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    RESEARCH AND INNOVATION IN ANINDEPENDENT SCOTLAND

    Dr Stephen J. WatsonChair of Academics for YES

    http://www.academicsforyes.org/http://www.academicsforyes.org/
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    Abstract

    In this document we elucidate the details of Scotlands percentage share

    in the UK-wide research and development funding landscape. In particular,we focus on Research Council Funding (RCUK), Public R&D expenditure inScience and Technology, and the big picture of Research Intensity; overallR&D funding as a percentage of GDP. We demonstrate that major gaps inScotlands R&D ecosystem have opened up under Westminsters watch. Wepropose that independence can close them.

    1 The R&D Landscape

    Research and Development across the UK, both in Higher Education institutions

    and the private sector, is operating under extremely challenging circumstances.Governmental funding to institutions continues to be eroded. For example, re-sponding to the UK 2014 budget, CaSE (the Campaign for Science and Engineer-ing) estimated that the cumulative erosion of the ring-fenced science budget willbe over 1.1bn from the beginning of the Spending Review in 2010 up to 2015-16[14]. Simultaneously, UK private sector R&D expenditure languishes at the lowerend of European levels, and well below the OECD average. Nesta reports that the2012 UK Business and Enterprise R&D (BERD) funding of 1.1% is consideredlow [6].

    Figure 1: UK Expenditure on Research and Development (R&D) by performingsector: Higher Education R&D (HERD), Business and Enterprise R&D (BERD),Private Non-Prot (PNP), Government Institutions undertaking R&D (GovERD)

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    There has been increasing global recognition of the importance of sufcientR&D intensity (Research and Development expenditure as a proportion of GDP)to drive Knowledge Economies: e.g., economies focused in advanced manufactur-ing resulting in high-skilled, high-wage labour. Horizon 2020, the e 77 billionEU Research and Innovation programme for 2014-2020, has the direct objectiveof increasing European nation states R&D intensity, as illustrated by The SMEInstrument which will encourage for-prot companies to put forward their mostinnovative ideas with an EU dimension that cant nd nancing on the marketbecause of their high-risk character [ 3].

    The Scottish Government has recognised, in its Higher Education Researchpaper, the need for a balance between Blue Skies research and that which is com-mercially driven [4]. However, an imbalance is clearly emerging in the UK, asevidenced in a recent letter to the Telegraph by 30 leading scientists which stated:

    Sustained open-ended enquiries in controversial or unfashionable elds are vir-tually forbidden today and science is in serious danger of stagnating [5]. In con-trast, The Scottish government has consistently demonstrated a commitment toHigher Education Research and Development. Indeed, a leading luminary of theNo campaign, Sir David Carter, conceded on the radio broadcast Good MorningScotland on 23 May, 2014: I think theyve [the Scottish government] done wellin safeguarding the funding stream going to universities and the Scottish govern-ment fully understand that medicine and life sciences is really a cornerstone of the Scottish economy. In addition, from the Scottish governments white paperon Higher Education Research: [the Scottish] government is investing, through

    the Scottish Funding Council (SFC), 364 million in research and knowledge ex-change in 2013/14, an increase of 11% on the previous year and a rise of 38%(100 million) since 2007. The main element of this funding is the Research Ex-cellence Grant amounting to 242 million in 2013-14 to support the research basein Scottish universities [ 4].

    To examine the current research and development picture in Scotland, it is im-portant to rst understand the full research and development ecosystem. Both thesources and destinations of all research and development funding within the UK,and how they stratify across different research categories: for example, Scienceand Technology.

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    2 R&D Ecosystems

    R&D funding has four main sources; Governmental, Business and Enterprise,Private Non-Prot and Overseas funding. These sources then feed into four mainfunding destinations: Public Research and Higher Education Institutions, Busi-ness and Enterprise, Private Non-Prot and Overseas spending. As an example,the UKs R&D ecosystem in 2010 is captured in gure [2] in its full complexity.

    Figure 2: An overview of the research and development ecosystem in the UK [2]

    This is clearly a complex picture, but what we aim to achieve with this doc-ument is to tease out the details of Scotlands percentage share in this UK-widefunding picture. In particular we will focus on Research Council Funding, fund-ing for Science and Technology and the big picture in terms of Research Intensity;calculations of overall R&D funding as a percentage of GDP.

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    3 Scotlands Share of RCUK Expenditure

    The 2012-13 Research Council UK (RCUK) funding analysis provides a historicalbreakdown of gures for research funding across the UK [7]. This analysis isbroken into spending directed towards two categories:

    Research funding to Higher Education Institutes (HEIs) including grants,studentships and fellowships

    Research funding to Research Council institutes, Independent Research Or-ganisations (IROs) and infrastructure funding.

    When discussing future research in an independent Scotland there is a tendencyfor commentators to mention only this former funding type. We believe that this

    not only portrays a misleading picture of the current Research and Developmentpicture in Scotland as part of the UK, but further serves to mislead audiences interms of the risks and benets for Scotlands future as an independent nation.

    For an explicit example of a government source cherry picking the rst of thesefunding streams see page 5 here. To understand why this preferential selectionof gures by the Treasury and the wider No campaign is so important and, webelieve, so misguided, it is rst crucial to understand clearly the denition of theorganisations and institutions identied under both categories. We believe therst categorys denition is clear, constituting the channeling of RCUK fundinginto our Higher Education Institutions including our universities. However, the

    second, oft-overlooked, category requires a little further examination to clarifyits true signicance to the overall research council funding picture. ResearchCouncil institutes and Independent Research Organisations are dened to be or-ganisations which do not meet the criteria to be Higher Education Institutionsbut which are eligible for funding from RCUK on the basis that they too carry outin-house research that materially extends and enhances the national research ba-sis and are able to demonstrate an independent capability to undertake and leadresearch programmes [8]. 1 It is incontestable that these institutes and organisa-tions each produce high quality and often world-leading research in a very similarcapacity to our Higher Education institutions. Crucially, these are organisations,like our universities, where academic experts aiming to lead eld aspire to be.

    Though this second category of funding is often left out of analysis of Scotlandsresearch and development future, we think it is absolutely crucial to understand-ing Scotlands true current research and development picture. To fully emphasise

    1Current examples include the British Antarctic Survey, the MRC Biostatistics Unit, BritishMuseums, the National Archives and the National Museums of Scotland. A full list of ResearchCouncil institutes and IROs is available from RCUK from the cited sources and makes for inter-esting reading [ 9, 10].

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    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/255788/bis-13-1115-scotland-analysis-science-and-research.pdfhttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/255788/bis-13-1115-scotland-analysis-science-and-research.pdf
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    why accounting for this second funding category in any discussion of the Scottishresearch and development ecosystem is so important, lets focus on some key g-ures from recent years. In 2012-13 Scotland achieved a 13.1% share of researchfunding from the rst of the above two categories; that is, from funding given toour Higher Education Institutions. It would appear then, on this basis and, as of-ten presented, that Scotland is punching above its weight in the Research Coun-cil UK funding stakes. However, when taken together with the second fundingcategory, that for public research institutes, IROs and infrastructure spending,the percentage of the UK total research spending from research councils falls to10.7%. This fairly stark reduction is a result of a mere 5.4% of this second fundingtype being allocated to Scotland [7].

    Figure 3: Complete RCUK Analysis [7] [23]

    To put this total RCUK funding gure of 10.7% in context, this is slightlysmaller than Scotlands share of UK academic staff for the same period 10.9%[23], indicating a slight underspend in Scotland. Further, when compared withthe percentage share of Scottish tax receipts for the year 2012-13, 9.1% [12], wesee that there is a difference of just 1.6% between total levels of research councilfunding in Scotland and our equivalent level of economic input i.e. tax revenues.This difference then equates to a funding differential of less than 50m from Re-search Council sources for 2012-13. Over the last ve years (from 2008-2013) thisdifferential averages at just 41m. To put this in perspective, we note that West-minsters annual underspend in Science & Technology in Scotland, which we willdemonstrate later, is 86 million on average (2008-2013), and furthermore that41m represents just 0.08% of Scotlands tax revenue for 2012-13 [12]. There es-tablishes that there is no legitimacy to the claim of a signicant RCUK funding

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    http://www.rcuk.ac.uk/about/aboutrcs/research-funding-across-the-uk/http://www.rcuk.ac.uk/about/aboutrcs/research-funding-across-the-uk/
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    gap" as alleged by the NO campaign.

    Figure 4: Data outlining Scotlands RCUK Funding Differential [ 7, 16]

    Figure 5: Scotlands RCUK Funding Differential [7, 16]

    The relative excellence of Scotlands researchers is evidenced by its compa-rable success in competitive RCUK grants, studentships and fellowships. How-ever, Scotlands underfunding in regards to public-research institutes effectivelycancels out this success. For example, none of head ofces of the Natural En-vironmental Research Councils six research institutes, including the Centre forEcology and Hydrology, the British Geological Survey and the National Oceanog-raphy Center, none of which are located within Scotland. It is noteworthy that

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    Prof. John Ludden, Executive Director of the British Geological Survey (BGS),stated that one of the BGSs key priorities in 2013-14 is to further integrate BGSscience with higher education institutions. Such integration, past and, increas-ingly, present, implies the following: we simply cannot look at funding for thesecategories in isolation. We need to focus on the true total of Research Councilspending in Scotland, without the bias introduced by basing gures on an arbi-trary classication by institution type as often done by the No campaign.

    In conclusion, the resulting big picture shows us the following: while Scotlanddoes relatively well on competitive funding for its Higher Education Institutionsthis is almost entirely offset by a lack of focus in fostering Scotlands capabilityin other areas. Often this is in areas in which we ought really, given our hugeresources, to have well-established and well-funded public institutions: for exam-ple, in sustainability and marine science which in turn can drive Scotlands Blue

    Economy. We instead see, on these areas in particular, that the present fundingstreams are not at all reaching research council institutes in Scotland; such insti-tutes simply do not exist in Scotland at present. With independence, our foremostpriority should be to reverse these years of poor oversight by Westminster, and en-sure we begin to balance our portfolio; to invest in key areas, creating new centresfor excellence in, for example, sustainability and marine science (aquaculture)and begin to kickstart our blue economy.

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    4 Scotlands Science and Technology R&D

    The principal sources of public R&D expenditure on Science and Technology arenot devolved but delivered by UK-national departments and bodies. Our analysisof GERS reveals the remarkable fact that Scotlands share of public R&D expen-diture in Science and Technology is not only below tax contribution, but also ourper capita share: see Figs. 6 and 7 . It is noteworthy that the scale of this decit -86 million annually This is explained by the lower shares of UK public spendingcoming to Scotland to fund science and technology, despite Scotlands outstandinguniversity sector.

    For all territories, the local funding that occurs is fairly minor compared tothe UK-wide sources, and this is also true for Scotland.

    Figure 6: Data outlining Scotlands Science & Technology Funding Decit [16]

    5 Research Intensity: A Global Comparison

    Research and Development Intensity (R&D Intensity) is dened as gross R&Dexpenditure as a percentage of GDP. While it cannot be said to give the full picture,it certainly provides a strong indicator of a countrys emphasis in using knowledgeand technology to drive innovation and growth. As part of the Lisbon strategythe European Union set a goal for its member states to reach 3% of GDP forresearch by 2010, aiming to transform Europe into a vibrant knowledge economy,in order to boost economic growth, create more and better jobs and ensure lastingprosperity in Europe [13].

    Far from Scotland seeing clear benets in this area as part of the union and,indeed, despite Scotlands science, technology and engineering history and inter-nationally renowned universities, our calculations indicate that we are seriouslyunderperforming on this target. In fact, our calculations for R&D intensity inScotland indicate that there is a large geographic split between Scotland and the

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    http://www.scotland.gov.uk/Resource/0044/00446179.pdfhttp://www.scotland.gov.uk/Resource/0044/00446179.pdf
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    Figure 7: Scotlands Science & Technology Funding Decit [16]

    UK average. This gap has opened up under Westminsters watch. Independencecan close it.

    First, lets focus on the UKs performance. The proportion of GDP spent onR&D in the UK in 2012 was 1.72%. This is well below that 3.0% target from theEU and means that we languish towards the bottom of the G8 and well below the

    EU-28 average of 2.8% [14]. Indeed there has been a clear downward trend since1985 as presented in gure [8]. We believe that this represents a shameful wastein potential.

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    Figure 8: Historical Research Intensity of the UK(1985-2012) [17]

    Focusing next on Scotland the ndings are striking. Using the Gross Expen-diture on Research and Development (GERD) Scotland 2012 gures it is possibleto calculate the equivalent R&D Intensity gure for Scotland [ 20]. Doing so weobtain a gure of just 1.31% R&D Intensity in Scotland for 2012. What this gurerepresents is an effective 700m gap between that achieved via current Scottishresearch and development gures and what would be predicted were we sitting

    even just at the UKs lower than average level [citation needed].

    Figure 9: Comparative study of Research Intensities [ 16] [18][19][20][21][22]

    Looking to other similarly-sized, comparable nations provides some indicationof just how much potential may lie untapped at present in Scotlands economy

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    http://www.ons.gov.uk/ons/dcp171778_355583.pdfhttp://www.ons.gov.uk/ons/dcp171778_355583.pdf
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    as part of the UK. A recent report from NESTA demonstrates how many smallcomparable countries have managed to thrive [ 6]. In 2012, Ireland matched UK funding, at 1.72

    Stian Westlake, NESTAs Executive Director of Policy and Research, concludesthat if Scotland were just to match the average R&D investment and commercial-isation of similar successful countries over a period of ve years then Scotlandseconomy would begin to income by around 12bn a year [citation needed].

    Figure 10: [7][16]

    Figure 11: Scotlands Research Intensity funding underspend relative to UK &OECD average [18][19][20][21][22]

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    References

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