SCOTLAND BE BRAVE: TOUGH CHALLENGES FOR THE ECONOMY

By Duncan Maclennan & Des McNulty

An edited version of this article first appeared in The Times

The constitution still dominates Scottish politics as Brexit and ‘autonomy’ issues remain unsettled. There is, however, a growing sense that the emphasis of debate needs to change.  Scotland is at the end of an economic era. The withering of the oil sector has raised the pressures to both fashion a new economic base and adjust to an expanded reliance on Scottish tax revenues. The Scottish Parliament has to evolve beyond being a spending authority for the Westminster grant to embrace real economic policy-making.

The Parliament has long focussed on pursuing social justice and inclusion aims whilst also funding extensive middle-class welfare with free personal care for the elderly, free prescriptions and free university education.  Many Scots support such programmes, though evidence suggests their redistribution and tax-paying preferences are much the same as the English. The Parliament has shied away from using (minor) tax powers.  Policy spending has been extensively driven by combatting decline rather than growth related investment.  Council tax levels have been frozen for a decade.  The culture of the Parliament has given little room for political leaders to make the tough decisions to grow the economy and generate the fiscal headroom for reform.  No doubt, post-oil and post-Brexit, Scotland, in or out of the UK, faces a hard decade of change ahead.

The different future has already started. The oil effect is now negligible. Population is ageing more rapidly than the rest of the UK with currently much larger per capita spending commitments for elderly health and social care. A rising share of revenues must emerge from Scottish tax decisions and growth. Nicola Sturgeon’s recent speech on the economy rightly recognises that a successful economic policy to support productivity growth is urgently needed.

Our new, edited volume, ‘The Scottish Economy’, documents progress that Scotland has made since the 1990s.  Economic performance is now at the average UK level although productivity remains a problem. A range of policy measures to better use Scottish resources and energies are proposed. Scotland’s new economic purpose needs a different governance of economic policy.  A Productivity Commission should be established. The framework of local authorities needs to change, with fewer councils and a new, wider tax base to promote local action with some degree of autonomy. City and growth deals need to maintain a growth focus. Glasgow and Edinburgh need to pay regard to how their competitors in England have been taking powers and resources from government. Quango boundaries, service reform and initiatives such as the recent economy and skills review need to be grounded in coherent areas for change. A dilemma facing the Parliament is whether there has been adequate investment in Scotland’s growing locations and sectors or whether the inclusive growth strategy, that it naturally leans towards, might spread resources inclusively but at the cost of stagnating productivity and fiscal resources.

Is Scotland ready to make tough choices?  Will the Scottish Government take the necessary steps to improve performance in school education, where pupil outcomes have been falling relative to the rest of the UK? Will it seek to remedy the long-standing mismatch between the skills needs of employers and skill levels in the population? Can free university education remain a Scottish Shibboleth when college and skills budgets are being shredded? The government has maintained a laudable resource commitment to housing and homelessness policies but discussion of the future deploys old, one-sided rhetoric of slipping back into rent controls and re-expanding council housing as responses to current difficulties. Scotland’s younger households primarily want to be home-owners. So often in Scotland, parties embrace strong, fair, future visions and then adopt weak, out of date means to deliver change.

The social justice rhetoric of Scottish politics will be empty if productivity does not rise. The Scottish Government recognise the issues. That is not enough, Scotland needs an economically savvy culture in its Parliament and councils if Scotland is to flourish. Scotland has the fiscal and human resources to perform much better. But we must be brave and be willing to challenge the policy orthodoxies that have that have held back economic progress since 1999.

The Scottish Economy, edited by Ken Gibb, Duncan Maclennan, Des McNulty and Michael Comerford, is published by Routledge.

Duncan Maclennan is Professor of Public Policy at the University of Glasgow and of Strategic Urban Management at the University of St Andrews. His chapters in this book include: The Scottish Economy: Background and ContextCities in the Scottish EconomyHousing; and Infrastructure and the Scottish Economy.

Des McNulty is Dean of Knowledge Exchange at the University of Glasgow. His chapters in this book include: The Scottish Economy: Background and Context; and Inequality and Poverty in Scotland