Territories need powers to shape the economic future

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Stuart McIntyre

Last week saw the launch of the National Economic Transformation Strategy.

The strategy presents a series of reflections from the Scottish Government, some of which are sobering, on the scale of the challenge facing the economy in the “decisive decade” to come.

It recognizes that engaging proactively and constructively with businesses is key to its success and builds on the work that has been done in recent years to develop a more successful export and foreign investment strategy.

Some of his recommendations to support entrepreneurship and innovation, in particular, are thoughtful and ambitious. Efforts to improve productivity at company level could help address a long-standing weakness in the Scottish economy. The strategy also recognizes the need to focus more, particularly on delivery, and to realize that evaluation needs to play a greater role in decision-making. These are long-standing critics of economic policy in Scotland.

There are many laudable things about the strategy, and some are new, but how much will the Scottish economy really be transformed? What was the “big idea” that would “produce significantly higher economic growth than the past decade”? This is not obvious.

A ‘big idea’ that did not feature was putting local communities, businesses and councils in the driver’s seat of developing their economies. Instead, the vision remains where decision-making continues to be concentrated in Edinburgh.

The Scottish Government will determine the vision for economic transformation and spending priorities.

There is no mention of handing over control of local economic development priorities, nor of placing central government agencies at the service of locally determined priorities. But this ignores the appetite of local communities to take ownership of their future.

Take the northeast. The region has been hammered in recent years by the double effect of the decline in activity in the North Sea and the challenges of the pandemic. Payroll employment in Aberdeen City and Aberdeenshire is down 8% since July 2014, compared to growth of 4% for Scotland. It is in dire need of economic transformation, from an economy concentrated in offshore oil and gas extraction to an economy embracing new energy innovations and greater economic diversity. But it’s not just the government that’s leading this initiative, it’s the local community.

This was highlighted last week with the launch of the Energy Transition Zone, including a new National Floating Wind Innovation Center. The main driving force behind this is the private sector initiative Opportunity North East which led and partly funded it, with support also from the UK and Scottish governments. But this is locally led and driven by the vision of its business and community leaders, including Sir Ian Wood.

The economic transformation strategy pays tribute to the work done by Opportunity North East, but does not seem to draw the right lessons from this experience.

Specifically, if there is to be successful ‘economic transformation’, it must be driven by the local priorities, capacities and needs of different communities across Scotland. The North East enjoys Sir Ian Wood’s convening power, but elsewhere in Scotland business and corporate leaders could also turn up – and if not, the Scottish Government should use its powers to convening to create a business-led forum for this purpose. .

Economic transformation requires giving local decision-makers the central role in decision-making and delivery for their communities, supported and enabled by the Scottish Government. It won’t succeed if only Edinburgh’s policy makers are left to pursue their vision.

Stuart McIntyre is a senior lecturer at the University of Strathclyde.

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