Scottish Development International (Strategy)
I welcome Sir Ian Robinson, who is the chairman of Scottish Enterprise, along with Neil Hood, who is the deputy chairman, Robert Crawford, who is the chief executive, and Martin Togneri, who is the senior director of international operations. The purpose of this morning's session is to discuss the international development strategy. I ask Ian Robinson to introduce the item.
Sir Ian Robinson (Scottish Enterprise):
Good morning, ladies and gentlemen. I am delighted to welcome you to Scottish Enterprise's new headquarters. I thank the committee for giving us the opportunity to present evidence on our global connections strategy and on our activities to establish Scotland as a major player in the global economy. The topic is important and we are pleased to give evidence.
I want to say a brief word on each of the witnesses. Neil Hood, as well as being deputy chairman of Scottish Enterprise, is a recognised authority on the Scottish and global economies and international business, so he will be helpful. The committee knows Robert Crawford well. He is doing a terrific job of running Scottish Enterprise. Martin Togneri, as the committee knows, is charged with the implementation of Scottish Development International. He has an important place. I hope that we can all add value to the discussion without getting in one another's road.
Martin Togneri will begin by introducing Scottish Enterprise's involvement in the global connections strategy and the role of Scottish Development International. We will all participate in the question-and-answer session.
Martin Togneri (Scottish Enterprise):
As the chairman said, I will explain Scottish Enterprise's contribution to the global connections strategy. Last winter we updated and unified the strategy for all our international activities. Meanwhile, our minister—Wendy Alexander—said that, later in 2001, she would publish a global connections strategy to expand on the international dimensions of "A Smart, Successful Scotland". Those go beyond our activities. For example, they also cover the work of VisitScotland. Our revised strategy was adopted by the Scottish Executive as a key contribution to the broader global connections strategy that was published last October.
I turn to the strategy itself. Our past approach to international economic development focused almost exclusively on inward investment and exports. That yielded good results for the 1980s and 1990s. However, the world has changed dramatically. In particular, the fundamental role of knowledge in creating sustainable regional economic growth has become ever clearer and we have seen a rapid acceleration in the pace of globalisation.
We now need an approach that is based on the better exploitation of knowledge in the context of accelerating globalisation. Instead of focusing only on supporting Scottish exports and attracting investment into Scotland, we need to support the export of Scottish knowledge out into the world and attract the world's knowledge to Scotland.
Looking first at getting Scotland's knowledge out, we acknowledge that exporting is one of the key ways that that happens. However, we also need to help Scottish companies to use deeper forms of internationalisation, such as technology partnerships with foreign companies or making their own overseas investments.
That has a critical connection to our business birth rate strategy. Accelerated globalisation means that many new companies must be international players from day one. Increasingly, we find that we are working with much younger companies than ever before.
We also need to work on the outward agenda with our universities in order to help them to commercialise their intellectual property and research capabilities overseas as well as at home.
On bringing the knowledge in, we will change our inward investment focus to target research and development projects as well as the more traditional types of inward investment. That highlights another critical link with our work in skills and training. Winning knowledge-intensive inward investment depends upon us having the talent that new investors need. Without a skills strategy that is closely aligned with the needs of the global connections strategy, that would be difficult to achieve.
We will also go beyond inward investment and seek new ways to bring overseas knowledge into Scotland. We will work with foreign companies and universities to help them to license their technologies to Scottish companies. We will engage people from overseas who have key skills and persuade them to come and work in Scotland. We will work to bring technology investments in Scotland to the attention of foreign venture capital firms.
We have had to change our structure in order to implement the new strategy. In particular, we have merged our overseas operations—the separate sales forces of the former Locate in Scotland and Scottish Trade International—into a single integrated field sales force. Instead of tackling the Intels of the world via two separate field teams, we will engage them using single account executives. Their job will be to bring the best of Scottish knowledge to bear on helping their clients to our mutual advantage.
When you think about it, companies like Intel are not only potential inward investors or buyers of exports. They also license technologies from elsewhere and license their technologies out. They place research contracts with universities. They invest in other companies. There are many ways in which we could work together but we would never find out what those ways might be if we carried on tackling those companies by using one sales force to persuade them to build factories in Scotland and another to persuade them to buy our exports. It is only by getting such companies to share their strategy with us, and working out how Scottish knowledge can help them to implement that strategy, that we will be able to conduct the most productive relationship with them.
Our domestic activities are also important and I will highlight three of them. Our trade team helps Scottish companies to start exporting or to enter new export markets. Our international business development team helps Scottish companies with deeper forms of internationalisation. Our international networks team builds networks of senior Scots and friends of Scotland around the world in order to harness their willingness to help us.
We have also updated our branding to reflect the new strategy. The names Locate in Scotland and Scottish Trade International no longer describe adequately what we do. They give clients the mistaken idea that we are interested only in inward investment and exports. Indeed, there is increasing anecdotal evidence that those names worked against us.
First, two names is one too many. Secondly, why should the chief technology officer of Toshiba, for example, see an organisation called Locate in Scotland when what she really needs is a new voice recognition technology and she does not want to locate new operations anywhere? We would be doing Scotland no favours if we did not see her because our name gave her the wrong idea of what we were trying to achieve. We have therefore chosen a single new organisation name—Scottish Development International—which best describes the new broader agenda.
As we move away from simply promoting Scottish exports or the location benefits of Scotland, our staff will need greatly improved strategic sales and marketing skills and product knowledge. Helping them to develop those skills and knowledge will be among our highest priorities for the year ahead.
Thank you, Martin. That was very helpful, as was the paper that has been circulated, which is much appreciated. I will use the convener's prerogative to kick off the questioning. In the old days, or the pre-SDI days, it was easy to measure the success of Locate in Scotland, as that was measured in jobs. STI was evaluated in terms of new exporters and the level of exports. To some extent, those are still relevant measurements. Taking into account technology transfer, knowledge transfer, the use of e-commerce and other aspects of globalisation, what are the key measures of success now? If we were to ask you to tell us about the success of the global connections strategy a year from now, on what key criteria should we judge that?
Like the other parts of the economic development network, we are subject to the same target-setting process which, through the joint performance team, leads into Scottish Enterprise's balanced scorecard. That work is being done now.
Although I cannot be specific at this stage, we would expect there to be additional measures that would reflect the new breadth, including the share of inward investment that is related to research, design and development; the share of the jobs created through inward investment that are above a certain salary level—which is a proxy for a measurement of the quality of a job; the number of companies that have created strategic internationalisation plans with our support; and the number of people who have come to pursue semiconductor design careers in Scotland through our technology talent pool initiative. Those are examples of measures that, although they may not specified in the operating plan, are likely to be added to it in the future.
Has the Scottish Executive set specific targets for you to achieve year on year?
Aside from the measures, the targets would be determined through the joint performance teamwork that is under way.
You touched on the issue of people and skills. One of my concerns in that area, which has not received as much attention from any of us as perhaps it should have done, is the prospect of a population drop. One forecast shows that the population of Scotland could go down as low as 3.8 million by 2065. I am not expecting you to come up with a solution to the problem of depopulation, but that entails a decrease in the percentage of the population that is of working age, which, in turn, affects the availability of the skills that we need to succeed internationally. Could you say a word or two about that?
Robert Crawford (Scottish Enterprise):
That is a huge question. The global connections strategy will not itself address what is a demographic time bomb. However, aspects of what the strategy seeks to do include the attraction to Scotland of people who may want to come here because of a particular technology, institution or relationship that they regard as important. That requires a wider set of engagements from Scotland—in other words, Scotland being a competitive place. People may want to come to Edinburgh, for example, because a certain job or relationship is there, but also because it is a good place to live and work. There are measures of competitiveness value that all countries are now considering.
The broader question covers issues that are fundamentally controversial, including the encouragement of immigration and the establishment of a green card system for graduating students, both of which I think are being considered. It would be dishonest to pretend that our contribution to the strategy is, by itself, remotely close to being enough to address what is already a demographic time bomb. I agree that it is an important issue facing the country.
The strategy, as I understand it from briefings and from reading it, is first class. The guts of it deal precisely with where we need to go.
I have several questions. I refer specifically to the point that Martin Togneri made earlier. This is a question with which I am wrestling, and I am keen to hear what he thinks, given his experience in inward investment. Is there a contradiction between an employment target, which was contained implicitly and explicitly in the inward investment strategy, and a growth target? Employment is a symptom of the core issue of growth, which is the fundamental question in the Scottish economy. Is there a contradiction and, if so, what do we do about it?
I focus secondly on growth. For ease of exposition, if growth is profits plus salaries, what is the balance? What is being done in the strategy to attract more profits than salaries, which we attracted in the past? What are the witnesses' views on getting headquarters functions embedded and on how they can get companies to do more in Scotland that is sustainable in the longer term?
My next question—I am trying to get them all in at the one time—is on international links. Scotland is already relatively exposed internationally, which brings ups and downs. There are obviously downs in the current climate. Do we have a target share, or even a sense of what share of the economy should be exposed internationally? What would be the optimum? There is probably no right answer to that question, but I would like to hear Scottish Enterprise's view on where we are going. Within that question, what are the witnesses' views on the risk spread in exposure to different sectors and different marketplaces? In the past 15 years, we have, by our nature, been heavily at fault—I do not refer to anyone individually—in being overly exposed in one or two sectors.
Finally, what are the core constraints beyond Scottish Enterprise's remit, in which it is working admirably just now? For example, on the macro-environment, is the issue of the euro causing difficulties? If so, should we, as a group of organisations in the public sector in Scotland, take a collective view on it? What constraints are there in macroeconomic policy? Does Scottish Enterprise even analyse that? If so, how do they respond to the constraints? Are any constraints within UK trade policy putting us at a competitive disadvantage?
I think that that is enough for one question, Andrew.
That was three or four questions.
That was the first leg.
We are okay. The witnesses have written them down.
I thought that there were about 30 questions, but they raised good points. Perhaps Neil Hood could start by answering the question about growth versus jobs and some of the macro issues. Martin Togneri can deal with some other points and Robert Crawford can wrap up.
Professor Neil Hood (Scottish Enterprise):
PhDs have been written on less, Andrew. I will be crisp, because your questions contained important issues. We should remind ourselves that, although there is a degree of tension between employment and growth, historically in inward investment we captured early steps in Europe. Historically there was a lot of growth in those waves of inward investment. About one third of that investment in manufacturing over quite a long time was the first entry to Europe by American companies and others.
In some senses that has almost seduced us to expect a level of ramp-up that will not happen. We should not play down the situation. For the United States, the UK might still be an important first step into Europe. That is why the strategy does not bin inward investment. It wraps round and takes a more mature and better-developed approach to the way forward.
We see headquarters function as central. It is absolutely critical that we ensure first that there is the kind of environment in Scotland that makes indigenous businesses want to have their headquarters here. In addition, ancillary support and regional headquarters for other types of businesses might be located here. Those two aspects are connected to the overall work of the committee. Scotland has to be the kind of place in which businesses will want to develop. I refer to our own businesses as well as to foreign business, which is associated with that.
There is the prospect that attracting business that is higher up the value-added chain might give us more growth, but the matter is not as simple as that. There was an enormous ramp in the early stages of companies developing personal computers for Europe in Scotland and great growth was associated with that.
I will touch on a second point before, as the chairman directed, Martin Togneri comes in. I am not sure that we know what the optimum international exposure is. It depends on how we measure it. We could scarcely comment on a more open economy than that in Scotland one way or another. Although our economy is highly internationalised, we have not yet captured the economic development that internationalisation provides in some parts of it. The specific example of that is universities, which form one of the most internationally oriented institutions in Scotland. They have all kinds of connections with research contracts and a bundle of related activities. One of our major challenges is to capture some of that as part of the global connections strategy.
I will try to address some of the points that Neil Hood did not cover. An important issue is salaries versus profits. The issue of how the global connections strategy can contribute to the generation of more profit in Scotland has less to do with the inward element of the agenda and more to do with the outward element. The main point is how we can help Scottish companies to become more competitive. Profits and salaries accrue to people who are resident in Scotland and the degree to which they are Scottish profits depends on whether the companies are owned by Scots. That is related to the issue of whether companies are publicly or privately owned. I am not sure that I can give you a specific answer.
The outward element of our agenda, in so far as we help Scottish companies to become more competitive internationally, should generate more profit as well as higher salaries. The change in focus in our inward investment effort more towards research, design and development should also improve salary levels for people working in such companies.
One of the misconceptions about being heavily dependent on inward investment in the 1980s was that there was a certain choice of sectors to target. Possibly we were choosing the wrong sectors to target, because we ended up getting a lot of electronics inward investment. However, the choice of sectors is actually very limited. In relation to the inward investment strategy, we have to choose the sectors in which there is a high demand from foreign companies for overseas locations.
For 15 to 20 years there have been three big sectors looking to inward investment—electronics, automotives and chemicals. We were strong in electronics, chemicals tended to have a high proportion of mergers and acquisitions in its foreign investment and we were not strong on automotives. Therefore, our inward investment strategy was heavily dependent on electronics. A broader international strategy that is less dependent on inward investment, such as the one that we are proposing, gives us the flexibility to consider a wider range of sectors and not just as inward investment targets.
At a recent Scotland International business event, Sir Ian Robinson and I heard the chief executive of a major global corporation say that he did not think that headquarters functions mattered. I could not disagree more with that point. The location of headquarters function—indigenous, regional and international—is fundamental and important for a variety of reasons. Our economy is weak in marketing skills, partly because we have a low level of headquarters function in Scotland.
We are interested in macroeconomic policy and we pursue it mainly through Charlie Woods's team. We will discuss that later. We do not have an independent model and I do not think that we need one. The key element of our strategy is its connection to other aspects of Scottish life. The bias of the strategy presumes that foreign engagement should support and extend indigenous enterprise and institutions, rather than taking the form of inward flows of investment. The bias is linked into the Scottish economy.
I did not answer Alex Neil's question on the numbers because it is difficult to measure. The strategy is pretty radical—I have not heard of anyone else doing this. However, we do not have any choice. The events of the past six to nine months demonstrate the significance of our approach. As the previous witnesses mentioned, we have to have a long-term, no-panic strategy. We might get it wrong in the first few years, but we must pursue and develop it.
Are there any macro constraints, such as the euro trade policy, that we should be aware of?
There are a variety of trade-related issues, such as the growth of the World Trade Organisation, the impact that China is having on the Asian regions in sucking in investments that were previously going elsewhere and the implications for Scottish businesses engaged in world markets.
There are always other macroeconomic restraints. At the moment the euro is not one of them, but it might become so. Businesses across Scotland and the UK are sending mixed messages, which reflect different experiences of being able to hedge and so on. As far as I am aware, for many of our customers that does not represent a constraint on flows of investment into the country or on engagement in foreign markets.
My question is a little more homespun. What proportion of your budget is being deployed on funding an international development strategy?
The funding is in two parts. Scottish Development International spends about £15 million. To return to what I said earlier, more is spent on supporting international engagement through the provision of, say, science parks, business incubators or the cluster strategy, which have a built-in international dimension. That expenditure, the purpose of which is to support Scottish businesses, will grow rather than diminish.
If your question is what specific amount do we spend on our international strategy, the answer is £15 million.
I want to return to the questions on monitoring and evaluation. The Scottish Executive's document "Scotland: a global connections strategy" mentioned the joint performance team. I am not clear how you interface with that team—is someone from Scottish Enterprise on the team? How many meetings have been held to discuss measurement and evaluation?
Charlie Woods represents Scottish Enterprise on the joint performance team, which is chaired by Dr Goudie, the chief economist. I think that the joint performance team meets monthly, although I might be mistaken. To return to the convener's question, the team's output will be reflected in the output measurements that we will introduce in the forthcoming financial year.
It would be helpful to know more about what those measurements are.
If it is appropriate, we will share that information with you in the informal session. We will happily give you more information, if you would like.
Is it not appropriate for that information to be in the public domain?
It is in the public domain. It has been published on our website.
From a broad perspective, we examine the targets monthly. That is not a direct answer to Annabel Goldie's question. We are very output and delivery orientated. We have introduced specific twice-a-year sessions with the press and other opinion formers at which we go through progress against our targets and outputs, so that there is as much transparency as in a public company.
I am perplexed about the board making a judgment on budget allocation. Fifteen million pounds might be a paltry sum—perhaps the amount that is devoted to Scottish Enterprise's international strategy should be increased vastly. I do not know how the board can make a judgment on priority spend, unless it has some idea about what all the work in this area achieves.
The board met here on Friday and spent a long time on budget, budget allocation and priorities. Clearly, there is a lot of history associated with where money has been spent and where good returns have been achieved. In my view, the agenda in the 21st century is different to the agenda of the 1990s, which is why the strategy of Scottish Development International is different.
A discretionary spend is left with the chief executive, subject to board approval. We need to put in extra emphasis to obtain the outputs. The £15 million is the bald lump sum. As Robert Crawford said, we are working around sustaining the strategy in several areas, such as technology and cluster development. The board is satisfied. We are spending the appropriate sum in a new venture on the Executive's recommendation. That venture has been given a huge emphasis and a huge push. If the chief executive needs to add something, he has some discretion to do that—although if he does, something else in the budget will have to give.
I will clarify some points so that members are left in no doubt. Martin Togneri controls the Scottish Development International budget of £15 million. The total sum that is spent on global connections—including clusters, infrastructure support, buildings and so on—is £92.6 million. The outputs are published each year and are in the public domain. The board gets a monthly report on performance output and, at the chairman's insistence, we publish performance details biannually in the same way that a public or private company would do. That means that, through the year, people are able to judge whether we are hitting our targets.
Scottish Enterprise's submission was an interesting read and its appendix contains information that helps with the case that you are making.
What does the fact that 63 per cent of Scottish exports are to Europe mean for the way in which you take the strategy forward? Is that percentage changing? Is it evolving in relation to certain sectors? I have a perception that the United States of America is an important market in relation to this matter.
Digital connectivity is an awful word.
Two words, actually.
Indeed.
At the weekend I saw a table from the Organisation for Economic Co-operation and Development, which showed that the UK was 22nd out of 30 developed countries in relation to digital connectivity. That is not based on a Scottish figure, so it would be helpful if you could talk about what the Scottish breakdown might be. The OECD also said that, in France, 320,000 businesses were broadband users, while the UK figure was low. I appreciate that the Executive has announced the pathfinders initiative, which is relevant, but I would like to know how you are addressing that issue.
I visited Compaq yesterday in an attempt to find out what that company is doing in relation to its future in Scotland. The company's research and development department is in Houston and I was told that it would not move from there. Am I right in thinking that, earlier on, you said that Scotland could tap in to that research and development work through academia generating ideas in Scotland that could be delivered under international licence arrangements?
Before our witnesses answer that question, I remind members that, in order to have only four witnesses instead of five, we agreed with Scottish Enterprise that digital connectivity would be dealt with mainly in a later session that would deal with the implementation of the new economy report.
I had forgotten that.
Our witnesses are welcome to answer Tavish Scott's question, of course.
My wrist is duly slapped, convener.
Martin Togneri will answer the question on Europe and the USA, Robert Crawford will deal quickly with digital connectivity and Neil Hood will talk about research and development.
At present, 63 per cent of Scotland's exports go to the EU. We expect a modest change in that situation, the biggest cause of which will be the entry of the accession countries. That will push the percentage of our exports that go to the EU to about 65 per cent.
The sectoral make-up changed dramatically in the early 1990s when electronics, computers and semiconductors overtook whisky as the biggest component of our exports. I am unaware of any major shifts on that scale since then.
The change in the percentage of our exports that goes to the EU will mean that the way in which we operate will change, in that Europe will become a more important priority for us during the three-year period of the global connections strategy. Countries are not priorities in themselves. That is one of the changes that I am trying to get across.
Our priority is to build our priority industries and we should devote the appropriate resources to specific regions or countries, given the balance of knowledge-in and knowledge-out opportunities for our priority industries in those countries. Having said that, it is quite clear that Asia should become a lower priority for us. We have already acted on that; over the past six months, we have shifted resources out of Asia to give us more flexibility elsewhere.
There are two reasons why we need to devote more of the available resource to Europe. The first is that we have historically underinvested in Europe because of the propensity to treat individual countries as priorities. Putting resource into India is the way to demonstrate that India is a priority, but the resource in India ends up being comparable to the resource in France, even though France takes £3.5 billion of Scottish exports and India takes £75 million of Scottish exports. You will see us shift more resource to Europe to try to redress the balance.
The other reason is that we will move to a more knowledge-based focus on our inward investment. Previous generations of inward investment were about market access. Compaq's plant in Scotland is to help its access to the European market. French and German companies already have that market access, because the market that people are accessing by inward investment in Scotland is the European market. However, as we move towards the research-and-development type of inward investment, the driver is not market access but access to skills. The skills are internationally mobile, so if Intel and NEC are short of semiconductor designers, you can bet your bottom dollar that STMicroelectronics, Infineon and the European semiconductor companies are short of them as well. For that reason, you will see a shift in our inward investment activities towards a greater focus on Europe.
I will say more about digital connectivity in the informal session, because our position on that is confidential and not in the public domain. However, there is a strong correlation between a country's digital connectivity and its competitiveness and, increasingly, that is being used as a marker by a variety of institutions and organisations. I did not recognise the fact that the UK is 22nd out of 30 countries with regard to digital connectivity, but I know that London and the south-east have far greater digital connectivity than the rest of the UK. Edinburgh and Glasgow are at the leading edge of the second group of UK locations, but the rest of the country certainly is not.
We have a proposal, which has been to the board and is now going to the market, to facilitate and accelerate business connectivity in Scotland, but, if I may, I will discuss that informally.
Tavish Scott asked an important question about the mobility of research and development, which is important to us. There are signs that research and development has become rather less centralised—I use those words carefully—over the past 15 years, but the major corporations are still inclined to do research and development in or near to their home country.
That connects closely to where we are, relatively speaking, in Europe. There is a so-called—I do not like this phrase—golden banana in Europe, which swathes across northern Germany and France and into the south-east of the UK, within which a high proportion of European research and development takes place. Major corporations are starting to recognise the labour markets' skills point and tap into university links, but much of that tapping in is virtual; it is done through corporate ventures, investment and research contracts. We are trying to capture more economic development from that. It is not an easy task, but there is the prospect of doing it, and there are trends that indicate that we are on to something that is growing.
My question follows on from what Neil Hood said. I was pleased to see the emphasis on "knowledge in" and "knowledge out" in Scottish Enterprise's informative submission.
Evidence that we have taken—not just in our lifelong learning inquiry but previously in our higher education funding inquiry—has mentioned the commercialisation of research and development. How do you see Scottish Enterprise's role in working with business and universities to help them? It came over to us strongly that Scotland has quite a good research and development base, but that the commercialisation of research and development has not been so successful. You talked about the exploitation of knowledge. What is your role in that, and how can you help?
We have a couple of schemes that are working well—the enterprise fellowship scheme and the proof of concept scheme, which we have expanded significantly. I would be happy to give the convener details of those schemes if required.
There is a strong relationship between the effectiveness of commercialisation and the competitiveness of the country. The logic of Martin Togneri's argument is that we need to do much better than we have done historically. With honourable exceptions, that is true of the whole of the UK. The exceptions are the Cambridges and the Imperial Colleges of this world. The problem is not specifically Scottish, but what is interesting is the extent of the opportunities in Scotland.
The board is considering—and will spend a full day later this month on the task—an ambitious proposal for a 10-year project to accelerate commercialisation of Scottish, and other, knowledge in Scotland. That project will involve a significant budget. We already have a facilitating and partnering role and we have increasingly good relations with the universities. In the project, we would have a lead role, but that role would pass in due course to public sector partners. Again, I would be happy to provide more detail on that.
I emphasise that, although the board has agreed to the project in principle, specific and highly detailed aspects still have to be worked out. We hope to do that this calendar year, because we are taking the project very seriously.
We all agree that we want a highly skilled and highly paid work force. How can we keep skills in Scotland and attract more skills to come in, within the strategy?
Our board and the Scottish Executive are much seized with the challenge of scaling up. What we do in commercialisation—with universities and others who want to come together to form innovative high-growth companies—is good, and is acknowledged as good. However, the challenge lies in scaling up by a factor of 10 or 20.
Anent all that, several schemes are needed in addition to what we are doing. That is reflected in the proof of concept scheme—which Robert Crawford mentioned—in innovation grants, and in thinking about seed funds, information on which we will share privily with the committee later. Scaling up requires us to think differently and more innovatively. We will undoubtedly have to skew more funds in that direction and "A Smart, Successful Scotland" is the classic framework in which to do that. If we had not had that strategy, we would have had to come and look for it. It is the right way to make progress.
I want to make a point about global connections. When we start to help small, high-tech, innovative businesses in Scotland, we find that many of them are almost born global. They have international connections from a stage at which it is far beyond their capability to be global. They need managerial help and advice, and they need to recruit the right teams. Global connections should not be seen as being at some high level; they are actually at a level that hits a lot of microbusinesses. What we hope to do in that regard is strongly linked to what the committee has been discussing, touching on indigenous growth and development.
There is a point that I would like to make in the public part of our meeting. We have heard some useful evidence and there has been an impressive outbreak of unanimity. I was impressed with the witnesses' submission.
If we are to have a stand-alone session, we will have to consider the format. I am not toadying excessively to this panel of witnesses. There are question-and-answer sessions, but we might all get added value from a discursive approach in a stand-alone session. Perhaps we can discuss that during the informal session.
I am interested in networking and the international networks that are referred to in the summary to the submission. We have to align effort to get the best results. We have key advantages because of our links to North America. Are we content that we are putting enough resources and effort into establishing links between universities in Scotland and universities in the States? How can we get the diffuse benefits of those connections?
Tom Devine at the University of Aberdeen is a very good example of someone who seems to be able to hoover up—if he does not mind my using that phrase—research moneys from American foundations and universities. To some extent, he does that by making them think that his institute is part of the North American network. How do you think we are doing in that area?
Our method of international networking is new. Plenty of economic development agencies around the world have said in the past—and say currently—that they network their expatriates and friends of their country abroad. In practice, they mean that they send them a quarterly newsletter and occasionally hold a cocktail reception for them at an embassy or consulate. We are talking about a different concept of networking—a sustained, resource-intensive effort.
I should make it clear what I mean by resource intensive. The £15 million that I will spend this year will support a total staff of just under 200 people. Four people based in Scotland are engaged full time on the networks. Part of the effort of each member of my sales force overseas is to maintain links with specific target members. Total spending on networking amounts to £200,000 per annum. The concept that we are seeking to develop is that of a web-linked network. We will create an incentive for Scots and friends of Scotland to participate by enabling them to use the web to share knowledge.
Brian Fitzpatrick asked what was being achieved, but the issue is how we capture that. Because the initiative is new, we do not yet know in specific detail all the things that it can achieve. The initiative was launched only in November, when we sent out invitations to the first 400 target members. Responses are now starting to come in. For example, the chief operating officer of Monsanto, who happened to be an initial target, has offered to host learning journeys for the biotechnology industry to his company. We did not go into the networking effort thinking that it would lead a chief operating officer to offer learning journeys.
We need to capture the offerings as they emerge. The initiative is focused on engaging people intensively, one on one, finding out what contribution they think they can make to Scotland and supporting them in making that contribution. We will learn as we go, but we are making extensive efforts to list the things that people say they are willing to do, so that we can act on those.
I have been an international person all my life. I have worked in 80 or 90 countries and lived on five continents, and I have never come across a country to which more good will was expressed than Scotland. That good will must be captured. Unfortunately, it relates more to traditional values than to 21st century values. The challenge is to preserve those traditional values.
When I was running ScottishPower, I used to visit Portland frequently. When we arrived there, we would be eight hours out of phase, but we would have to attend a reception at 8 o'clock—that is 4 o'clock in the morning UK time, so it was hard for us to keep our eyes open. We attended such receptions every two weeks, but on each occasion 80 or 90 people out of 100 would line up to tell us about their experiences of Scotland. Some had Scottish ancestors, whereas others had an interest in Scotch whisky, technology or golf. A significant number of key people in senior positions throughout the world have an interest in Scotland. Capturing that interest for our 21st century vision is a huge challenge, but the fact that it exists is a huge plus. We are in the early part of the journey. There is a great deal to come from senior people who have good will towards Scotland, as they have towards their schools and universities.
From that, can I take it that we are prepared to be as promiscuous as the Irish when we define what qualifies as a connection with Scotland?
We have a rugby team that does that pretty well.
As a member of the alumni club of digital worldwide, I should point that it includes not just expats and third or fourth-generation Scots. There is a great deal of good will towards Scotland.
Hence my question.
I am all for promiscuity.
I thank Ian Robinson and his team very much. Both their oral evidence and their written evidence were first class and much appreciated. We look forward to our private session with the witnesses over lunch.
Thank you, convener.
I ask members of the public to excuse themselves, as we are moving into private session.
Meeting continued in private until 12:05.