The Learned Society of Wales presents

Small Nations Deep Dive: Scotland

The Learned Society of Wales hosted a roundtable of experts to reflect on innovation policy and practice in Scotland. Our objective in hosting the roundtable was to understand how Scotland approaches stimulating innovation and apply that learning to the Welsh context. This roundtable featured speakers from the University of Glasgow, Interface, and the Royal Society of Edinburgh (RSE).

Critical insights: 

  • Embracing Holistic Approaches to Economic Development: Scotland’s innovation policy’s shift towards inclusive growth signals a departure from traditional growth-focused approaches.
  • Addressing Challenges in Multi-level Governance: The challenges posed by multi-level governance and the potential dissonance between UK-wide and devolved approaches to innovation highlight the need for coordinated and coherent policy frameworks.
  • Optimising Innovation Funding Mechanisms: Scotland’s diverse range of innovation funding mechanisms, such as the Innovation Voucher Scheme and Accelerator Programs, offer valuable models for supporting collaboration between industry and academia.
  • Leveraging Place-Based Interventions: Initiatives like innovation districts present opportunities and challenges for Scotland and Wales. While these interventions hold promise for revitalising local economies, ensuring inclusivity and community engagement is paramount.

By incorporating these insights from Scotland, policymakers can create a more coordinated, inclusive, and effective innovation ecosystem in Wales.

Evolution of Innovation Policy in Scotland

In the post-Brexit and post-COVID landscape in 2022, Scotland's commitment to fostering innovation-driven growth and addressing societal inequalities materialised in the National Strategy for Economic Transformation (NSET).

By examining Scotland’s approach to fostering entrepreneurship, collaboration between academia and industry, and leveraging regional strengths, policymakers in Wales can identify promising practices, potential challenges, and innovative solutions relevant to the Welsh economic landscape. This cross-contextual learning enriches policy discussions and facilitates the exchange of ideas and collaboration between devolved nations, ultimately contributing to the shared goal of driving innovation-led growth and prosperity across the UK.

This roundtable examined Scottish innovation policy over the past two decades, during which the country has significantly evolved in its conceptualisation and approach to stimulating innovation (the following summary is derived from work by Waite, Roy, McIntyre and Goudie, drawing on Scottish Executive and Scottish Government sources).

In the early 2000s, shortly after the establishment of the Scottish Parliament, the focus was primarily on transitioning Scotland towards a more innovation-based, knowledge-intensive economy with the publishment of FEDS, the first economic strategy in the new parliament. This period laid the groundwork for subsequent developments, emphasising the importance of science and technology as pillars of innovation. In 2007, the Scottish Government expanded their definition of innovation beyond its traditional focus on science and technology in the Economic Strategy of 2007, addressing low levels of business R&D. In the wake of the global financial crisis, the Scottish Government, in the Economic Strategy 2011, once again widened their definition of innovation, increasing support for entrepreneurship, international trade, and university-industry collaborations.

A pivotal shift occurred in 2015 with the inclusion of inclusive growth aims in the Economic Strategy 2015, marking a departure from traditional, growth-focused approaches. The change was in part influenced by the work of Joseph Stig and his contemporaries who identified that inequality serves as a hindrance to competitiveness and growth. In line with this shift towards a more holistic view of economic development, the Scottish Government established the Innovation Forum and eight innovation centres supported by the Scottish Funding Council (SFC).

In the post-Brexit and post-COVID landscape in 2022, Scotland’s commitment to fostering innovation-driven growth and addressing societal inequalities materialised in the National Strategy for Economic Transformation (NSET), marking the culmination of these evolving strategies. Notably, the idea of physical or network-based clusters being integral to Scotland’s innovation success re-emerged in this strategy. The strategy also identified environmental sustainability as important to economic success. 

However, despite these advancements, there are notable challenges in Scotland’s innovation landscape. Specifically, the complexity of multi-level governance and the risk of mutual dissonance between the UK-wide and Scotland’s approach to innovation could pose obstacles to progress for both entities. For example, in the Scottish government’s National Innovation Strategy (2023), the concept of “levelling up” was mentioned only twice: once during the mapping of strategy documents and again when acknowledging the allocation of £33 million into the innovation accelerator in Glasgow. Meanwhile, the UK government’s levelling up white paper barely acknowledges any of the initiatives led by the Scottish government in innovation.

Furthermore, initiatives such as innovation districts, while promising, raise questions about their effectiveness in supporting place-based regeneration and inclusivity. The Glasgow Riverside Innovation District exemplifies this conundrum. While significant capital investment in line with this initiative promises to revitalise deprived neighbourhoods, ensuring inclusivity and community engagement remains a critical concern. However, local policymakers’ recognition of the need for transformative change, adoption of a long-term perspective, and commitment to engaging local communities offer reasons for optimism. Additionally, the linkage to a City Deal infrastructure project provides further grounds for hope for the success of the innovation district. However, caution is warranted due to past instances where investments in the area appeared disconnected from their impacts on the local community.

While significant capital investment in line with this initiative promises to revitalise deprived neighbourhoods, ensuring inclusivity and community engagement remains a critical concern.

State of Scottish Innovation

In Scotland, innovation funding is channelled through the following key funding mechanisms, each tailored to cater to specific needs and objectives:

  1. Innovation Voucher Schemes: These schemes provide companies with financial backing, typically starting at £7,500, to engage in collaborative research and development endeavours with academic institutions. The primary goal is to facilitate knowledge exchange and catalyse innovation within businesses.
  2. Advanced Innovation Voucher: Building upon the basic voucher scheme, this advanced version, managed through Scottish Enterprise, extends additional support for more ambitious projects. This funding stream supports companies in accessing heightened levels of expertise and resources, fostering innovation on a larger scale.
  3. Inward Investment Catalyst Fund: This fund provides financial assistance to innovative projects with significant growth potential. By strategically targeting ventures with promising prospects, the fund endeavours to stimulate entrepreneurship and propel economic growth across Scotland.
  4. Accelerator Programs: These programs offer intensive support, mentorship, and access to resources for start-ups and early-stage businesses. By providing guidance and resources, these programs enable companies to accelerate their growth trajectory and effectively penetrate the market. One notable example is the Techscalers, which has a £45 million budget for the current 5-year programme and offers tailored support for everyone across Scotland with the ambition to build a start-up at any stage of their innovation journey.
  5. Enterprise Agency Support: Various R&D funding and specialist support from Scottish Enterprise, Highland and Islands Enterprise and South of Scotland Enterprise.
  6. Smart Scotland Scheme: Managed by Scottish Enterprise, this scheme provides substantial grants, amounting to £100,000, for research and development initiatives. Encouraging collaboration between businesses and academia, the scheme prioritises innovation-driven projects to enhance competitiveness and productivity in Scotland’s business landscape.
  7. The High Growth Spinout Programme (HGSP): Operated by Scottish Enterprise, the HGSP provides funding to support the commercialisation of advanced technologies developed at Scotland’s universities, research institutes, and NHS boards. The funding aims to address gaps in the prospective technology’s business plan. The grant can support up to 100% of the direct costs of a project, up to a maximum of £75,000.
  8. CivTech: Funded through the Scottish Government. A programme where public and third sector organisations set challenges and become sponsors to problems they would like solved. Designed along the lines of a staged accelerator programme, with companies proposing their ideas and receiving funding to go through an exploration stage. Those who are successful and selected earn a place on the accelerator and receive further funding (with no equity or IP stake taken by the scheme).
  9. Converge Challenge: Programme to support spinouts from Scottish Higher Education Institutions through funding and an accelerator programme.

Scotland’s structured innovation funding mechanisms provide valuable lessons for other regions seeking to foster collaboration, drive research and development, and stimulate entrepreneurship. Scotland sets an example of proactive innovation policy by tailoring support to meet the specific needs of businesses and academic institutions. These funding modes facilitate the transformation of ideas into innovations and promote
cross-sector collaboration, offering insights for regions that cultivate dynamic innovation ecosystems.

Another notable example of Scotland’s unique support resources for innovation is Interface, a central hub which connects businesses with academic expertise and research facilities across Scotland. Interface plays a pivotal role in fostering collaboration between academia and industry, helping businesses to innovate and grow by leveraging cutting-edge research and specialised knowledge. While there are initiatives elsewhere similar to Interface, this initiative is unique to Scotland and exemplifies the region’s commitment to driving innovation through effective partnerships.

Scotland's structured innovation funding mechanisms provide valuable lessons for other regions seeking to foster collaboration, drive research and development, and stimulate entrepreneurship.

Challenges and Opportunities: Scottish and Welsh Innovation Policy

Opportunities abound for devolved nations to leverage their unique strengths and resources to stimulate innovation-led growth.

Devolved nations like Scotland and Wales face common challenges in navigating complex policy landscapes and ensuring coherence and alignment across multilevel governance. The proliferation of initiatives and funding streams, coupled with overlapping responsibilities, underscores the need for greater coordination and clarity in policy implementation. Additionally, balancing the promotion of high-tech sectors with support for traditional industries and SMEs is crucial for achieving inclusive growth and addressing regional disparities.

Opportunities abound for devolved nations to leverage their unique strengths and resources to stimulate innovation-led growth. By fostering collaboration between government, academia, and industry and investing in place-based interventions such as innovation districts, Scotland and Wales can unlock their full innovation potential and drive sustainable economic development.

In conclusion, while Scotland and Wales share common aspirations in promoting innovation and economic growth, their respective policy approaches reflect each nation’s diverse contexts and priorities. By learning from each other’s experiences and leveraging their distinct advantages, both nations can chart a course towards a more inclusive and prosperous future through innovation.

Background: Learned Society of Wales Innovation Roundtables

Over the last two years, the Society has held a series of innovation roundtables, bringing together innovation experts, practitioners, and leaders to help inform and contribute to discussions that may improve innovation policies and practices in and for Wales. This activity programme initially coincided with the Welsh Government’s development of the Innovation Strategy for Wales and associated delivery plans. For 2024, the Society has commenced a new series of innovation roundtable programmes.

In this next phase, the Society is further engaging with thought leaders and practitioners in the field, continuing to develop recommendations to help inform and improve innovation strategies and the innovation environment in Wales. The core new theme for this next phase is “Inclusive innovation,” which is defined in the broadest sense but with particular emphasis on equality, diversity, and inclusion, as well as measuring impact beyond the economic. This second phase will also include a deep dive into a theme from the previous series of roundtables: “Innovation in Small Nations,” an opportunity to share lessons that Wales can learn from other small nations. 

All roundtable sessions are conducted under Chatham House rules, and this is the anonymised and unattributed report of critical points from the third roundtable.

The Learned Society of Wales is Wales’s national academy for arts and sciences. Its Fellowship brings together experts from across all academic fields and beyond. The Society uses this collective knowledge to promote research, inspire learning, and provide independent policy advice.