News & Views

Ahead of the Covid Conversation #8 on ‘Innovation for Recovery’, Adam Lang, Head of Nesta in Scotland, shares some insight on innovation for recovery and renewal of Scotland’s economy.

Even before the COVID-19 pandemic and associated public health crisis, Scotland was facing a raft of significant and seemingly intractable social and economic challenges.

Inequality across our society was getting worse. Levels of homelessness were on the up. In-work poverty and child poverty were deepening. We have seen the rise of the gig economy, under-employment, precarious work and stagnant wages all impact on our workforce – and for much of the last decade, levels of productivity in our economy have remained stubbornly low. All of these social and economic fault lines in our society have been exacerbated and further exposed by the pandemic. A global public health emergency which has not and does not impact on us all equally. Same storm, different boats – as Fiona Duncan, CEO of the Corra Foundation, eloquently summarised it in a blog post back at the start of the pandemic.

When you set these very real, very urgent and very human challenges in the added context of a global climate emergency, an ageing population and a rapidly changing world of work, driven by the technologies of the fourth industrial revolution, it quickly becomes clear that more of the same simply won’t cut it.

We need new thinking. New ideas. New ways of collaborating to solve shared problems. New types of evidence and insight. New solutions to deliver a fairer, healthier and more sustainable future in Scotland.

Innovation and Scotland’s economy

In this regard, innovation will be vital to Scotland’s economic recovery in the months and years ahead. Significant measures have been put in place to mitigate the economic impact of the pandemic in the short-term. But thinking ahead, our longer-term prospects depend on improving productivity and embracing the opportunity to think beyond traditional growth metrics as a measure of our economic success. We need to prioritise the innovative ideas that are inclusive and don’t leave parts of the population behind.

In many ways, on paper, Scotland is ideally placed to deliver on this ambition. We are a small nation and have a disproportionate number of universities and higher education establishments on our doorstep, delivering world class research and development. We are a founding member of the Wellbeing Economies Alliance and at a government level, the National Performance Framework provides for a shared, inclusive and aligned framework for action to help inform and direct central resources to shared, sustainable and inclusive outcomes.

But it is clear that to-date we have not made the progress needed and we need to be bolder and more proactive.

In our recent report, Innovation after Lockdown, Nesta identified three areas in need of urgent action across the UK to support more inclusive and mission-led innovation in our economies:

• Building the productivity and resilience of the wider economy – Too often our industrial or economic strategies focus on either a specific or narrow range of sectors that do not, and will never, represent the majority of Scotland’s workforce. Yet small productivity improvements in sectors that employ large numbers of people could have a big effect on overall productivity and, crucially, on the wellbeing and livelihoods of many people across Scotland. More investment and policy focus is needed to help support innovation in sectors that are not normally thought of as being at the ‘technological frontier’, like social care and retail.
  
• Addressing regional inequality – Public spending on R&D in the UK  is heavily skewed towards London, Oxford and Cambridge and we know that in Scotland the same is broadly true with regard to the Central Belt. In terms of Government Expenditure on Research and Development (GERD), Scotland performs well in comparison to other nations and regions of the UK, however we do markedly less well in terms of Business Expenditure of Research and Development (BERD). While significant steps have been taken in recent years in Scotland to help improve this – most notably the recent creation of both the South of Scotland Enterprise agency and the Scottish National Investment Bank (SNIB), there is still a clear need for a much more place-sensitive and place-based innovation support. Institutions like UK Research and Innovation must take on new responsibilities for geographical rebalancing of public R&D spending.
  
• Mission-led innovation for the public benefit – we need a more proactive approach to guiding innovation in the public interest. Market forces alone do not always produce innovations that create societal value and sometimes produce innovations that are harmful. The governments of Scotland and the UK should develop institutional infrastructure for more proactive, democratic governance of innovation, enabling the UK’s innovation system to fully embrace a mission-led approach to R&D and take advantage of new, anticipatory approaches to regulation.
  

While action of the type detailed above is increasingly urgent, Scotland’s economy does not sit in isolation to other equally important aspects of our society – many of which are also in need of reform.

Our democracy, public services, skills system and public finances (to name just a few) all equally require renewal and innovation if we want to embrace a holistic approach to ensuring we can be a fairer, more inclusive, healthier and more sustainable society. One that can rise to the many complex and interconnected challenges we will face in the 21st century.

As with all such ambitious agendas, there is a risk that the use of jargon and soundbites overtakes the action needed on the ground, or that we fetishise new ideas or technologies and treat them as silver bullets. Delivering the innovation and renewal we need in Scotland will take time, persistence and hard work. And as much as anything, it will require a different mindset that better embraces a working culture of collaboration, experimentation, trial and error. Fortunately, we know that this is something the Scottish public recognises as an important part of driving the country forward.

Now is the time for Scotland to embrace these challenges. Next year’s Holyrood elections will be significant and will shape our national policy agenda for more than just the next five years. And with the eyes of the world on Glasgow and Scotland for November’s COP26 global summit, it has never been more important or more practical for us to set and act upon a bold agenda for change and innovation to help deliver the fairer, healthier, more inclusive and  sustainable society that we want to see.

Adam Lang

Head of Nesta in Scotland