Scotland as a technology nation: Innovation Minister speech

Opening speech delivered by Minister for Small Business, Innovation, Tourism and Trade Richard Lochhead at the Scottish Parliament, Edinburgh, 25 January 2024.

Today, as we celebrate the contribution of Rabbie Burns to the world, in this debate we can celebrate and discuss Scotland’s contribution to the world as a Technology Nation.

The world’s economy faces two extraordinary and arguably unprecedented forces. 

Unavoidable forces.

Firstly, the critical need to transition from an economic model based on fossil fuels to one based on sustainable resources.

But also the need to rethink the way we live and work in order to harness the potential of AI and other forms of new technology.

These are forces transforming our world, demanding collective leadership to steer a course through uncharted waters but which is an exciting voyage of discovery.

Scotland can face this journey with optimism.

Equipped with an abundance of natural resources, and with our history, universities, and industry providing opportunities to lead and break new ground: improve productivity, create new businesses and open new markets at home and around the world.

Scotland absolutely has the potential to be a leading nation in technology, science, and world class innovation.

We start from a position of strength, with our tech sector employing over 80,000 people and contributing around £6bn to the economy. That’s an astounding 107.5% increase since 2012.

With more than 700 life sciences organisations for instance employing over 42,500 people, Scotland is one of the largest life sciences clusters in Europe.

Worth £3 billion to the Scottish economy.

Achieving 8% growth each year since 2010.

And exports stood at £3 billion in 2019.

And Scotland is also home to 227 fintech companies.

And the cluster has seen a 24% increase in jobs over the past two years and is breaking new ground in areas such as green finance and financial regulation.

We have a thriving space industry with over 130 companies in a sector that employs 18% of the UK workforce and has seen recent revenue growth of 30%.

Indeed, I see Orbex has just been identified in the top ten space start-ups to watch globally.

And this year we hope to see the UK’s first vertical launch take off from Scotland which will command headlines in Scotland and throughout Europe.

We also have one of the largest critical technologies clusters in the UK, with a turnover estimated at over £2.8 billion.

These underpinning and often invisible technologies are vital to our future and have huge export potential in particular.

Photonics, the science and technology of light, including lasers, optical systems and fibre optics, generates £1.3 billion in revenues with over 96% being exports.

The growth achieved rightly warrants celebration.

This is tremendous growth in tech against a backdrop of the challenges of Brexit, Covid, inflation, energy costs, of course faced by all industries including technology and wider business community.

This is testament to the strength and resilience of Scotland’s high-tech industries.

We want the sticky jobs that stay in Scotland associated with tech jobs. We want to not only invent things in this country, we want to get the jobs and economic benefits from that.

Indeed, our National Strategy for Economic Transformation and the recent Innovation Strategy set out a very clear model to build on this. 

Forging partnerships between Government, academia and industry to build an entrepreneurial, innovative and successful technology nation.

Together, we have invested in an infrastructure that nurtures talent and provides opportunities to apply the technologies of tomorrow to the challenges of today as well. We have for instance in terms of infrastructure:

  • the National Manufacturing Institute Scotland
  • the Medicines Manufacturing Innovation Centre
  • the National Robotarium
  • the Aberdeen BioHub

Just a small sample of some of the new infrastructure that has opened, in this case, in these four examples, just in the last two years. Just in the last two years.

With a Scottish public contribution totalling over £100 million for those projects.

And we have invested over £155m in innovation centres since 2013, with a further up to £8m per year announced just last week.

The Scottish Funding Council carried out a review, at arms length from Government, on long term funding for innovation centres and there is a lot of work going on in terms of those innovation centres to secure the long term funding from SFC about how the new model can work for those particular centres and there is work going on for the Scottish Funding Council who are leading that exercise.

So, I am confident that in some shape or form the great work carried out by some of these innovation centres will continue.

We’ve committed £60m so far to the implementation of the Scottish Tech Ecosystem Review’s recommendations.

Including £42m in our national and unique Techscaler network to support the next generation of Scottish start-ups over the next five years.

We’re also developing ‘Entrepreneurial Campuses’ with academics, researchers and students bringing new business ideas to life. 

So this is the technology nation in action.

And our science excellence fuels our innovation and technology.

With our world class universities underpinning our tech revolution.

The universities have received over £1 billion from the Government per year for the last number of years and what I am concerned about, of course, is the very difficult budget that the Scottish Government has got to implement following the settlement from the UK Government.

That is why everyone across the Chamber, in all parties, should be concerned about the cut in the budget that the Scottish Government has received from the UK Government.

In terms of universities, they are playing a tremendous role at the minute and will continue to play a tremendous role. Spin outs from the Scottish universities continue to attract significant investment, with £235 million, making it a record year for spinout value, up 53% on 2021.

Dundee was named the world's most influential pharmaceuticals research institution, above MIT, Berkeley, Oxford and Cambridge.

TauRx, an Aberdeen spin out seeking to develop a treatment for Alzheimer’s, has raised hundreds and hundreds of millions of dollars since its founding back in 2002 and promises great things.

And the Research Excellence Framework for 2021 shows there’s world-leading research in every Scottish university.

Napier, for instance, is one of three in Scotland and one of seven in the UK to achieve the highest rating for research in computer science.

Our global leadership can also be seen reflected back at us from space - Scottish scientists designed crucial technology within the world’s most powerful telescope, the James Webb Telescope looking back in time by tens of millions of years.

And developed key components for the LIGO [Lye-Go] project, the first in the world to detected gravitational waves.

All parts of Scotland’s tech for good approach these advancements can be seen to benefit our health and other needs of society.

Indeed two university spinouts, MR Coiltech and Wideblue, are behind new technology being used in the next generation of ultra high-resolution MRI scanners and other medical devices.

I think agritech has a big role to play as well and I am very keen to learn more about that as part of our innovation strategy as we take that forward. Of course it is absolutely vital, at the same time as we keep an open mind to new technologies, that we do protect Scotland’s incredible image for provenance and good clean food and drink in terms of the raw ingredients that make up our fantastic food and drink industry. We have got to balance those approaches going forward and I think we have got the right balance for Scotland at the moment.

Can I also say that there is a new international standard that has been created for WIFI light communications. Edinburgh based, pureLiFi are at the forefront of this emerging technology.

Edinburgh also recently opened the Quantum Software Lab and will host the UK’s first next generation supercomputer – 50 times faster than any of the country’s existing machines. Edinburgh was chosen to host that computer.

And last year, the famous XPRIZE chose Glasgow as its new European Hub.

And not to forget we have got brilliant games technology with its own track record of success largely born in Dundee of course.

And that track record looks set to continue with Edinburgh based ‘Build A Rocket Boy’ successfully securing £87 million in capital just last week, another sign of the fantastic momentum in Scotland’s technology sectors.

But we need to keep moving up the international league tables of technology nations.

We must continue to create the conditions for success.

Like rolling out fibre infrastructure which is truly the backbone of the technology nation.

A backbone that enables every business in Scotland – no matter where they are located – to play its part in the digital economy.

Our record investment in the R100 programme is extending gigabit-capable fibre networks across the length and breadth of Scotland.

Over the past ten years, we have invested over £1 billion delivering almost one million broadband connections.

5G is another engine of growth and its adoption has the potential to increase Scotland’s GDP by up to £17 billion, adding up to 160,000 jobs and helping to create over 3000 new businesses by 2035.

That’s why we’ve invested over £14 million in establishing the Scotland 5G Centre and its network of regional hubs.

And our enterprise agencies are of course playing their part and I will hopefully come on to one of the points about scaling up.

Scotland continues to be the most attractive location outside of London for inward investment, with more than 8,500 jobs created last year.

Our projects were up by 3.3% in 2022, compared to a 6.4 per cent fall in the UK. In terms of inward investment we are outperforming the UK as the best performing area outside London.

Our agencies work together of course to help businesses access the capital they need to grow.

M Squared Lasers, a quantum and photonics company in Glasgow, received £12.5m investment from the Scottish National Investment Bank in November 2020. It’s first investment.

 The Bank has now committed over £500 million of investment to 31 businesses and projects, bringing alongside it more than £800 million of investment from third parties.

In fact, research last year showed that equity investment into Scottish businesses reached a record £953 million, that was an increase of 26% from 2021.

A strong and vibrant technology sector can do much to help us manage the challenges as well that we are facing now and in the future.

So these sectors generate high value employment and high wages.

And more tax revenues.

And they are export driven.

Many tech sectors pay well above the national average.

The photonics sector, for example, has an average employee GVA of £89,000 thousand.

And it’s important for us all in this chamber today as I draw to a conclusion, to remember the ultimate point of all this.

Technology can improve our quality of life, save our planet and support humankind.

It can keep us secure, protecting vital systems and services from attacks.

We’re producing agri tech, climate tech, cleantech, education tech and so much else.

And much of the emerging new technologies to help the public sector and public good are emerging through our successful CivTech programme as well.

So in conclusion Deputy Presiding Officer, to ensure Scotland’s high-tech industries are equipped to meet future challenges, the Scottish Government will

  • continue to invest in digital and enabling infrastructure
  • we will work with business to develop a Green Industrial Strategy
  • we are going to convene the industries to come together to understand how we can better support and drive collaboration between these high tech industries
  • we want to explore the appointment of ambassadors for instance for each of these high-tech industries
  • we want to promote Scotland’s position as a science and technology nation

It’s 25 years since the opening of this Parliament. We have witnessed enormous changes in that time.

And 25 years from now the world won’t be the same as it is today.

But Scotland is in a position of strength.

And Scotland can be, and if we play to our advantages, will be, a hub of world class science and technology and I urge Parliament to support the motion.

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