When it comes to the economy Nicola needs to stop daydreaming
EVER have one of those mornings when you just can’t get out of bed? The alarm is blaring, the kids’ packed lunches have still to be made and you have that important meeting at work – but this big marshmallow of a duvet is just too toasty.
The snooze button is duly thwacked. You know it’s a bad idea. You have to get up eventually and you’re only making things worse for yourself. But another ten minutes of light dozing is far more appealing than leaping up and confronting the cold light of day. You’ll pay for it later.
The Scottish economy works in much the same way – except the warning bells have been sounding for years now and we have stayed hidden under the covers.
A damning new report tallies up just what all those long lies have cost us. Wealth Of The Nation, published by the non-partisan David Hume Institute, concludes: ‘Productivity is the single most important determinant of a country’s average living standards and wealth. But, despite a skilled workforce and no shortage of strategies, Scotland’s productivity performance underperforms compared with many advanced economies.’
Narrow
Scotland’s economy is in worse shape than half the 36 countries in the Organisation for Economic Co-operation and Development. Business investment is too low and our export base too narrow. We have plenty of modest small businesses and not enough commercial powerhouses. Productivity growth has been stalled for the past 14 years.
Report author Jane-Frances Kelly studied how other countries turned around similar problems by focusing on skills and building a political consensus around growth. She is blunt about the consequences of not learning these lessons: ‘We are not the first country to face this challenge but – as our research shows – politicians and policymakers need to get their act together and make choices guided by evidence. Failing to do this will put the Scottish economy at risk.’
Miss Kelly has taken our snooze button away and chucked a bucket of ice water over us. It is especially welcome after that somnambulant shopping spree Nicola Sturgeon tried to pass off as a Programme for Government.
The First Minister staggered from shelf to shelf, filling her trolley with goodies from a lengthy wish list, with nary a concern about how it would all be paid for. Amid these dreamy promises she paused to bang the drum for independence once more. Scotland is burdened with wage stagnation, a construction sector that would never pass a surveyor’s inspection, and an annual GDP growth rate one would generously describe as sluggish.
To heap on top of all this a costly breakup of the country would prove ruinous. That Miss Sturgeon can even raise separation with a straight face is proof that, whatever else is wrong with our economy, Bute House is still the UK’s largest exporter of gall.
In the First Minister’s hierarchy of priorities, independence comes first, public spending second and economic growth doesn’t even make the top 20. Miss Sturgeon likes announcing this pot of money and that, but she seldom shows an interest in how the pots get filled. In this she is hardly alone in Scottish politics, but she is the woman in charge and the one responsible for economic leadership.
Wealth generation is the challenge of our time. As the Kelly report reminds us: ‘Of course, decisions will need to be made about how to distribute the gains to ensure broad-based prosperity. But without growth in the first place, there will be no gains to distribute.’
On the strength of Miss Sturgeon’s Programme for Government and her government’s priorities and performance, it is clear she has little interest in, and even less of an idea how, to bring this about.
What is not clear is whether or not anyone in Scottish politics does. The Tories went in swinging for Miss Sturgeon’s pro- gramme but were noticeably circumspect on their alternative for the economy – or anything else. If Ruth Davidson’s party wins the next election, we know it will rule out a second independence referendum. What we don’t know is what it will do on Day Two. Scotland lacks economic direction and it is not simply because we are more concerned with spending wealth than accumulating it. Since 1999, we have expended far more energy on constitutional tinkering and social meddling than on the national accounts.
Holyrood was not designed for growth and innovation – its motor purpose was sandbagging Scotland from the policy preferences of the rest of the country. The Scottish parliament still sees itself as a handbrake rather than an accelerator.
Whenever the discussion turns to what ails the country, the response is predictable. After some chiding for ‘talking down Scotland’, we hear the compulsory demand for more powers – and not just from Nationalists. Devolution is the habit Scotland’s political class just can’t kick.
Solutions
Yet, as Miss Kelly notes: ‘The Scottish parliament already possesses significant powers to influence long-term economic performance, including education, health, housing, planning, transport and economic development.’
Scotland does not need more powers. It needs politicians and policy-makers capable of cobbling together an economic vision and using the powers of the parliament to achieve it. There are no easy solutions, but Miss Kelly tells us where to begin: ‘Scotland needs to make a choice about what it wants from its economy.’
If the answer is prosperity, then growth must be the goal and, to realise it, an acknowledgement that we cannot overtax and over-regulate businesses into success. We have to prioritise skills and understand that our failing education system is not only a social problem but a burgeoning economic crisis. New markets need to be explored, with research and development support in tow, and Scotland must be made an attractive proposition for fresh talent.
Above all is the need for stability. We cannot afford another year like the past five, where the constitution has been the only game in town. Scotland’s inert and fragile economy is vulnerable to shocks and another global recession would hit us hard. We can’t daydream our problems away. We must wake up and face them.