Jeremy Peat: 'Rumblings in political undergrowth of start of constructive debate'

Last week Ruth Davidson, leader of the Scottish Conservative Party, spoke at the RSE for the David Hume Institute. This was one of a regular annual series of talks by the party leaders, with this year’s theme being ‘Scotland after Brexit’. Each of the previous DHI series of leaders’ talks had taken place in the run up to a major election or referendum. Indeed, as Ms Davidson pointed out, in her 8 years as party leader she had had to cope with 6 national – Scottish or UK – elections and 2 referenda. The spectre of Brexit still looms large over all political and economic debate, but perhaps there is now a chance to peer beyond the horizon and focus on the medium term outlook rather than undue concentration on the very short term.

The need for this longer term view is clear. As Ms Davidson pointed out the forecast for the Scottish economy provided by the new and independent Scottish Fiscal Commission (SFC) was distinctly gloomy. Not only does the SFC forecast point to the lowest sustained period of GDP growth for Scotland for more than 60 years, it is also, Ms D assured us, the lowest projected GDP growth rate in the developed world; lower than any other official forecast across the EU, the OECD and the G14. We know that all forecasts are doomed to be wrong in some unpredictable direction, but even being at the very bottom of the forecast league table has to be at the very least cause for concern – and a cause to pause and reflect what can be done about this sorry state of affairs.

The easy answer is to blame our low growth outlook on some combination of Brexit and the restrictive policies of past and present UK Conservative Governments. But that cannot be an adequate response. We must look to our own policies, procedures and programmes and see how we can hope to facilitate faster – and preferably more balanced – growth via actions for which we have responsibility or at least influence.

There are signs that this examination is underway. Ms Davidson referred to the Economic Commission led by Lord Dunlop which she has commissioned. A report is due around May and topics to be covered will include how to improve Scotland’s conversion rate of high quality research and innovation; a re-visiting of priorities within education to better reflect the demand out there in the big, wide, evolving world; priorities for infrastructure; and the need for a clearer, over-arching economic strategy for Scotland.

This new report will not be on its own. The comprehensive examination by Andrew Wilson and team for the First Minister, inter alia on means to improve balanced growth, must be published before too long. It has been long trailed and long anticipated, but it should finally reach the public domain by March (this year!). Their work should be of genuine high quality and well worthy of careful examination – covering the growth disappointment, the public finances, and currency options in the event of independence. Note the lack of easy bits!

I was in the group of sceptics when the government decided to create a strategic and over-arching board to oversee the work of the Enterprise and Skills Agencies. My concern was what value-adding function this body could fulfil, given the boards that existed for each of the separate bodies. However, it would now seem that they have found a really valuable role for themselves – working to develop the over-arching economic strategy referred to by Ruth Davidson, obviously in close collaboration with Government Chief Economic Adviser Gary Gillespie and his team.

This work would start by considering how best to achieve inclusive growth, including what is really implied by that term and what the trade-offs might be between faster and more inclusive growth. Even accepting that there may be such trade-offs is a major, and essential, step forward.

I understand that the areas this group plan to examine include Scotland’s weakness on business skills; productivity in every aspect; empowering young people to thrive as the digital agenda unfolds; and, consequently, a fresh look at education priorities particularly the 6th form and beyond. Their approach will be to work on problems and then solutions, hoping for close business involvement in that process.

From all these different strands there is real hope of constructive and effective debate. Perhaps the biggest issues surround education and skills. Professor David Bell said the other day that ‘Automation is going to win out on practically everything that does not involve human contact’. But that should not mean some great schism between on the one hand top level jobs for the few, where unique human skills still dominate, and on the other low skill, low productivity, jobs for the many where automation has won out. We need to equip younger people, and that includes many already within the labour force, with the right skills (broadly defined) to find their roles in the evolving world. Success here will help to bring, in the decades ahead, both balanced growth and work/life satisfaction for those within the labour force.

Jeremy Peat is visiting professor at the University of Strathclyde International Public Policy Institute.