We must seize the opportunities offered by new industrial strategy

It’s a crucial time for Scotland’s economy, writes Sir John Elvidge

An industrial strategy is a novelty. For almost four decades before Theresa May announced her intention to create one, a broad orthodoxy had been shared by successive UK Governments.

The most valuable contribution to economic growth by government was deemed to be through the management of favourable macroeconomic circumstances. The fortunes of individual sectors of the economy and of companies in particular parts of the country were left to the market to determine and the role of development and skills organisations in different parts of the UK. The UK was by no means alone among developed economies in embracing that orthodoxy. The shift in UK policy is a significant departure from that consensus.

The Royal Society of Edinburgh (RSE) has welcomed the shift. We believe it is essential we seize the opportunity. Our response to the consultation identifies a wide range of ways of doing so. It reflects the powerful combination of business, academic and public sector expertise offered by the RSE’S Fellowship. One of the ten pillars of the industrial strategy on which the UK Government is consulting is driving growth across the whole country, so it is right to offer a strongly Scottish perspective.

Many key issues about the industrial strategy overlap with those being considered through the RSE’S current work on the implications for Scotland of Brexit, which draws on the same mix of expertise. Most prominent of these is the need to continue to build upon Scotland’s strength as a generator of research which can form the basis of business innovation.

For developed economies like the UK, innovation is crucial to our future success. Investment in research and development underpins innovation but is a measure on which the UK lags behind our main competitors. The RSE believes the UK Government should set a firm target to raise the level of investment in this area.

The research strength of our universities is a crucial contribution to innovation and a particular source of strength in Scotland. We have three universities ranked in the world’s top 100. Germany, 12 times our population size, has one. What is ground-breaking academic research today can become worldleading business innovation tomorrow, particularly when the academic researchers are living and working in close proximity to the entrepreneurs who can drive that transition.

We have had a published economic strategy, with clear elements of an industrial strategy, since 2007. It has rightly given prominence to the importance of nurturing our university research base as well as the enriching of our skilled workforce which the internationalisation of our student intake offers. The RSE has argued

strongly for the need to avoid government actions which threaten to undermine these positive strategic intentions, adapting the medical profession’s first principle of doing no harm.

Most obviously, we share the widespread view that the openness ofouruniversitiesto international talent must not be constrained by the change in our relationship with the EU. Brexit must not result in reducing access to research funding or the scope for international research collaboration. We have pointed out that the Scottish Government’s unprecedented statutory intervention in the governance of our universities risks making them less attractive to world-leading academics. Anecdotal evidence suggests damage has already been done.

No one argues against the merits of having a better skilled workforce, of course, but this is another issue which overlaps with the RSE’S consideration of the future relationship with EU member countries. Scotland has particular challenges from our declining population of working age people and our longstanding lack of attractiveness to migrants relative to other parts of the UK. Ways of achieving a better skilled workforce of the size our economy will require are another key strand of the RSE response to the industrial strategy consultation. Scotland already has some strengths in this respect but the RSE response anticipated recent evidence on literacy and numeracy by warning of the importance of those universal foundations for skills.

The RSE will look for further opportunities to ensure that the Scottish perspective and the devolution dimension are properly understood. Watch this space. Sir John Elvidge FRSE is the chair of the RSE’S working group on EU Strategy.