A striking figure about Scotland emerged from the latest Fraser of Allander Quarterly Bulletin – as depressing as it was all too familiar.
Our growth rate continues to lag the UK. That’s been true more often than not. The gap between Scotland’s onshore economic performance and the UK is as wide as ever. Indeed, it has recently been widening – and in the UK’s favour. UK GDP now stands 5.1 per cent above the pre-recession peak compared to only 2.3 per cent in Scotland.
So, for all those ra-ra releases about inward investment, job creation and capital spending we are still unable to contain the undershoot, never mind narrow the gap.
All manner of explanations are to hand; 0ur larger public sector, our under-investment, our post-industrial legacy, our poor health, our crap weather, our twisty, windy roads.
It’s all external forces, colossal burdens left by history, all out of our control. And what does it matter anyway?
Contiguous economies often develop in different ways and at different speeds. We have a different business composition. We do not have London.
Convenient though such explanations may be, and many true in part, it is not altogether true that a widening growth gap with the UK is our existential lot. There is much that we can do with the powers we already have, to make Scotland a more attractive and competitive business environment.
What’s lacking is not the means, but the will.
This week sees the publication of a 12-step programme to make Scotland a better place in which to invest and expand. And the striking feature of this publication is that most of its excellent ideas – like the continuing underperformance it seeks to remedy – have been around for years.
The programme is set out by Reform Scotland’s retiring founder Ben Thomson [pictured]. During his period with RS, he has championed many long-needed reforms, whether in business, education or local government.
Not everyone may have gone along with his espousal of full-on constitutional change. But his contribution to policy debate in specific, targeted issues has been immense.
This latest publication is no exception to the Ben Thomson style. It is an eminently practical, ‘can do’ list of policy changes that would attract broad cross-party support.
They range from reform of business rates, giving control to local authorities, more support for colleges, scrapping Air Passenger Duty, cutting back on quangos, better provision for child care, a ‘one stop shop’ for business support and advice and a clampdown on late payment – both in the public sector and private.
Many can be given immediate effect. But are others too far-fetched and impossible to achieve? Take planning reform. The system in Scotland, says RS, “can too often be seen as an inhibitor of economic growth due to the length of time it takes for planning permission and its inability to respond adequately to demand.
“The problems of the planning system in Scotland stem from the lack of the appropriate incentives to ensure that a balance is struck between the need for economic development and the public’s desire to preserve and enhance the quality of the environment.
“Under the current system of financing local government, councils find they do not gain sufficient financial benefit from allowing new development to make it worth their while to do so. RS believes that local authorities should have greater control over their own income, as opposed to relying on central government grants. This would help to give them an incentive to create a better economic environment as they would benefit from any increase in tax receipts.
These are all good points. Complaints range from the catch-all resort to environmental objections, time taken on issues of minor import and that too many planning issues drag on because staff are on long periods of maternity leave or on public sector holidays and away days.
There is an equally strong argument for devolution of business rates currently controlled by the Scottish government. Councils have no incentive to design business taxation policies and broader local economic development strategies to support the growth of local businesses, encourage start-ups and attract investment.
The council would benefit directly from the growth in income. Devolution would also allow councils to develop their own rate relief schemes to reflect local needs and priorities and help individual areas in need of regeneration.
Reform Scotland has long championed a quango cull, believing that they are neither fully part of, nor independent of, government and lack transparency and accountability. Instead, it argues that their functions should either be transferred back to government departments, where decisions would be accountable to ministers; carried out by fully independent bodies which could contract with government to provide certain functions; or be devolved to local authorities.
It points out that a number of the larger quangos have a huge impact on businesses in Scotland, most notably Scottish Enterprise and Highlands & Islands Enterprise. The rationale for quangos was that they enabled arm’s length decision-making from the political pressures of Holyrood.
But in effect the administration continues to control through the appointment of key personnel and in budget allocation.
SE has been left to wither on the vine – ‘not invented here’ has characterised the SNP’s attitude – and it has no separate voice in Scottish economic or business affairs. Taking it ‘in house’ would almost certainly accelerate its decline.
In the event of further devolution of income and corporation tax it advocates a department with responsibility for economic development in Scotland.
While this seems reasonable, the problem already well evident is that economic policy is already suffused and overburdened with a jumble of political, vote-catching social policy agendas (income inequality, sexual equality and diversity issues), that have little to do with economic development.
It is hard to see in the current climate how a single entity would curb this confusion and indeed could probably add to it.
However, all in all, this is an impressive and strongly argued ‘dazzling dozen’ that would indisputably help Scotland on the move. Well done to Reform Scotland and Ben Thomson (now off to the Scottish Malt Whisky Society – a stiff one well-earned after unstinting years at the public policy wheel).
John Swinney and Fergus Ewing could now usefully get on the case.