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Chamber and committees

Meeting date: Thursday, November 17, 2016

Meeting of the Parliament 17 November 2016

Agenda: General Question Time, First Minister’s Question Time, Flexible Working Practices, Scottish Child Abuse Inquiry, Innovation, Parliamentary Bureau Motions, Decision Time


Contents


Innovation

The Deputy Presiding Officer (Christine Grahame)

The next item of business is a debate on motion S5M-02511, in the name of Shirley-Anne Somerville, on how Scotland’s innovation centre programme is driving innovation in Scotland.

15:03  

The Minister for Further Education, Higher Education and Science (Shirley-Anne Somerville)

As the American economist Theodore Levitt stated:

“Creativity is thinking up new things. Innovation is doing new things.”

Here in Scotland, we can lay claim to having done both quite well over the years. We have a proud history of many historic achievements, from penicillin to the telephone, and from the bicycle to the ATM. However, we cannot, and should not, live in the past. To become a more successful country, we need to drive greater innovation and create opportunities for our businesses and Scotland to flourish. This Government is doing what it can to grow a sustainable economy that is resilient and inclusive. Encouraging innovation is key to that.

Innovation is critical to our ambition to shift the dial on Scotland’s economic performance. That is why it features heavily in the four pillars of the Government’s economic strategy. It is why we have published the Scotland can do statement of intent for Scotland to become a world-leading nation in innovation and entrepreneurship. It is why the innovation centre programme was established in 2013 to drive greater collaboration between industry and academia and to build on our research strengths.

The programme has been developed with and is being delivered through the Scottish Further and Higher Education Funding Council in partnership with Scottish Enterprise and Highlands and Islands Enterprise, supported by Government funding of up to £120 million between 2013 and 2019. The eight innovation centres sit within some of our key sectors: construction; oil and gas; stratified medicine; digital health; industrial bio-technology; sensors and imaging; big data; and aquaculture.

Ensuring that an industry demand-led focus sits at the heart of the innovation centres’ activity has been a real strength of the current approach, bringing people, businesses, academics and agencies together, physically and conceptually, so that ideas are sparked and co-developed. The collaborations seek to address challenges that industry has identified by exploiting the strength and quality of research in Scotland’s world-leading universities. Our higher education sector was exactly the right place in which to establish the innovation centre programme, with universities being able to provide the right governance and support structure, as well as a strong research base, the right mix of graduate and academic skills and a project-focused ability to generate new ideas, products and processes.

It is appropriate today to acknowledge the exciting progress that has been achieved to date, with impact already being made both in Scotland and internationally. NHS Scotland, Thermo Fisher Scientific, Hydrasun, Marine Harvest Scotland, Cascade Technologies, AstraZeneca and Ingenza are just a few examples of the global players that are working alongside our small and medium-sized enterprises in innovation centres across a range of sectors.

CENSIS, which is the centre of excellence for sensor and imaging systems, recently announced its £6 million mirage project, which is a collaboration with four companies and the University of Glasgow to produce materials for goods that use sensors, ranging from asthma inhalers to infrared cameras. Placing Scotland at the forefront of the £7 billion global sensors and imaging systems market, the project is expected to deliver £56 million to the Scottish economy during the next 10 years and will give the companies involved a critical competitive edge in the global sensors market.

The Scottish aquaculture innovation centre, working with Marine Harvest Scotland, Scottish Sea Farms, BioMar and the University of Stirling, is co-ordinating a £4 million project to help address on-site control of sea lice—a key challenge facing salmon aquaculture—through the cultivation and use of cleaner fish as biological alternatives to medicinal control. Aquaculture is one of our real economic success stories. If it is grown sustainably, it is on track to contribute more than £2 billion annually to the Scottish economy by 2020 and to support 10,000 jobs—and there is significant potential thereafter.

Some collaborations are also helping to deliver benefits for the health and wellbeing of people in Scotland. The digital health and care institute has been involved in the development of my little one, which is technology that makes it possible for parents to keep in touch with their babies while they are in neonatal care. In October, stratified medicine Scotland, representing NHS Scotland and Scottish universities and industry partners, and AstraZeneca announced a new partnership, which will offer researchers new opportunities to develop innovative new treatments and target the right patients to the right medicines using patients’ genetic information. It means that Scotland will be an active partner in AstraZeneca’s global genomics initiative, further demonstrating Scotland’s ability to attract major industry projects.

By working to meet the needs of industry and graduates, innovation centres are also adding to our skills mix and encouraging the development of existing and new skills. Recognising that Scotland is a global centre of excellence for data science, the data lab is partnering with MBN Recruitment Solutions, one of Europe’s leading data science and big data recruiters, to help place MSc graduates in organisations that are seeking to make the most of their talent.

The industrial biotechnology innovation centre has been working with Forth Valley College and Glasgow Kelvin College to develop bespoke higher national certificate and higher national diploma courses in industrial biotechnology. Those qualifications aim to produce graduates who have key skills for employment in the sector, meeting crucial industry demand.

There is no doubt that a great deal has been achieved in the early years. However, at the halfway point in the programme, it was right to commission a review of progress to date. I thank Professor Graeme Reid for chairing that work and for the review’s thoughtful and in-depth reflections.

It is reassuring that Professor Reid concluded from the evidence that his review gathered that the programme is on the right track for delivering long-term economic benefits to Scotland. The recommendations chart a useful course for the way forward, building on strengths and identifying—rightly—the challenges for the next stage of the programme’s development. I assure Professor Reid and every member in the chamber that we are considering the recommendations fully and thinking about what needs to happen next to allow the centres to realise their full potential.

I will respond to several of the report’s key recommendations. The first recommendation calls for the periodic assessment of whether additional innovation centres should be created, subject to the availability of resources. The Government is happy to accept that recommendation and the timescales that it sets out. It is right and proper that we ensure that we focus on the right spheres and sectors and that we are keeping up, as there is nothing innovative about developing solutions for past rather than future priorities.

Recommendation 6 advises

“that every university and each Innovation Centre should make renewed efforts to involve as much of Scotland’s excellent research base as possible with the programme”.

I agree whole-heartedly with that, and I am sure that the innovation centres, the funding council and the university sector will work to the timescales that Professor Reid suggests.

Professor Reid also recommends that

“the Scottish Funding Council ... explores Further Education ... college participation in Innovation Centres”.

Although a number of colleges are already active in enhancing the work of the innovation centres in various areas, colleges can and should do more to capitalise on their local connections and their proven ability to engage with business. I was interested to hear about the work of the construction Scotland innovation centre in exploring how it can work more closely with the college network.

From my many visits to college campuses since I became minister, I know that there are already great examples of innovation happening in our colleges, but we need to expand that and encourage such work throughout the college sector so that colleges view the innovation agenda as being as much in their space as it is in that of our universities. There is definitely a bigger role for the college sector to play in the programme. We will explore with the funding council how best to take forward the actions that Professor Reid has suggested and will consider what more might need to be done to enable the further education sector to play its part.

Another key recommendation is for the enterprise agencies to

“identify and assess opportunities for new approaches to their funding support for Innovation Centres to increase business engagement and enhance the Innovation Centres programme”.

Professor Reid also recommends that the Scottish Government should

“simplify the outward appearance of arrangements for business support and better define and explain its specific benefits to individual businesses”.

He goes on to state that

“support for the business community”

should

“be articulated consistently in business-friendly language rather than the language of the public sector”.

Both those recommendations align strongly with the conclusions of phase 1 of our enterprise and skills review and will be considered in phase 2 of that review.

In recognising the value of those and other recommendations, the Government is demonstrating that it is open to addressing the opportunities and challenges ahead and that it intends to stay focused on the future needs of our economy. I hope that there will be agreement across the chamber on many of the key areas. In that spirit, we welcome all the Opposition amendments and their shared focus on the key points that arise from the review.

Paul Wheelhouse and I look forward to a robust debate, and we will listen carefully to what members have to say. After all, there is no monopoly on wisdom on this issue and many other issues. This is a shared endeavour, and it is important that we get that message across to all agencies, businesses, universities, colleges, students, graduates and academics. It is important that they hear that the Scottish Parliament shares a belief in the role that innovation is playing and should continue to play in helping to create sustainable economic growth and prosperity. The Parliament should acknowledge and, indeed, value the contribution that Scotland’s innovation centre programme can make to driving our innovation forward, both now and in the future.

I move,

That the Parliament acknowledges the contribution that Scotland’s Innovation Centre Programme can make as a driver of innovation on some key sectors of the economy; welcomes the publication of the independent review of Scotland’s Innovation Centre Programme by Professor Graeme Reid, and recognises that the review’s recommendations set out a helpful course for the Scottish Government to consider during the next stage of the programme.

15:15  

Dean Lockhart (Mid Scotland and Fife) (Con)

We very much welcome this debate on innovation, the role of the innovation centre programme and Professor Reid’s recommendations. We agree with the minister that innovation is important for our economic wellbeing. It is the basis for economic and social development. According to the Confederation of British Industry, innovation drives productivity, attracts international investment, raises living standards and supports inclusive growth, which we can all agree with.

In Scotland, we are rightly proud of our strong history of innovation and our world-class universities. From James Watt and the steam engine more than two centuries ago to Dolly the sheep, we have been at the forefront of innovation. However, the unfortunate reality now is that we have been overtaken by other countries on innovation and productivity performance. In 2007, Scotland’s productivity levels ranked in the second quartile of Organisation for Economic Co-operation and Development countries, but the latest data places Scotland in the third quartile, with productivity levels that are some 25 per cent below those of neighbouring countries such as Ireland and Denmark. The target for Scotland to be in the first quartile by 2017 will—unfortunately—not be met.

I make it clear that this is not about league tables; it is about our economic wellbeing and, ultimately, the amount of money that is available for public spending. According to Scottish Enterprise, failure to meet innovation and productivity targets has cost the Scottish economy around £45 billion, which is the equivalent of an increase in annual average wages of £6,500.

Ivan McKee (Glasgow Provan) (SNP)

Does the member accept that small, independent countries such as Ireland and Denmark have overtaken Scotland because they control more of the levers that enable economic growth than we currently do?

The Deputy Presiding Officer

Before Mr Lockhart answers, is your microphone on, Mr McKee?

Ivan McKee

Yes.

The Deputy Presiding Officer

You must point it upwards, or heavenwards. Please continue, Mr Lockhart.

Dean Lockhart

Thank you, Presiding Officer. That gave me a bit of time to think.

I genuinely think that most of the required policy levers are devolved—they relate to education, skills, enterprise and training. They are in the hands of the Scottish Government, as are those for related productivity areas such as transport. We can therefore work together, because we have the powers to improve levels of productivity.

There is a clear policy challenge for all of us on how we can address the innovation and productivity gap. The innovation centre programme is definitely a welcome step in the right direction. Private sector research and development spending in Scotland needs to increase, and the innovation programme brings together industry and universities to address the innovation needs of businesses across the eight sectors that the minister mentioned.

The centres are industry led, which means that business in a sector can identify and drive the innovation that is required. The centres typically target projects that have technology readiness levels in the range of four to seven out of 10. Such projects are in the challenging middle ground between early-stage academic research on the one hand and projects that are close to being market ready on the other.

Historically, the area between academic research and commercialisation has been difficult to bridge, so anything that helps to improve the transition is welcome. Although the centres are funded by the SFC, it is important that each centre tries to obtain private sector investment on a project-by-project basis. A good example of that has been the Scottish aquaculture innovation centre, based in Stirling, which I understand has leveraged an average of £270 from industry for every £100 of its own investment. I, too, congratulate all the other innovation centres, which the minister mentioned.

The review that Professor Reid undertook and the supporting analysis by Ekos indicate that the programme is on the right track, but a number of important recommendations have been made on how it can be taken to the next level. I, too, thank Professor Reid for his excellent review. The absence of performance targets for the programme was recognised as a gap that should be addressed so that overall performance can be assessed against expectations. There is also a need to clarify what the programme is trying to achieve overall. What is the optimal balance between generating income in the short term and delivering a long-term benefit for the Scottish economy?

Clarity is also required on Government policy. As the co-chair of the innovation Scotland forum said in his feedback, the Scottish Government is

“very focused on innovation without articulating what is meant”.

I agree that innovation is a central part of the Scottish Government’s economic strategy, but the Government needs to clarify precisely what it is trying to achieve, what success will look like and how that will be measured.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I am travelling with the member on the thrust of his argument. Does he agree that it is important that there is space for projects and thinking that do not lead to a successful outcome? In other words, does he agree that one of the tests of whether people really have space to think is whether only a proportion of the ideas ultimately succeed?

The Deputy Presiding Officer

It is all right, Mr Lockhart—you can wait to rise until I call you. I see that you did not need time to think of a response to that question and that you are desperate to get to your feet. You may do so now.

Dean Lockhart

The short answer is yes—I agree.

I agree with the minister that the engagement of Scotland’s colleges in the programme should be encouraged. We would go further and reinstate a number of the full and part-time college places that have been cut, which we believe has resulted in a growing skills shortage.

It is recognised that the innovation centres are operating in a crowded landscape, and the review recommends that the Scottish Government should simplify the innovation and business support that is available. We have called for that and look forward to the Government addressing that as part of phase 2 of the enterprise and skills review.

We agree with the Reid review’s calls for increasing private sector investment and periodic assessment of new additional innovation centres—we have called for a renewable energy centre to be created. We also agree with the call for the promotion of case studies to highlight successful outcomes and help to promote Scotland internationally as a business-friendly environment.

The innovation programme has already achieved success in terms of new projects in Scotland and overseas, new products and services, and close to £5 million in revenue that is attributable to those new products and services. Those achievements are significant, and we are confident that there will be many more to come. However—this is not a criticism—those outcomes and achievements do not quite meet the optimistic targets that Mr Russell announced in 2014, when he told the chamber that

“Based on the business plans for individual centres, the cumulative boost to the Scottish economy could reach a massive £1.5 billion and up to 5,000 jobs could be created”.—[Official Report, 20 August 2014; c 33689.]

I look forward to hearing today from the Government whether those forecasts remain its central forecasts for the programme.

I look forward to the Scottish Government announcing new innovation and productivity targets for 2017 and beyond. If the Government wants to reach the first quartile, it should follow Professor Reid’s recommendations and take our policy advice. We need to address the skills gap through reinstating college places; simplify the cluttered enterprise and business support landscape; address the shortage of science, technology, engineering and mathematics teachers in school and STEM subjects in further education; take steps to increase productivity in the public sector, including the national health service; and use the enterprise review to help Scottish business to scale up and access the growing export markets.

We welcome the fact that the Scottish Government has already followed our policy ideas on a south of Scotland enterprise agency and on expanding the Scottish Development International network. We look forward to the Government adopting more of our policy ideas to make Scotland a more innovative and productive country.

I move amendment S5M-02511.3, to insert at end:

“; urges the Scottish Government to introduce clearer industry-defined success measures in order to assess the overall performance of innovation centres; encourages it to take further action to boost productivity levels in the Scottish economy through innovation, and notes with concern the latest available productivity figures, which show that Scotland currently ranks in the third quartile of OECD countries for productivity, despite the Scottish Government’s target for Scotland to rank in the top quartile by 2017.”

The Deputy Presiding Officer

Before I call Iain Gray, I inform members that I can give them a bit of extra time if they take interventions, so people need not look so anxiously at the clock.

15:23  

Iain Gray (East Lothian) (Lab)

There can be no doubt that the space in which the innovation centres are designed to operate—the interface between business, enterprise and academic research—is critical to our future economic prosperity. Whether we are in or out of the European Union, the single market, the European Free Trade Association or the European Economic Area, globalisation means that our future lies not in low-skill, low-wage jobs but in high-skill, high-value and highly innovative knowledge-rich enterprise.

While we congratulate ourselves—as we often do in the chamber—on the quality and volume of academic research that Scotland produces, whether it is measured by peer-reviewed papers or the fact that we win more than our fair share of research funding, we also know that, in the private sector, research and development investment and activity remain low in comparison with many of our competitors or even other parts of the UK.

The Government is right to invest in innovation—in ensuring that close-to-market research is undertaken by academics; in helping businesses, especially small and medium-sized enterprises, to understand the importance of innovation; and in connecting businesses with partners that can drive innovation through their businesses.

It is a difficult area, though, and this is not the first attempt. The intermediary technology institutes were launched many years ago to achieve similar ends, with a bigger budget. I had some small part in that initiative, and I have to admit that the institutes did not achieve what they set out to do. Hindsight suggests that they did not deliver on research close enough to market, they had a too-linear—and perhaps outdated—concept of the innovation pipeline, and the funding model that they generated for controlling intellectual property hampered commercialisation.

Stewart Stevenson

The member talked about academic research. When Albert Einstein published his paper on the special theory of relativity, it did not contain a single reference. In the modern climate, it would not have got beyond his tutor. Is one of the issues that we must break down barriers around academic research, so that there is blue-sky thinking and people do not simply look for and recycle other people’s ideas?

Iain Gray

We certainly have to ensure that there is blue-sky research in our academic institutions, but I am saying that we must also encourage academics to do research that is perhaps closer to real-world problems than Einstein’s paper was at the time. I might say more about that towards the end of my speech.

The innovation centre programme is critical, but there are pitfalls that we must avoid falling into again. It is surprising that this is just about the first time that we have debated the programme, as far as I can see, although it has merited mentions—but not much more than that—in the First Minister’s programme for government and in the economic strategy.

Professor Reid’s review is welcome and timeous, although in some respects it raises more questions than it answers. It does not really measure the centres’ success against the core objectives to which Mr Lockhart referred—the leveraging in of private finance or the generation of gross value added in the economy. Above all, there is no evidence of the creation of 5,000 jobs as a result of the programme, as was promised. Professor Reid also raised the issue of whether the centres are operating in the right sectors, but he gave no view on whether that is the case.

It is fair to say that the review is of the programme rather than the centres, and it is reasonable to imagine that some centres are more successful than others. My colleague—or comrade, as he usually prefers—Richard Leonard will talk about his positive visit to the innovation centre for sensor and imaging systems. Other innovation centres seem to have had a more chequered beginning. For example, the digital health and care institute experienced a sudden shift from being hosted by the University of Edinburgh to being hosted by the University of Strathclyde. It has lost a chief executive and, more recently, a chief finance officer. Public statements from the institute provide little explanation for the change, although they say quite a lot about the recruitment of Andy Murray as an ambassador for digital health. I am as big an Andy Murray fan as anyone here, but I would like more evidence of the centre’s substantial output.

As the minister acknowledged, the Reid review recommended further evaluation of the programme—and soon. It is important that that happens and that there is an assessment of success in specific outcomes, such as jobs and private investment. That is why we lodged the amendment that we lodged. We also suggest that, when that has happened, we should debate the programme again. I repeat that we regard the policy intervention as critical, in a critical area of the economy. We support it and we need to give it more detailed attention in the Parliament.

We need the Government to give some indication of the programme’s security. The initiative is not new; it was launched in 2012 and its initial five-year run was from 2013 to 2018—the minister said 2019, but initially it was to run to 2018—so we are more than halfway through. Professor Reid suggested that we commit to 10 years. In principle, such a long-term commitment makes sense, but only if we have detailed evidence of early interim measurable success.

The Royal Society of Edinburgh briefing raises another uncertainty for the programme. The centres are overseen by the Scottish Further and Higher Education Funding Council board, around which rumours of imminent demise swirl. The innovation centres could well benefit from oversight that involves input in which the balance has shifted a bit more to the enterprise agencies. Perhaps a case could be made for that, but that cannot be in any way a wedge for subsuming the funding of higher education generally under an overarching enterprise and skills board—especially one that is chaired by a minister.

Universities are key to our economic growth, and the innovation centres are important to that. However, as Mr Stevenson indicated, universities and research are about much more than that utilitarian objective. To compromise their wider role, or even their autonomy and independence from the Government, would be an unforgivable act of folly.

I move amendment S5M-02511.1, to insert at end:

“; notes that Professor Reid called for a further review to be completed by June 2017, and considers that this review should report to the Parliament, which should include progress made on innovation centre objectives, including the generation of 5,000 jobs and the leverage of private sector funding into centre projects, and on improvements to the involvement of further education colleges in the programme, and that it should recommend whether new centres in other sectors are required.”

15:30  

Tavish Scott (Shetland Islands) (LD)

I, too, want to start with the context that other members have raised. The United States President-elect is, by any standards, uttering protectionist views about trade policy for the future, and we are potentially leaving the European trading bloc, which, in that context, must be even more utterly mad than the proposition is at the moment.

What are Scotland’s advantages against what is at best the most uncertain period that most of us have known in our adult lives? We have certainly been a nation of innovators. Whether we can be that again depends not just on innovation centres, but on many more fundamentals of our education system and other aspects of that.

I recognise that Governments across the piece have looked into the issue and considered different ways of addressing it. As Iain Gray rightly mentioned, the intermediary technology institutes, which were part of a previous plan, had much merit, but they got bogged down, did not ultimately work, and were hand-tied by quite a lot of difficult work that became too much for them. If I remember correctly, they were subsumed into Scottish Enterprise. That in itself may be a lesson that current ministers may want to consider very carefully.

I took one other lesson from the whole ITI examination. A piece of research by some entrepreneurial researchers from universities across Scotland that was published in January 1915—I am not going that far back; I meant 2015—was critical of the intellectual property points that Iain Gray rightly mentioned. In particular, the researchers said:

“Innovation policy-makers need to become less focused on generating the supply of new IP and more focused on increasing the ability of Scottish SMEs to undertake innovative activities ... A critical mass of innovative SMEs will provide more of a seed-bed for new tech start-ups than policies to stimulate and protect new IP.”

There is something in that. I mentioned that in the context of Scottish Enterprise because I am not the only member who has, over the years, received representations from small and medium-sized businesses about the account managed system of our enterprise agencies, which concentrates on the medium and the large, but not necessarily on the small. Lena Wilson is usually very open about that, and I hope that ministers will reflect on that in the context of work that is being done on the innovation centres.

The minister rightly mentioned Professor Graeme Reid’s recommendations, and others have commented on them, too. I will not go through them all. They all have merit, of course, but I want to mention one that has particular merit. It is about exploring the further education sector’s relationship with the innovation centres. It is claimed that no further education colleges contributed to the review. That must be of some concern.

The Scottish aquaculture innovation centre, which has already been mentioned, is doing work with further education colleges, not least the North Atlantic Fisheries College in Scalloway, which is in my constituency. Under a three-year project, work on a core pilot-scale hatchery for the mussel industry is going on. Members may ask why that is important. Many members might sit in Edinburgh’s finest restaurants and eat mussels. I am pleased to say that 80 per cent of Scottish production of mussels comes from Shetland. However, there is a significant commercial issue with spat. I will not bore members with five minutes on spat—Stewart Stevenson will do that later—but that is nevertheless an important matter. We have an innovation centre, a college and—more to the point—industry working on solutions to that particular problem, and that is exactly the kind of progress that must be made and work that must be done in this area.

My amendment, which Iain Gray kindly touched on, asks the Government for clarity around the skills review not because of its own importance but because, for a number of years now, our attempts to consider big structural changes to our organisations in Scotland have been littered with examples of the eye being well and truly taken off the ball when people, their jobs and their organisations are, at best, being questioned. That is the current situation not just for the funding council that Mr Gray mentioned, but for the three other bodies that are part of the review.

Government has, of course, every right to undertake a review, but bringing this review to a conclusion is now of the essence. The funding council has an acting chief executive; the chair, Alice Brown, leaves at the end of the year; and there is no certainty around the board. Highlands and Islands Enterprise, too, has an acting chief executive, and there is no certainty there, either. I suggest to the Government that none of that helps the on-going process of ensuring that there is a real focus on these innovation centres and that the focus for the organisations in question is on all the recommendations in the review being discussed this afternoon instead of the inevitable focus on their own future that they currently have. That is the danger with reviews that go on and on.

I would therefore be very grateful if the ministerial team could, when they wind up, clarify the review’s timescale. They could also make absolutely clear the position of the individual boards of these four organisations and tell us whether and when temporary chief executives will become full-time chief executives. That would allow the innovation centres underneath all that to move forward with the significant all-party and Government support that they clearly and correctly have.

On the Reid report’s recommendation with regard to the future of innovation centres and assessing whether additional centres should be created, which the minister mentioned and which the Government is accepting, I note that the renewables industry has made the case, as Dean Lockhart rightly pointed out, for a renewables innovation centre. I should say, though, that if our Conservative friends spent a bit of time down at Westminster changing Conservative renewables policy we would all get on a lot better in Scotland with regard to the future. Nevertheless, it is an important policy development, and it is, without a doubt, an area in which Scotland can play—and is already playing—a very significant role. Surely it is part of that innovation for the future that we need for our economy, and I suggest that the Government take it forward.

I move amendment S5M-02511.2, to insert at end:

“; notes that the report stated that the Scottish Funding Council and enterprise agencies have vital roles in supporting the innovation centres, and calls for clarity from ministers on their proposals for a Scotland-wide board governing Scottish Enterprise, Skills Development Scotland, Highlands and Islands Enterprise and the Scottish Funding Council, and how this will impact on innovation centres and, in particular, their ability to make strategic long-term decisions.”

15:37  

Kate Forbes (Skye, Lochaber and Badenoch) (SNP)

The million-pound question for Scotland’s economy is what will drive sustainable growth in it—or perhaps we should call it the £100-million question, given that that is roughly what the Scottish funding council is investing in innovation centres over the next five years. Each of us knows that, in our constituencies and across Scotland, there are bright entrepreneurs, innovative ideas and business opportunities, but one of the greatest hurdles is how to connect the individual with the idea and the finance. If we get that right, we get collaboration and growth.

We are not short of great ideas, entrepreneurs and opportunities to innovate in the Highlands. With growing sectors such as energy, food and drink, tourism and life sciences, as well as a new university in the Highlands, we have unprecedented opportunities to innovate, to create jobs and to raise income levels. At this point, I want to take a moment to welcome Fortrose academy, whose pupils I believe—I hope—have just entered the visitors gallery and who I am sure will play a key role in the future of the Highland economy if they are given the opportunity to contribute to research and business opportunities, wherever they find themselves both now and throughout the rest of their lives. They will drive growth. After all, it is growth, which is intangible until it hits our wallets or opens job opportunities, that—yes—is required across Scotland. However, I think that this is a huge opportunity for our Highland economy right now and why innovation centres can play a key role in our future Highland economy.

The minister and others have already outlined the recommendations of the review. I would like to take a moment to identify the opportunities for innovation through the innovation centres model and to reaffirm the importance of having sectoral and geographical spread and making the opportunity to contribute to innovation as accessible as possible so that it does not get bogged down in bureaucracy and box ticking.

Several projects have already had a positive impact. Recently, the University of the Highlands and Islands, Highlands and Islands Enterprise and Scotland’s Rural College installed 50 long-range wireless sensors at An Lòchran, a learning lab that is shared by the three institutions. The technology, among many other things, will monitor temperature, humidity and noise, and there are hopes that it will make the building more efficient in terms of both energy and work quality. The project, which is being conducted by the innovation centre for sensor and imaging systems, will make it possible to generate a new way for technologies such as the sensors to be implemented elsewhere in the Highlands. We want to see more of that.

As for the oil and gas sector, which is operating in particularly challenging circumstances and which has arguably had a disproportionate impact on employment prospects for highlanders, the oil and gas innovation centre is matching innovators with research and development opportunities in Scotland’s universities. I was particularly pleased to hear and read the words of Ian Phillips, chief executive of the innovation centre, who said:

“No innovation is off limits.”

As other speakers including Tavish Scott have said, there is scope to expand the projects and programmes, and I would like to see continued research into sustainable, renewable energy, because that is an area of huge potential for the Highlands. The sector is vital to the future of Scotland’s energy resources; arguably, it has even broader potential across the world if we manage to get the technology right; and it is critical to our ambition of being 100 per cent dependent on renewable energy. I would welcome the creation of a sustainable energy innovation centre and I hope that we could harness the benefits for Highland jobs and income levels.

In the Highlands, we have unrivalled resources. We have people with creativity and ideas, natural assets from wind to tides and a history of requiring to constantly innovate and find new ideas. That may well be why we performed better during the most recent recession. However, through digital opportunities, building on growth sectors and enabling our population to connect with ideas and finance both nationally and internationally, we could really see our local economy flourish. I want to see innovation centres providing new opportunities in the Highlands. Growth is critical to our economy, but it is utterly dependent on collaboration and connections between individuals, ideas and finance. Innovation centres must continue to work on that across all sectors and geographies.

15:43  

Jamie Greene (West Scotland) (Con)

My colleague Dean Lockhart emphasised the importance of innovation to the productivity of our economy, and I am sure that we all broadly agree that innovation centres have been a positive addition to Scotland’s innovation ecosystem. They have really become a focal point for collaboration between universities, industry and business and they represent a great meeting of minds between academia-driven research and development and the needs of business.

However, public innovation support is something that we must continually seek to improve, so I welcome the report by Professor Graeme Reid, which includes some constructive recommendations. From what I see in the report, three areas should be priorities when we talk about improving the innovation centre programme. First, while ensuring that public money is spent wisely on innovation centres, we should avoid putting too much emphasis on project outcomes. In other words, we should expect value for money, but that expectation should be balanced by an understanding that innovation will not always succeed in time for an end-of-year review or a mid-term report. I agree with the idea that a strategic time span for innovation centres should be extended to 10 years, which I think would provide a much more realistic period of time for R and D to take place, and it would give the resulting partnerships and business models a better chance to mature and to become more self-sustaining.

The second point that I took from reading the report concerns the need to reduce the administrative burden on innovation centres. As is often the case with publicly funded ventures, Professor Reid’s report points out the need to simplify and reduce the administrative burden on the centres. Every time that a scientist or researcher is stuck behind their desk filling out paperwork to justify their existence, that is important time away from the lab, where they could be innovating and collaborating. There is therefore almost a need for the public sector to engage in internal innovation itself.

My third point is that, to understand and evaluate the centres’ benefits to the Scottish economy in the long term, clearer objectives must be set, monitored and regularly revisited. I stood in the chamber just a few weeks ago in another debate saying exactly the same thing about the Scottish Government’s enterprise and skills review. A common theme in these debates seems to be the lack of strategy on how to assess and measure the centres’ effect on the economy.

Setting clear objectives and evaluating them does not mean dictating from the top down how innovation centres should go about their business. To me, it means that we should provide them with clear problems to solve, based on evidence and foresight on where the global economy is headed and on which new technologies and industries are on the horizon—in other words, where do the opportunities lie for Scotland? It also means establishing ways to effectively measure failure as well as success and establishing ways to assess the impact on productivity, so that best practices can be replicated in other centres. It means ensuring that all that information feeds into a clear decision-making process about whether to open up new innovation centres in the future.

As innovation centres move on from their start-up phase, we now have the opportunity to take on board what we have learned thus far. I hope that the Scottish Government and its agencies will take on board the points that we have raised today and those that are highlighted in the report.

The independent review provides a good overview of where we can improve, but the Scottish Government clearly needs to take the report as a cue to look in greater detail at what is working and to be honest about what is not. We have to work towards a culture within public innovation support that embraces calculated risk. We must spend public money wisely, but investing in research and innovation is not the same as building a bridge or a new motorway. There is not always an immediate wow moment at the end of it. The added value of public sector involvement is that our innovators should be given time and space to explore their fields, to experiment and even, dare I say, to fail. The very nature of innovation is that sometimes we need to fail fast in order to find the best solution to the problem, a point that Stewart Stevenson has rightly made.

To take an example of a country where R and D is vital to the economy and industry, in Israel the Government understands that innovation and failure sometimes come hand in hand. That is reflected in how it funds and supports innovation centres in that country.

In my view, the continued success of innovation centres rests on two specific things: first, giving them time, resource and a clear vision on what they should be doing and secondly, giving them the freedom and flexibility to revisit their goals as industries and markets evolve. Much more than that, innovation centres can give us foresight on where trends are emerging, be it in big data, artificial intelligence or microrobotics, to name a few areas.

There is clearly consensus today on the importance of the centres, but we must also think about what research and development in Scotland will look like in 2030, not just in 2020, regardless of which party is occupying the middle benches at that time.

15:49  

Ivan McKee (Glasgow Provan) (SNP)

Innovation is key to our economic success. It drives the gains in productivity that we need as a nation, making us competitive internationally and creating jobs in the process. That is particularly critical at this point in time. The economic challenges that we face are significant, with forecast after forecast showing the severe impact that Brexit will have on our economic fortunes. Regardless of the eventual constitutional outcome, Brexit makes it even more imperative that Scotland learns how to excel in inclusive growth and exporting.

Innovation is also particularly critical for the success of small and medium-sized countries, as the work of David Skilling has shown, more reliant as they are on early-stage companies making the leap to become successful exporters early to maintain their growth trajectories.

It is imperative that we leverage all our talents in academia, business and the public sector in the most effective way to drive our economy forward. The Scottish Government’s programme for innovation, including the creation of the innovation centres, is welcome, as it gives focus and impetus to that imperative. Professor Graeme Reid’s review of the innovation centres is timely and gives much food for thought.

By its nature, innovation is iterative, as we learn from what works and adjust and adapt to make further progress. Therefore, it is right that, in our efforts to drive it forward, we be open to the processes of continuous improvement in our innovation programme. The culture of innovation treats change as a constant and continuous improvement as a way of life.

The innovation centre programme was established to drive a change of culture towards innovation and ambition in business and simultaneously to help universities to become more flexible and responsive to business. In particular, it was established to ensure co-operation between the higher education sector and business to deliver industry-led—that is key—collaborative innovation to support and enable business to increase competitiveness; to create economic impact through increased revenues and jobs; and to focus on transformational innovation opportunities.

The innovation centres bring together industry and universities to address the innovation needs of businesses in eight different sectors. Each focuses on a specific industrial segment and each is potentially an anchor for the growth of new sectors. They are hosted within universities but industry led. That is important, as the programme exists to enable business to deliver growth. Academia’s role is to support business in that endeavour.

One of the most striking of Professor Reid’s recommendations is the call for support for the business community to be articulated consistently in business-friendly language rather than in the language of the public sector.

The Scottish Government has welcomed the review’s key recommendations. The first is to consider whether additional innovation centres should be created and, if so, in which sectors. I hope that that will become clearer over time.

Secondly, there is the recommendation to balance stability and dynamism, to attempt to bring together different cultures—that of small business, where the focus is on landing the next order and making payroll at the end of the month, and academic research, where no concept is too big and no timescale too long—and to ensure that the Government is effective in bringing the two together.

It is also recommended that we renew efforts to involve as much of Scotland’s excellent research base as possible and explore further education colleges’ participation in the innovation programme, bringing their ambitions and ideas into play. We also need to be open to proposals for changes in the ownership and governance of innovation centres where that makes sense.

The review recommends that we create and promote a centralised body of data and case studies about individual businesses and their successes, which is critical to show the way forward and to learn from what has gone before. We also need to recognise that innovation is about more than technology—the productivity uplift that innovation in management processes delivers can be as transformative as the impact of technology.

Indeed, although innovation is traditionally discussed in the context of developing businesses, we should not limit our concept of it to the private sector. The public sector in Scotland accounts for a significant element of the economy. Smarter service delivery and more efficiency—delivering more with less—are essential ingredients of our future prosperity. A culture change to embrace innovative ways of working in the public services is essential, and we should use our knowledge of academia and experience of industry to power it.

In addition, we should promote the attractions of Scotland as a location for innovative businesses and, through the enterprise and skills review, simplify the arrangements for business support, better defining and explaining its benefits to individual businesses. Finally, we should remove administrative clutter to allow for a sharper focus on action; review and streamline innovation products and policies; and reduce the number of public sector forums that are involved in innovation.

The Government’s innovation action plan will be published in the coming weeks. It will be based on investing in ambition, building the right culture and creating connections. The manufacturing action plan is designed to encourage Scotland’s manufacturers to innovate and expand. Through all that, the Scottish Government is building on the excellence of our universities and the drive of our innovative businesses and is supporting the commercialisation of world-class research in Scotland as a much needed engine of our economic growth.

15:54  

Claudia Beamish (South Scotland) (Lab)

Innovation centres provide opportunities for collaboration, invention and progression, and those principles must be championed. I welcome Professor Graeme Reid’s review as an opportunity to nurture and improve centres that are, and could be even more, transformational.

My colleague Iain Gray highlighted the need for concrete results in measuring the progress of each centre. The recommendation is for 10-yearly reviews, which seems lengthy, and although I accept Jamie Greene’s plea for freedom and space for innovation, it is important that we have assurances of the centres’ success. I echo lain Gray’s call for the 2017 review to report on the core objectives of job creation and private sector funding.

I recognise the existing contribution of the oil and gas innovation centre but, earlier this year, I wrote to Professor Reid to add my endorsement on behalf of Scottish Labour to the suggestion of a new sustainable energy innovation centre. In the face of a changing climate, it is vital that we have inclusive transitional steps towards a low-carbon economy. In my opinion, that is an area in which an innovation centre could have a monumental impact.

As we all know, Scotland is committed to a number of ambitious targets to limit greenhouse gas emissions and the global temperature rise, and the Parliament will soon consider the Scottish Government’s energy strategy and climate change action plan. It is evident that, in some sectors, including transport and heat, progress has been challenging and more must be done. It has been suggested that some technologies that will be required in a low-carbon economy in the future have not yet been invented.

For the economy and the environment, the future of Scottish industry relies on highly skilled and highly technical jobs. A sustainable energy innovation centre could provide the cross-sector synergy and integration of energy systems that are so fundamental for the green shift. Scottish Renewables highlighted that, beyond carbon savings, engaging businesses with higher education institutions could have considerable economic effects.

Decarbonising innovation in renewables and energy storage holds the potential for consumer savings of £8 billion a year and could also make a contribution on fuel poverty. Furthermore, stimulating industry demand could foster employment opportunities in a flourishing sector that already provides 21,000 jobs.

However, the review notes:

“there is no systematic process for deciding whether new Innovation Centres should be created”.

Will the minister give members an update on whether such a process will be developed and on what consideration he or she—depending on who gives the closing speech—has given to the proposal for a sustainable energy innovation centre, which appears from today’s debate to have considerable cross-party support?

Universities Scotland has stated:

“the value of graduates cannot be overemphasised”.

Young people will benefit greatly from embedding the spirit of enterprise into academia and from the opportunity to make contacts across various sectors. Expanding opportunity and setting young people up for success can only drive Scotland and our economy forward.

However, Scottish Labour would like greater involvement of further education in the innovation centre network, so I am relieved that the minister has today acknowledged the value of the review’s recommendation on that.

I have been blown away by the progressive trajectory of colleges in my region. Ayrshire College works with local businesses to upskill in smart metering and new energy systems, and South Lanarkshire College, which many of my constituents attend, has won awards for its business-to-college knowledge transfer and sustainable innovation. Further education institutions have a valuable contribution to make, and I hope that the skills partnership will form part of the innovation equation, too.

Tavish Scott mentioned innovation in relation to colleges and the aquaculture industry. I will finish by highlighting the Scottish aquaculture innovation centre, not least because I was heavily involved—as was the Minister for Business, Innovation and Energy—in the Aquaculture and Fisheries (Scotland) Act 2013. Aquaculture is one of the most important contributors to the Scottish economy and supporting the sector in the context of sustainable development is vital for the longevity of the industry. As MSP for South Scotland, I welcome the Scottish aquaculture innovation centre’s projections for delivering 1,197 jobs to rural and coastal areas, and I note the ambitious target for growth by 2030.

The centre lists as an area of interest stock improvement and breeding, which are vital, not least against the backdrop of the Scottish Government’s salmon export ambitions. The aquaculture innovation centre is a fantastic opportunity to pioneer advancement of sustainable technologies, such as the non-chemical tackling of sea lice, which the Minister for Further Education, Higher Education and Science mentioned in her opening remarks. However, this morning I read that the Scottish Environment Protection Agency is intervening in the aquaculture industry to reduce its polluting impact. The number of fish farms rated “poor” rose from 42 in 2014 to 58 in 2015. I would be interested to know what the innovation centre is doing to help businesses to address that issue of worsening environmental pollution.

Innovation centres hold the potential for the symbiotic relationships between academia and industry that will drive Scotland forward if they are established in the right way. To ensure that we seize that opportunity, I add my support to the call for further parliamentary scrutiny of the very important IC programme.

16:00  

Richard Lyle (Uddingston and Bellshill) (SNP)

It is great to be speaking in a debate on innovation in this Parliament at the heart of a country that is, I believe, filled to the brim with innovation and, importantly, innovators.

I often speak in the chamber about how privileged I feel to be the constituency MSP for Uddingston and Bellshill. Today is no exception, because there is nowhere better than this chamber to reflect on some of the innovators I have been working with, some of whom base their work in my area. One such group of innovators is NVT Group. Formed in September 1988, the company provides consultancy and design in developing software and customer services in the information and communications technology arena. NVT Group’s headquarters is based in my constituency, and the company is an example of the outward-looking innovation that we cherish here in Scotland, from its recognition as an Investors in People gold standard employer to its reliability, which is ably demonstrated in its winning of contracts as the technology services integrator for the 20th Commonwealth games, which was hosted by the great city of Glasgow. Its work has not stopped there, however. Its modern apprenticeship programme has been recognised with two employer of the year awards and its investment in young people has been recognised with Investors in Young People certification.

Another company that I have come across called Own Energy had the innovative idea of producing lamp post-mounted wind turbines that deliver electricity into the national grid. Along with NVT Group, it is now piloting wi-fi provision in towns, villages and glens, all of which works through a smart wi-fi device. Local authorities and other agencies should consider looking into such innovations, as they are definitely the future of renewable energy and connectivity in Scotland.

Those are just two local examples of the success that we enjoy in innovation. There is much work to be done by the Government across the country to promote an environment in which innovation is encouraged to create more vibrant communities. An example of that broader work by Government is the subject of today’s debate—the IC programme, which, as we have heard this afternoon, was established to drive a change of culture towards innovation and ambition in business, all the while working to help universities in particular to become more flexible and more responsive to business.

As I have outlined, innovation is vital to the long-term growth of individual businesses and is crucial to the Government’s ambition to shift the dial on Scotland’s economic performance. I have cited two examples of what innovation is all about: realising the real opportunity and benefits that can come from increased creativity and knowledge, which has the potential to boost Scotland’s economic growth.

The IC programme has been ambitious from the outset, with funding of up to £120 million over the period 2013-19. Like anything, it will require time to fulfil its original vision and potential. That said, already more than £93 million has been committed up to 2019. We should welcome that, as we have centres of innovation that are there to influence change, grow networks and, importantly—and, I would argue, crucially—encourage and foster innovative thinking.

One of the stand-out points for me is the news that the Scottish Government is investing an additional £2 million per annum to support around 200 postgraduate places in innovation centres, developing bespoke skills to support Scotland’s economy. That is indeed a good news story. This Government has a plan for Scotland and its economy. Already we can see that Scotland’s economic strategy is built around improving productivity through innovation and making Scotland more internationally competitive. We recognise that increasing business innovation and use of research are critical.

The SNP Government is committing more than £345 million in 2016-17 to the enterprise agencies and the Scottish funding council to support research and innovation. A substantial amount of that funding—£232 million—is to support research in our universities that is recognised as “internationally excellent” or “world-leading”.

The work has not stopped there. The SNP continues to support workplace innovation, through support for the fair work convention and initiatives such as Scottish Enterprise’s workplace innovation service. Now the Scottish Government is implementing Scotland can do Scale, which is an education programme that is aimed at developing entrepreneurial skills and innovative ideas.

Those few examples articulate well the level of innovation that the SNP Government is taking when it comes to encouraging and promoting growth in the innovation sector. It is clear that the Government remains committed to delivering on our ambitions for Scotland to become a nation of even more innovation. We are, as I said, a country filled to the brim with ideas and passion. I hope that through the work done by this Government and others, including programmes such as innovation centres, we can continue to build on that and deliver for the people of Scotland.

The Deputy Presiding Officer (Linda Fabiani)

We have some time in hand. I call Edward Mountain, to be followed by Stewart Stevenson, so I guess that we should eat into some of that time over the next two speeches.

16:07  

Edward Mountain (Highlands and Islands) (Con)

As other members have done, I welcome Professor Reid’s review.

In my time as a businessman I have discovered quite a few things, and there is one in particular that I keep reminding myself of. Why? It is a self-evident truth: to solve a problem, you need to invest not only money but time, and you need to nurture that investment so that it has the best chance of succeeding. The best literal example of that would be scattering seed corn on concrete. Initially it will grow and you will see a sea of green, but it will quickly wither and die, and it will probably not produce a crop.

In 2007, when the Scottish Government published its economic strategy, it rightly concluded that Scotland’s productivity would be enhanced by stimulating growth innovation. That was reaffirmed in 2015, and to date the Government has invested £120 million in Scottish innovation centres. That is more than just seed corn; indeed, it is a significant amount. We should already be able to reap some of the harvest, but we are not reaping as much of it as we should.

If members do not believe me, they should look at the Organisation for Economic Co-operation and Development rankings in productivity. In 2007 we were ranked 17th and today we have dropped to 19th—not an impressive result.

I do not want to stand here and just say that the Government could do better. That would be true, but unhelpful. I would like to look at where it has succeeded and, in some areas, failed, so that future steps build towards success, not failure.

First, the independent review makes a clear case for innovation centres, and the Conservative Party supports the programme, which is a great step in the right direction. However, as Jamie Greene said, you cannot run a programme without targets. It is just too easy for those who run programmes to show optimism bias. That is a new term that I have learned in this Parliament; it was used to describe what happened with the problems with the common agricultural policy information technology system. It describes how those who oversee a programme cannot see the potential problems as they arise. Targets would prevent that.

Secondly, in terms of performance as measured by the monitoring and evaluation framework, there is welcome progress in some areas, but a more consistent approach in the application of the framework is required across the board. That would enable an increase in the number of outcomes and impacts that are actually reported and a closer eye could then be kept on performance. That in turn would allow greater collaboration, or indeed intervention, as required.

Part of that could be to allow innovation centres to have a much more focused, industry-defined measure of success. At times, the focus on performance is more heavily weighted towards individual company success, rather than the success of the industry as a whole. A consequence of that is that the benefits favour private companies as opposed to being public benefits. That is unacceptable, given that part of the initial investment has been made from the public purse through Government funding.

Thirdly, there is a disparity between the initial forecasts of the amount of income that would come into innovation centres and the actual income that they have received. Whether the income is from industry or enterprise agencies, it has not been quite as good as we hoped. I understand that, as a consequence, most of the innovation centres are making revised budgets. One way to increase income is for innovation centres to be allowed greater flexibility over the projects that they undertake. This would allow them to adapt to everyday variables such as market conditions and staff turnover, to name but two. There is also plenty of opportunity for our innovation centres to develop long-term partnerships across the whole of the Scottish economy, which should be taken advantage of.

Finally, in terms of the governance of innovation centres, although the majority of issues that have been highlighted have been addressed, it is worth mentioning that, as outlined in the review, in the long term some innovation centres should change the governance model that they are using, to achieve better outcomes. In such cases, if governance procedures were improved by a variety of means, there would be a better balance between the autonomy and the accountability of those innovation centres. Much more needs to be achieved in relation to effective communications and referrals across the board.

In conclusion, the idea of innovation centres is one that we welcome and believe should be encouraged. Our efforts to make them a success have to be better than they are at the moment and, in some cases, assessments are needed so that a sharp refocus can be made where required.

I am glad to say that we agree, I believe, across the chamber that innovation centres are good for Scotland, and we would like to work together to make sure that they succeed in the future.

The Deputy Presiding Officer

I call Stewart Stevenson. We still have a little time in hand.

16:12  

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I will try to squeeze it in under half an hour, Presiding Officer.

I am doing the usual innovative thing in relation to my speech. I have random things written on bits of paper here. It is quite illustrative to think of how public key cryptography, which I referred to last week in debate, came into being.

One of the original authors of public key cryptography was a guy called Ron Rivest. He was the mathematician on the team. He had a very restless night when he did not really sleep very much, turning over in his bed, because they were trying to find a one-way mathematical algorithm that worked forwards but not backwards. Do not bother to understand: just take it from me.

He was walking downstairs to make his breakfast in the morning. He got down to the bottom and thought, “I had the answer.” So he had to go back upstairs and walk back down again. Then he remembered what the idea was, which was a matrix transformation, if you really want to know.

He sat down at the breakfast table and he wrote the answer down. He wrote the paper, and it took him 30 minutes to come up with the answer to the problem that he had been wrestling with for a year.

It is illustrative of the innovation process because, although it took 30 minutes to write the answer down from it springing into his mind to his completing the paper, it took a lifetime of preparation for all the intellectual detritus that was floating around in his brain to coalesce in a way that actually produced something new, innovative and required.

We probably all have favourite books. Edward Mountain’s would probably be Sun Tzu’s “The Art of War”, in which Sun Tzu postulates nine territories for military engagement; number 3 is contentious ground, and the first of the battalions to occupy it is the one that will command the outcome. In innovation, that is exactly the ground that we are debating. Sun Tzu dates a very long way back. My favourite inspirational book, Fred P Brooks’s “The Mythical Man-month”, is much more modern, as it was published in 1974.

It is worth thinking about the character of innovators. The best innovation is disruptive and very often unwelcome because it challenges and changes the status quo. Innovators are, by nature, anarchists. Of course, innovation does not always go the way that the innovator thought it would. When Alexander Graham Bell demonstrated the telephone in 1876, politicians got involved, because communication was the purview of the Royal Mail. The postmaster general of the time, in reaction to the invention of the telephone, said that there was no need for it because of a superfluity of telegram boys. It was considered that communication worked well enough.

The other side of it was that Alexander Graham Bell did not think that he had invented the telephone. He thought that he was inventing a broadcast device. That is often the way with innovation. In modern times, we all have mobile phones with facilities for texting. It is worth remembering that the text facility that is part of the Groupe Spécial Mobile system that underpinned the first digital telephones was put in there to allow the communications company to send messages to telephone users about conditions in the network.

Jamie Greene

Would Mr Stevenson agree that much of the innovation and changes in technology that we see today has been driven by military research? A lot of what we use in our daily lives originated in military use but was converted into everyday use. What are his views on that?

Stewart Stevenson

The member is almost certainly right. For example, when, in 1963, the National Aeronautics and Space Administration put out a contract for various bits of what would become the moon lander programme, NASA could provide only 1.4 W of electricity for the computer for navigating the moon lander. That was a quasi-military requirement that could be met only by Rockwell—the successful bidder—producing the first integrated chip, although there had been integrated circuits in the 1940s. That is why we have computers in the sense that we have them today. The member is absolutely correct, but I do not think we should discount the fact that civilians can come up with some pretty good ideas.

Ivan McKee

Would the member agree that military spending is an extremely expensive way of publicly funding innovation programmes?

Stewart Stevenson

The member is absolutely correct. However, I refer to my previous response. We have to acknowledge that innovation in war is very important.

I want to talk about another innovation that came from war. A gentleman called Tommy Flowers, who was a General Post Office engineer at the Dollis Hill research laboratory in northern London, got posted to what is now the Government Communications Headquarters, which was then the base that was trying to break the Enigma codes that the Germans used for their military communications.

Bob Doris (Glasgow Maryhill and Springburn) (SNP)

Will the member give way?

Stewart Stevenson

I will develop it a wee bit, if I may, Presiding Officer, depending on how much time you choose to give me.

An even more horrendously difficult machine was the Lorenz machine, which was used only by Adolf Hitler and the navy and was far more difficult than the Enigma machine. Alan Turing came up with thoughts of how that could be dealt with but Tommy Flowers, who was a relatively small cog in the big machine, said that he had used thermionic valves to build circuits that would do switching and that he could build a computer.

Up to that point, they had been using things called bombes, which were mechanical devices for breaking Enigma that the Poles had developed in the run up to the war. Tommy Flowers said that he could do it but he was forbidden. However, he was a natural anarchist and he went away and, at his own expense, got 1,500 electronic valves—finding them was a terrific thing to do during wartime—and built Colossus Mark 1, which was the first real electronic computer. It was quite good, but he built another one—Colossus Mark 2—and he delivered it on 1 June 1944. They broke the first Lorenz messages in the 24 hours after getting that first machine made by an anarchist innovator. The message that was given to Eisenhower on 4 June said that the Germans were not moving troops into Normandy so it was safe to land there, but there was a concentration of troops in one place, so the Allies moved one of the landing points. If Tommy Flowers had not done that, it is thought that the Normandy landings would not have been successful because they would have encountered severe resistance.

We knew nothing about Tommy Flowers until many decades later, because he was covered by the Official Secrets Act. The story goes on, however. Although he had paid for the development of the computer himself, the Government refused to refund him. Eventually, it gave him £1,000, by which time it no longer mattered and he shared it with the rest of the team.

The Deputy Presiding Officer

May I interrupt you for just a couple of seconds, Mr Stevenson? I am certainly loth to do so, but it might now be time to come back to the motion.

Stewart Stevenson

I will say 10 words. The important thing about innovation is that innovators have time to think, space to think and, more importantly, people of different minds, not the same mind, with whom they can think collaboratively. If innovation centres do anything, they must do all those things.

The Deputy Presiding Officer

Thank you Mr Stevenson. We now move to the last of the closing speeches, which I am sure will be just as interesting as Mr Stevenson’s. I call Gordon Lindhurst.

16:22  

Gordon Lindhurst (Lothian) (Con)

Presiding Officer, I am indebted to you for allowing me a chance to speak, and also to Stewart Stevenson for not speaking for an entire half hour. When he was describing codebreaking, I almost felt as though he had been personally present. I am also indebted to him for his explanation in the parliamentary lifts today about the Otis safety clip. I am afraid that I am unlikely to be able to rival his innovative approach to speech making.

To return to the subject that we are tasked with discussing, today’s debate on innovation in Scotland is particularly relevant to a country of storytellers, of which Stewart Stevenson is one, and innovators. James Watt has been mentioned as one of the innovators who were critical to the industrial revolution of the 18th and 19th centuries. At the same time, our current worldwide reputation for excellence in research at the universities exceeds itself. I was pleased to be able to recognise in a recent motion the success of the University of Edinburgh in the Quacquarelli Symonds world university 2016-17 rankings, where it was ranked 24th in the world for research.

However, it is disappointing to read some of the figures that are associated with Scotland’s prevailing performance under measures such as entrepreneurship, innovation and productivity. My colleagues have already mentioned some of those figures, the most disturbing of which might be the entrepreneurial rate of 5.5 per cent, which is 3.1 percentage points below the UK rate. I am not sure how that statistic is calculated, but it is interesting in any event. It reflects recent figures announced by the Scottish Government that indicate that Scottish entrepreneurship is lagging behind. Scotland now has the lowest business density rate of any part of the UK and there are fewer small businesses per head in Scotland than there are UK-wide. Those businesses are the life-blood of our economy and are often key to driving innovation. Those disappointing figures do our historic successes an injustice.

Over the past few months, we have listened in the chamber to a lot of scaremongering about the economic outlook for Scotland, which is said to be the result of political developments. Many of those factors are overplayed, but I agree that it is more important than ever that Scotland can stand on its own two feet and that we ensure that its people are equipped with skills and its businesses with ideas. Above all, as we heard this week in evidence to the Economy, Jobs and Fair Work Committee, we need to encourage our innovators, entrepreneurs and businesses in their enthusiasm and ambition. That is where innovation centres can play a vital part in the Scottish economy by bringing together established universities with businesses across different fields.

Like my colleagues, I welcome that step and the innovation that has been achieved so far. One example is the oil and gas innovation centre, which is operating in a lower-for-longer price environment in which innovation provides a lifeline to under-pressure businesses. One such project is the partnership between Hydrason and Heriot-Watt University in the Lothian region, which developed low-frequency multibeam wideband sonar that is delivering new sub-bottom imaging for the industry.

Support for innovation centres is welcome, but that is but one aspect of the debate. As the review identified, there is much more to be done if our people and our economy are to make full use of their innovative skills and outputs. I will repeat what I have said: let us all encourage the enthusiasm and motivation of Scotland’s innovators.

16:26  

Tavish Scott

The debate has ambled through the ups and downs of innovation in a pretty consensual manner. Gordon Lindhurst said—or rather, implied—that those of us who have been somewhat concerned by what is going on in the world around us at present may be overplaying the arguments. We will find out a bit more about that next week in the autumn statement. If the state of the public finances is as dire as has been said, and as even the Chancellor of the Exchequer has expressed, we will be looking at a deficit of £100 billion, and the consequences for spending across the country—by which I mean all the nations of the United Kingdom—will be significant indeed. I hope that those who say that we do not have anything to worry about will consider carefully the remarks that their own chancellor makes in the House of Commons next Wednesday.

Claudia Beamish made a broad observation about the opportunities for innovation as a result of climate change. That reminded me of a President of the United States: thankfully not the President-elect—who, worryingly enough, said in the course of his campaign that he would dump the Paris climate change accord—but President Clinton, who was in Glasgow some years ago at a time when some of us held ministerial responsibilities in certain areas. I think that Iain Gray was there too; I cannot remember.

In the question-and-answer session that followed President Clinton’s speech, he was asked by the compère—I cannot remember who compèred the event—where he saw the greatest business opportunities arising in the future. His whole answer—which, given that it was President Clinton, was somewhat brilliant—was about climate change. He spoke about how businesses would respond to those challenges and come up with solutions that are self-evidently needed not just in our part of the world but around the globe. I thought that there was something in that.

The arguments from a number of members this afternoon for an innovation centre in the broad area of energy but more specifically in renewables appear to be strong. In some respects, it is not for Government and politicians to be doctrinal about that—I would rather that such work was developed in the very spirit and manner by which innovation centres have grown in other areas. Nevertheless, there is a lot in that argument.

I commend members who have mentioned the Scottish aquaculture innovation centre, which I think has a much longer title. It is run by Heather Jones in Stirling, who produced the best briefing for today’s debate. Those who ask for testimonials to illustrate the involvement of business in a wider context—Claudia Beamish made that point about salmon farming—need look no further than that briefing. Jim Gallagher, the boss of Scottish Sea Farms, is shown on the back page making exactly the point to which Claudia Beamish rightly drew attention.

I want to pick up on a couple of points from the minister’s opening speech. I am sure that I will be corrected if my paraphrase of her words is wrong, but she challenged colleges by saying that they could and should do more. I take that point, which is about the link to business and the economy. I am going to offer what is probably far too radical a thought for this stage on a Thursday evening, but one of the strongest ways in which to do more on that link would be to decentralise Skills Development Scotland. If we want to make one big change on skills, it is to disaggregate that organisation and take the empirical evidence that SDS builds up but does nothing with—it has a vast amount of data, but I am not sure that it ever gets down to business level—and ensure that it is absolutely wedded to the regional college level.

I know a fair bit about the set-up in the Highlands and Islands, and there is so much more that could be done there if SDS was much more decentralised. That was the point that the Aberdeen and Grampian Chamber of Commerce made to the Education and Skills Committee in evidence last week and it is a point that a number of others have made over a long period of time. I do not expect ministers to make policy up on the hoof, but I think that there is a very strong case for looking at what happens on skills, on business and on the tie to innovation centres in the context of SDS, and taking that organisation down to where it logically should be.

I also just observe that we learned last week that SDS has an annual budget of £208 million, of which it spends £65 million on staff. By any standards, if we look at the balance of spending of organisations across Scotland, that is pretty darned significant.

Ivan McKee and one or two other members mentioned the Reid review recommendations in relation to explaining innovation centres more clearly to business, which is a very fair observation. I suggest that the proposal on SDS could contribute to that as well.

The other Reid recommendation that I think is important is the one on the 10-year horizon. Iain Gray made a couple of observations about that in his opening remarks, and he had a broad point there. We do short-termism too much in politics and we have too much government by initiative. That applies to all Governments over every session of the Scottish Parliament. If an organisation has an adaptable and appropriate model that is working, there is a lot to be said for helping it to continue and giving it some depth in terms of policy support and, indeed, budget. Some colleagues argued that there should be a proper assessment of how organisations are doing, and I suppose the reflection on it is in that regard a fair one.

The table in the Reid review on research and development in Scotland is pretty sobering, albeit that the figures are from 2012 and they might have changed. If the Government can update those, I am sure that that would be helpful to a number of parliamentary committees. However, the figures show that, in terms of R and D spend as a percentage of gross domestic product, Scotland is below the EU-27 average and below such countries as Finland, Sweden and Denmark. I guess we know all that, but the figures look pretty stark in that table. A number of members made the strategic point in the debate about recognising what our current situation is and having a clear approach to changing it. That table alone should provide the evidence for doing that.

I briefly mentioned in my opening speech the Royal Society of Edinburgh’s submission on the skills review, which refers to the importance of the separation of responsibilities and strategic decision making between the Scottish funding council and the other enterprise agencies. For many of the reasons that other members gave in the debate, that separation is fundamental, but I also commend paragraph 13 of the RSE’s submission to ministers in that regard.

I have two final points. First, it was right that Kate Forbes made observations about the oil and gas innovation centre. As far as I can remember, it was set up when oil was $110 a barrel. Sadly, the price is now rather less than that but, despite the massive loss of jobs and the continuing loss of the oil and gas supply chain not just in north-east Scotland but right across the UK, it has managed to continue to invest in 27 approved projects, with another 46 in the pipeline. That proves that an organisation can adapt and change.

You are giving me that benign smile, Presiding Officer, so I guess you want me to shut up.

The Deputy Presiding Officer

It is not so benign really.

Tavish Scott

Quite.

My final observation is that, if change is happening in our economy, innovation certainly needs to continue to happen, and the example of the oil and gas innovation centre illustrates that that can be good for the Scottish economy.

16:35  

Richard Leonard (Central Scotland) (Lab)

I am pleased to be closing the debate for the Labour Party and am glad that we are debating innovation as well as innovation centres, because innovation forms a key part of the Government’s manufacturing plan, which was launched in February. The plan claimed that the Government would

“establish a new joint Centre for Manufacturing Excellence and Skills Academy to act as a hub for continuous innovation in manufacturing that can sustain globally competitive businesses in Scotland.”

That was supposed to be under way by quarter 2 of 2016. This morning, we heard from the Cabinet Secretary for the Economy, Jobs and Fair Work that the location for that academy has yet to be found. Perhaps, in his closing remarks, the minister could address progress towards establishment of the joint centre.

The plan for manufacturing also included a plan to increase the engagement of small and medium-sized enterprises with the network of innovation centres. According to the plan, an action plan was to be under way, again, by quarter 2 of 2016. I hope that we will hear in the minister’s winding-up speech a little bit more about what is being done to tackle that.

As Richard Lyle mentioned in his speech, the Government’s manufacturing action plan spoke of a workplace innovation service that would be implemented by Scottish Enterprise and Highlands and Islands Enterprise in the third quarter of 2016, and would be aimed at workforce engagement. Again, the cabinet secretary, in answer to a question that I asked in the chamber this morning, confirmed that work on that service is under way. However, we do not know how far from fruition it is. More detail on that in the minister’s closing speech would also be welcome.

As my colleague—or comrade—Iain Gray mentioned earlier, yesterday morning I visited the innovation centre for sensor and imaging systems in Glasgow and was suitably impressed by much of what I saw. There was engagement with some big companies that operate in the Scottish economy, from Thales Optronics to FirstBus. However, many of those who are innovating are small businesses—sometimes microbusinesses—and the markets that they are supplying involve public transport, renewable energy and social housing, among other things, which are precisely the activities in which we in the Labour Party want to see differential growth.

It is worth pointing out to the supporters of the free market and those who favour neoliberal economics that those activities—to which we can add defence—are all in one way or another reliant on significant public subsidy. It was clear to me that the links in the supply chains that I saw yesterday would not have been formed without the presence of the innovation centres. What was less clear was the number of jobs that that activity had so far created. We need to put in place better monitoring of that—a point that we make in the Labour amendment.

In his opening remarks, Tavish Scott expressed concerns, which we share, about the creation of a single statutory supervisory board for Scottish Enterprise, Skills Development Scotland, the Scottish Further and Higher Education Funding Council and—not least—Highlands and Islands Enterprise. Last Monday, I visited Inverness and met representatives of HIE and Highland Council. At that meeting, the leader of Highland Council, Margaret Davidson, handed me a motion that was supported unanimously by the Labour group, the independents, the Liberal Democrats and—yes—the Scottish National Party’s councillors. The motion said that the parties are “very concerned” at the proposals and regarded the loss of an autonomous local board in the Highlands as “a serious mistake.” I ask the minister to reflect on the expression of that unanimous view in the Highlands.

It was a Labour Government that established the Highlands and Islands Development Board, and we have consistently supported a distinctive approach to economic and social development in the Highlands and Islands, and a distinctive remit and structure. We will continue to do so.

Members including Edward Mountain and Ivan McKee argued that productivity is lagging in Scotland. They are right, and they are right to put that down, in part, to a failure of innovation. However, I suggest that they consider whether there is also a deeper-seated structural problem of failure of investment and failure of research and development. Figures for 2014-15 that were released this morning show that Scotland is falling further behind in that regard. I argue that there has also been a failure to build a broader industrial strategy.

The Reid report contained telling evidence and opinions. Dean Lockhart commented on a quotation that also caught my eye, in which Scottish Government policy was described as

“very focused on innovation without articulating what is meant”

by that. It would be useful to hear from the minister what is meant by “innovation” in the Government’s eyes.

I worried when I read that the Scottish Government deputy director for higher education had

“highlighted that we cannot ‘assume that the state will continue to fund (ICs) forever and at the same level’.”

I ask the minister to clarify that comment and to say whether it reflects the Government’s current thinking.

We lodged our amendment to try to provide some targets, objectives, performance measures, deadlines and accountability for the innovation centres, as well as some accountability of the Government. We need to ensure that the centres bring a jobs dividend and boost socially useful work.

It is the job of Parliament to hold the Government to account. We hope that that is a role that every party in Parliament in this afternoon’s important debate is willing to assume.

The Deputy Presiding Officer

I call Liam Kerr, who has eight minutes.

16:42  

Liam Kerr (North East Scotland) (Con)

Thank you, Presiding Officer.

“Investing in innovation is critical to raising long-term economic growth. In this current economic climate, uncovering new sources of growth and leveraging the opportunities raised by global innovation are priorities for all stakeholders.”

Those are not my words, but the words of the World Intellectual Property Organization director general, Francis Gurry. He was speaking in August at the announcement of the global innovation index 2016—an index that puts the United Kingdom at third in the world, behind only Sweden and Switzerland.

We completely agree—innovation is at the heart of economic and social development. It drives productivity, it attracts international investment and it gives us a chance to raise living standards throughout Scotland. Conservatives have always supported the role that innovation can play in boosting economic growth and capitalising on areas in which Scotland has a competitive advantage.

Our amendment, with which I am certain all members agree, urges the Scottish Government

“to introduce clearer industry-defined success measures in order to assess the overall performance of innovation centres”,

and encourages it

“to take further action to boost productivity levels in the Scottish economy”.

Innovation is a vital cog in a vibrant and flourishing economy. In supporting the first part of the motion, we recognise the importance of innovation centres as vital collaborations between academia and business, which encourage and support innovation across Scotland’s key economic sectors. As such, we welcome the independent review of the centres. However, the motion simply states that the review’s recommendations

“set out a helpful course”.

We call on the Government to heed and implement the recommendations.

Although the innovation centres are important and do much to foster the growth of business and innovation, there are serious issues out there. In a powerful speech, Dean Lockhart talked about how relative productivity has declined in Scotland. A number of members made that point. In 2007, Scottish productivity ranked in the second quartile of the OECD countries. The latest data place it in the third quartile—25 per cent lower than Ireland and Denmark. Scotland is in the fourth quartile of innovation-driven countries and is below any other in the much-vaunted arc of prosperity.

Gordon Lindhurst talked about the entrepreneurial activity rate being barely 5.5 per cent, which is a full 3 per cent below the UK’s 8.6 per cent rate and is an incredible 19 per cent drop on the previous year. Scotland can and must do better.

Richard Lyle made it crystal clear that we have a proud history of innovation, invention and pioneering thought in engineering, science, design and architecture, to name but a few areas.

As Gordon Lindhurst eloquently said, it is now more important than ever that Scotland stand on its own two feet. It is more important than ever that the Government take action to support economic growth and productivity in Scotland. Under the Government, jobs growth has stalled for a decade. In fact, Scotland lags behind every other UK region on job creation rates. Only yesterday, there was the shocking news that the inactivity rate north of the border is now 37.9 per cent. That rate is higher than it is in other regions across the UK. The 2.2 per cent increase since May 2007 is the worst in Britain. Let us put that in real terms: it means that 176,000 more Scots have become economically inactive in that timeframe.

We echo Universities Scotland’s calls for a long-term plan and strategy for innovation centres. The Scottish Government must ensure that long-term investment is in place. That will give the business community the confidence that it needs to encourage business investment.

Much of what we are discussing echoes many of the themes of the debate three weeks ago on the review of enterprise agencies. I am pleased that Shirley-Anne Somerville agreed with us and said that the Scottish Government will look at how we can build on and improve our innovation centres, and build on the review of the enterprise agencies in the round.

Tavish Scott was clear that there may be too great a concentration on medium-sized and large businesses, and he welcomed the moves in that regard. We agree with him that clarity on the Scotland-wide governing board proposals and the impact on innovation centres would be welcome. Therefore, we will support his amendment.

We will be able to combat the serious issues that the economy faces only by taking the approach that I have mentioned and developing a coherent and linked-up economic and industrial strategy with targets, as Edward Mountain said.

I must quickly turn myself into an innovation centre, as I did not expect to have eight minutes.

I must refer to Stewart Stevenson’s contribution. He made his usual interventions, which involved Einstein and innovation through failure, but despite everything, he failed to take up Tavish Scott’s invitation to discuss spat. That was probably wise, given what else we heard.

Ivan McKee made a very persuasive argument about innovation being about more than technology and including the public sector and management innovation.

We believe that innovation centres are a step in the right direction. I am again grateful to Tavish Scott for pointing out the vital work of the oil and gas innovation centre in Aberdeen, which is doing important work in incredibly uncertain times for the industry in asset integrity and life extension, decommissioning, remotely operated underwater vehicle research, shale gas exploration and production optimisation, to name but a few areas.

We support the Government’s motion and the amendments, but innovation centres do not provide the full answer. As Jamie Greene said, there has to be an agreed framework by which to measure their performance on an interim basis as well as on a longer-term basis. Iain Gray’s amendment, which we support, calls for that.

Dean Lockhart mentioned that Mike Russell said in the chamber in 2014 that he predicted the creation of up to 5,000 jobs. It is important to note that. The Ekos Consultancy report to the SFC just this September said that 53 jobs that have been created in companies are attributable to innovation centres.

As Jamie Greene has said, we need to move out of our comfort zone, be more ambitious and listen to where the innovators say our economy is headed. In our amendment, we urge the Scottish Government

“to introduce clearer industry-defined success measures in order to assess the overall performance of innovation centres”

and encourage it

“to take further action to boost productivity levels in the Scottish economy through innovation”.

Our amendment genuinely seeks to find the best way ahead. Let us move forward together. As Dean Lockhart has made clear, we have solutions—indeed, we have proposed some over and above those that are in the report—and we hope that the Government will reflect on them and take them forward.

Voting for the Scottish Conservative amendment will send a signal that we can move forward together, and I look forward to the chamber sending that signal to the Scottish people.

16:50  

The Minister for Business, Innovation and Energy (Paul Wheelhouse)

I welcome the opportunity to close this debate on how the innovation centre programme is driving innovation in Scotland, and I, too, thank Professor Reid for his very valuable report.

As members have said, innovation makes a vital contribution to Scotland’s economy, but we need to start acting collectively to drive up business participation in innovation. There have been a number of references today to business expenditure and R and D figures and, clearly, the latest figures that have come out confirm that there continues to be a gap between us and the UK and the European Union.

That said, I want to make a point that has not yet been mentioned but which I think is significant. Scotland is second among EU countries in terms of university graduates as a share of our adult population, and fifth in the OECD in terms of higher education spend on research and development. I think, therefore, that we have to see things in the round. We have a very educated workforce, and we have great investment through our universities sector. The issue is how we convert that into economic impact and get business to engage, which is perhaps the focus of the debate.

We need more businesses that are ambitious and which use innovation to drive growth, to create more and better jobs and to access international markets, and we also need to develop a stronger innovation culture among businesses across Scotland to support that aim and drive productivity growth. Of course, as members have pointed out, such an approach leads to higher productivity, the ability to pay higher wages and more prosperity in our economy. I certainly agree with Tavish Scott’s point about the need for a culture change, because we need a culture in which everyone understands what innovation is and how it can benefit them. I will say more about the nature of innovation in the course of my remarks. We also need to connect our support systems to make them easy to understand, navigate and use—again, I will say more about that later.

Having a thriving and dynamic innovation ecosystem is essential for improved productivity, competitiveness and growth, and colleagues can be assured that the Scottish Government continues to be clear on the importance of innovation in driving improvements in productivity. We are determined to improve Scotland’s performance in the area. The latest UK innovation survey showed that the share of innovation-active enterprises in Scotland has increased by 18.8 percentage points since the 2011 survey, compared with a 17.6 percentage point increase for the UK as a whole. There is still a gap; however, that gap has narrowed, which I think is significant. It means that 50.4 per cent of enterprises are now innovation-active in Scotland, and that figure is up 7.1 per cent since 2013.

It has been shown that the main driver for innovation among those businesses is improving quality of goods and services, although I would add that process innovation, too, should be seen as important. We seek to improve on those trends and numbers, and I am pleased to say that the spend on business enterprise research and development—albeit, as we all know, low—has gone up 41 per cent in Scotland since 2007 compared with a 17 per cent increase in the UK as a whole. The gap is being closed, but a gap remains and needs to be closed even more.

Our ambition is to become a world-leading nation in innovation and entrepreneurship and to that end—and in light of stubborn productivity statistics—we need to shift the dial. Reference has been made to Einstein, but I remind the chamber that his definition of insanity was to keep doing the same thing and expect different results. That is why we are looking at reshaping the innovation landscape.

Clearly there are strong links to our economic strategy. We will continue to focus on its four key pillars—investment, infrastructure, innovation and internationalisation—while promoting fair work and innovation in the workplace. If I have time, I will say a little bit more about workplace innovation, but I should say that we are also driving innovation by reaching out to the world through our innovation and investment hubs in locations such as Brussels, Dublin, Berlin and London and trying to identify business challenges around the world.

We are also trying to improve collaboration between business and academia. That is a key aim; indeed, it is a key role that innovation centres in Scotland are playing.

Iain Gray made an important point about the role of the ITIs. It was a reasonable attempt to challenge us on the issue, but there are issues around the degree to which the solutions are closely developed by business rather than by the academic community. That is clearly an important aspect of what we need to try to achieve.

We also need to follow through on the recommendation in Professor Reid’s report that we encourage closer links between innovation centres and the college sector, as Shirley-Anne Somerville set out in her remarks.

The Deputy First Minister established the Scotland can do innovation forum last year in order to improve collaboration. Over the past year, forum members have been assisting us with identifying and setting clear objectives that will help to increase levels of innovation in businesses in Scotland, which in turn will help to drive up levels of productivity. The forum has focused on three overarching themes: investing in ambition, building a can-do innovation culture and creating connections.

As a result of those discussions and the recommendation of the First Minister’s Council of Economic Advisers, we are undertaking a review of the innovation ecosystem, which will help to define how we can shift the dial on innovation. However, we already know that certain initial steps will help to address Scotland’s innovation challenges, including the innovation centres, and we will set out those actions at the end of November.

In response to the points that Tavish Scott made, I say that, although business investment in research and development activity is important, innovation is a broader concept—this also ties in with what Richard Leonard said—that encompasses the development and exploitation of new processes, products, services and business models. The vast majority of business innovation, unfortunately, is undertaken by large firms. Although that is not surprising, the establishment of a culture of innovation and, crucially, its commercialisation across business more generally is vital. Equally important for firms of all sizes is the ability not only to create innovation, but to capitalise on innovative ideas and to commercialise them. [Interruption.]

The Deputy Presiding Officer

Excuse me, minister. Will members please stop having private conversations? The debate is still on-going.

Paul Wheelhouse

The colleges’ role will help with the required cultural change, in that they have fantastic access to a wide range of small and medium-sized enterprises—and indeed large enterprises—across the country. They clearly have a role to play.

I turn to workforce innovation. When companies benefit from innovation, so should the workforce. To create the conditions and culture in the workplace that can stimulate and inspire innovative ideas is equally, if not more, important. Ensuring that the talents of all members of staff are used and developed is therefore a key part of our innovation approach, and we believe that it develops the win-win environment that we want to encourage. We are seeing some of that emerging in the oil and gas industry, where the workforce is working with management to drive out costs, and we are supporting an SE-led workplace innovation service. Workplace innovation makes business processes as profitable, efficient and responsive as possible by enabling staff to make full use of their skills, experience and creativity in their everyday tasks.

Academic research shows that increasing employee motivation and wellbeing in the workplace plays an important role in reducing employee stress, enhancing job satisfaction and wellbeing, improving mental health and increasing retention.

In the time that I have left, I will address some specific points that were made by colleagues across the chamber. Stewart Stevenson was quite right to highlight that we need to have an appetite to take a bit of risk. We need to accept that, in innovating, we will have failures as well as successes. That came out of the ministerial review group as a key message for the Scottish Government.

Dean Lockhart, Kate Forbes, Claudia Beamish and others mentioned the need for a renewables innovation centre. I point out that we already have a number of key centres, albeit that they are not innovation centres at this time. We have the European Marine Energy Centre in Orkney, Fife energy park and the Offshore Renewable Energy Catapult, and the Fraunhofer centre is doing work on photonics in Glasgow. We have demonstration projects for floating offshore wind and Wave Energy Scotland.

Dean Lockhart rose—

Paul Wheelhouse

I apologise to Mr Lockhart, but I am very short of time.

We also have a number of areas of pioneering R and D.

There is a process whereby we will look through the review and take on board any claims or cases that are put forward for new innovation centres, but those will be directed by the work that is undertaken following phase 2 of the enterprise and skills review. A number of members asked about the timescales for the review. Phase 2 started on 1 November and is expected to last for six months.

Ms Somerville pointed out that, at its next meeting in December, the SFC board will look at the role of colleges in the context of Professor Reid’s remarks.

A number of members, including Jamie Greene, made points about the need to minimise the admin burden in the innovation centres, but there is a balance to be struck. We want to generate evaluation evidence and impact evidence, so we require some input from the innovation centres through the monitoring and evaluation framework. Some of the centres, such as the centre for aquaculture, have already done a lot of work to take forward assessment of the economic impact to date.

We have had a good, largely consensual debate, which has highlighted the important work of the innovation centres, the importance of innovation to our economy and the need to target that work in specific sectors such as renewables, oil and gas and, I would add, fintech for financial services. We will continue to work with all our partners, including the innovation centres, to nurture a thriving and dynamic innovation ecosystem, helping to create sustainable economic growth.

Importantly, we have to take forward the recommendations in the innovation centre review to help drive innovation in Scotland. I urge all members to support the motion in the name of Shirley-Anne Somerville.