Scotland is squandering the legacy of Charles Rennie Mackintosh thanks to an "abysmally low" government and business appreciation of the country's design talent, according to the head of one of our top art schools.

Professor Stuart MacDonald, principal of Gray's School of Art in Aberdeen, believes businesses still see design as an "add-on", despite it being the biggest sector within the creative industries.

"It's a paradox," he said. "We had the first real iconic designer, Charles Rennie Mackintosh, and have that fantastic legacy, and we still produce fantastic designers who are creating fantastic things every day. But the public awareness doesn't match the iconic reputation. We're doing the reputation a disservice and our designers a disservice."

MacDonald pointed to the rich talent seam of graduates from Scottish universities, such as textile designers Timorous Beasties, automotive designer Tom Scott, fashion designer Christopher Kane and Colin Burns, director of public transformation company, Particle.

"We produce fantastic designers who then go on and improve other people's economies," he said. "A diaspora flows out of our universities every June. We need to do more to retain our creative talent and develop the structures and policies that create demand and keep talented designers here in Scotland."

MacDonald suggested one solution might be to create a national design agency to encourage businesses to make the most of Scotland's design talent. He highlighted Finland's flourishing economy, which is fuelled by such an agency exalting design and working closely with the likes of Nokia, as a prime example.

Scottish businesses, however, disa-greed with this suggestion.

"While recognising there is a need to champion the business benefits of design, we remain to be convinced the way to do that would be by creating a new taxpayer-funded quango, with all the extra costs that might imply," said David Lonsdale, assistant director of the Confederation of British Industry, Scotland.

A recent Design Council study said every £100 a business spends on design increases turnover by £225, but less than a quarter (22%) of Scottish businesses believe design has become more important in helping them compete.

Janice Kirkpatrick, former chair of the Lighthouse and founder of Glasgow-based design agency Graven Images, agreed with MacDonald's assessment. She said the economic impact of design is "beyond doubt".

The problem with Scotland, she said, was that too many people see design as a "touchy-feely subject" and, more seriously, the government continually mishandles the sector.

"We wrote the handbook on this stuff. We ought to be leading the world, not trailing along behind it. But for that to happen, design needs to be valued within the Scottish government, and that means banging heads together.'' MacDonald questioned whether Creative Scotland would be able to give design the attention it deserves. He fears design will be lost among the new body's wide-ranging remit.

"Creative Scotland is simply reflecting Scotland's economic myopia when it comes to design," he said. "We need a national focus on design, which is distinctive from the arts."

Creative Scotland's transition director welcomed MacDonald's comments. Anne Bonnar said: "The joint board is committed to ensuring Creative Scotland has the remit, relationships and resources required to support those engaged in the country's arts and creative industries."

She said the transition team was in the process of clarifying with industry and education where design will sit within the new body.

The Scottish government defended its record on design, pointing out schemes that help businesses engage with design-led processes such as the new general R&D grants and Smart:Scotland. A spokesman said: "We fully recognise the importance of design in contributing to innovation and increasing sustainable economic growth.

"Design will be an important element in the Scottish government's Innovation Framework, due to be published later this year."