Murdo Fraser - Growing a Knowledge Economy
23/03/2006
Murdo Fraser MSP
I would like to start by echoing Allan Wilson’s [Deputy Enterprise Minister] support for our universities and colleges. The further and higher education sectors make a valuable contribution to Scotland’s economy: we know that for a public investment of less than £700 million, higher education generated £2.8 billion of wealth and created over 50,000 jobs, and the sale of Scottish higher education services overseas earns £360 million per annum. It is clear that a strong HE and research sector will help to bring investment and talent to Scotland.
In order to continue to attract talented students and academic staff, Scotland must maintain her excellent reputation for teaching and research. Particularly as industries turn to China or India, where there is a low cost base and high human capital, it will become increasingly important to collaborate with our international partners in the supply and development of HE. This will help Scotland to coexist with these economies in a fiercely competitive global environment.
Scotland has been particularly successful in attracting international students. There are 27,480 international students from over 180 countries studying in Scottish universities. The latest available figures show that international students’ personal expenditure is £434 million per year. Having a range of international talent at our universities means that we can contribute to and be involved in the development of the HE sector in our future economic partners, and hosting international students will help to forge strong links between Scottish research, businesses and communities.
Scotland’s Higher education sector consistently punches above its weight in terms of patents and research citations. We are familiar with the statistics which show that with 8.5% of the UK population, Scottish institutions last year produced 19 % of all UK patents and 17 % of UK licences. However, Scotland only invests 1.5% of GDP in research and development compared to Sweden’s 4%, and only 0.56% of this is successfully commercialised. It is clear that Scotland at present is failing to capitalise on her investment and research output.
Professor John Coggins of Glasgow University has said that links between higher education and industry are not as good as they should be, despite a growing willingness in universities to encourage researchers to create spin-out companies. Applied research has suffered from a lack of recognition compared to pure research, despite its importance to the economy.
The Executive’s new ‘Interface’ initiative has identified the need for greater and more effective collaboration between the higher education sector and business, but unless Scotland can support a broad range of innovative commercial activity which goes beyond university research spin-off companies we will not be able to generate the critical mass of knowledge, skills and opportunity which Scotland needs to sustain growth.
The Association of the British Pharmaceutical Industry has also expressed this view, identifying the three key factors critical to Scotland attracting R&D investment as access to skills and knowledge; a competitive cost base for collaborative research and a market which supports innovation. Without these factors it is difficult to see how a knowledge economy can grow or be sustained.
It is imperative for Scotland to support and develop our best asset: our people and our ideas. We need to develop a high-skill, high-knowledge workforce which is flexible enough to respond to the changing demands of the economy. However, I do not believe that increasing participation in Higher Education will of itself boost our knowledge economy. In order to truly unlock the full potential that Scotland has to offer, the focus should be on quality not quantity in Higher Education. In order to provide businesses and research with a skilled workforce, the FE sector also has a key role to play in providing the technical skills necessary to support research and knowledge transfer.
In order to secure the status of Scotland’s university sector, we must be able to attract and retain top staff. To achieve this, universities must have adequate capital funding to develop good facilities, including libraries, labs and accommodation. It is clear that if staff salaries in England are raised as a result of extra funds from top up fees, Scottish staff salaries will have to be raised in line to prevent a brain drain. If government reduces the amount and proportion of ring fenced funding, universities will have greater flexibility to direct funds where they will be most effective.
The growth of our knowledge economy is being impeded by the fact that GDP growth in Scotland has consistently lagged being that of the rest of the UK; by the fact that the number of business start ups has been falling and by the fact that public sector growth has outstripped that of the private sector.
Government can support the university sector in keeping pace with international competitors by developing a long term strategy which does not simply react to successive spending reviews, which is collaborative and which brings together the HE and FE sectors with genuine participation from business, but ultimately, in order to compete with other economies, we must foster a dynamic business environment which will attract talent and investment and support entrepreneurial activity.