21 Apr 2021
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
Am I being too cynical in assuming that an election campaign is not usually the moment for sophisticated debates on the future of Scotland’s economy? This is the season for silver bullets and simple targets.
So it was a pleasant surprise to see the publication by the Hunter Foundation of Oxford Economics’ Raising Scotland’s Economic Growth Rate.
Sir Tom Hunter can always be relied upon to tackle head-on the trickiest of issues, and with governmental policy language completely dominated by the concepts of just transition to net zero or the evolution of fair work it is refreshing to read a report that asks the basic questions about how we earn a living.
The report’s main premise is that Scotland’s economy falls well short of comparators like Norway, Denmark or Singapore. Measured by GDP per head of population Scotland needs an increase in its economy that would be the equivalent of a business the size of Google to match Norway. The present policy offering is simply not enough. The report’s final words are unequivocal – bigger policies are required.
The diagnosis has some familiar components. Scotland’s stock of businesses per head of population is amongst the lowest in the UK, our business birth rate is ninth out of the 12 UK nations and regions and our scale-up rate is also low. Our business research and development has become more concentrated in a smaller number of mostly foreign-owned companies. Collaboration links with higher education are too few.
These are long-standing issues which Scottish Enterprise set out to tackle as far back as the mid-90s with initiatives like the Business Birth Rate project and I sympathised with the comment that, whilst some bad policies persist for too long, good policies may fall victim to changes in government or minister – or quango head I might add – when they have had limited opportunity to succeed.
Crucially our employment is less focused compared to the UK as a whole on advanced services in information and communication, in financial services or in scientific and technical industries and although we have a workforce that is more highly-educated we have larger numbers of professionals working in health and education rather than in industry.
Here is where I felt Glasgow’s experience is relevant. On the one hand Glasgow has made much of its International Financial Services District on the Clyde as a magnet for inward investment, now 20 years in development and coming to fuller fruition with the investments in progress by Barclays, Virgin Money and JP Morgan. It is in the IFSD that Glasgow has grown its presence in ICT and financial services jobs which pay well above the national median salary. Here is a project that has been given time to succeed and can still deliver more.
Might the same be possible with the city’s three innovation districts but with a greater emphasis on making the connection between our higher education institutions – which the report acknowledges as a national strength – and industry? The report notes the first investment made by the Scottish National Investment Bank in M Squared Lasers which of course supports that company’s development in the Glasgow City Innovation District.
There is plenty to agree with in the analysis, although I felt that the dismissal of transport as an important feature of economic development was rather glib and unconvincing and was promptly contradicted in the Denmark case study that emphasised investment in transport infrastructure.
This is a welcome and helpful addition to Scotland’s economic debate and when the Scottish elections are over, we should take time to further explore its conclusions.
This article was first published in The Herald on Wednesday 21 April 2021
