Reform Scotland

The Scottish Government’s economic strategy isn’t Scottish enough – Gordon Hector

Last year I spoke to an Irish government official who summarised its economic strategy in a single word: ‘just internationalise’.
A bit of a simplification, obviously. But it does capture the sense of focus in Ireland’s enterprise policy: get investment in, get exports out.
Yesterday the Scottish Government published its new economic strategy.
It has some good things. It is clearer than past strategies, and thinking about how to implement existing ideas is refreshing.
But does it have this kind of clarity? Do we have our equivalent of ‘just internationalise’?
All too often, public sector strategies are really lists of activities – just a long collection of things that should happen without any sense of how they fit together.
Even worse are the ‘plans of plans’, where the list of actions is simply a collection of other documents.
Neither is actually a strategy. Strategies have some little nugget of insight about the things that will really make the difference. For national economic strategies this is often a really clear sense of underlying strengths and how to make the most of them, or a rationale for backing a particular sector, or identifying the supply-side reform with biggest impact. The crucial thing is to have prioritised, and done so with an intelligent read of the environment and at least some sense of why an action will lead to change. Which is how Ireland ends up with ‘just internationalise’.
The themes in the Scottish Government strategy are broadly sensible. But there is still too much listing of Things That Could Be Done.
The best bit is in the entrepreneurship section. It’s well-recognised Scotland lags behind in new companies and scale-ups. It’s also recognised that specifically scale-ups lead to wage growth. I think it’s accepted, if not always talked about, that Scottish culture sometimes doesn’t like people getting too big for their boots. So creating a culture that supports more entrepreneurs and high-growth companies is a good thing, rooted in evidence on why it matters. It is hardly new, but it is sensible.
But the other themes are far less focussed. The second chapter is on ‘new market opportunities’. This could, with a bit of tweaking, become a strategic approach: building around identified sectors and focussing policy around cluster-building. But it’s too scattergun: touch of hydrogen here, bit of renewables here, new funds and investment committees over there.
Scotland’s institutional landscape on this front is increasingly complicated with city deals, new enterprise agencies, and the new Scottish National Investment Bank all in play. The SNIB in particular catches the fashion for Mazzucato-ism – defining big ‘missions’ to refocus capitalism – and it’s really not at all clear how that approach fits in to this plan. It would make sense for a strategy to be mission-based and all the institutions fit that. Or vice-versa, making the national plan reflect institution-level strategy. This does neither.
Then there are chapters on regional growth, skills and fair growth, which veer towards the dreaded plans-of-plans, as they are things that broadly were going to happen anyway. Particularly on the role of regions, massive questions are ducked: you could see regional-level institutions as the great focus for investment from now on, making much more sense than national- or local-level approaches. But it is barely touched upon.
So where the whole thing ends up is this sentence:
As a consequence of the 6 programmes, 18 projects and 77 actions set out in this strategy, we will have achieved our vision of building a wellbeing economy.
This has the slight feel of willing it to be true.
Compare yesterday’s plan with, say, Rishi Sunak’s Mais lecture last week which identified three priorities. The second (skills) was very blah blah blah but the other two (capital and ideas) were serious, thought-out arguments about what the economy needs. What really stands out is that it was all wrapped in a statement of strategy – an argument about why free markets work, and where they don’t, and how Sunak sees the world. It is not like he said anything original, and you can disagree with what he thinks. But it is at least a working theory to underpin everything else.
What’s odd is that Kate Forbes has a reputation for being on the centre-right. She is, obviously, in favour of independence. And the best economic argument for independence is a bracingly free market one, which is that a small, open economy like Scotland’s would have no option but to face reality, and relentlessly focus on whatever it is keeps us in the game.
Odd then, to feel that what the economic plan lacks is this sense of crispness, of being lean, nimble, adaptive, and above all else focussed.
It’s a lot better than previous plans but needs to go further. It needs to streamline more. It needs to list fewer actions but with greater conviction. It needs a stronger sense of why certain things should be done and why others should not, based on a vision of the role of government.

Ironically, for a Finance Minister coming from the right and in favour of independence – it needs a much stronger sense of what it really means to be a small country.

 Gordon Hector is a policy consultant and former Director of Policy and Strategy for the Scottish Conservatives