Those of you who were off broiling yourselves on some distant beach this summer will no doubt have taken along a couple of juicy potboilers to while away the hours on the lounger. If so, you would have missed three ‘good reads’ that have appeared and which, taken together, pretty much pose the question of what will become of Scotland. For once, this is not a Mexican stand-off between Indy and non-Indy tribes but they pose a more fundamental debate, one which no-one seems to want to have.
The key document, published early this month is “Delivering for today, investing for tomorrow: the Government’s programme for Scotland 2018-2019” Snappy titles are not Holyrood’s forte (we’ll call it SGPG for short). But the Executive Summary does contain some lively intentions, including:
“We will make it our mission to steadily increase annual infrastructure investment so it is £1.5 billion per year higher at the end of the next Parliament than in 2019-20…On current estimates that would mean around £7 billion of extra infrastructure investment by the end of the next Parliament.“
Were this to come to pass, there is a strong likelihood of it triggering an economic boom, much as Roosevelt’s New Deal dragged the USA out of the Great Depression in the 1930’s. There are two questions that must be answered before knowing whether such good intentions pave the way to Scotland’s heaven or its hell: 1) Where is all that money coming from and 2) Which infrastructures will receive that level of investment? For the first any benefit will be offset if the money used us diverted from other, essential services and investment; for the second, though the construction of popuar swimming pools and community centres may win votes, it does little to boost GDP.
The second document, which gives a context within which the is SGPD operates is the Sustainable Growth Commission’s Report of May 2018 (SGCR). Part A of the report considers the performance of the Scottish economy, set in the context of the global and UK economy and assesses the potential for improvement. It sets out principles for a new Scottish economic model and long-term policy strategy. The approach is to grow GDP by focusing variously on productivity, population and participation (inclusive) growth. The central argument is that Scotland should be seeking to emulate the performance of the best small countries in the world, rather than sticking to its current position as the best of the rest of the UK.
This position is reinforced by the third document, Wealth of the Nation, (WotN and a deliberate reference to Adam Smith), published by the David Hume Institute this month (September), It puts Scotland’s productivity in an international context, where it fares much less favourably than in comparison with the rest of the UK. Some definitions:
- GDP (Gross Domestic Product) = income generated in a country over a year
- Productivity = GDP, divided by the total number of hours worked
- Value added = a much trickier thing to measure per worker than the hours worked
By these raw measures, Scotland (and, for that matter, the UK) is not doing well. To quote WotN and show one of its charts:
“Scotland’s productivity over the last fifteen years has been largely stagnant and has under-performed, compared with many other European countries.”
Scotland enjoys a low unemployment rate and its workers already work a high number of hours. Meanwhile, its working-age population is shrinking. This means that productivity growth will be of central importance to future increases in Scottish incomes and living standards. This is compounded by two decades of the Scottish Parliament focusing on social, rather than business priorities in its legislation. Though nobody would question the social value of hours worked by social workers or NHS staff, the extent to which they increase the actual wealth of the country, as compared to a farmer or oil worker, is less clear. It is not simply a question of services versus goods production—financial services contribute prodigiously to national wealth— but not all employment contributes the same “value added” per hour worked. The series of case studies within WotN suggests ways in which such questions can be addressed in Scotland. The turnarounds in the case studies involved:
- focus on the evidence, (Scottish public bodies dwell on intention, not outcome)
- consensus and collaboration, (multi-body working is rare or superficial)
- credible and strong institutions, (work done by juniors who are not empowered)
- focus on skills (time served does not mean experience and, even less, qualified)
The SGCR emphasises Scotland has very significant comparative economic assets and advantages, in terms of natural resources, the education and skills. Yet, median income of the group of 12 small advanced economies is 14% higher in GDP per head; a
gap of £4,100 per person. To redress this, two fundamental lessons are clear: Scotland must become more engaged, not less, in the global and European economy in order to boost growth. And the opportunity to contribute to, and benefit from, that growth must be more widely shared—as in those countries.
Will the EGPG achieve this? Consider the suite of bills that form the backbone of the programme:
- Budget Bill
- Biometric Data Bill
- Census (Amendment) Bill
- Consumer Protection Bill
- Disclosure Bill
- Electoral Franchise Bill
- Female Genital Mutilation Bill
- Non-domestic Rates Bill
- Scottish National Investment Bank Bill
- South of Scotland Enterprise Agency Bill
While not every piece of legislation can be a barnstormer, much of the lists are re0treads from last year with a whiff of populist grandstanding thrown in. The promise of funding a mental health worker in each high school sits badly with a promise made last year to fund extra staff that were never provided.
With the exception of the one on an SoS Enterprise Agency (which will do little beyond shore up damage from decline in Borders knitwear and atrocious transport options along the Solway coast), there is nothing to make Finance Ministers in Ireland, Denmark or Singapore quake in their Gucci loafers at the impending appearance of a Scottish tiger on global markets. And none of these bills come near the inspirational. There is certainly nothing that can hold a candle to even the Land Reform Bill in terns of social impact.
So, if we do see “£7 billion of extra infrastructure” materialise in the life of this and the next parliamenst, the probability it will be in the shape of a myriad pork barrel projects with plausible social cover but little leverage to boost the economy is high. If Messrs Mackay, Hepburn and Ewing were worth their ministerial salt as Finance, Business and Tourism champions, respectively, we might all wake up in 2026 with a world class global hub airport, or the Aberdeen/Ventral Belt triangle electrified, or a world-beating renewables sector, or a Munich-quality transport system for our constipated capital. Infrastructure vision on that scale could light a roaring fire under our national productivity.
But ah hae ma doots…