David Watt | The Scotsman | Read the original source now
There are dangers for Scotland’s financial future if we become overly fixated on the mechanism of our governance
THERE is a great deal of talk about the nature of the economy in an independent Scotland – ahead of The Scotsman conference on that very topic today – yet there is a real danger that the debate itself is masking some of the enormous challenges that we face in Scotland, regardless of the constitutional format we eventually choose.
Of course the debate on the constitution is potentially life-changing for the nation, and its people, and ultimately could change our place in the world and impact on all our lives. This may be enormously negative, or enormously positive, depending on your point of view, but it can be argued that many of the effects will be felt in the longer term. And some commentators feel that, in a globalised society, independence may in effect be more of a rebranding than a truly earth-shattering change of status.
The one real issue for those in the business community is what the state of the economy would be in the future – in the short, medium and long term. What effect would staying in the Union have – and what impact, in contrast, would independence have? What opportunities will arise from either system in a time that is looking pretty grim?
For the key concern right now is the economy – not the constitution.
Many believe that we fundamentally need to alter the balance of our economy away from the public sector to the private or the third sector, where social enterprises grow and thrive. There is a real need for the focus of our economic activity to be on wealth creation, and not on spending, if our economy is to be lifted out of recession now and in the future.
Scotland has to grow its international aspirations and restore its historical entrepreneurial culture if it is to thrive and survive in the global marketplace – regardless of its constitutional state.
This needs our full attention right now and requires all of us – politicians and business people, educators and civil servants – to decide what to do and to do it as soon as possible. The time for action is now and we must not delay.
There are many good examples of what can be done – for example, the additional £1million for the Prince’s Scottish Youth Business Trust announced last week, and the changes in the education system through Curriculum for Excellence which could help change attitudes and focus on education which is for life and work and is of interest and stimulating to all.
There is also the private sector focus on renewable energy businesses, while the foreign inward investment in this area proves that we can lead the world in R&D in 21st Century industries. Alexander Dennis expanding into Australia in bus manufacturing also illustrates where and how we can develop. And we also have top companies coming in to Scotland – like Mitsubishi and Gamesa.
We do need to develop our own companies, though, and keep them headquartered in Scotland. These need not be big companies – you can devise games businesses with our sophisticated technology with worldwide impact on a small scale that will be well placed to succeed internationally. We must do more of that. We can only solve our economic problems by bringing in more money from outside – not just circulating our own around more often.
It is simply not satisfactory to have our exports at a level which is less than a fifth of that of Ireland, a country which is smaller than Scotland in population terms. There are sizeable parts of the world which are not in recession, and we must get our products and services into them as a matter of urgent priority.
We need to spend public money where it produces the most added benefit – on infrastructure – and stop spending it on unsustainable universal benefits. Coupled with moving the public sector to the status of a facilitator rather than the more expensive deliverer, this will see a real change in our economic landscape.
The private sector and the third sector can deliver most public services more efficiently and effectively, while the public interest is safeguarded by our democratic structures and control of the purse strings. We must not be restricted in our thinking by bad previous examples of poor PFI deals or unsatisfactory care homes, but we must learn from these lessons of the past and ensure that we get the best value for our hard-earned taxpayer pound.
The Scottish Government’s “shovel-ready” projects should be pursued as this will provide worthwhile employment and much-needed increased infrastructure for the future development of our economy.
We have really lacked such investment in this country for many years and we need to push on with this even in the most straitened of times. President Obama has proved that this can work in the United States.
We also desperately need banks to lend money to individuals and companies to allow potential growth to happen. The recently announced UK government and Bank of England initiative is a step in the right direction as long as the banks do allow the free flow of this low-cost money into the market place.
In some cases it might take longer to get our investment in the big banks like RBS back if they lend more, but the priority right now is overall business growth and this badly needs that kind of investment.
This is the backdrop of economic change that we need – a new model of our economy which focuses on wealth creation leading to prosperity for all and not in the service of an overwhelming state machine which sucks money from the economy and uses expensive mechanisms to reinvest it where it chooses.
The private sector can grow and soak up some of the public sector staff who will come on to the market, but we need to facilitate their growth through good workforce planning and development linked to a procurement system which helps local companies win contracts.
It is also essential that a really active planning and development service at both local and national level is embedded in a positive culture of growth and innovation.
We have been the world’s most entrepreneurial country and one of the most international – and we can get there again. Politicians need to encourage that move – and not become fixated purely on the constitution.
• David C Watt is Executive Director of IoD Scotland. He will be one of the speakers at today’s Scotsman conference: A Question of Independence, the Economics of independence. Follow on Twitter using @ScotsmanDebate
Other speakers include John Swinney, the cabinet secretary for finance, and Alistair Darling, the former Chancellor of the Exchequer.
Follow the debate on Twitter at: @ScotsmanDebate/Bill Jamieson: @Bill_Jamieson/Eddie Barnes: @EddieBarnes23/Peter MacMahon: @petermacmahon//.. This entry was posted on Tuesday, June 19th, 2012 at 9:08 am and is filed under Business, Economy, opinion. You can follow any responses to this entry through the RSS 2.0 feed.