Meeting of the Parliament

Meeting date: Tuesday, June 20, 2023

Official Report 1073KB pdf

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Innovation Strategy

The next item of business is a debate on motion S6M-09594, in the name of Richard Lochhead, on the Scottish innovation strategy. I invite members who wish to speak in the debate to please press their request-to-speak button now, or as soon as possible.

15:33  

I am pleased to sponsor another debate in Parliament on Scotland’s economic future and the great work that is taking place to shape the future of our economy, country, quality of life and, of course, the planet.

The publication of “Scotland’s National Innovation Strategy” and the timing of the debate come at a pivotal moment in Scotland’s long and incredibly rich history as an innovative nation, because we all live in a rapidly changing and truly interconnected world. The next decade will be one of profound change, and right now we, along with many other nations, face pressing challenges on climate change—as we just heard at topical questions—health and the cost of living.

At this moment, we have an opportunity to face those challenges head-on and to be a global leader for change. We have the opportunity to build on our achievements of the past, to make the most of our considerable natural advantages, to translate our excellent research base into commercial opportunities and to deliver economic success for every section of the economy and every part of our country.

We must harness the incredible power of and potential for innovation in Scotland. It can drive our nation’s journey towards becoming a thriving net zero economy, encourage further international participation to address the pressing global challenges and attract further international investment to Scotland.

We have the opportunity to take our place once again as one of the most innovative small nations in the world and to take our place with European countries that are of similar size, such as Denmark, Norway and Finland, where innovation is a core driver of their national economies.

That ambition is bold, but everyone in the chamber is aware of Scotland’s strengths in innovation and of the history of spectacular successes that we have spawned in this country. We have a proud and enviable history and tradition of invention and innovation. For centuries, our people have been known as innovators. Some of the best scientists and engineers, as well as writers and philosophers, have come from Scotland and have helped to change the world. Scottish innovators and entrepreneurs have been solving global problems in energy, health, manufacturing and engineering, creative and digital technologies, and a range of other sectors and industries.

Innovation is a key priority for the Scottish Government. Over the past decade, we have established multiple innovation centres as well as entirely new bodies such as the National Manufacturing Institute Scotland, which represents a £75 million investment by the Scottish Government in the future of Scottish manufacturing. It is a prime example of how we are supporting industry to innovate. Besides the advanced forming research centre catapult, the cutting-edge facilities include a digital factory, a manufacturing skills academy and a lightweight manufacturing centre. The vision is for it to be a place where manufacturing businesses of all shapes and sizes can explore possibilities, collaborate and find solutions to the challenges that they face.

Does the minister recognise that what he has just outlined and Scotland’s absolute potential will be enhanced only if there is a body of economic policies behind it that make Scotland a very attractive place to come to work in and manufacture in?

Yes, I agree with that. That is why I am so delighted by yesterday’s statistics relating to the attractiveness of Scotland’s inward investment projects, which are absolutely stunning. For the second year in a row we have outperformed the United Kingdom and Europe, and for the eighth year in a row we have been the best performing area outside London. The number of projects in Scotland has increased by 3.3 per cent, I think, compared with a decline of more than six percentage points in the UK. That is a great success story. We have a lot of attractive qualities that allow companies to invest in Scotland, and we have to keep that up.

The minister will recognise that, although the headline figure is welcome, inward investment is not all created equally. The criticism of silicon glen by economists, for example, was that there was a dependent relationship with multinationals that very quickly moved to other countries. Can we ensure that inward investment is analysed to ensure that it is developmental, deep and value-added investment in Scotland, and not simply about buying Scottish companies to asset strip them and take their intellectual property overseas?

That is a factor that we should take into account, which is why I am delighted by a new phrase that I have recently learned from the tech sectors in Scotland: “sticky jobs”. The current generation of inward investment projects is different from those that have gone before. The projects are based on our talent and our university and research capability, and the result is that those jobs, in effect, cannot go anywhere else. They come here and stick here. As a result, other indigenous Scottish sectors and businesses are benefiting, as well. That lies at the heart of the innovation strategy, and I will come on to that.

Scotland is already benefiting from innovation, with success stories across the country and recognised excellence in a number of areas in industry and in our universities. I could give many examples, but I might not have enough time to do so. I will therefore give Kenoteq Ltd as one example. That company was a spin-out from Heriot-Watt University. It produces the world’s first 90 per cent recycled brick. With more than 2 billion bricks a year being produced in the UK, there is a significant opportunity to set up more production facilities across the country and internationally. I could give a host of other examples of innovations that are happening in Scotland just now.

Although Scotland’s productivity and business investment in research and development have seen significant improvements in recent years, with the gaps between them and those of the rest of the UK having largely been closed, we have work to do to catch up with our international competitors. That is why the time was right to publish “Scotland’s National Innovation Strategy”. I know that Scottish innovators, entrepreneurs and our innovative companies stand ready to accept that challenge and to return Scotland to a central role on the global innovation stage.

Innovation thrives on collaboration, and it is through collaboration that we get the most value from our investments in Scotland’s businesses and world-class research community. In that spirit, the strategy was designed and developed alongside industry experts, entrepreneurs, business leaders and academics, who all came together with a shared vision to make Scotland one of the most innovative small nations in the world, once again.

The development was guided by an expert steering group, which was co-chaired by Professor Sir Jim McDonald—I thank him and his colleagues—and supported by intensive engagement through working groups, round-table and workshop events and an extensive evidence-gathering exercise. I also thank my predecessor Ivan McKee, who is in the chamber today, for all his good work in his previous role on putting together the strategy and working with those individuals.

The strategy sets out the actions that we will now take to achieve our bold vision through four transformational programmes on cluster building, investment, commercialisation and productivity. Within the next decade, we will have a unified network of high-performing clusters in each of our innovation priority areas and we will provide valuable signposting to attract more international investment, collaboration and talent.

The strategy identifies four key areas in which Scotland has the clear potential to be world leading: energy transition, health and life sciences, advanced manufacturing and data and digital technologies. We will take a European-style cluster-building approach to support those areas to become world leading and internationally facing, thereby driving mutual benefits from international partnerships.

Scotland has a range of established, growing and emerging clusters that can act as a foundation for a vibrant innovation-led economy. Over time, we will develop an approach of developing tailored packages of public support that act as catalysts for growth and which stimulate more private sector investment to support priority clusters to achieve their potential.

Within the next decade, we will also have increased the number of innovation-active businesses—that is one our challenges—and we will have nurtured highly scalable organisations to drive the economy forward.

Will the minister take an intervention?

I will take it, if I can get—

I can give you a bit of time back, minister.

I am grateful—it is an important question. We are already doing well on innovation in relation to many of the things that the minister has mentioned. However, it is clear from the data paper that was published alongside the strategy that business enterprise research and development remains a stumbling block. That is about private sector businesses reinvesting. Does he recognise that that aspect requires further work in the strategy?

Yes, I do. However, we are performing quite well with research and development, particularly in the higher education sector—as, I am sure, Daniel Johnson is aware. The picture is also improving in the business sector. Internationally, Scotland compares reasonably well with many countries, but we must match the best and we must improve. The innovation strategy addresses that on-going challenge.

We also want to adopt an investor mindset in relation to supporting our most innovative businesses, investing where we have a competitive advantage, providing a comprehensive and co-ordinated package of support and leveraging in venture capital. Through that renewed package of support, we will place our priorities at the heart of our approach, as we increase alignment of funds, reduce unnecessary duplication and, over time, close any gaps in the funding landscape and explore innovative models of investment to support Scottish businesses and clusters to innovate.

Within the next decade, we will see an increase in scaling companies from cutting-edge research by applying innovation to seed the creation of new markets and harnessing new innovations to support increased productivity in existing ones.

Will the minister take an intervention?

I can give you a bit of the time back, minister, but not all of it.

I ask that the intervention be very brief, then. I also note that it will be the final one that I take.

The Conservatives consider that the Scottish Government has a misguided attitude—hostility—towards gene editing. A leaked document suggests that the European Union is about to change its approach and that it will align itself more with the position on gene editing in England. I ask the Scottish Government to act quickly on that to ensure that farmers and some of our world-leading institutions in Scotland do not miss out.

We have an open mind to new science—that has always been the Scottish Government’s position. We pay close attention to developments in the European Union in relation to the issue that Finlay Carson mentioned and in relation to other issues.

Another issue that we must address is our commercialisation landscape. We must strengthen our research base and the role that that plays in driving economic prosperity in our country.

Working with the higher education system and the Scottish Funding Council, we will evaluate the sufficiency of Scotland’s current investment in applied research, knowledge exchange and broader research projects.

Given the time, I will draw my remarks to a close. Over the 10-year lifetime of the strategy, the programmes will deliver an ambitious increase in the level of innovation in businesses across Scotland, which will result in increased productivity, improved economic outcomes and a more inclusive economy. To ensure that we are making the necessary progress towards achieving our vision through the four transformative programmes, we will track our innovation performance on a number of key metrics over the next 10 years. We will do that through Scotland’s innovation scorecard, which will track Scotland’s innovation performance over time on a set of key indicators, against other nations.

In conclusion, I want to restate the Scottish Government’s ambition, and my ambition, that Scotland will once again be known as one of the most innovative countries in the world, by leading the world in a number of key areas and providing solutions to global problems. I believe that that ambition is entirely achievable and that the strategy will help us, as a nation, to achieve it.

The power of new ideas and technologies is driving global change at an unprecedented rate and scale. Countries can harness that power. We can thrive in the 21st century. Scotland can become a magnet for talent and investment and for exporters of the next generation of products and services, and we can significantly raise our citizens’ quality of life. Scotland can take its place among the leading countries on innovation. I look forward to the debate.

I move,

That the Parliament welcomes the publication of Scotland’s National Innovation Strategy; recognises its vision for Scotland to become one of the most innovative small nations in the world over the next decade as a key part of delivering a greener, fairer, wellbeing economy; recognises Scotland’s potential to become a world leader in four key areas of the economy, which are energy to address the climate emergency, health and life sciences, advanced manufacturing, and data and digital technologies; welcomes the strategy’s four programmes, which are a national network of clusters in key sectors, a renewed investment and support offer for businesses, a new framework for realising the commercial and community benefits of research, and a new programme focused on supporting businesses to become active in innovation and improve their productivity; recognises that the Scottish Government will measure and evaluate Scotland’s innovation performance and compare this to similar nations on an annual basis; welcomes the extensive engagement, consultation and joint working with industry, academia, entrepreneurs, investors and the public sector that helped develop the strategy; notes the successful examples of innovation taking place across the country; recognises the important role of enhanced employee engagement and alternative ownership models in fostering innovation, and understands the significant opportunities for Scotland, and its businesses, entrepreneurs, workers, communities and universities, to grow and scale its excellence in innovation and technology to become recognised globally as a world-leading innovation nation.

I call Jamie Halcro Johnston to speak to and move amendment S6M-09594.2.

15:46  

Scotland has a rich history in research, innovation and invention, with contributions ranging from development of the telephone and television to groundbreaking advances in medicine, such as penicillin and the hypodermic needle. Of course, we are also the home of Dolly the sheep.

Innovation should be a key driver of economic growth and societal progress, and no one should fail to recognise the importance of boosting innovation in Scotland within the public and private sectors, and of supporting innovative new ways of doing things.

We welcome the Scottish Government’s recently published “Scotland’s National Innovation Strategy” because, although there have been notable achievements, there are also real challenges that hinder Scotland’s innovation potential. The strategy recognises that Scotland remains below the UK average on all measures of innovation activity, and it also recognises Scotland’s poor record on productivity. The strategy accepts that Scotland’s efficiency in producing spin-outs from research is 50 per cent of that in the rest of the UK and it accepts the need to improve the number of alumni from Scotland’s universities who found venture capital backed companies.

Over the next 10 years, the hope is to make Scotland one of the most innovative small nations in the world and to make Scotland fairer, more equal, wealthier and greener. I am sure that many of us welcome those ambitions, but the Government needs to be ambitious, given some of the issues that I have mentioned previously. With Scotland’s economy facing a challenging future, and with unsustainable public finances thanks to 16 years of the Scottish National Party Government, it is vital that Scotland embraces opportunities to innovate.

The strategy identifies four broad innovation themes to focus on: health and life sciences, data and digital technologies, advanced manufacturing and energy transition. The importance of innovation in our health sector cannot be overstated, particularly with the Scottish Fiscal Commission forecasting that in 50 years health spending will rise to 50 per cent of our total public spending. Innovation is not a luxury; it is a necessity.

Only a few weeks ago, we debated the growth of artificial intelligence and the vital role that it will play. We share the ambition that Scotland be a global leader in development in that area and we recognise the role that AI can have. However, we need the infrastructure in place to make that happen, and too many parts of Scotland are still missing out. Although I welcome the attention that the energy sector is given, it is worth remembering that some of the most innovative work in the energy sector has come from, or has been funded by, an oil and gas industry that the SNP-Green Government wants to call time on prematurely.

Of course, the Scottish Government has blocked the UK Government’s attempts to support Scotland’s nuclear energy sector, which could have been a significant driver in Scottish innovation, as well as providing reliable zero-carbon energy. Only in March this year, the then Cabinet Secretary for Net Zero, Energy and Transport, Michael Matheson, made it clear that the Scottish Government is opposed to the building in Scotland of new nuclear fission power stations with current technologies. Scotland, which played a leading role in the early development of nuclear, with sites including Dounreay in my region, will play no part in its future.

We need more than warm words from SNP ministers about fostering of innovation, given the contradiction in approach and the deep-seated issues that have grown under their watch, including a rise in economic inactivity and a drop in business confidence.

Scotland remains the highest-taxed part of the UK, which is making it harder to attract and retain skilled workers. Our enterprise agencies, which could and should play an important role in supporting businesses to innovate, have had another year of budget cuts, which is reducing their ability to provide that support.

In education, we have the lowest number of science entries at higher level in five years. The SNP-enforced student cap makes it harder for Scottish students to enter university and £46 million has been cut from our colleges and universities. Funding that was promised in December is now, reportedly, not available. That all impacts on our ability to train in the numbers that are required the skilled workers that we need to drive and support innovation. I have met people from various sectors who are already struggling to find the talent that they need to fill the roles that they have.

Although most Governments seek a more collaborative approach in this area, the Scottish Government continues to push its obsession with breaking up the United Kingdom, and is intent on cutting off a vital funding source that is valued by universities and other bodies, as well as on putting up a border across the UK single market, which will only create significant challenges for Scotland’s businesses’ ability to trade and operate.

I completely agree that we need to look at the broader economic context and things like people studying science, but does Jamie Halcro Johnston not also recognise that we need an innovation policy? Why would the Conservative amendment completely obliterate, in its entirety, all mention of an innovation policy?

We recognise the importance of that, but we are trying to focus on some of the changes that need to be made.

The Scottish Government would do those things despite recognising in its innovation strategy the role of the UK Government initiatives and funding schemes including UK Research and Innovation, innovate UK, the UK industrial strategy and the UK levelling-up white paper. Yesterday, it was good to see the UK Minister for Science, Technology and Innovation, George Freeman MP, whom I met earlier this year, announce £72 million in funding for new infrastructure, including £23 million for the UK’s National Wind Tunnel Facility network and £34 million for digital infrastructure.

Here in Scotland, the Scottish Conservatives’ 2020 policy paper, “Power up Scotland”, advanced the argument for greater innovation spending and increased direct support for innovation. However, it is also important that spending be directed in a positive and structured way. Given the considerable sums of public money that are involved, it is vital that value for money can be assured. Support should also be accessible, while it is ensured that it remains results driven.

I hope that we all want a successful, entrepreneurial and ambitious Scotland, where innovation helps to provide solutions to some of the real problems that we face in terms of the cost of living, an ageing population and the climate crisis. My party believes that successful achievement of that lies in co-operation between Governments across the United Kingdom, not in cutting ourselves off. It believes that it will be driven by economic policies that provide Scotland with a competitive advantage, and not ones that make Scotland the highest-taxed part of the UK and leave our businesses struggling to attract talent. It believes that proper investment in infrastructure—not projects that are left unfinished and promises that are left undelivered—brings real benefits to businesses and communities, and it believes that we need a Scottish Government that builds confidence in businesses and drives innovation, and not one that is saddled with a militant Green element that is anti-business and has an anti-growth agenda.

I move amendment S6M-09594.2, to leave out from first “welcomes” to end and insert:

“recognises the importance of driving innovation in Scotland, both within the public and private sectors, but believes that the current direction of the Scottish Government is creating barriers to growth and inhibiting innovation; further recognises that high taxes on individuals and businesses risk impacting on growth; regrets the reduction in the 2023-24 budget settlement to the enterprise agencies, which will reduce their ability to support Scottish businesses; acknowledges the challenges faced in the university sector for Scottish students due to high levels of competition and the resulting impact that has on the ability to train, in the numbers required, sufficiently skilled workers to drive and support innovation; believes that leaving the United Kingdom would severely damage Scotland’s ability to succeed by creating a border across the vital UK single market, creating significant challenges for businesses to trade and operate across the United Kingdom, and would cost the Scottish economy billions of pounds, reducing the ability to foster a strong, vibrant and innovative economy, and believes that Scotland’s success lies in cooperation across the United Kingdom, economic policies which provide Scotland with a competitive advantage, proper investment in infrastructure to benefit businesses and communities, and a Scottish Government with a firm grasp on public finances to build business confidence and drive innovation.”

15:53  

It is really important that we have a clear and ambitious innovation policy and strategy. It is also vital that we have a collective sense of mission about that. That is why, although Labour will be making criticisms of and suggestions on the policy, we ultimately support the publication of the paper.

My main criticism is to ask why it has taken so long. The lack of clarity and of a clear innovation policy was identified and discussed some time ago. Indeed, I remember that, leading up to my election to Parliament for the first time, debate was very much focused on that.

I refer to a paper that I have often looked to, which was published in 2014 by Nesta—the national endowment for science, technology and the arts. It is about innovation in small countries and it identifies five key factors that a successful innovation strategy brings: first, a focus downstream, making sure that you deliver commercial success; secondly, openness and being open to the world; thirdly, a whole-government approach; fourthly, effective and flexible institutions; and, fifthly, a sense of mission. That last one is why I think we have to have a consensual debate.

It is clear to me that the Government has addressed the first and fifth points but, on the third and fourth points—whole-government approaches, and effective and flexible institutions—the strategy is found wanting.

Ultimately, the strategy dodges two big, central questions. The first is on institutional landscape. We still have a cluttered landscape and there are only oblique references in the strategy to what has to happen to improve that.

Secondly, the biggest issue that we have on innovation is private sector investment. I take slight issue with what the minister said. He is correct that Scotland has good figures if we look at gross domestic expenditure on research and development—GERD. However, if we split that between higher education expenditure on research and development—HERD—and BERD, we see that, on BERD, we are behind the UK on levels of investment and we would be at the very bottom of the Organisation for Economic Co-operation and Development tables.

Yes, we have strong, higher education-led research and innovation, but those fail to translate. The section on productivity in the strategy does a huge amount of work because it is the only place where the spillover is talked about or focused on in any meaningful way. There has to be a great deal more work to improve the detailed plans under the strategy to deliver on that.

To come back to the cluttered landscape, we have only to look at the diagram on page 14 of the strategy to see it. That diagram resembles something that we might see in the optician’s. It is a sea of coloured blobs without any clarity about who is in charge. Indeed, the strategy identifies five different lead institutions on innovation. It certainly does not set up our version of Tekes or Sitra in Finland. We need urgently to learn the lessons from 30 years ago in Finland rather than attempting to paper over the institutional cracks in our own framework.

The other key point that I will make is that the strategy assumes that innovation is something for external organisations to do. It is assumed to be a task for the private sector or higher education sector but, ultimately, the Government needs to internalise it.

I was at the recent Scottish EDGE awards. One of the winners, who has come up with an amazing product to help to use operating theatres in the national health service far more effectively, said that his peers told him not to bother to sell into the NHS because it is too difficult. If that is what entrepreneurs are saying, we have a big problem. Members should couple that with the insight that there has been a massive fall-off in the number of clinical trials in Scotland. We need a public sector that innovates end to end, and does not leave it to the private sector, because it understands that it ought to be a test bed and platform for innovation to help our life science businesses to grow.

In other areas, the strategy fails to understand where we are. It does not deal with the nuts and the bolts. We already have our clusters—they are successful. We do not need to set up new clusters but to get behind the ones that already exist. That is not about doing fancy things; it is about the nuts and the bolts. If we talk to life science companies, we find that their issues are to do with planning, roads and infrastructure. Those issues are what holds them back from setting up and innovating, but the strategy does not deal with that adequately.

I will touch on skills. I agree with Jamie Halcro Johnston that, unless we develop the mainstream skills in science and other key subjects, we will struggle.

Unfortunately, I cannot support the Conservative amendment because obliterating the innovation strategy in its entirety is wrong. We need an innovation strategy and there are good things in the one that has been published, but it does not go far enough. Ultimately, we need an innovation strategy that joins up with an integrated industrial strategy because it will not and cannot deliver unless we get innovation right and contextualise it within a good, strong, investment strategy and a procurement strategy, along with regulation, planning and skills.

That is why we mentioned the plans that we launched yesterday. They are an example. They have innovation in them, as well as research, delivery and investment in supply chains and delivery. That is the sort of industrial strategy that we need.

I move amendment S6M-09594.1, to insert at end:

“; recognises that ambition alone will not be enough to realise the potential of Scotland’s people, businesses and communities; believes that a genuine coordinated industrial strategy, built on investment, skills and infrastructure, will be central to driving innovation; welcomes the identification of the energy sector as a sector with high potential, and believes that the best chance of realising the potential in Scotland’s energy sector is through the Labour Party’s plan to create a new publicly-owned energy company, which will be headquartered in Scotland and will deliver lower bills, energy security and good jobs for Scotland.”

15:59  

Scots are rightly proud that our country has long been considered one of the world’s most inventive and innovative. John Logie Baird created the first television, James Watt invented the steam engine, Alexander Fleming discovered penicillin and, more recently, Dolly the sheep became the first mammal to be cloned from an adult cell at the University of Edinburgh’s Roslin institute.

The Scottish enlightenment had significance that reverberates down the centuries. In this tercentenary of Adam Smith, we should remember his astonishing global contribution.

Perhaps lesser known is Dr William Cullen, a professor of chemistry and medicine from Hamilton who, in 1755, gave the first documented public demonstration of artificial refrigeration, which ultimately changed the way in which people store and transport food, prolonging the life of perishable items. That example powerfully demonstrates that innovation is the bedrock on which we built the prosperity that is enjoyed today compared with previous generations, and it is a main driver of long-term economic growth.

I therefore welcome the publication of the Scottish Government’s 10-year innovation strategy, which aims to re-establish Scotland as one of the world’s most innovative nations, ranking alongside Denmark, Norway and Finland.

However, we should stop referring to Scotland, let alone Finland and Norway, as small. More than half of the countries in Europe are smaller than Scotland, and we have more inhabitants than New Zealand or the Republic of Ireland, and our population is similar to that of Singapore.

That said, I agree with many of the points that are raised in the innovation strategy, most importantly its focus on encouraging European-style business clusters. Sectoral clusters strengthen collaboration between business, academia and public bodies in areas where we have a competitive advantage. Of course, such clusters already exist in Scotland. Dundee’s contribution to fields ranging from the development of ATMs, comics and video games has long been recognised beyond our borders; the Highlands and Islands are at the forefront of technological advances in areas such as renewable energy and the space industry; and Ayrshire and Renfrewshire have a vibrant life science sector, exemplified by the medicines manufacturing innovation centre?at Abbotsinch, the opening of which I had the pleasure of attending last St Andrew’s day, along with Ivan McKee. In Glasgow and Stirling, the knowledge economy has just attracted 500 new pharmaceutical jobs and a £30 million investment from Merck. With more than 700 life sciences companies, Scotland has one of the largest clusters in Europe, which includes GSK and DSM, two major North Ayrshire employers. Indeed, 800 people in North Ayrshire work in pharmaceutical manufacturing—which represents the highest density in Scotland.

The innovation strategy noted, however, that,

“while Scotland has a rich history of invention and a vibrant life science sector, we have a poor record of quickly scaling and spreading innovation.”

We can and must improve.

Government grants can target projects that are likely to have the most long-term benefits, and research shows that grants will lead to more patents being filed by private firms. The Scottish Government’s renewed and consolidated innovation investment programme, to be published in 2024, is therefore eagerly anticipated. The public sector invests in business innovation through enterprise and skills agencies. Given that innovation is known to significantly boost productivity growth, it is vital that funding in the priority clusters identified in the strategy remains at a high level, especially in times of budgetary constraints.

To boost productivity we need young people. Last week’s Economist discussed research showing that innovation comes disproportionately from young people—in particular completely novel, positively disruptive and discipline-changing ideas. Entrepreneurship is markedly lower in older countries, and Japan, with its rapidly aging society, has fallen far behind in new thinking over recent decades. With demographic decline everywhere, improved education and skills are required to slow the decline in the number of innovative young thinkers.

Innovation is about new ideas, technologies and research—

Daniel Johnson rose—

The member is bringing his remarks to a close.

Sorry—I was just about to conclude.

The member is about to conclude, yes.

Innovation is about new ideas, technologies and research, adapted to benefit the economy and society. I welcome the fact that, in its innovation strategy, the Scottish Government reiterates its commitment to the scaled development of clusters, such as Ayrshire’s life sciences, which can have a transformative impact on our economic performance and international competitiveness if they are underpinned by robust and targeted public sector innovation funding and an eye to how we tackle demographic decline.

16:03  

I opened the innovation strategy document with some excitement and hope, but I felt depressed after reading the minister’s foreword. In it, he says:

“Too few Scottish businesses are innovating, and some of our most innovative companies struggle to scale.”

He goes on to say that, when it comes to research and development,

“we have work to do to catch up with our international competitors.”

The strategy reads like a list of SNP failures over the past 16 years when it comes to economic growth and innovation. We are below the UK average on all measures of innovation activity; the percentage of businesses investing in innovation activity is lower in Scotland; Scotland has a poor record on productivity under the SNP Government; and Scotland’s efficiency in producing spin-offs from research is lower than in the rest of the UK.

If only we had a Government that was focused on the real priorities of Scotland: growing our economy, promoting innovators and entrepreneurs, investing in business and funding our leading universities and research institutes. Having 16 years of the SNP has left us with a country that is the highest-taxed part of the UK and has the conditions not for growth but for division.

Will the member accept an intervention?

Is there time, Presiding Officer?

The time would have to be subsumed within your allocation.

I am sorry; I cannot take that intervention.

We were used to seeing huge amounts of innovation, growth and investment in the north-east and, with energy transition, could see that again. However, for that to happen, we must stop the demonisation of the oil and gas industry. Historically, energy companies have spent vast sums on research and innovation and could do that again when it comes to energy transition, but they need the revenue from oil and gas to provide them with the cash to spend on research and development. While there is still a demand for hydrocarbons, we should produce those in this country, not only to protect the thousands of jobs that rely on the sector but to safeguard the huge amounts of cash that will be invested in renewables.

Will the member give way?

I am sorry; I do not have time. I will come back to the minister if I have time.

The strategy goes on to tell us how much stronger we are as part of the United Kingdom with the financial weight that that brings. The UK Government has invested significant funds to drive up innovation and productivity: it has invested in free ports and in the regional growth deals that much of the life science innovation mentioned in the report comes from and it wants to go further in developing our nuclear energy capacity, which will bring huge investment in research and development but is, of course, being blocked by the SNP-Green coalition.

Let us be really clear about the facts: the SNP has reduced enterprise agency budgets this year, stifling those organisations’ ability to make significant impacts on their regions. The SNP-Green Government talks a lot about higher education in the strategy, but we must remember that it has cut £46 million from college and university budgets this year.

The strategy has lots of warm words about economic growth for our central belt cities, but sets out no roadmap to get there and there is very little mention of how our rural communities will play their part.

I welcome the strategy and its recognition of the strength of being part of the United Kingdom. I have no ambition to be in a leading small country when we can be part of a leading world power with the economic strength that that brings. I welcome the strategy’s recognition of the investment that being part of the UK has brought to Scotland at a time when the SNP Government is cutting budgets. After 16 years in power, the minister should be embarrassed to place the strategy before us today. It lets down our rural communities, is an admission of failure by the broken SNP-Green coalition and is a clear indication of how we benefit from being part of the United Kingdom.

16:00  

We all know Scotland’s wonderful heritage of innovation, which goes far beyond the inventions commonly listed on a souvenir shop tea towel. Almost every town in Scotland can point to at least one major invention or innovation that happened there or that is attributable to someone who came from there. That is important, because the past inspires the future. My constituency is no exception. Sir James Dewar, who was educated at Dollar academy, invented the vacuum flask, and George Meikle of Alloa invented a water-raising wheel that was used to drain the moss of Kincardine in 1787.

In creating that reputation for innovation, Scotland benefited from being in the vanguard of the industrial revolution—although, with the hindsight given by history, we should recognise that that period of growth was built on the backs of the working masses and often involved resource-thirsty enterprises being fed at the expense of the peoples of an empire that then covered the globe.

Our search for innovation continues, as it must, and I am pleased to be able to point to a package of investment in innovation and infrastructure that will help to drive inclusive economic growth in the area that I represent. The city region deal funded by the Scottish and UK Governments, Stirling Council, Clackmannanshire Council and the University of Stirling will invest more than £214 million over 10 years and will deliver innovation hubs specialising in aquaculture, the environment and intergenerational living, each of which will play a crucial role in addressing the challenges of the future.

World-leading technology solutions will be developed in those centres of excellence, transforming the local economy, tackling low job density through the creation of high-quality, skilled local jobs and strong regional supply chains and, at the same time, supporting community wealth building and the wellbeing economy.

Stirling University Innovation Park, which is in my constituency, was established in 1986. Its aims are to assist the regeneration of the local and national economies by providing an environment that facilitates, encourages and promotes businesses with a focus on innovation. Those are the kinds of projects that the national innovation strategy, which is outlined in the motion, can and must support and promote.

The new fields of knowledge on which the future of our planet will depend need the same explosion of innovation that the industrial revolution brought about, and it is essential that Scotland is at the forefront of this new revolution, in which we must, admittedly, play our part in repairing the climatic and economic harms that have been caused by global industrialisation.

Arthur Herman of the Smithsonian Institution in Washington DC wrote a book, published in 2001, entitled “How the Scots Invented the Modern World”. As the Scotsman reviewer said at the time, the

“overblown rhetoric invites a sceptical reaction. But I suggest we just accept this extraordinary compliment graciously.”

The important thing now—for us and as part of our continued contribution to the world—is that we continue our love of knowledge and our support for innovation and play a leading role in the development of the postmodern world. We could talk about the almost unique achievement of Scotland’s universities; the last time that I heard, five of them were in the top 200 universities in the world. The explosion of ideas during the Scottish enlightenment is an inspiration. Perhaps we will not see the Boris Johnson school of philosophy on the nature of truth or the political economy thesis of Kwasi Kwarteng, but there are important antecedents that should inform how we look forward and give us inspiration that Scotland can lead again.

There is a wider message here, too. If we are determined to become a world leader in entrepreneurship and innovation—I know that it will be uncomfortable for some Conservative members to hear this—we must reverse the isolationist approach that has been thrust on us as part of Brexit Britain. Scotland must use all our powers to create an economy that supports businesses to thrive. We will do that by harnessing the skills and ingenuity of our people and by seizing the economic and social opportunities that are provided, but not as part of a delusion about being a world power. We will do it best with the normal powers of an independent nation.

I support the motion.

16:12  

It is a pleasure to follow Keith Brown and his analysis, particularly of industrialisation. Many of our communities have at their heart individuals who have done so much. I extend that to the significant number of communities that have at their heart evidence of the effects of industrialisation. I am thinking particularly of Prestongrange—close to where I live—which, as an industrial centre, has had not just decades but hundreds of years of industrialisation from glass making all the way through to brick making and, of course, coal mining. However, to pick up on one of Keith Brown’s points, I note that it is also about the damage that was rendered to the communities that gave so much in the creation of industrialisation.

I welcome much of the Scottish Government’s strategy—in particular, its focus on the four key areas of the economy that have been identified. I take the opportunity to pick out a couple of them that raise some questions and comments.

The first is advanced manufacturing. I will draw on energy production—I would feel almost disappointed if the minister did not realise that I would do so. Our history, identity and politics are often wrapped up in the story of energy and where it has come from, how it is moved, how much it costs and who has benefited from it. We need to build the skills, talent and expertise that are already abundant in our energy sector if we are to forge forward to a just and equitable green transition.

I make mention of Torness nuclear power station, near Dunbar in East Lothian, in the south of Scotland. More than 500 people are employed directly by it and it brings in £15 million in wages a year for the community. There are also more than 200 jobs in the contracting workforce that surrounds Torness, driving further tens of millions of pounds into the local authority. On some days, with that workforce and on just one tenth of a square mile, half of the energy needs of Scotland are met. It is still short-sighted of the Scottish Government to close its eyes to the potential of nuclear power, be it small modular nuclear reactors or others, to give us a green future and to allow for the base-load that is required by the energy systems that surround us.

In the short time that I have to speak in this debate, I will also pick up on the health and life sciences sectors, which have been commented on already. Scotland should be a world leader in healthcare, and we need to lead in healthcare innovation. With the UK Government, we have one of the finest databases in the world to allow for the role of AI, which we have debated in the chamber in the recent past. The database will be invaluable if we can work out access to it and the return that our NHS and, through it, each individual patient should see for that access. That is a powerful prize to look towards, with the requirement to work together.

As Daniel Johnson stated, this future is not just one of words. That could be the result of the strategy, but it also requires planning, infrastructure and joined-up thinking. It requires the Scottish Government to do something that, with respect, it has struggled to do, which is not just to talk but to work with our communities, our businesses, our university and college sectors, the UK Government and other Governments around the world to drive forward what I know Scotland can produce—a confident, innovative future that supports our people.

16:16  

As a small, outward-looking nation, Scotland is uniquely placed to punch well above its weight when it comes to innovation. We are blessed with a reputation for producing some of the greatest trailblazers and revolutionary thinkers that the world has seen, from David Hume to Peter Higgs and from Rabbie Burns to Robbie Coltrane. It follows that the Scottish Government’s newly published innovation strategy is an ambitious document with a clear vision: that we will prosper and thrive alongside other small, successful nations.

While there is much to unpack in this 10-year plan, I am drawn to the emphasis on collaboration, from the primary classroom, where children design and build alternative robust housing structures to help out the three little pigs, to the science labs of our universities and their collaboration across sectors. It is so important that research and innovation are fruitful and that they translate into a tangible end product that ultimately benefits our society and delivers sustainable growth for our economy.

As an example of that collaborative working, I recall that, during the pandemic, students from the University of Glasgow who were involved in designing face masks teamed up with a small business in Stirling. The result was the creation of a better-looking and better-fitting product.

It is perhaps worth mentioning that the University of Glasgow is highlighted in the strategy on account of its exciting partnership with Scottish Enterprise and Glasgow City Council to create the Glasgow riverside innovation district, or GRID. It will act as Scotland’s first whole-systems innovation demonstrator. The district will be home to the world-leading clinical innovation zone; the emerging cultural quarter, which is based around the Kelvingrove art gallery and museum; the Scottish Event Campus; and the media hub at Pacific Quay. Increasing channels of communication and collaboration between a range of sectors with diverse skill sets is a bold and welcome move that has the potential to push Glasgow further to the forefront of international industry and innovation.

The University of Strathclyde also sits at the pinnacle of world-class research and innovation. As members have mentioned, we are grateful to the Minister for Small Business, Innovation, Tourism and Trade, Richard Lochhead, and to Ivan McKee before him, for co-chairing the creation of the strategy with the university’s principal, Professor Sir Jim McDonald.

The university’s success in its collaborations with student start-ups has been showcased by recent break-out stars such as Bellrock Technology, which is an award-winning software company that allows the electrical power sector to use its data more effectively, and M Squared Lasers, which grew from a Strathclyde spin-out company and is now anchoring the quantum industry—an industry that is growing quickly in Scotland. Each of those stories tells us what we already know: the talent is there. However, we need to harness it and clear a path for it to flourish.

I had the pleasure of meeting Mohammed Rashid Iftikhar, who is a pre and post-disasters scientist and inventor of the world’s first AI vehicle and property fire or flood damage mitigation system, which was showcased during the 26th United Nations climate change conference of the parties—COP26. I ask members to think of the transformational effect that that technology can have in flood risk areas across Scotland and the world.

I realise how lucky I am to represent a city, and a constituency, that boasts a long history of innovative success, from the television and the refrigerator to antiseptics and beta blockers, and—let us not forget—a creation so influential and so controversial that it still shocks me to my very core: the chicken tikka masala.

There is much to be envied in our little powerhouse of a nation. I look forward to seeing not only how the strategy will provide the chance to create future jobs in traditional and new, emerging sectors, but how it will open up spaces for conversations that can pave the way towards a more inclusive marketplace.

16:20  

Scotland has a long and proud history of supporting and nurturing innovators, and I know that we all agree that we want to continue being an innovative nation. At a time of twin crises for climate and nature, increasing global uncertainty and rising inequalities, it is perhaps more important than ever to ensure that we work towards innovation for a purpose. That purpose should be the development of a greener, fairer, wellbeing economy that sustains healthy and happy communities across our country.

We must have a strong topical emphasis on the structural challenges in our society, which innovations in all four areas that the strategy identifies should seek to address. Other members have spoken about the four priority areas that are highlighted, so I will not rehearse those in the time that I have. However, I will say a little bit about what we mean by innovation.

Innovation has that nebulous quality of generally being seen as a good thing. Innovation is driven by change or new knowledge so, as we look at the crises that we face, we need to consider what is changing. One of the obvious areas of change is technology. We also need to consider how knowledge develops. We then need to understand the intersection between the things that have changed or the things that we have newly discovered, and existing processes.

The valuable thing about innovation is quite simple: setting out the problems or issues; identifying the technologies or knowledge we have now that we did not have previously; and working out how those can aid us in dealing with a problem or challenge that has previously been identified.

Let us be clear: innovation is not something that happens only in the private sector, done by the wealthy and focused on digital and new technology, although that is often where the focus is. The challenges that we face cannot be limited to those who have traditionally been associated with that approach. Rather, innovation requires the application of our collective creativity, intelligence and insight to address the problems of climate breakdown, Covid recovery and social isolation, to name just three.

Mariana Mazzucato has set out clearly how innovation does not stem from the wealthy folk in silicon valley, but rather is driven by public sector research and investment. Her eye-catching observation that almost all of the technology in the iPhone, for instance, resulted from publicly funded innovation is something that we must remember. Her proposed solution to the problem of how to focus our innovation investment is to develop missions and challenges that we can turn the attention, ability and insight of our citizens to addressing.

We have to be clear about what those missions are, and what the challenges that sit within them are, and how we define them, so we can innovate as effectively as possible with maximum impact for our citizens and our communities—that is innovation with purpose.

In 2021, and in different ways more recently, I was pleased to see that the cabinet secretaries were given responsibilities for two of the more important missions that we must address: net zero and Covid recovery. That speaks to the recognition that the challenges that we face are not neatly contained in discrete departments. I welcome that approach, and even the European Commission—not an institution that is known for its embrace of new or dynamic ways of working—has adopted the same approach. Our approach to innovation must therefore go beyond a focus on private sector innovation, and we must mobilise our public institutions and our communities. We need a broad-based approach that gives everybody a clear target and aligns institutions with citizens and communities towards addressing problems, because the real value in innovation is when it is focused on social purpose.

We must also ensure that our innovation strategy is embedded in a broader industrial strategy. We know that manufacturing is often the locus for significant innovation—we have centuries of evidence to back that up. We have to rekindle Scotland’s manufacturing potential, of which we know that there is loads, particularly if we think of the opportunities in local supply chains—

Ms Chapman, you are over your time. Please conclude.

Apologies, Presiding Officer.

There are opportunities in local supply chains for the renewables industry.

If we get all of this right, the real beneficiaries will be Scottish businesses, entrepreneurs, workers, communities and universities—

Ms Chapman, you need to conclude.

—working for all.

I remind members that speeches should be up to four minutes.

16:25  

It is a pleasure to be speaking in the debate and I am delighted to see the strategy, critical and central as it is to the development of Scotland’s economy. It has been widely anticipated and a great number of people were involved in putting it together, and it has received a very positive response from across industry and universities as a consequence.

The strategy’s key objective is to further commercialise the world-leading research that is coming out of Scotland’s universities. We recognise that tackling that challenge is absolutely critical. We have some great and improving numbers on start-ups and spin-outs, but the commercialisation-to-scale piece is the bit that needs the most focus.

Alongside that, we need wider diffusion of innovation across the wider base of businesses—SMEs in particular—and we need to drive up innovation in the public sector.

The strategy identifies what needs to be done, and the hard work starts now. Taking forward the programmes that have been defined, tracking progress against actions and making sure that they are delivered in the months and years ahead will drive forward what needs to happen across Scotland’s innovation ecosystem. If the strategy sits on the shelf, we will absolutely fail to do that, so it is really important that it is grasped and driven forward by Government.

I want to highlight a couple of really important points. The first is clusters, areas of focus and accreditation. We recognise that Scotland cannot be good at everything, but we need to be the best in the world at what we are good at. That central concept lies at the heart of the strategy.

The four areas have been spoken about, but, frankly, they are so broad as to be almost meaningless. What is really important are the 11 sub-sectors that are identified in the strategy at quite a specific level, because those are the areas where Scotland can be genuinely world leading and beat all comers. The purpose of the cluster accreditation process is to ensure that that happens and that those clusters are developed to become the best in the world, and that other clusters that emerge over time, in our rapidly changing technology environment, have the opportunity to do likewise.

The investment piece is critical, and the funding review, lining up behind those clusters. It is really important that we put our money where our mouth is and drive that potential forward.

Wide adoption of innovation activity across the SME base is absolutely central to driving productivity, which has been highlighted by a number of members. The programme to take that forward is absolutely critical.

I want to talk about the public sector and its role, because a number of aspects of that are central to the strategy. As an enabler, the public sector has to make sure that the infrastructure is in place to support the development of innovation at the cutting edge and more broadly. If you only look at one thing in the strategy, Presiding Officer, I recommend that you flick through and have a look at the maps, which are an excellent and handy guide to all the immense amount of work that is happening in Scotland across all those key areas.

Secondly, we need to make the public sector itself more innovative. I would encourage the minister to make sure that that part of the strategy is taken forward, because the public sector is a significant part of the economy. As we all know, a huge amount more can be done to make the sector innovative across all its aspects.

The next point, which Daniel Johnson correctly mentioned, is about the public sector as a customer. That is covered in the strategy, which highlights the work of CivTech, the Scotland innovates portal, the Scottish health and industry partnership group and so on, but more has to be done to leverage our procurement spend.

Finally, of course, measuring is absolutely critical. The annual report or score card, to make sure that everything is on track across that wide range of metrics that are all important to developing and delivering on the innovation strategy, needs to be driven forward.

I am sure that the Government will take all those points on board and propel Scotland to be a leading nation when it comes to innovation.

16:29  

I welcome this debate on the Scottish innovation strategy and the wider issue of driving innovation in the economy. As we have already heard, Scotland has a great history of innovation. In the 19th and early 20th centuries, we were arguably among the most inventive nations in the world, with Scottish innovators and inventors producing world-leading breakthroughs in the fields of science, engineering, mathematics and medicine, examples of which Kenneth Gibson and Keith Brown gave us in their contributions. There is therefore a great legacy for us to build on.

The focus on innovation at this time is much needed. Economic growth in Scotland is sluggish. We know that our growth here has been roughly one half of the UK average in the years since 2014. Had we grown the economy at even the average rate of the UK in that period, we would today have more jobs, better pay and, crucially, more tax revenue. It is therefore in all our interests to deliver a growing economy.

In that connection, I was pleased to see the innovation strategy state explicitly that the definition of “innovation” includes activity with the purpose of

“helping to solve societal challenges or delivering economic growth.”

We do not often hear the coalition Government talking about economic growth—perhaps because the junior part of it is actively and explicitly hostile to that concept. However, if we are now seeing a new approach from the Scottish Government that is about embracing growth, that is very welcome. However, it will need policies to be put in place to deliver such growth. Too much of what we have seen from the Government in the past has been anti-growth: it has been about hiking taxes in Scotland and stifling economic activity with excessive regulation.

It is not just growth that we have a problem with; it is also productivity—or, rather, the lack of it. That problem is not unique to Scotland. It affects the whole of the UK economy, and indeed most European economies to a greater or lesser extent.

As we have debated in the chamber many times previously, the labour market in Scotland, the UK and across the western world is currently very tight. We know that Scotland is not attracting its fair share of immigrants from the rest of the world, and we lag behind every region of England, apart from the north-east, in our attractiveness to new immigrants, which is particularly important when net immigration into the UK today sits at roughly double where it was prior to Brexit.

Such labour shortages are driving businesses to innovate out of necessity. Let me illustrate that with a short example that involves a pharmacy business in my region, the operators of which I talked to recently. Every week, the work of pharmacists includes producing blister packs of pills for patients, which—particularly for those with complex medications—is absolutely essential to ensuring that they are taking the right pills in the right order and at the right times of day. The preparation of such packs is time consuming and laborious, and precision is absolutely vital. Traditionally, it is done by hand. My local pharmacy practice was struggling to recruit staff with the skills and the focus required to do that repetitive work. Instead, it has invested in an expensive new piece of equipment, which, once set up and programmed, will now prepare pill packs through a mechanised process with 100 per cent precision.

That represents a real productivity gain through innovation. It comes with substantial up-front capital cost and investment, but it allows the members of staff who are presently employed on that important but repetitive work to be redeployed to fill gaps elsewhere in the business, and it delivers a better and safer service to the patients who are the business’s customers. It is a good illustration of how innovation can deliver productivity improvements for a small business, and help to tackle labour market challenges.

I could say much more about the role of universities, but I will conclude by saying that although the new £100 million innovation fund is welcome, Universities Scotland has questioned whether that is new money or simply represents a repurposing of existing investment streams. It would be good to get clarification on that from the minister.

We need to recognise the importance of the Scottish Government’s working with the UK Government in such areas. If our ambitions about improving innovation are to be delivered, which is what we want, that will happen only if both our Governments work together.

16:34  

Scotland has a rich history when it comes to innovation. While we celebrate the achievements of the past, it is important for our focus to be firmly on the future. Neighbouring countries such as Ireland, Denmark and Norway have shown just how successfully innovative small nations can be. It is crucial that we follow their lead and prioritise putting innovation at the heart of a thriving Scottish economy. If we do not do that, we risk being left behind.

The strategy that we are debating is undoubtedly exciting and bold. In Scotland, we have some of the finest research institutes, colleges, universities and businesses in the world. However, what has been missing is a coherent strategy to link all those elements—a proper road map that spells out how to turn research into successful products and businesses and how the Scottish Government can support scaling up.

In Clydebank, we have seen at first hand how innovative technologies bring benefits to a community. For example, the Queens Quay development features Scotland’s first major water-source heat pump system, which will heat water from the River Clyde and distribute it to customers through a district heating network. That project, which was supported by the Scottish Government’s low-carbon infrastructure transition fund, is a fine working example of research being turned into a successful product, supported by the Scottish Government, and delivering benefits to my constituents.

I hope that, as the strategy is implemented, more such successes will occur across Scotland. I often hear from businesses with great ideas that their biggest challenge is securing the funding to deliver. I am therefore particularly encouraged by the strategy’s focus on routes to invest.

Generating funding from private enterprises alongside ring fencing further public sector spending will be vital if the strategy is to succeed. In my constituency, I have been working with the Malin Group on an ambitious project to deliver a Scottish marine technology park, which would provide a unique environment for world-leading innovators in the marine industry and allow them to create a self-sustaining ecosystem that would reinvigorate shipbuilding and renewable industries on the banks of the Clyde and beyond. The key barrier to development is funding, so I am pleased that the strategy outlines how the Scottish Government will work with such projects to bring the investment that they need and to drive collaboration with key partners.

I welcome the renewed focus on the positive contributions that our colleges make to the innovation ecosystem. Too often, they have been deprioritised, but I am pleased that colleges such as West College Scotland, in my constituency, are at the heart of the strategy. Every business that I speak to talks of skill shortages, so it is important to support our colleges as they work to provide Scotland with the skilled workforce that it needs to drive innovation.

In Scotland, we have the natural capital, talented workforce and sectoral strengths to build a thriving economy, but too many of the powers that are needed to deliver our vision lie at Westminster. We need to be free from Brexit and right-wing immigration policies that harm our economic and social prospects.

Will the member give way?

The member is concluding.

Change is not coming from Westminster, with the Tories’ crashing of the economy, and there is no promise of change from Labour, either. Labour’s amendment refers to Keir Starmer’s pledge on the so-called GB energy company, but we know that that man’s pledges quickly disappear into the wind.

To further maximise our economic prosperity, we need full employment, energy and revenue-raising powers to be devolved to this Parliament, which would mean that Scotland was no longer held back by the UK Government.

We move to closing speeches.

16:38  

I am pleased to close for Labour and I am keen to emphasise the importance of innovation across our economy. Many members have spoken about Scotland’s historical pedigree on innovation, but I am afraid that that picture has faded considerably. Even on patents, for example, Scotland has just a quarter of the European average on patent density.

The root cause of a lot of that comes back to firm generation. We are simply not generating the velocity of firms that are owned and headquartered in this country to allow us to have the sovereignty over industrial growth that we need in order to get back on track with all the metrics that we have talked about, such as productivity, product development, exports and patents, which are all critical and surround the firm.

The joint-stock company was the great innovation of the industrial revolution and of the Scottish enlightenment that gave Scotland a huge global head start. There have been great examples. We have talked about Glasgow. Many members have discussed the engineering genius of Scotland. Engineers, scientists, entrepreneurs and canny investors all came together in close proximity to crack the industrial leads that we needed.

There are many opportunities in Scotland today. The innovation strategy focuses on life sciences and health. The BioQuarter in Edinburgh is certainly a great asset. However, we must not forget the life sciences expertise and innovation potential across the country. In particular, a great ecosystem of innovation is taking root in Glasgow.

I had the pleasure of visiting the University of Glasgow’s new Clarice Pears school of health and wellbeing, which has brought together academics who are working to address health inequalities. It will also be a key aspect of the Glasgow riverside innovation district, which was mentioned by Kaukab Stewart.

I put on record the 450 new jobs that are being created at the West of Scotland Science Park as part of a £30 million investment in molecular science by Merck, which is investing to make Maryhill a centre of excellence for innovation in that field.

Yes, the Merck investment announcement was great and a good example of high-quality, high-value jobs. However, again, I lament the fact that it is not a Scotland-headquartered company that is driving that investment in Scotland. We cannot deny that that investment is great, but we come back to the fundamental question about ownership. It is an opportunity for us.

There are two practical challenges. Let us take the strategy in the abstract and then drill down into practical applications. One of the most rewarding things that I have been doing, working with several members from across the chamber, is forming the cross-party group on shipbuilding. I have a personal background in the shipbuilding industry. Although we have focused heavily on naval shipbuilding and ferry building, there is a lot more to it than that. The key to that is the opportunity that exists for Scotland in driving those huge procurement into value propositions that can build companies in Scotland.

I am really concerned that we are potentially going to miss two critical opportunities. I will cite them today for the benefit of the minister. I hope that we can work together to capture those opportunities for Scotland.

Ultimate Boats is a company that is already building on the Clyde and needs to expand. It needs to move to a larger site—moving to a larger site on the Clyde would mean that Ultimate Boats could build 500 vessels a year and create 300 high-quality jobs. The current lease runs out in May 2024 because the landlord wants to redevelop the land for housing. Ultimate Boats has identified a couple of suitable sites in Scotstoun and Inchinnan, but it is struggling to engage with landlords to agree a lease.

The current owner of the business has put in £7 million of capital funding but needs £10 million of extra investment. There has been interest from several buyers. As the current lease is up next May, if the company is unable to find the funding, it will not be in Scotland as of 1 January 2024. A move to the United States is possible—the US is willing to invest £10 million for 5 per cent equity and is likely to see a £100 million return within five years. Another possibility is Poland, where there is a European investor who is ready to invest £30 million to £40 million for 30 per cent equity. Similarly, Invest Northern Ireland is keen to bring the company to Belfast, with the promise of various grants.

What is happening in Scotland? Scottish Enterprise seems uninterested and the Scottish National Investment Bank will not support the business because it is too small. That is not acceptable, minister, and we need to get a grip on the situation urgently. That is a critical, tangible output that we need to secure for Scotland within the next six to seven months.

The cross-party group on shipbuilding has been working to identify opportunities. The products that Ultimate Boats is developing represent huge opportunities. Recent sea trials of a new counter-terrorism craft for Hampshire Police, which leads on counter-terrorism for UK police forces, went very well. Police Scotland diving teams and anti-terrorism units also took part in those trials. Ultimate Boats can build such a vessel in as little as two weeks. The company could be a market leader in that field, but it is likely to leave the UK for the US or Europe unless it can secure the funding—in debt or equity—this year. Time is of the essence if we are to secure those opportunities.

Similarly, there is the Zephyrus project; a tripartite consortium of Aluminium Marine Consultants, an aluminium boat builder, Shift Clean Energy, which makes batteries, and Ecomar Propulsion have agreed to join together to retrofit crew transfer vessels to service offshore wind farms. They are trying to set up a facility in Montrose or on the Clyde. For the latter, they were looking at the Malin Scottish marine technology park facility that is under development at Old Kilpatrick but, unfortunately, timescales for its completion are currently unclear. We must help them to find a facility. Ecomar needs 15,000 square feet, AMC needs quayside access and Shift needs 7,000 square feet for a battery factory. Ecomar needs £2.5 million in equity and £2.5 million in debt to get the propulsion software hydrogen integration factory started. AMC needs £10 million over two years to start to build a yard on the Clyde and create up to 2,500 jobs. Shift requires £5 million to set up a battery facility, but a larger 300MW plant would need £20 million investment in debt.

Therefore, for £30 million to £45 million of investment, the Clyde and Scotland could have a yard, a battery factory and a low-emissions propulsion manufacturer, which would make the area a global leader in zero-emissions crew transfer builds to service the ScotWind project and global export markets.

I urge the minister to meet me and the Scottish National Investment Bank to move the issue on. We cannot afford to wait any longer for those key investment decisions. Zephyrus waited a year for a reply from SNIB. My understanding is that SNIB’s focus may simply be on larger companies, but we will miss—

Mr Sweeney, you should bring your remarks to a close, please.

We really need to get on with this, and I hope that we can seize the opportunity for the good of Scotland—time is of the essence.

16:45  

I welcome the document that has been published by the Scottish Government, because it is a much-needed outline of the route map to making Scotland a world-leading small nation for innovation, which we are definitely capable of being. Daniel Johnson made the good point that we have been a long time waiting for this. Nonetheless, we broadly welcome the steps outlined in the strategy, which is necessary to grow the sector. Likewise, we support the decision to develop an innovation scorecard, which will measure the success of the strategy by comparing Scotland’s innovation ecosystem with those of other nations. That is very important when it comes to inward investment.

Various members have said that Scotland has, for centuries, punched well above its weight in technological innovation, but the surrounding investment infrastructure is now a problem. Ivan McKee was quite right when he said that that is as essential in the public sector as it is in the private sector.

We have raised some key points this afternoon, but by far and away the most important of them is the need to complement the ambitious innovation strategy with economic policies that make Scotland the most attractive place in which to live, work and invest. To date, despite the Scottish Government’s very blunt acknowledgement in the foreword that Scotland’s productivity has lagged behind, we simply do not have the economic policies in place to properly address the issue.

The minister referred to stickability, but I hope that he recognises that that has to change to relate to the policies that Murdo Fraser described in his speech, because current tax structures do not bring in the necessary revenue to drive growth, and considerable increases are expected in Scottish Government expenditure over the coming years, especially in health, social care and social security. The current tax structures definitely need reform.

The Scottish Government claims that this is all about progressive taxation, with threats to increase income tax even further. Business, however, will tell a very different story, because it believes that it is about making Scotland less competitive, which is a big worry when it comes to innovation.

Government ministers tell us that looking to Scandinavia for best practice is about innovation. I think that that is true about innovation up to a point, but it is certainly not true when it comes to tax policies. We need look no further than Norway to see what has happened with its investment potential. Paul Sweeney made a good point about new patents.

As the Scottish Government has acknowledged, not nearly enough of our enterprises are innovating, and those that are find it difficult to expand. The Scottish Government has a really big question to answer about why that is, because it is all very well having a national productivity programme, but that must come alongside the right economic policies to create growth and stability. That includes ensuring that the—

Will the member give way?

Of course.

Does the member recognise that perhaps one of the big constraints is access to capital? It is simply very difficult for Scottish businesses to organically access capital finance in this country. Often, the only alternative is to put themselves up for sale overseas.

Yes, I recognise that. The capital aspect of the issue is vital. I hope that the Scottish Government is taking a few lessons this afternoon about what we have to do with capital infrastructure. It is also very important that it listens carefully to what our universities are saying, because, to be quite blunt to Keith Brown and Ivan McKee, it is all very well to talk about the outstanding work that is going on in our universities—that is very clear to those of us who know them—but we have to listen to what Professor Dame Sally Mapstone is saying. When the Scottish Government is clawing back £46 million of promised expenditure in tertiary education, there can be innovation only if there is “well-supported, excellent research”, and she posits the idea that Scottish universities are not there to manage decline—that is a quote from her. Those are strong words from Universities Scotland.

Will the member take an intervention?

Do I have time?

You have three minutes, Ms Smith.

Liz Smith says that we need to reduce taxes and, at the same time, calls for more spending. Can she square that circle?

Yes, I can. We made suggestions at the time of the budget about where we would make some savings, and we will continue to do that.

Success is all about Scotland’s two Governments working together. I am not quite sure why there were some murmurings from the SNP when one of my colleagues mentioned that. I think that that is what the public want to see. Particularly in difficult economic times, the last thing that we want is a divergence of opinion between our two national Governments. It is welcome to see what the UK Government is doing, but it is also welcome to see what the Scottish Government is doing. I am getting a bit tired of the constant constitutional bickering in the chamber. The public want to see success. They want to see us working together, and they want to see delivery in that respect.

We should not underestimate the scale of the financial support that is required when it comes to innovation. That is why it is vital that there is a joint approach.

Economic growth is absolutely critical. I do not understand why the Greens are so intent on opposing economic growth in order to do all the things that they talk about when it comes to social wellbeing and so on. We will not have social wellbeing unless we have the fundamental economic growth that underpins that social wellbeing. I simply do not understand the Green position on that, and I do not think that some SNP members understand the Green position on that either.

To conclude, we very much welcome the publication of the much-needed strategy, but if the Government is to have any chance of making a success of it and harnessing all the vital potential that Scotland undoubtedly has, we have to ensure that it is complemented by economic policies that make Scotland an increasingly attractive place in which to live, work and—most important—invest.

16:51  

The debate has been a good one, and I will do my best to cover some of the themes that have been raised by members across the chamber.

I think that we can all agree—indeed, we have agreed this in the debate—that Scotland is a country that is famous for ingenuity, invention and innovation. Over the centuries, we have played a role in shaping the future, and here we are today with a vibrant and innovative sector, research, universities and institutes in our country as well as entrepreneurs once again putting in great work to shape the future. Indeed, in many ways, the future is here already.

We have to be very careful when politics enters the debates, because amazing things are happening in Scotland at the moment. We should be broadcasting that to the rest of the world and talking about them over and over. The James Webb space telescope, which is the world’s most powerful telescope, is now sending back breathtaking images going back to the beginning of time—if we can get our heads round that. One of the key instruments on that telescope—the infrared instrument—was developed in Edinburgh in a project that was led by Professor Gillian Wright. That is what Scotland is contributing to humankind at the moment. Others have cited many other examples of what is happening in the economy, the business community and the health system, for example.

Some of us remember “Scotch and Wry”. I think that the Rev I M Jolly has been reincarnated in Douglas Lumsden. The fact that he delivered such a negative, doom-and-gloom speech in the debate was out of synch with many of the other contributions across the chamber. Members talked up Scotland’s achievements and what is happening in Scotland at the moment.

There has been a lot of talk about productivity, for instance. It is important to note that Scotland’s long-term productivity growth has outperformed that of the UK as a whole. Between 2008 and 2021, productivity in Scotland grew at an average annual rate of 1 per cent a year. That compares with the UK average of 0.6 per cent. The level of productivity in Scotland is now estimated to be 97.6 per cent of the UK average. That means that we now have the gap down to less than 3 per cent. There is more to be done, but we are outpacing the rest of the UK.

I agree that we should not be wholly pessimistic, but nor should we be blindly optimistic. The HERD numbers put us above the UK average, but will the minister address the point about BERD? Will he acknowledge the fact that, in 2020, Scotland had just 251 patents granted? Does he recognise that that is the challenge that we have in front of us? Will he set out what he thinks we will do to drive up the number of patents?

We have set out what we want to do to address some of the challenges—they are outlined in the national strategy for innovation that we are debating today.

In 2020, Scotland’s gross expenditure on research and development as a share of GDP was above that of the EU, which was only 2.19 per cent as compared to Scotland 3.13 per cent. We were also above the OECD average, which was only 2.67 per cent.

In addition, Scotland ranked first among OECD countries for its higher education R and D spend as a percentage of GDP back in 2020, so it was also above the rates for the EU and UK.

The latest UK innovation survey results from 2020-21 show that, in Scotland, 33.5 per cent of collaborating innovative businesses did so with a university or other higher education institute, which is the highest rate in the whole of the UK.

The European Commission’s regional innovation scoreboard assesses the performance of 240 regions across the continent. Scotland was classified as a strong innovator, with its performance improving. Indeed, we were ranked in the first quintile of that scoreboard.

There are lots of reasons for optimism. As the strategy lays out, there is a lot of room for improvement, too. We do not want to settle for where we are; we want to match the best.

Ivan McKee and others addressed the issue of—

Will the minister address my point about Universities Scotland? I asked whether the £100 million new innovation fund is new money or just a recycling of previous announcements.

We introduced an increase in the research funding for universities, but the £100 million fund is a university initiative, and it is important to bear that in mind.

Ivan McKee and others raised the role of the public sector, because this is not just about private business. It is important to say that Scottish Government’s CivTech initiative is the world’s first successful public sector-focused innovation accelerator. It is already regarded as an exemplar initiative and has been described as a gold standard public sector innovation driver.

We have also got the supply chain development programme, which uses public sector procurement to improve the capability of Scottish manufacturing chains.

One of the Tories had the audacity to say that rural communities are not mentioned in the strategy. That is nonsense. The national innovation strategy recognises the existing expertise across Scotland, including our regional strengths across the Highlands and Islands and throughout the south of Scotland, from harnessing our natural capital assets such as renewable energy to revolutionising dairy farming and agricultural practices, which some members mentioned. The future of all Scotland and our rural communities is at the heart of the strategy.

We are not starting with a blank sheet of paper. This Government has created seven innovation centres. We have got the Data Lab; the Industrial Biotechnology Innovation Centre; the centre for sensor and imaging systems; the Scottish Aquaculture Innovation Centre; a centre on the built environment; the Digital Health and Care Innovation Centre; the Precision Medicine Scotland Innovation Centre; and, of course the National Manufacturing Institute Scotland. Each year, £430 million is invested in innovation across the whole of the public sector.

We are outperforming the UK in the creation of green jobs, on exports and in a range of other areas. It is clear that all that investment in innovation is paying dividends for the Scottish economy.

Murdo Fraser, Jamie Halcro Johnston, Martin Whitfield and others mentioned the potential for innovation and what it is delivering in health and social care. There are some fantastic examples. Murdo Fraser mentioned one in relation to pharmacy, but there are so many others. For example, NHS Greater Glasgow and Clyde is investigating the potential of using artificial intelligence to detect a variety of cancers from thin slices of human tissue from a biopsy that are treated with chemicals and traditionally examined under a microscope. There is innovation throughout the NHS at the moment.

There is also the private sector. We have got many global challenges being addressed through innovation. One of our companies, Intelligent Growth Solutions, is an award-winning international agritech innovator, delivering indoor vertical farming solutions to people, customers and businesses across the world, as well as contributing towards our net zero targets.

We have got Spirit AeroSystems, which is one of the world’s largest manufacturers of aerostructures for commercial aircraft, defence platforms and regional jets. Its facility in Prestwick has been established as a centre of excellence for research and development of advanced materials and digital manufacturing technologies and processes.

Those are just some of the examples of the great innovation that Scotland’s capable of by seizing the opportunities that we have.

The space industry, which we debated recently in the chamber, is another exemplar of innovation. We have an ambition to grow the space sector in Scotland to 20,000 jobs by 2030 and to having a £4 billion share of the industry globally. That is a really exciting innovative sector at the moment and it is paying dividends. Just a couple of weeks ago, I was at a space sector event in Farnborough, and I spoke to companies from all round the world that knew what was happening in Scotland. They want to relocate to Scotland or invest here to become part of the cluster here. That is why the cluster approach that is being adopted in the strategy is so important—it will be a magnet to attract companies from around the world.

The minister makes an important point about the clustering effect. One of the big opportunities identified in the debate was about the maritime sector and ScotWind, and I mentioned two companies in that regard. Will the minister refer to those companies and offer to try to make them succeed in Scotland?

Please conclude, minister.

I do not have time to address all the sectors, but of course the maritime sector has great potential for innovation.

The space industry, which I just mentioned, is one of many sectors that are exemplars of the benefits of inward investment. Some Tory members said that it is important that Scotland becomes an attractive location for investment. I say to the Conservative Party that we are already a very attractive location for investments. We are outperforming the UK and the European Union on that. As announced yesterday, Scotland’s growth in foreign direct investment projects outpaced growth in Europe and the rest of the UK for the second year in a row. Scottish projects were up by 3.3 per cent in 2022, compared to—wait for it—a 6.4 per cent fall in the UK and only a 1.4 per cent increase in the rest of Europe.

Minister, we are over time, and I must ask you to conclude.

We should congratulate all the innovative businesses in Scotland on the work that is leading to those record-breaking results for inward investment projects here.

We can be proud of the new strategy. It is a 10-year strategy and, in 10 years’ time, when we look back, we will be proud of all the achievements of Scotland’s growing economy and growing high-value businesses, and of the contribution that innovation is making to humankind and the planet and to Scotland’s quality of life and wider ambitions.