Ten-Year Economic Strategy Reviewed

Robin McAlpine - March 3rd, 2022

The Scottish Government's ten-year economic strategy has been unveiled and it is fair to say it has been met with something short of enthusiasm. Its staunchest supporter would struggle to argue that it offers anything new on the policy front and even its description of what kind of economy it is trying to create is so generalised and familiar that it is unclear what it is all about.

Some of it is concerning, most notably the commitment to weave financial and corporate business interests even more deeply into the policy-making structures in Scotland. But mostly it is simply disappointingly vague and backwards-looking.

So what is missing? What would a serious economic strategy for the next ten years include that isn't here and how could Common Weal's Resilient Scotland work inform that? As there are five themes in the strategy document, let's propose an alternative five themes here.

1. Have an analysis

Pretending that everything is great is not helpful. There is a tendency never to want to 'talk down' your own economy, but you do need to have clear sight of why you need a strategy in the first place. That is something the Scottish Government doesn't do here. There is no 'why' in its analysis.

Why are we not producing enough good jobs? Why are we not capturing manufacturing supply chains? Why are we so reliant on imports? Why is decarbonisation moving at such a sluggish pace? Why do we have such substantial skills gaps in the workforce?

Knowing that you want to make something better is a start, having ideas about how to make it better is great, but understanding why it isn't better should come in between these. Common Weal has a clear analysis – the corporate domination of the economy has led to an enormous loss of company headquarters and the emaciation of the medium-sized industry sector which are key to quality jobs and research and development investment.

And this dynamic of foreign-owned Scottish assets and market dominance being used to extract wealth rather than reinvest it explains the sluggish development of the economy, its low productivity and the rising income inequality.

If the Scottish Government doesn't think this explains what it is it is trying to improve, fine – but it needs a compelling explanation of its own. It does not currently have one.

2. Make choices

From reading the strategy you'd probably draw the conclusion that 'business' is one thing that the Scottish Government can invite to a meeting. It reads like all business is good business and any business is good for Scotland. There is nothing on whether we might wish a higher degree of manufacturing, or a greater proportion of domestically-owned industry, or more medium-sized businesses or a particularly rural economy.

When it proposes to open the doors to business it really means the Big Four accountancy firms, the Edinburgh financial set and corporate representatives. Common Weal works with medium-sized businesses in Scotland and they regularly complain about not being at the back of the room, never mind not being at the top table.

Any gardener will tell you that you can't just let everything grow at random because some things will suck the nutrients away from other things. If low-skill work created by megacorporations dominates on the basis of their stupendous levels of political influence and market dominance, the workforce isn't developing in a more highly-skilled direction.

This is why we need an industrial strategy, being forensic in identifying what kinds of economic activity generate the kinds of adjectives that appear throughout this report. If you want more productivity, can you get that from increasing the number of supermarkets? If you want more research and development, will that come from selling off your energy resources to overseas companies?

3. Devolve power

You will find aspirational phrases all over the report – though they are mostly mentioned and then forgotten. Hence the recognition that Scotland has major regional economic differences comes and goes with no real explanation of what this strategy is doing about it.

Because the economic issues that face Edinburgh might look a little bit like the ones that face Glasgow but look little like the ones that face rural Scotland, much of Ayrshire, Fife, Dumfries and Galloway and so on.

The strategy is remarkably (and inextricably) built round the outdated idea that 'entrepreneurship' is the missing ingredient in Scotland's economy. But the idea that entrepreneurship classes in schools will turn around decades of malign neglect of a region like (say) Dumfries and Galloway is not credible. Central belt policy has invested in the central belt with a central belt focus since devolution.

A serious strategy for Scotland would mean devolving economic power down to the region and indeed town level. Central belt policy has not helped in the past and won't help now. Edinburgh doesn't seem capable of devising an economic strategy for its 'hinterlands' and there is little evidence it is going to get any better in the near future. Place-based policy must become the norm.

4. Be useful

The strategy seems quite focussed on making the Scottish Government look like it is doing something, much less on getting the Scottish Government to do something useful. In equipping Scotland for the future to come, generic 'entrepreneurship' lessons (read marketing and basic finance) are truly useless. They code no code, teach no trade, build nothing.

At various points in the report it tries to pretend that it amounts to more than a long list of previous low-quality initiatives stacked on top of each other. It is unsuccessful in that. It tries to imply that there is a 'culture of delivery' in Scotland's economic development agencies. This is equally unpersuasive. 

Rather than peering at itself in the mirror and telling us all how good it looks, a effective strategy would focus on doing genuinely useful things, things that a Scottish business figure or skilled worker or low-pay worker would look at and say 'ah, that helps'. Perhaps something simple like public procurement reform or scrapping economic agencies and redesigning business development support worth the name.

5. Lead

The strategy uses the language of an introductory course to business leadership – but offers no leadership. A charitable interpretation would be that it believes that its role is to facilitate and let 'the market' lead, but as it does neither that would be too charitable.

It lacks the courage of a vision (beyond bland adjectives) or the nerve to do things that might lead to transition. And yet this is the economic strategy for a period which is make-or-break for the future of humanity and requires much of the work on decarbonisation to take place. Other than selling off energy assets and soft commitments to 'asking' businesses to do more', there is no action.

Decarbonisation is only possible with concerted action across the public and private sectors, but as much of the private sector will continually seek delays, it must be driven by the public interest and not profit motives. It is that simple.

This is only one example of where economic leadership is needed. In supply chain resilience, in getting skills development right (again, not a module on how to market a pizza with new toppings), in recognising that existing business support services are not fit for purpose, in breaking central belt dominance – in all of it, bluster and PR leads nowhere. 

Transformation does not happen because you say you want it to but because you make a serious contribution to it happening. That is leadership. Press releases are something else.