Appendix 5: VISIT TO SCOTLAND
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
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).
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.
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.
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,
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.
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
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
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.
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
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
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
19. Members then met Professor David Gani, SHEFC's
Director of Research Strategy and Policy. He made the following
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
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
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.
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
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
66 Scottish Enterprise subsequently submitted written
evidence to the Inquiry (see page 312 of Volume II). Back
See Chapter 8 of Chips for Everything: Britain's opportunities
in a key global market, 2nd Report Session 2002-03, HL Paper
The RSE's President, Lord Sutherland of Houndwood, was detained
in London on Parliamentary business and had sent his apologies
The RSE subsequently submitted written evidence to the Inquiry
(see page 310 of Volume II). Back
BIA Scotland subsequently submitted written evidence to the Inquiry
(see page 249 of Volume II). Back