Innovative, International Tay

Innovation is recognised as the most effective route to productivity growth. Moreover, there is a proven link between businesses that meet their international ambitions and those that choose to innovate. Scotland’s innovation record is currently below the ambition of the Scottish Government for Scotland to be a first quartile OECD country.

It is estimated that in order to close the gap, Scotland needs to encourage an additional 1,800 actively innovating businesses and increase the volume of business R&D by around £1.8bn. In 2015, businesses in our region accounted for just 6% of Scotland’s total business expenditure on R&D, with businesses investing around £56m. If business R&D were to match the area’s proportionate share of economic output as it stands, approximately £11m of additional business R&D spend would be required.

Moreover, as part of Scotland’s ambition to move from the third quartile of OECD economies to the first, it needs to encourage an additional 2,500 additional business to export and increase overseas sales by around £3.4bn. To contribute to our share of this increased target we would need to find and encourage around 230 more exporters generating additional export sales of around £300m.

Through this regional economic strategy, and the supporting Tay Cities Deal, we will support more business to innovate and to trade internationally. In addition to supporting all businesses across all sectors to do this, we have also identified nine specific growth opportunities with the potential to deliver significant productivity improvements in the region as well as, over time, new skilled jobs. The Tay Cities Deal Proposal makes the case for specific investment to deliver these growth opportunities.

Our approach will be focused on a number of key types of support across these nine growth opportunities to support businesses to innovate, internationalise, diversify and grow. We want our region to be recognised as a living lab for exploring new ways of working and new ways of doing things.

By working together across our region in partnership with the Scottish and UK Governments we will address some of the existing barriers to growth for companies within these sectors and our approach will include:

  • support for collaborative partnerships between businesses, academia, research organisations and the public sector
  • the development of multi-functional creative spaces, which could be real or virtual, to support commercialisation, cooperation and collaboration
  • support for collaborative approaches to training, research and development
  • enhanced and sector specific business development support
  • investment to improve key products and services
Tay Cities region - Growth Opportunities

Growth Opportunities

Building a World-class Oil & Gas Decommissioning Industry

Our region has and continues to play an important role in supporting Oil & Gas operations in the UK Continental Shelf and in other oil and gas producing basins across the world. Our port infrastructure, business base, academic and training expertise will continue to play a key role here and it has contributed greatly to Scotland becoming a globally recognised centre of industry expertise demonstrating technical, operational and innovative excellence in the sector.

The life cycle of the sector in the North Sea continues to move and decommissioning now represents a significant emerging economic opportunity to the Scottish and UK economies, with a projected 17.6bn spend in the next 10 years. We believe the Tay Cities economic region focusing on port infrastructure in Dundee, Montrose and Methil and drawing on business expertise across the area can become the UK’s leading Hub for the decommissioning sector.

As well as activities that will take place offshore and on our quaysides, we see significant synergies with the area becoming a Living Lab for eco innovation in the specific areas of waste management and recycling. To capitalise on the supply chain opportunities that North Sea decommissioning will create, we have formed a new private sector-led partnership - Dundeecom - to pitch for and win significant business not only for Dundee but the wider region.

Creating Higher Value Food & Drink Businesses

Food & Drink manufacturing employs over 3,500 across the region. Moreover, when primary agriculture is included, this figure rises to over 13,000 jobs. However, these jobs do not deliver their full productivity potential, with each job in the region being around one-third less productive than the Scottish average. It is estimated that closing the existing productivity gap alone would deliver at least an additional £100million per annum in GVA to the economy.

Most people work in small businesses, sometimes in remoter rural locations, with limited capacity and little or no access to the new skills and technology needed to innovate and grow. In recent years a significant amount of new, small, innovative businesses have started in the area which have the potential to grow into globally successful businesses. They require a solid infrastructure in which to make the transition from start-up to larger scale companies which can compete both nationally and internationally. This could be in terms of premises, research and development or training. This is especially true for the drinks industry with the area having a critical mass of young but successful craft brewers and distillers.

The agriculture sector is facing difficult times, but forward looking businesses are looking to diversify - in to food production, retail or agri-tourism products (such as farm tours or food-related visitor experiences) and there are many best practice examples of this across the area. These businesses need the encouragement to show that diversification is a realistic future for them and that there is support available to make their plans a reality.

A significant strength of this region is our cluster of universities, colleges and research institutions (James Hutton) with sectoral expertise not found anywhere else in Scotland. Each are making their own investments toward closing some of the productivity and skills gaps, but will deliver much more with additional targeted investment to help local SMEs to innovate using local produce, adding value, delivering better employment opportunities and developing the skills required for success in the future. We will work as a partnership of four local authorities, industry, universities, colleges, Scottish Enterprise, Scotland Food & Drink and the James Hutton Institute to drive up innovation in the food and drink sector. The Tay Cities Deal Proposal sets out our investment case to establish a strong framework for support for innovation and internationalisation to close the productivity gap over time.

Commercialising Biomedical Innovation

The region’s Biomedical sector sustains more than 4,000 high-value jobs in research, development and manufacturing. Together the Tayside Academic Health Science Partnership, Institute for Medical Science & Technology and BioDundee support the creation of partnerships between academia, the NHS and business. This, together with the region’s strengths in the creative, design and digital technologies, uniquely offers Biomedical SMEs and larger organisations a collaborative environment and community in which to develop innovative new products for a global market.

At present a lack of sector-specific commercial accommodation close to our major biomedical facilities at the University of Dundee Medical School and Ninewells Hospital limits expansion of the sector. A number of companies are currently investing in research and innovation partnerships with NHS Tayside and the University of Dundee. However, the lack of available, business-ready, accommodation and bespoke business support for spin-out, or spin-in, companies from these partnerships means they are, due to the international status of these companies, likely to locate outwith the UK without further investment in this region. This will result in a loss of Intellectual Property within the area, fewer jobs being created and a loss of reputation within the Biomedical sector.

We will work as a partnership of four local authorities, industry, Scottish Enterprise, Skills Development Scotland, universities and colleges to ensure we maintain and grow an internationally competitive technical and research skills base and provide the right support environment to grow more businesses in our region. The Tay Cities Deal Proposal sets out the business case for targeted investment over 10 years to grow our Biomedical cluster.

Growing our Creative Industries

Our region is home to a key creative cluster that continues to offer innovative ideas, products, services and digital content, producing winning brands from “Peter Pan” to “Grand Theft Auto”.

Creative industries are worth at least £87.4bn GVA to the UK economy and exports of creative services reached £19.8bn in 2014. In the Tay Cities economic region there are over 1500 creative industry businesses employing over 8,500 people and generating GVA exceeding £120m. Full implementation of the region’s strategy for creative industries would see a step change in the development of an eco-system maximising the potential offered by business models ranging across commercialisation, cooperation and collaboration.

We aim to:

  • Create diverse, innovative, creative space focused on the market needs and demand of creative industries through a mix of partnerships including public-private
  • Develop these as hubs for commercial generation of new IP, development of innovative products and services, new business models and regional creative communities
  • Respond to the strategic and logistical needs of diverse creative businesses, communities and processes through a mix of co-working facilities, studios, events, retail and, in a new move for creative hubs, incorporation of residential and short-stay accommodation
  • Support, nurture and grow the scale of the creative economy across the Tay Cities region, increasing creative impact, influence and GVA
  • Attract inward investment, incoming projects and talent
  • Develop new markets by capitalising on emerging creative service opportunities
  • Foster UK and international export markets by growing existing relationships and forging new UK and global creative and commercial connections
  • Optimise the use of specialist services and innovative, smart contracts to promote and market the region, support business development and broker business and creative relationships
  • Expand the creative and cultural reach of the region towards the growth of related tourism and generation of new audiences and visitors to the region

Our commitment is to work as a partnership of four local authorities, industry, Scottish Enterprise, universities and colleges – with the support of the Scottish and UK Governments through the Tay Cities Deal – to ensure that our creative talent is nurtured and supported in Dundee, Perth and across our region.

Developing a World Class Tourism offer

Tourism is one of our major industries with an estimated 1,580 businesses in the Tay Cities economic region (12% of Scotland’s total) and 22,000 people working in the tourism industry, approximately 11% of all jobs in the area. Yet there are some underlying weaknesses, including over reliance on day visits, the domestic market and a recent decline in staying visitors. There is a productivity gap, (as measured by GVA per employee), in comparison with the rest of Scotland – tourism businesses in the Tay Cities economic region are collectively less productive than their counterparts across the rest of Scotland in terms of economic output. Separate analysis of tourism data highlights that seasonality remains a key issue for the sector, particularly outside the main urban centres, with annual hotel room occupancy rates remaining significantly below the national average (66% - Tayside and Fife, 71% -Scotland).

However, this economic region is well placed to grow the value of its visitor economy and establish a world class tourism destination offer. Major tourism investment is underway, planned or in the pipeline, including resort and leisure developments, most notably the V&A Dundee which is projected to attract 270-300,000 visits per annum. This will bring a spotlight to bear on the region and this investment, together with the region’s inherent strengths, provide strong foundations on which to build the destination proposition, increase the sector’s impact and contribute to the national stretch target in growing the value of tourism to Scotland’s economy, (growing visitor spend by £1bn from £4.5 to £5.5bn by 2020).

Growth will come from increasing the attractiveness of the area, increasing length of stay and repeat visits and appealing to higher value markets. To do this we need to support enhanced performance in the sector. We need to develop our tourism workforce, invest in existing and new cultural and heritage attractions, develop and market our world class golf offer, and capitalise on the activities and adventure tourism opportunities presented by our region’s greatest natural asset – the River Tay.

Our ambition is very clear. We want to deliver a world class visitor experience in a world class destination. We will work as a partnership of four local authorities, industry, Scottish Enterprise, VisitScotland, EventScotland, universities and colleges – with the support of the Scottish and UK Governments through the Tay Cities Deal – to achieve this.

Exploiting our Strengths in Digital Innovation

The Tech Nation Report for 2016 identified Dundee’s reputation as a hub of digital excellence particularly in terms of software development, technology services and mobile app development and this expertise can play a crucial role in the wider economic rejuvenation across the Tay Cities area. In addition to developing some of the world’s biggest selling games we have significant digital capabilities in other fields, including augmented reality, mobile phone app development, data centres and cloud storage, computer hardware for customer transactions, digital media and entertainment. The region also has an internationally recognised strength in the emerging field of cyber-security which has the potential to create a significant number of jobs over time.

Dundee now has the third fastest growing digital turnover in the UK and many companies, particularly software firms, are operating on a global scale. The presence of Dundee and Abertay Universities, Perth College UHI, and Dundee & Angus College helps with supplying the skills, in terms of software and hardware engineers, that local companies need. Combined with the development of world class digital connectivity across both urban and rural areas and the involvement of Perth and Dundee in the Smart Cities Scotland initiative, (which is developing a range of smart city projects from smart waste to intelligent street lighting), the strengths of the region in digital innovation are bright.

We will work as a partnership of four local authorities, universities and industry to consolidate and grow our digital business base and maintain our reputation for digital excellence. Our Tay Cities Deal Proposal focuses on investment in cyber-security, digital forensic science and digital health.

Creating a Living Lab for Eco-Innovation

Thanks to exceptional natural resources of forest, wind, hydro and solar, the Tay Cities economic region is already contributing significantly to renewable electricity and heat generation, with a diversified supply chain including FTSE 100 business and around 250 SMEs. However, economic benefits are not fully realised or shared across the region and with other key economic sectors, as investments in innovation, synergies and collaborations are not sufficiently developed.

We have the ambition to create a step-change shift to a low carbon, regional economy and establish the Tay Cities region as a UK and European leading living lab for Eco-Innovation, stimulating economy growth and business innovation. Through investment in low carbon technologies we will demonstrate, in a real life situation, that decarbonising heat, transport and decentralising energy generation and use, can support new job opportunities, attract additional investment and open international markets as well as reducing fuel poverty and carbon emission.

Eco-innovation will stimulate innovation and cross-sector fertilisation within clean and renewable technologies, Food & Drink, Oil & Gas and Tourism sectors as well as supporting connectivity, targeted skills and workforce development. We will explore all opportunities that exist within the circular economy in the areas of waste management and Oil & Gas decommissioning. Low carbon industries in Scotland generated £10.7 billion in turnover and supported 43,500 direct and indirect jobs in 2014 (ONS). We aim to capitalise on these opportunities to deliver growth through additional, active, innovative businesses within the supply chain, increase business R&D in low carbon technologies across key region sectors and create or sustain a wide range of types of jobs, including high skilled jobs. These opportunities have been identified in the Scottish Government’s Low Carbon Economic Strategy which has been a fundamental driver in the government strategy since its publication in 2010, as well as by the UK Government and InnovateUK funding programmes.

We will work as a partnership of four local authorities, Scottish Enterprise, universities, colleges, Zero Waste Scotland and industry – with the support of the Scottish and UK Governments through the Tay Cities Deal – to accelerate this region’s contribution to making Scotland a greener, cleaner more innovative place.

Maximising Job Opportunities in Health and Care

Just like the rest of Scotland, our region faces the challenges presented by an ageing population. Current trends indicate that in the Tay Cities economic region the population is expected to rise from 490,000 in 2014 to 520,000 in 2039, a projected increase of 7%. During the same period the percentage of our population aged 65 or over is projected to increase by 22% (NRS, 2014). The landscape is further complicated by challenges in recruiting and retaining people in a care career due to low pay, anti-social hours and difficult working conditions.

The Scottish Government’s stated ambition is to enable everyone to live longer, have healthier lives at home, or in a homely setting, by 2020 whilst also recognising that people are living longer with multiple health conditions and more complex needs, thus increasing the number of people requiring long-term healthcare in their own homes. In order to achieve this, government has directed its policy towards a shift in the balance of care to community based services. These challenges and the shift in policy present an opportunity for the development of a new innovative community based and managed social enterprise company, supported by all four local authorities and third sector organisations in the Tay Cities region, to provide a health and social care service for local people in their own homes and by local people.

We will work as a partnership of four local authorities, NHS Tayside, colleges and the voluntary sector to develop social care services for older people through our approach to inclusive growth, and in doing so create significant numbers of new job opportunities across the region.

Strengthening our Engineering and Manufacturing Capabilities and Capacities

The importance of manufacturing to Scotland’s future economic growth and prosperity is increasingly recognised in national policy, including Scotland’s Economic Strategy and the recently published Manufacturing Action Plan. To clearly understand the contribution that this sector makes to the Tay Cities economic region a study was undertaken in December 2016. It concluded:

  • The Engineering and Advanced Manufacturing (EAM) sector contributed £7.7bn GVA to the Tayside economy in 2014 – 16% of all output in that year. This is lower than across Scotland as a whole, where the industry accounted for 20% of national GVA.
  • The sector is a particularly large component of the Angus economy, accounting for a third of all output from the area in 2014. The sector is proportionally smaller in Dundee and Perth and Kinross, although still accounts for 17% and 8% of economic output respectively.
  • The Tayside EAM sector grew steadily between 2010 and 2013, outpacing growth across the Scottish sector as a whole. However, there is evidence of a recent downturn in the region, in contrast to continued growth nationally.
  • The EAM sectors in Dundee and Perth and Kinross are less productive than the Scottish sector as a whole, with GVA per head amounting to 66% and 63% of the Scottish average respectively. However, productivity in the sector in Angus is 6% above the Scottish average, suggesting that the area is home to relatively high value added manufacturing activities.
  • The EAM sector is an important source of well-paying jobs across the region, with workers in the sector earning an average of £24.6k per year, relative to £18.2k across all industries.
  • There were 775 manufacturing companies in Tayside in 2015, the majority of which were small businesses employing fewer than 10 people – mirroring the profile of the sector nationally.
  • Manufacturing firms in Tayside invested £34.6m in R&D in 2014 – 7.1% of the Scottish total. The majority of this investment was made by companies located in Dundee, with relatively low levels of R&D investment from companies located in Angus and Perth and Kinross.
  • There were 8,700 people working in the EAM sector in Tayside in 2015, accounting for 6% of all Scottish jobs in the sector and 5% of all jobs in the region. Tayside has high concentrations of employment in a range of EAM sectors, including architecture, engineering and the manufacture of metals and machinery.

The study identified that replacement demand – i.e. to replace those who retire, change occupations or move away – will result in 2,300 job openings in the regional EAM sector up to 2024 across a range of job types. It also reinforces the significance of the EAM sector as a source of wealth and employment opportunities to the region. However it also identified some key challenges to sustain that contribution over the next decade:

  • lack of sufficient R&D to remain competitive
  • the need for increased exporting
  • future proofing the skills base by collaborative industry/education working
  • maximising technology to implement new manufacturing processes
  • collaboration on innovation

To drive maximum impact and address these key challenges to increase the global competitiveness and innovation will require a coordinated and consistent approach by the public and private sectors across the region. Therefore we will work as a partnership of four local authorities with industry, Scottish Enterprise and Colleges to strengthen the engineering capabilities and capacity of our regional Engineering and Advanced Manufacturing Sector to boost investment and innovation, encourage greater internationalisation and future proof the skills base.

Promoting International trade and investment opportunities

International investment in any area creates employment and in many cases these jobs can be high value. Such jobs provide important opportunities for progression within the labour market, help to retain graduate talent and create more opportunities at all levels in the labour market. To help achieve this we must work together across the public and private sector to attract inward investment into the area and invest in the required infrastructure to support this.

Likewise, our productivity will be improved if more of our businesses could be encouraged and supported to trade beyond their current local and regional markets and ideally internationally. At present our customers tell us our approach is disjointed, with businesses unclear about who does what and, in relation to inward investment, the Tay Cities economic region, underperforms.

We will work as a partnership of four local authorities, Chambers of Commerce, Scottish Development International and the Department of International Trade to establish a Tay Cities International Trade & Investment Partnership. This partnership will provide one stop approach to international services in the area.