Research growth hidden by the trees: BERD analysis

Scottish university research continues to be rated as world class according to the UK wide 2014 Research Excellence Framework (REF 2014). According to Research Fortnight, over 85% of Scottish university research was rated as having an impact in wider society and economy. However, figures from the Scottish Government @scotgov shows that our research base is not being exploited here in Scotland.
 
The Business Enterprise Research and Development (BERD) Scotland 2013 figure outline the spend on R&D by business. The good news is that R&D spend has increased by 10% in cash terms in 2013 compared to 2012. However, the spend in proportion to GDP has remained stubbornly at 0.6% for the last decade, despite government interventions to increase the spend using tax breaks across the UK and the promotion of knowledge transfer with university researchers. So it looks like government policy is not having an impact in developing the Scottish research base but the devil is in the detail.

The overall BERD spend is dominated by large companies and sectors so a look at a breakdown maybe more revealing. One area where there is significant growth year-on-year is in BERD spend by small and medium size enterprises (SME) with a 12% increase in 2013.  This is interesting as the government policy is likely to have a greater impact on SME R&D spend than that of large businesses such as pharmaceuticals.  The large businesses consistently spend relatively large amounts on research which makes it difficult to make an impact on the overall figure due to relatively small growth in BERD spend by SME.  Successful SME are also ripe to be taken over, hence there is significant volatility in the figures, particularly for independent SME, but the overall rise in spending is heartening.

The sources of funding reveal that investment by other UK business declined from 20% in 2005 to 1% in 2012 whereas own funding for R&D has increased from 50% to 75%.  The source of own funding is not expanded but this lack of spend by other business could have contributed to the demise of wave technology companies.

Comparisons with the rest of the UK show that Scottish business is lagging behind as even Northern Ireland spends proportionality more and only Yorkshire, Wales and the North East spend less. Relative BERD spend in Scotland is half that of the UK as whole which itself is half to quarter of that of our competitors.

It does seem that there are the roots for the growth of a knowledge economy within SME but that large enterprises dominate the figures. So, it is likely that government policy has at least contributed to the growth in R&D undertaken by SME and the rating in the REF 2014 show that our university research base is world class.

Economic forum, research spend and wind not waves.

National Economic Forum

The national economic forum met in Edinburgh this Wednesday with the theme of Rebalancing the Economy: Creating a Fairer and more Prosperous Scotland. The forum brings together business and wider society  representatives with government to discuss economic growth. It is opened with an address with the First Minister who outlines relevant government policy and  takes questions. This is followed by a panel session and workshops chaired by relevant ministers. The event allows for a two way exchange on  policy which allows government to share its ideas and gives representatives an opportunity to affect how those ideas are  implemented. The theme of this meeting followed on from the business pledge, that was announced as part of the Legislative programme, and the effect of further devolution arising from the Smith Commission. I gave an overview of these announcement in All Change as the Smith Commission publishes report, in a review of the week for PubAffairs.

Nicola Sturgeon led on the business pledge stating that businesses will be asked to commit themselves to good business practices, such as innovation and internationalisation, as well as a living wage, gender equality and supporting workforce engagement. In return, the companies will be offered more support from the Scottish Government and enterprise agencies. She went onto to say that the government will improve skills and maintain the most competitive business rate system across the UK as well as investing wisely and well in infrastructure and to support innovation.

Research Funding

Meanwhile in London Vince Cable, addressed the Royal Academy of Engineering saying that investment in science brings an economic return and that we should follow the EU example and count science funding as investment not spending. He lamented the relative lack of R&D spend by business but said he was in favour of great investment in Science. 

Despite the tax breaks for R&D and initiatives from Scottish Enterprise and the Funding Council there has been no growth in business spend on R&D as a proportion of GDP in Scotland (or the UK).

Wind not waves 

While wind power continues to take off it seems wave power has stalled. In Scottish Parliament questions on Thursday, Labour MSP Malcolm Chisholm asked the Scottish government about Pelamis Wave Power which has gone into administration.While it seems they can not help the company, the government hopes to keep some of their employees in Scotland with the creation of Wave Energy Scotland. However, they will have competition from those made redundant by Aquamarine Power. It seems neither could secure the funding required to further develop their wave power prototypes from private investors.

Creative review

The Economy, Energy and Tourism Committee has announced a review of the Economic Impact of the Creative Industries. The inquiry will focus on the TV and film and video games industries. The deadline is 8 January but with Christmas preparations this doesn't give much time.

To consider how Scotland can grow sustainable TV and film and video games industries. - See more at: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/84491.aspx#sthash.KdMtssg0.dpuf

To consider how Scotland can grow sustainable TV and film and video games industries.   - See more at: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/84491.aspx#sthash.KdMtssg0.dpuf

Economic Impact of the Creative Industries