set up on the right lines or being given appropriate funding.

f.  Some developments had been hampered by the difficulty of disaggregating reliable Scottish data from UK statistics. The Scottish Scientific Research Index should provide a useful database to guide policy.


20.  Finally, members met Dr Barbara Blaney, Director of the recently opened Scottish Office of the BioIndustry Association[70]. She made the following main points.

a.  430 organisations (including 51 research establishments) in Scotland had been identified as being involved in biotechnology and life sciences. There was great potential in the sector, and the UK had a significant lead. However, sustainability was a critical issue: product development lead times were long and the failure rate was high.

b.  Adequate development finance was hard to come by, especially for smaller businesses. Venture capital tended to be London-based. Scottish Enterprise could play a valuable part in pump-priming biotechnical research, encouraging collaboration and helping to harness research and commercial capacity with longer-term finance.

c.  Most Scottish institutions were still not realising the full potential of their IP. In particular, NHS trusts generally had a lot to learn in this field. More coherent strategies needed to be developed for managing and exploiting that potential.

d.  Scottish Enterprise had consulted widely in the initial preparations for ITIs, but appeared to have drawn up most of the detail in-house. If the potential of the ITIs was to be realised, the wider community should urgently be re-engaged in the initiatives.

e.  HEIs needed to be more responsive to the needs of business. Many researchers were still culturally averse to commercialisation. Some university commercialisation units lacked adequate expertise and tended to reinforce the barriers between researchers and the commercial sector. A priority for Scottish Enterprise was to help engender a more effective approach.


21.  Members endorsed the Chairman's thanks to Scottish Enterprise, the RSE and all those involved in the various sessions for a valuable insight on the Scottish experience which would greatly assist the Inquiry's consideration of the situation in England.

66   Scottish Enterprise subsequently submitted written evidence to the Inquiry (see page 312 of Volume II). Back

67   See Chapter 8 of Chips for Everything: Britain's opportunities in a key global market, 2nd Report Session 2002-03, HL Paper 13-I. Back

68   The RSE's President, Lord Sutherland of Houndwood, was detained in London on Parliamentary business and had sent his apologies  Back

69   The RSE subsequently submitted written evidence to the Inquiry (see page 310 of Volume II). Back

70   BIA Scotland subsequently submitted written evidence to the Inquiry (see page 249 of Volume II). Back

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