Just last week President Biden slapped 100% tariffs on Chinese electric vehicles and 50% on Chinese solar panels. Coupled with the 2022 Inflation Reduction Act – the US government’s flagship climate legislation channelling $369 billion towards US clean energy projects – this is a clear attempt to dominate the industries of the future.
Playing catch up, last year the EU launched a €270 billion Green Deal Industrial Plan aimed at countering the EU’s import dependency and place it at the forefront of markets that will emerge from the race to net zero.
China has been developing a very effective industrial strategy for decades and is now responsible for almost 30% of the world’s manufacturing.
There is a common thread running through these approaches – they want to protect and develop their domestic industries. The US model is also an attempt to fundamentally shift employment relations, by setting conditions that facilitate good pay, and requiring the use of unionised labour. In the US, thanks to active industrial strategy, companies now come to unions for partnership.
So where is the UK Government on this agenda? No where it seems. It did publish an Industrial Strategy in 2017, but ditched it in 2021.
Labour did publish an Industrial Strategy in September last year proposing four missions: delivering clean power by 2030, harnessing data for the public good, caring for the future, and building a more resilient economy. The document sets out plans to ‘Buy, Make and Sell more in Britain’ and recognises the importance of the everyday economy, such as social care, where most people work. It proposes an Industrial Strategy Council with business, academics, and trade unions. The document lacks specifics on funding and a previous green investment pledge of 28 billion has been reduced but it’s a decent start.
What about the Scottish Government? Last September, then Economy Secretary Neil Gray MSP, committed to publish a Green Industrial Strategy. And speaking last week the Energy Secretary, Mairi McAllan MSP, said this would be published ‘in the coming weeks’.
All good? Well, not quite. Because as important as having an Industrial Strategy is, it is the content of the Strategy that matters.
While the US model is focussed on building domestic industries and partnering with trade unions to deliver good quality, unionised jobs, the mood music around the Scottish Government’s Industrial Strategy is quite different.
In the words of the Energy Secretary Mairi McAllan MSP: “It will be a clear and unambiguous statement of intent providing investors with one window in which to consider Scotland for investment.”
Not so much supporting domestic industry or supporting workers but creating a brochure of what Scotland has for investors.
Why does this matter? Isn’t investment good, wherever it comes from?
Well, no. Investment into Scotland’s economy, doesn’t necessarily mean new jobs and wealth stay here. As work by Common Weal has highlighted, Scotland experienced an outflow of wealth every year since records began in 1998 – totalling around £277 billion between 1998 and 2021. The only other advanced economies with similar levels of wealth extraction are well known tax havens such as Ireland, Luxembourg and the Cayman Islands.
The development of Scotland’s renewable energy is a microcosm of this trend.
The Scottish Government and the renewables industry will be quick to proclaim the development of onshore wind and the future ScotWind licensing rounds as a great success. The growth in renewable electricity generation has helped to support the reduction of emissions from our energy supply, a vital process in the context of climate change.
Yet this was also coupled with the closure of coal-fired power plants, hubs of employment in communities across Scotland. Ownership of new renewables in Scotland was taken on by private companies, many of which were publicly owned by our European neighbours. The vast majority of investment needed for these projects went overseas, and along with it went the job opportunities. Employment in onshore and offshore wind has fallen in the last year, with turnover rising rapidly. For the communities who relied on employment in coal power, and for the wider economy which would benefit from the wealth of Scotland’s natural resources; this has been a failure.
What’s more, many of the jobs created aren’t good quality, unionised jobs. For years the RMT have been highlighting that migrant seafarers on Scotland’s renewables projects are being paid less than the minimum wage. Many of these multinational companies do actually provide good terms and conditions in their home countries. The publicly-owned Scandinavian companies Equinor and Vattenfall – highly unionised in their home countries – don’t recognise unions in Scotland.
The Scottish Government setting out to achieve only inward investment may well succeed in doing so. However, that does not mean it will help meet the First Minister’s priorities to eradicate child poverty, or create new and high-quality jobs, or improve public services, or build wealth and reindustrialise our communities. We need to reprogramme our economy so that it works in the interests of society rather than just in the interest of corporate elites. The best examples of industrial strategies bring together government with trade unions and industry to identify common ground to support economic opportunities in ways that advance wider social and economic objectives.
For decades, the managed development of the economy has been absent from the thinking of governments across the UK. Even our capacity to do this thinking has been curtailed, with an ever-increasing reliance on consultants and big financial institutions to set the terms of how, and for who, our economy works.
Their priorities are often far removed from those of workers and their communities, and the consequences have shown as much. We’re down to the bare bones in the parts of our economy which we all rely on – our health and social care, energy, and public transport. There is progress to be made retrofitting Scotland’s homes, greening our public transport network, and investing in transitioning crucial industrial hubs such as Grangemouth.
A Green Industrial Strategy addressing these challenges could create tens of thousands of jobs and would directly benefit the lives of people living and working in Scotland.
We need a Green Industrial that supports those businesses, workers and communities that actually make and do things. That asks investors to commit to our priority social and economic conditions. That does not simply make it easy for finance to own and control common resources and extract wealth from others.
An industrial strategy that simply relies on promoting inward investment, without placing conditions on that investment and clearly defining who our economy should provide for, is not worthy of the name.
* Roz Foyer is the general secretary of the STUC
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