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Another conference that ignores the problems.

Review of Royal Society of Edinburgh conference

" The Creation of Wealth"

16th November 2005

James Irvine

Teviot Scientific Publications Ltd, Edinburgh and Perthshire

Filed 04 Jan 06

This should have been an important conference. There is much concern expressed in the media about Scotland's economic performance (1). Many Scottish businessmen are aware of the problem: a problem that in the eyes of many (including the CBI) is becoming increasingly acute (2). Many Scottish citizens wonder where the money is coming from to support the numerous ideological projects generated by the Scottish Parliament with the commensurate increase in the public's expectations, but too often linked with a failure to deliver and/or the generation of a whole array of new problems consequent upon the extravagant funding of single interest agendas.

Yet Scottish Enterprise (a Scottish Executive quango) gets through an annual budget of £416.9million of taxpayers' money (3). What is there to show for it other than prestigious buildings and a massive staff? And that vast sum excludes funding for the Highlands and Islands, which has its own quango and enterprise budget from the Scottish Executive.

Quoting from the publication of the Sheffield University 2001 Census Atlas (4), the Chief Executive of the Edinburgh Chamber of Commerce, Ron Hewitt has stated that in contrast to the 121,000 new jobs created in the public sector in Scotland since 1997, only 35,000 jobs have been created in the private sector. The consequence is that the public sector is stifling Scotland's economic growth (5). Indeed, one has only to look at the jobs pages of the Scotsman or the Herald on a Friday to appreciate the reality of the problem.

The current Scottish Enterprise chairman, Sir John Ward recently made waves - as well he should - but sadly this was allegedly unintentional. According to press reports, Sir John was addressing MSPs at a supposedly private meeting to discuss the problem of Scotland's chronically low economic growth rate. His message was that the Scottish economy was still too dependent on the public sector. Indeed, he allegedly went on to say that in places like Ayrshire, the dominance of the public sector was similar to that in countries in the old Eastern Bloc (6).

The MSPs did not take kindly to such an outrageous slander, with allegedly all sorts of defamatory comments aimed at Sir John. But the government's own figures bear out what he was saying. In Ayrshire public spending accounts for 74% of the local economy, only to be beaten by Argyll and Clyde where the figure is 76%. For the whole of Scotland the figure is 55% compared to that for England at 40%.

Instead of reacting with such a predictable, ideologically driven, knee jerk reaction to Sir John's statement of reality, the MSPs should have responded by setting up a cross-party debate or discussion. Apparently, they did no such thing. Can the Royal Society of Edinburgh, which claims to be politically impartial, do any better? Was a conference on the subject entitled "The Creation of Wealth", and prefaced by a statement of the economic problem (7), going to introduce a balanced perspective on this important topic?

Regrettably, the omens did not look good. The website announcing this whole day conference, almost up to its start, gave no title for one of the talks and no speaker or title for another. There were two sessions on education with speakers from the same university. The political perspective was represented by two speakers, both of whom had strong current or previous affiliations with but one political party. Even worse, although Small and Medium sized Enterprises (SMEs), which make up 99.8% of Britain's 4.3 million businesses and which are responsible for half of all UK jobs and turnover, never got a mention anywhere in the programme (8). In the spirit of trying to be constructive, this reviewer pointed out this rather obvious omission to the organisers some months prior to the conference, and when there was clearly an opportunity to remedy the matter. The suggestion was refuted, with the statement that the matter would be covered within the existing schedule. It wasn't.

Professor Gavin McCrone

Chairman and Vice-president of the Royal Society of Edinburgh

Addressing some 80 delegates in a less than full house, Professor McCrone started the conference in remarkably downbeat mode. First, he had some rather discouraging comments for the press. After some entirely inappropriate reference to "Charterhouse rules" that clearly did not apply to a conference that was open to the public, was in the public interest and carried a conference fee, he expressed his displeasure about any photographs being taken, but " if you have to .." etc. Presumably this was specifically directed at this reviewer, who had taken the trouble previously to email the Chief Executive Officer of the Society seeking his approval for a modest amount of photographs to be taken. This had been graciously given, and the suggestions that he had made were complied with to the letter. It was worrying that the chairman should appear to so hostile to the press. Like it or not, but www.land-care.org.uk is now part of the press due to its substantial online readership. Indeed, the number of visits to the Land-Care website every day of the week throughout the year would dwarf the attendance at the conference. Surely, a conference of this nature should welcome press coverage as part of its commitment to promote informed public debate.

Professor Gavin McCrone
Chairman of the conference & Vice-president of the RSE
Photo ©Kimpton Graphics

Next, he proceeded to downplay the widely recognised problem with the Scottish economy. This is scarcely the way to stimulate debate, especially coming from such a distinguished and influential figure. He referred to the many years he had spent at the Scottish Office, and how important it was to take risks and to accept that mistakes are an inevitable part of the process. But it may be recalled that some of these "mistakes" were massive, trying to bribe foreign companies to invest in Scotland and leaving some very big white elephants in their disastrous wake. When the foreign investors left, they took with them much of Scotland's manufacturing base and created massive redundancies.

So the conference had scarcely begun before it became apparent that the message from the chair seemed to be "don't rock the boat." But this reviewer is not alone in thinking that this boat does need rocking, and urgently.

No mention was made of the prospect of even more trouble ahead for Scotland's economy. According to Treasury figures, by 2008 the block grant to Scotland will have more than doubled since 1999, and will be almost £30bn annually. At that point a new spending review takes effect, when the rate of increase is expected to drop off dramatically.

According to Professor McCrone, situations change. It is no great deal that Scotland - as with the rest of the UK - has largely lost its industrial base, not manufacturing anything very much. He gave the impression that he was quite content that the financial and service sectors had more than adequately replaced manufacturing as far as Scotland was concerned. But has it?

Wendy Alexander

MSP for Paisley North.

According to the conference documents;

"Wendy Alexander has held a variety of ministerial positions, serving in the cabinets of all three First Ministers since devolution in 1999. Sometimes she is referred to as the "one time minister for everything, but currently minister for nothing". A graduate of Glasgow and Warwick Universities, she holds an MBA from INSEAD. She is currently a member of the Scottish Parliament's Finance and Education Committees and Visiting Professor at Strathclyde University."

Wendy Alexander, MSP Paisley North
Photo ©Kimpton Graphics

While this sounds all very impressive, this website recalls her performance at the Soil Association/SAC's disastrous conference held in Paisley in 2003 entitled "Agriculture: the primary health service?" (9). If this is the standard of the elite of the Scottish Parliament, then it is hardly surprising that we are heading for such big trouble.

It is fascinating to observe how a politician's individual social situation greatly colours how he or she views policy appropriate for the whole nation? Although no direct statement was made on the matter, it does appear that reproduction is top consideration for our Wendy. Thus in her estimate, tackling population decline, followed by investing in early years, are the top priorities for the role of government in stimulating wealth creation. These are important long-term objectives, but something a little more urgent is currently imperative.

She then went on to emphasise the importance of stimulating entrepreneurship, omitting of course to mention the numerous obstacles that her party in government (in Scotland as part of a coalition with the Liberal Democrats for the past 6 years) has put in the way of budding, and even established, entrepreneurs. For an entrepreneur to succeed, he or she must be able to rise above the endless routine, bureaucratic tasks and energy-draining hassles to see the wider picture, and the opportunity.

Sadly, her presentation simply amounted to politician speak. Scotland does not lack entrepreneurs: it just fails to give them fair breathing space in which to operate. So Scotland's entrepreneurs prefer to go elsewhere or just give up. After all, one of the characteristics of a good entrepreneur is to know when to quit as well as when to start a business.

She made no mention of the problems that face small to medium sized businesses (SMEs) in Scotland, through over-regulation and the dominance of the public sector creating inflated costs and salaries, overgenerous benefits and poor work ethic. If you want a better pay scale, job security, lots of flexitime opportunities (including an incredibly high number of sick days) and the best prospects for a pension, why try and set up on your own with none of these advantages? Only recently has the Scottish Parliament promised to reduce business rates back down to match those in England.

"Scotland needs to think harder about how to attract and retain value mobile investment embodying the latest technology and ideas. Today the single most important ingredient in keeping firms in a region, and attracting new ones, is the availability of skilled workers.

"Scotland must send strong signals by providing an improved climate for entrepreneurship and the implementation of structural reforms that enable innovation and competition. Incentives to raise the level of entrepreneurial activity, including minimising the stigma of failure, overcoming inefficient regulation, as well as increasing innovation, R & D and technology transfer...."

(Wendy Alexander in Conference documents)

Fine words, but from the perspective of someone running small businesses in Edinburgh (publishing) and in rural Perthshire (farming), they are just that. The reality is that since devolution in 1999 the Scottish Parliament has presided over the country's mounting economic problems. Extension of Employment Law has become a serious impediment to the SMEs in the private sector. Planning regulations and the excesses of the Water Authorities (Scottish Water as well as the Scottish Environmental Protection Agency) have added to the difficulties unnecessarily. In farming an icon of Scotland, the quality of its beef industry, is under serious threat through misguided and highly expensive overgilding of the microenvironment - the desire to have tidy fields with butterflies and to spend vast sums on raising the standard of water purity which will make miniscule difference to the persistently deplorable health of the nation.

There are countless numbers of serious problems with the planning authorities, apart from their delays and unjustifiable fees. A local example here is that to date it has taken Historic Scotland (currently chaired by a previous civil servant who was head of SEERAD at the Scottish Executive) getting on for one and half years - and still waiting - to come up with a decision as to whether or not they want to impose a severely restrictive preservation order on Cultybraggan Cadet Camp, a complex of tin huts that was used as a prisoner of war camp, and which housed some nasty Germans at the time who murdered one of their own - scarcely something to glorify (10). The restrictions on further use, and the costs imposed on any purchaser who would be required to maintain such poor buildings long after their sell by date, is frankly absurd. Has Scotland really got the money to waste on such projects? It certainly is mighty unhelpful to the farm business next door, which of course is encouraged by another department of the Scottish Executive to diversify and bring employment to this rural area, or to raise its game so as to be more competitive in the market place. Fat chance.

A classic example of how Government unnecessarily interferes with business to its substantial detriment is the case of Margaret Beckett and the use of tallow as a biofuel (11). On the 7th December 2005 the National Farmers Union Scotland (NFUS) said in a press release:

"The UK Government has three weeks to avoid a major set back in the use of renewable fuels, caused by its current plans to implement the EU Waste Incineration Directive. The plans would also lumber the agricultural industry with a significant, but completely unnecessary, cost.

"The industry has convinced the European Commission of the problem. However, Brussels has only committed to reviewing the legislation, not amending it, prior to implementation. That review would last two years. Up to 22 of the 25 EU member states have agreed that tallow can contribute to be used as fuel. UK farming unions, meat wholesalers and the renderers' association are urging the UK Government to follow suit"

NFUS President John Kinnaird said:

"The current UK Government position flies in the face of commitments not to goldplate EU legislation. Bizarrely, if this decision foes ahead, we will see rendering plants switching from burning renewable fuel to burning oil just two weeks after Government announced its plans to encourage the country to do exactly the opposite"

With regard to this reviewer's publishing business, the changes to the education system, both in relation to schools and universities, have not helped in providing the skilled workforce to which Wendy Alexander claimed to aspire. The merit of holding a recent degree from a Scottish university has been seriously devalued, with the product too often lacking basic skills in communication and numeracy.

Unfortunately, at the end of the morning Wendy Alexander MSP had to return to the new "palace" of Holyrood (with its reputation for economic crass mismanagement during its creation) to vote on the proposed extended opening hours for pubs in Scotland - yet more misconceived legislation generated by MSPs. Misconceived, because alcoholism and antisocial behaviour (much of the latter through drink and drugs) are already massive problems in Scotland. How extending already pretty liberal opening hours can help the problem beggars belief. A bit like the Land Reform (Scotland) Act which enables the public to more or less go wherever and whenever they like over farm land, with no effective control or education, but relying on the individual's own assessment of what is responsible behaviour. Likewise, the devolved Scottish Parliament found time to ban hunting for foxes, thereby destroying many rural businesses and a worthy tradition. Ironically its progenitor, appointed a lord of the realm no less for his services to the Labour party when he lost his seat, currently languishes in goal for wilful fireraising that put at risk the lives of others.

Is this the environment that is favourable to business and to the Scottish economy?

Dennis Stevenson (Lord Stevenson of Coddenham)

Scotland's finance Sector

According to the conference documents:

"Currently Dennis Stevenson is Chairman of HBOS (the amalgamation of the Halifax Building Society and the Bank of Scotland), and very recently retired as Chairman of Pearson plc. He is a non-executive director of Manpower Inc, Chairman of the House of Lords Appointments Commission and Chairman of Aldeburgh Productions Ltd. Until September 2000 he was the Prime Minister's Special Adviser on the application of ICT in education. He currently sits on the cross-benches in the House of Lords"

Dennis Stevenson
Lord Stevenson of Coddenham
Chairman of HBOS
Photo ©Kimpton Graphics

There is no doubt that the financial sector has been very successful in Scotland: indeed, much of Scotland's economy now depends upon it. Fortunately, the HQ of HBOS is based in Scotland, but it could have been otherwise. Indeed banking is such a global business that the Bank of Scotland might have been involved in some entirely different amalgamation or take over deal, that could have left Scotland in a very different position. Witness what has happened to the Clydesdale Bank following its take over by the National Australia Bank Ltd: its flagship building in central Edinburgh is up for sale and many of its staff are to be laid off.

The Royal Bank of Scotland is even bigger than HBOS, having acquired the NatWest bank in 2000 in the biggest takeover in British banking history. Based in Edinburgh it is now one of the largest banks worldwide. Nevertheless, in the current global market massive and long-established institutions like the London Stock Exchange seem to be vulnerable to takeover bids from foreign parts. The insurance industry is also dominant in Edinburgh, but is even more vulnerable to change than banking. Although Abbey National was not a Scottish based company, look what happened to it. It now has its HQ in Spain.

While the huge success of the financial sector in Scotland is to be applauded in terms of the amount of tax the government receives as a consequence, it may not be so good for SMEs who make up the vast majority of the workforce employed in Scotland, as in the rest of the UK.

Thus in the eyes of Dennis Stevenson - and indeed of other speakers at the conference - the driving force of Scotland's economy should be centred on a link up between Glasgow and Edinburgh, to make one unit competing globally as a single team. Dundee might get a little look in, but forget Aberdeen or any of these other places consigned to Scotland's hinterland.

With the predominance of the public sector and the wealth of the financial sector, it is not easy to run a SME in Edinburgh, for example. Office rates are high. Wage demands are high even if you can attract staff, or be able to keep them for long enough for the business to benefit from the training that needs to provided. House prices are high, so are property rentals and car parking is diabolical.

The banks make a substantial part of their huge profits from within the UK: that is, from UK citizens and from SMEs. This is achieved through high bank charges operating through a wide range of activities, such as interest above base rate, transfer charges, differential exchange rates, cheque charges etc, etc. Only recently has effective pressure been put on banks to desist from holding on to cash from UK cheques for 5 working days before releasing funds, allowing the banks access to vast amounts of free cash at their client's expense. The upside is that the banks may be more inclined to take a risk on new ventures, but probably only against security that would be worthy of a nuclear bunker.

When a sector such as banking is so dominant it can have serious consequences for SMEs when a main player changes its trading arrangements. Thus, it is alleged, one or more of the main banks headquartered in Edinburgh decided to stop using a certain Edinburgh printer, preferring to transfer their printing contracts south of the border. As a result a long established Edinburgh printer went out of business. That had a knock on effect on this reviewer's publishing business. Printing in Edinburgh has declined from the state of excellence that it used to enjoy to a shadow of its former self. On discussing this situation with a banker at the conference, the hard-headed response was "the printing company should not have had its portfolio so heavily based on such a limited range of customer". Fine, but if banking and the public sector are so dominant and since SMEs are finding it difficult to survive, where are these other customers supposed to come from?

The high salaries and massive bonuses (based on the bank's profits) paid to many bankers contribute to widening the gap between the "haves" and the "have nots" in Scotland, as in the rest of the UK. The level of debt incurred with the banks by the average UK citizen has, in the views of some, reached alarming proportions, but a rich source of income for the banks.

Banks are a bit like supermarkets with severe competition between the few that remain, as each fights for dominance. The main providers of the wherewithal (SMEs and private citizens in the case of banks, and farmers in the case of supermarkets) that enable these institutions to make their huge profits, generally get a raw deal. Of course it is better that the HQs of some of the banks are in Scotland. Whether Scotland actually benefits from the tax that they pay depends on the performance and policies of the political party in power: for devolved matters in Scotland and for reserved matters in Westminster (11a).

Back in the year 2000, the UK government said that it recognised that SMEs were fundamental to future UK economic growth, and pledged to make the country the best place in the world to start and grow a business by 2005 (12). It set up the Small Business Service (SBS), but according to the CBI this has failed to achieve four of its seven targets (13).

"To build an enterprise culture: failed
To make it easier to start up a firm: achieved
To encourage entrepreneurs in disadvantaged areas and by under represented groups: failed
To make Government more accessible and helpful: achieved
To improve regulation: failed
To improve access to funding: achieved
To create a positive environment for growth: failed"

In the view of the CBI:

"The SBS is not to blame for these results. How can an enterprise economy break through when the Government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk-averse by the day?"

This reviewer does not recall Lord Stevenson making any significant reference during his presentation at the conference to the role of small or medium-sized businesses (SMEs) in the economy of Scotland or of the UK as a whole. Perhaps in his view they are but fodder for the highly successful financial sector.

Jim McColl

Chairman & Chief Executive, Clyde Blowers Ltd

The conference documents state:

"Jim McColl started his career as an engineering apprentice with Weir Pumps in Glasgow. After six years in engineering and six years part-time study he left work to take up full-time study for a BSc degree in Technology and Business Studies on a four year course at Strathclyde University. After achieving a BSc degree with Honours in 1978 he returned to Weir Pumps where he remained for three years while studying part-time for a Masters Degree in Business Administration.

"In 1992 he bought 29.9% of Clyde Blowers plc a small engineering company with a full listing on the London Stock Exchange. Prior to purchasing his stake in Clyde Blowers it had a market capitalisation of £2.2m. In 1999 Jim led a management buyout of Clyde Blowers plc to take the Company private. Over the 10 years Clyde Blowers has grown at an annual rate in excess of 35% and has developed into a portfolio of truly Global Engineering."

Clearly this is a major success story concerning an individual and a Company. Clearly also this success is good for the Scottish economy and for employment in the area. Clearly lessons are there for others to try and emulate. But this example is hardly likely to be the way forward for the Scottish economy in terms of the broad picture. Too much industrial expertise has been lost from too many areas. Even Jim McColl referred to the absurdity - particularly in relation to time scale - of the administration of some of the government grants that are currently supposed to help. In farming this is all too obvious, with grants that are conceived to help (ironically encouraging people to get out of farming) coming on line far too late with a time scale that is far too slow, and flanked by so many rules and regulations that it may well be wiser either not to try, or to go it alone without the government aid that is so often wasted (14, 15). For every one farmer there would appear to be 10 bureaucrats. Or is it now even more?

But hopefully some new entrepreneurs will be able to follow Jim McColl's example, with enough resolve and energy to fight through the plethora of excessive regulation and service charges. Two examples are to be found in the food industry in Scotland - Andrew Macphie of Glenbervie and Andrew Booth of The Store (16). In the former, the company has already achieved growth and established its national reputation: in the latter, it will be important to see whether it opts to remain small or to try and grow but still retain the standards of genuine quality that have come to be associated with it.

The Rt Hon Brian Wilson: Energy

According to the conference documents:

"Brian Wilson stood down at the last general election after 18 years as an MP for Cunninghame North in the West of Scotland. Following the election of the Labour Government in 1997, he held five ministerial posts - each of which gave him an involvement in energy and particularly the North Sea. He was the Scottish Industry minister in 1997-98 and the UK energy minister from 2001 - 2003. When he announced his intention to leave Parliament, the Prime Minister asked him to act as his Special Representative on Overseas Trade, with a particular focus on energy issues. Although no longer an MP, he has been asked to continue in that role. In addition, he is now involved in advising several energy companies, particularly in the renewable sector."

He gave a well prepared and forthright talk on the sources open to the UK for the supply of future energy. Indeed, his talk was a model of presentation - clear, precise and to the point.

He made no bones about it. If the UK's energy supplies were to be secure in the future, nuclear was a must. He dismissed renewable sources from wave and wind as not being sufficiently developed or sufficiently reliable on which to base the UK's economy, although they may have an important ancillary role. He correctly emphasised the political vulnerability of depending on gas or oil supplies piped to the UK from or through countries that have not always been the best of friends with the UK. The recent behaviour of Russia towards the Ukraine and eastern members of the EU that depend on gas coming from Russia illustrates his point well. Russia quadrupled the price, and when it was not paid Russia shut down supplies on January 1st, 2006. It took some international pressure before a temporary compromise was reached. And it is President Putin's turn to head up the G8.

Brian Wilson gave his audience some insight into the political shenanigans played by some parties at Holyrood and at Westminster, whereby they use the vital topic of future energy supplies as political lever in order to achieve some other agenda.

On account of the limited lifespan of our current nuclear power stations and the limited future supplies of North Sea oil and gas, he emphasised how important it was to get on with making the necessary decisions - based on facts, rather than fancies - before it is too late. Failure to make these decisions in the very near future would result in Scotland (along with the rest of the UK) becoming dependent on the import of energy to keep the lights on. The UK would then be dependent on the importation of energy, food (following the government's decision to decouple farm subsidies from food production) and most manufactured goods.

It was pity that he was not able to stay to contribute to further discussion throughout the conference. But he did raise the level of anxiety as to what the current Scottish Parliament at Holyrood was up to on the vital matter of our future energy supplies. Scotland's future wealth creation would heavily depend on coming up with the right answer and in time. The French have already built their new nuclear facility and could build one for us in Scotland as soon as asked, he said. Have we really fallen so far behind that we might have to get France to do the job for us? But, there again, the French showed a long time ago that they can make "modern" trains to schedule, that both tilt and run on time.

Sir Alan Langlands: Education

Principal and Vice-chancellor, University of Dundee

According to the conference documents

"Alan Langlands has been the Principal and Vice Chancellor of the University of Dundee since 2000. The University is recognised as world leader in biomedical research, the UK's first ranking university for teaching quality and a key contributor to the economic development of Scotland. In the past 5 years, turnover has risen by 40% to £150m pa; the value of research grants and contracts has risen to an average of £60m pa and the number of spin out companies has doubled.

"Alan maintains a wide portfolio of interests relevant to healthcare and higher education. He recently led the Gateways to the Profession report published on 2nd November 2005 (16b). He chaired the Commission on Good Governance in Public Services published in February 2005. He chairs a steering group representing 25 medical schools world-wide, committed to developing an "international virtual medical school" which aims to achieve maximum benefit from new educational technologies and is convener of the Universities Scotland Funding Policy Group. He also chairs the Biobank's Board of Directors, overseeing a major £62m genetic epidemiology project on behalf of the Wellcome Trust and the Medical Research Council.

"As Chief Executive of the NHS in England from 1994-2000 and the Secretary of State principle policy advise for the NHS, he was accountable to Parliament for the effective stewardship of a £42bn revenue budget."

Sir Alan Langlands
Principal and Vice-chancellor, University of Dundee
Photo ©Kimpton Graphics

As the last speaker of the morning, Sir Alan talked about creating the right conditions for improving the economic contribution of Universities through new company formation, effective collaboration with existing businesses, new models of technology transfer and new educational initiatives. His focus was on life sciences "from the cell to the community" as he put it: including the emerging era of "translational medicine" (whatever that is) and therapeutics. The challenge for Scotland - and it is indeed a challenge - is to "stay at the leading edge of scientific and technological development in clearly defined areas" and "to win in the global competition for capital and good people". His aim was "for universities to created the environment in which great students and great research contribute to progress."

Fine words indeed, but what about the reality? Sadly the debate never got round to discussing the reality in any depth. The reality is that in the UK both the NHS and the education policy are in turmoil. Billions of pounds have been spent by government trying to get the NHS to deliver what the government promised it would. As in other areas, the expectations of the public were raised but not met. Worse still, too many hospitals are dirty with the result that hospital infections, such as MRSA, claim alarming numbers of avoidable deaths. Excessively restrictive working time directives have created havoc with staffing and their training. Out of hours GP services often now amount to a highly unsatisfactory telephone service with a "nurse" at the end of the line. In some areas rural services are reduced to frankly dangerous levels, and NHS dentistry a scarce commodity. We are told that the UK is beginning to catch up with our European neighbours. What a disastrous fall from grace for a country that once boasted with some justification the excellence of its health service.

Education has not done much better. Scotland was indeed once famous for its focus on education. But the policies that are now being followed are doing much to undermine, rather than enhance, that reputation. Education in schools currently produces youngsters generally lacking in numeracy and communication skills, and a dearth of science. How is this going to help Scotland become a globally competitive nation in focused areas of expertise?

And what has happened to our universities? With political pressure for more and more scholar leavers to go to universities, the consequence is that the standard of teaching necessarily falls. Commensurate with that is the standard of the qualifications awarded (17). The fact that an academic education following school is not the best option for the majority of school-leavers is not recognised, in the ideological but illogical drive to "give as many young people "the best chance in life irrespective of their backgrounds." Does one really need a plumber or a bus driver with a degree in philosophy or medieval history? If a country wants a prosperous economy it needs to have the skilled workforce to maintain it. Most of these skills do not require a university type of education, and are none the worse for that.

What can be an alarming experience is to enquire as to what now constitutes an honours degree or an MSc degree, even at long established and famous Scottish universities. Such is the drive to commercialised university funding that its "bums on seats" and "numbers at graduation" that count: a commodity rather than what used to be a quality product.

But even Sir Allan seems to appreciate that, saying in diplomatic speak:

"we should not underestimate the difficulties we face in maintaining our present position"

This reviewer would go further than that. If present policies are continued it will be inevitable that foreign governments will recognise the drop in quality and send their students elsewhere, or generate equally as good or better education for them at home. If our students were better at languages they may even in the future opt to study abroad.

After all China was due to overtake the UK in the international economy stakes by now or in the very near future, and they would appear to be getting rather good at science and its application.

As an employer of students and recent graduates, the changes described above in Scottish education are all too obvious. Indeed, the situation is now such that it is hardly worth interviewing graduates from certain universities, as there is little confidence that the qualifications that they boast might even suggest employable material - although the aspirations, and indeed expectations, encouraged by the authorities in these individuals seem to have no bounds.

Douglas Anderson

Founder and Vice Chairman, Optos plc

According to the conference documents:

"An engineer by training Douglas is founder and Vice Chairman of Optos plc, a company that designs, manufactures and supplies advanced retinal imaging systems particularly into the US primary eyecare Market. Optos plc today commands a leading position in the primary eyecare market in the US. Having grown rapidly in recent years (listed in Sunday Times Tech Track 100 fastest growing companies for the last 3 consecutive years) with revenues for last fiscal year of $48m and projected current year $68m.

"Douglas is also Chairman of Crombie Anderson Associates Ltd, a long-established and profitable multidisciplinary design consultancy employing 30 full time designers and engineers offering services in business communications, and technology product development focussing on healthcare in particular.

"Douglas has extensive experience in the successful management of the product development process and in building early stage companies in the healthcare field. He is the founder of four high-tech start-up companies, two of which are operating in the medical technology arena. He has been involved in raising over £40million in private and institutional funding including taking one company to AIM"

Here was another commercially highly successful entrepreneur, although he was at pains to point out that it was not thanks to market analysts or other forms of advisers, who had repeatedly told him that the product he was developing was not wanted. The idea behind the Optos technology is excellent, and it is difficult to understand how the official advisers were not able to recognise it as such.

His experience shows that It is not always useful to seek advice from "advisers" who may know little about the technology of business in question, but who may have an MBA or diploma from some university or other, or indeed have no such qualification.

Clearly he succeeded on account of persistence, focus and confidence in his own project and abilities, but he did not make it clear how he managed to stay in funds after so many years of being turned away. Neither did he describe what difficulties or otherwise he had encountered concerning the more recent start-up companies with which he has been associated.

Surprise, surprise! This reviewer never managed to catch the chairman's eye to ask a single question throughout the whole conference thus far.

Professor Jane Brown FRSE

Chair in Enterprise Management, University of Dundee

The conference documents state:

"Jane Brown holds the Chair in Enterprise Management at the University of Dundee. Through research, teaching and consultancy she has been involved for many years in the management of technology innovation in a number of international, high technology industries. For the last six years she has delivered the business training programme for the RSEESEn successful Enterprise Fellowship Programme. She worked initially for 15 years as a biomedical researcher at Stanford and Edinburgh Universities, and at the MRC Human Genetics Unit. She became increasingly involved in the process of developing g novel technologies in the UK, USA and Japan, directly and through consultancy and research. The life science industries have been the main but not exclusive focus. During two years in the Oil & Gas industry she designed and raised funds for the Nova oilfield technology venture fund based in Aberdeen, and since 1999 she has worked with young firms in a wide range of industries. She was a member of the Scottish Science Advisory Committee 2002-4, a member of the Scottish Higher Education Funding Council 2001-5 and is currently the Chairman of the Scottish Stem Cell Network."

Professor Jane Bower FRSE
Chair in Enterprise Management
University of Dundee
Photo ©Kimpton Graphics

Certainly the concept of trying to harness scientific research in Scotland to commercial gain is of paramount importance to the future economy of Scotland. Professor Bower was the only speaker to make any significant mention of the importance of the development of small companies, but probably thought it undiplomatic in the context of the conference - and indeed on account of her affiliations - to highlight the difficulties.

Again, there was little other than anecdotal evidence of what success a university department of enterprise management was achieving. Or indeed what the quango Scottish Enterprise was achieving, or not achieving.

Dr John Brown FRSE

Chairman, BIA Scotland

The conference documents state:

"Dr Brown is an independent Non-Executive Director. He currently Chairs the Governing Council of the Roslin Institute in Edinburgh and is Chairman of Scottish Biomedical (a division of Biomedical Industry Association, BIA). Dr Brown is a Non-Executive Director of a number of private and public biotech companies including Ardana plc, Prothenics plc and Cambridge Antibody Technology plc. He sits on the Advisory Board of the Life Sciences ITI in Scotland. Dr Brown is a member of the DTI Technology Strategy Board and the DTI Biotechnology Leadership Council. He is also Chairman of BIA Scotland.

"Until Dec 2003, Dr Brown was Chief Executive of the FTSE 250 biotech company Acambis plc, a leading producer of vaccines to treat and prevent infectious disease. Dr Brown joined ICBMs as Finance Director in 1995 and was appointed CEO in 1997. At Acambis he was responsible for the acquisition of OraVax Inc, a Boston, US-based vaccines company, together with a £23 million rights issue and a $40m strategic alliance with Baxter International. Dr Brown managed Acambis through the UK IPO (Initial Public Offering) process and most importantly on to profitability."

Dr John Brown FRSE
Chairman, Biological Industry Association Scotland
Photo ©Kimpton Graphics

All this is very fine, but compared to the global market where are the results for Scotland, or indeed for the UK? As one who served on the Foot and Mouth Inquiry for the Royal Society of Edinburgh (18), and as a farmer who appreciates just what a disaster that epidemic was, this reviewer is left wondering what had happened to UK biotechnology: and how useful it could and should have been if it had been properly applied.

Included among the submissions to the inquiry was the complaint from Colin Fink, Joint Scientific Director, Micropathology Ltd, about how his offer to help was rejected (19). Also included was the complaint from United Biomedical Inc (20), who were working with the USA Department of Agriculture, whereby the offer of help with modern PCR technology was refused.

Diagnostic slide tests suitable for use on farm were available at the time of the outbreak, but were never deployed. PCR technology was also available, but not used. To this day the objection by those with influence that "the tests have not been validated' goes on, while mighty little effort has been made to try and achieve such "validation." Indeed, there was much public suspicion that the UK Government was deliberately preventing the use of technology until such time - however slowly - government sponsored institutions such as Pilbright and Porton Down managed to advance enough to get their own patents in place (21).

In his submission to the RSE FMD Inquiry, Magnus Linklater (22) clearly articulates the concerns of many as to the manner in which such a disastrous epidemic was handled. The points he makes are highly relevant to the environment in which industry can effectively operate within the UK. One of the central aspects is the trust, or lack of it, that the public has in science.

The emphasis in terms of the UK's science base went into statistical epidemiological modelling, rather than applying and expanding the existing biotechnology in terms of vital rapid on farm diagnostic tests. As a consequence the slaughter policy lead to vastly more animals being slaughtered than was necessary.

Again, in relation to the SARS outbreak there was impressive international cooperation between Asia and Europe, but the UK did not register in the effort. Where is all this impressive biotechnology that we are supposed to have? Germany, for example, did much better (23).

With regard to Avian Flu, China can apparently make and vaccinate billions of birds, while the UK waits in the queue to buy stock of vaccine that would be due for delivery well after the main risk period is over - coincidentally coming into the next financial year.

Vaccine production is in the hands of large commercial companies. If they don't think there is enough money to be made they do not participate. Organisations such as WHO and OIE that might be expected to co-ordinate international effort to control diseases such as FMD seem to be ineffective. How then does a small or start-up company get involved in this massively important area?

No mention was made of the criminal activity of animal rights protestors and the serious effect it has had on the development of biotechnology in the UK. Huntingdon Life Sciences left the UK for the US some 3 years ago, and Cambridge University abandoned plans for a neuroscience centre in January 2004 (24). Minority groups, with or without the use of criminal techniques, bolstered by disproportionate media coverage, have excessive influence on the development and application of biotechnology, be it related to medical research or agriculture. Indeed single interest lobby groups have a too much influence on how farming is conducted in the UK today. Having no financial responsibility for what they advocate, they are free to indulge in ideological programmes that greatly affect the viability of many businesses in Scotland, as in the rest of the UK (25).

The GlaxoSmithKline plant at Montrose on the Scottish east coast - an area desperately in need of employment - is under threat. 700 jobs are thought to be at risk following the collapse of a proposed deal to buy the plant. The Dutch Chemical giant, Alzo Nobel, was planning to buy it but pulled out, citing the poor current economic conditions in the pharmaceutical sector. Whether it was poor economic conditions within the UK or internationally is not clear.


As an entrepreneur of the ME variety, I did not get much encouragement from this conference. Indeed it was profoundly depressing.

Here, the successful and the good did the speaking - with rare exception (and he had got so big that he was pretty well untouchable) every speaker gave the unspoken impression that it was undiplomatic to criticise the establishment, lest their own boats be rocked. There was no doubting the sincerity of all involved, but it could perhaps be said that they or their organisations had become successful in spite of the system, or by going along with it although realising that possibly in the long term it was not the course to follow. But to fall out of favour with the ruling politicians would result in being starved of the possibility of having influential status and might put their access to public financial support at serious risk.

Perhaps that is what is wrong - why the Scottish economy is not doing as well as it should. Apparently nobody can tell the emperor that he has no clothes, and so the embarrassment continues. The CBI would appear to be correct in its assessment that the Small Business Service (SBS) , set up by Government as an agency of the Department of Trade and Industry, has failed in 4 of its 7 targets:

it has failed to build an enterprise culture;
it has failed to encourage entrepreneurs in disadvantaged areas and by under represented groups;
it has failed to improve regulation;
it has failed to create a positive environment for growth.

This reviewer can only agree with the CBI when it states:

"The SBS is not to blame for these results. How can an enterprise economy break through when the Government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk-averse by the day?"

Yes, it was another conference that ignored the problems. The Outlook 2005 conference, held by the Scottish Agricultural College (SAC) the previous day, also did just that (16). But one had hoped for better from the Royal Society of Edinburgh.



1. Linklater, Magnus (2005). Linklater's Scotland. Once a nation of adventurous entrepreneurs.
This article, originally printed in the Spectrum section of Scotland on Sunday on 15th May 2005, is reproduced here with the kind permission of its author and of the newspaper.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 16 May 05, www.land-care.org.uk Click Here to View

2. CBI (2005). Growing north-south divide in business start-up rates is cause for serious concern.
New Release. 10th October 2005.

3. http://www.scottish-enterprise.com

4. Sheffield University 2001 Census Atlas.

5. Hewitt, Ron(2005). Public sector is stifling Scottish growth.
The Scotsman, 13th Sept 2005

6. Barnes, Eddy (2005). Revealed: state's grip on Scotland
Scotland on Sunday. 9th Oct 2005, p1

7. http://www.royalsoced.org.uk/events/recent.htm#wealth

8. Irvine, James (2005). Scotland's continuing economic decline.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 10 Oct 05, www.land-care.org.uk Click Here to View

9. Irvine, James (2003). Agriculture: the primary health service? Soil Association and SAC conference, Paisley 28 May 2003. High in hype but poor in credibility.
See FOOD Homepage, filed 29 May 03, www.land-care.org.uk Click Here to View

10. Irvine, James (2005). Historic Scotland obstructs as it sits on its hands for 9 months.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 05 Sep 05, www.land-care.org.uk Click Here to View

11. Editorial (2005). The absurdity of Margaret Beckett's goldplated tallow directive.
See ENVIRONMENT Homepage, filed 08 Dec 05, www.land-care.org.uk Click Here to View

11a. Linklater, Magnus (2005). Linklater's Scotland. World beaters? 2005 in review.
Reproduced with permission from Scotland on Sunday
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 31 Dec 05, www.land-care.org.uk Click Here to View

12. CBI (2005). A more dynamic start-up market: enabling the enterprise revolution.
Enterprise revolution2.pdf

13. CBI (2005). Government missing targets to help small businesses. News Release. 11th August 2005

14. Irvine, James (2001). New enterprises -new beginnings. Farmers workshop sponsored by SAC, Coupar Angus.
LandCare Scotland: vol. pp 45-50.

15. Editorial (2005). Land Management Contracts - a joke, if they were not so sad.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 28 Feb 05, www.land-care.org.uk Click Here to View

16. Irvine, James (2005). Talk up farming, don't talk it down, and never mind reality.
Review of SAC Outlook Conference "Taking market opportunities" Edinburgh 15th Nov 05
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 17 Dec 05, www.land-care.org.uk Click Here to View

16b. http://www.dfes.gov.uk/hegateway/hereform/gatewaytotheprofessions/index.cfm

17. Editorial (2004). The fallacy of university top up fees. If you are going to employ a graduate you had better ensure that he or she is a good one.
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 25 Jan 04, www.land-care.org.uk Click Here to View

18. Royal Society of Edinburgh (2002). Inquiry into Foot and Mouth Disease in Scotland.

19. Fink, C. G. (2002). Submission of evidence to the RSE FMD Inquiry, in his capacity as Virologist, Physician and Jt Scientific Director, Micropathology Ltd, University of Warwick Science Park, Coventry.
See Submitted evidence, RSE FMD Inquiry, www.royalsoced.org.uk

20. Walfield, A. M (2002). Submission of evidence to the RSE FMD Inquiry, in his capacity as Director, Patenting and licensing Affairs, United Biomedical Inc, Hauppauge, NY, USA.
See Submitted evidence, RSE FMD Inquiry, www.royalsoced.org.uk

21. Critchley, Mary (2005). "Tests have to be validated by the OIE. We are waiting on that" Lord Bach.
See entry 14th December 2005, http://www.warmwell.com

22. Linklater, Magnus (2002). Submission to the Royal Society of Edinburgh Inquiry into Foot and Mouth Disease in Scotland.
See Submitted evidence, RSE FMD Inquiry, www.royalsoced.org.uk

23. Irvine, James (2003). SARS: just look at the speed of scientific progress. If can be done for SARS, why not for FMD?
See SCIENCE Homepage, filed 06 Apr 03, www.land-care.org.uk Click Here to View

24. Mansell, I., Henderson, M. and Charter, D. (2004). Oxford's research centre's contractors pull out after animal rights protests.

25. Irvine, James (2004). Concerns about the validity of statements made by on the condition of SSSIs by members of Environment LINK,
Review and comment on a case study presented by Kirsty Macleod at People Too conference, Perth
See SOCIAL/ECONOMIC/POLITICAL Homepage, filed 17 Nov 04, www.land-care.org.uk Click Here to View