Donald Anderson: Prejudice against the private sector must end

Published on Friday 17 February 2012 12:22

Scotland will only prosper if we support innovation and clamp down on public spending, writes Donald Anderson

Scotland is long overdue for some proper due diligence in our economy and public services. It is needed, not because we are on the verge of a historic decision on independence – though that in itself should prompt such a debate. No, we need to take a good long look at Scotland because of major issues holding back our growth and development regardless of Scotland’s status in the UK. Such a move is overdue after more than a decade of devolution, the aftermath of the financial meltdown and the challenges of public sector reform.

The world in the 21st century is a rapidly changing place. Emerging economies will shape our future in ways that we are only beginning to understand. The nature of economies is changing as well. Take private companies for example, many of the biggest companies and brands were unknown even 15 years ago. We urgently need to consider how well Scotland is placed to succeed in that “Perfect Storm” of economic turbulence, and what we need, to deliver a competitive private sector and efficient public sector and ensure our future prosperity.

Somehow, in the dark years of the 80s, Scotland took its intensive dislike and distrust of “Thatcherism” and turned it into an unhealthy dislike of the private sector. I was pleased to see Alistair Darling criticise the removal of Fred Goodwin’s knighthood. There can be no doubt that the errors in pursuing the RBS merger with ABN Amro were massive, and the consequences were tragic in jobs and public sector bailouts.

That said, is Barclays to be praised for having the good fortune of losing the bidding process? Goodwin took a Scottish company and made it amongst the biggest and most successful in the world – alas, for too short a time. RBS was the biggest taxpayer in the UK at the peak of its success, and despite all the comments from those with “20-20 hindsight”, no political parties saw the collapse coming and no government would have had the guts to intervene. However, rather than learning genuine lessons, it’s much easier to blame Fred, as if the choice was just to leave RBS the way it was.

Yet, markets (yes properly regulated markets), are an efficient way to run vast swathes of the economy. China has achieved the largest increase in prosperity in human history, delivered by a Communist regime that has put its faith in private enterprise. Alas, in Scotland, we too often undermine and attack the private sector, clinging to the false belief that the public sector is somehow inherently more important and more virtuous. A large proportion of the population of Scotland thinks that public spending is an answer in itself. Since the establishment of Holyrood, almost the entire Scottish political debate has revolved around spending money, rather than how we can earn a living in the modern world, ignoring the fact that in order to distribute wealth, we have to create wealth. Our companies need to win business in increasingly competitive global markets. Regardless of the debate on independence, we lose sight of that at our peril.

We have some exceptional public services. The health service provides a superb standard of care relative to cost. The United States spends nearly two-and-a-half times UK spending, and the health outcomes in the US are demonstrably worse – some markets don’t work. However, since devolution many straightforward efficiencies and rationalisations have been spurned in favour of a debate that has revolved around avoiding unpopular decisions. To provide high quality care we need fewer and better specialist facilities. Quality will be achieved by well trained and experienced staff, not by buildings.

In education, we have a system that needs to continually challenge its own conservatism. Even simple things like schooI uniforms were fought by the education department in Edinburgh, until they were introduced by announcement – thanks Yes Minister. I well remember researching a recent speech to school business managers and feeling depressed at the extent to which many state schools ignored the curriculum when they spoke to parents, but extolled the virtues of their extracurricular activities. We now have a Curriculum for Excellence, a term for which any parent of a child in the system will realise that George Orwell’s description “doublespeak” could have been invented. Sometimes I despair. Whatever happened to good exam results? In Asia, it’s a different world, and that matters because our children will increasingly be competing in world terms.

In higher education, the challenges are no less severe. We may not accept tuition fees, but how will that help us compete? How can we – or should we – sustain the number of institutions we have in Scotland? Edinburgh University is bigger than all of the other higher education institutions in the city combined, yet in world terms it’s a small university. Currently ranked 40th in the world, we should be backing Edinburgh as a genuinely world-class university.

Our public services need reform more than ever, and neither the debate nor the reform can wait until after the referendum.

Lastly, and crucially, remember that there is no Scottish economy. The Scottish economy is made up of sectors that can often bear little or no relation to each other. Our cities, particularly Edinburgh and Glasgow, increasingly like London, are post-nation cities. The Central Belt underpinned by the twin engines of Edinburgh and Glasgow, delivers 68.9 per cent of the gross value added in the Scottish economy. And that’s not counting the dynamic hub that is Aberdeen.

Growth in Edinburgh itself has been a key factor strengthening local economies from the Borders to north east Fife. Edinburgh both competes with and depends on London – and competes with other cities like Manchester and Liverpool, not to mention Frankfurt and Dublin. We need policies that help our cities as well as our industries compete.

As for the politics, pride will not allow many in the Scottish opposition to accept that on many issues – such as housing and planning, the SNP has actually performed well. Denial makes a rational debate on the issues much more difficult. The debate about independence can’t be driven by who is “anti-Scottish” or “anti-English”, nor by who we think has the nicest party members.

It’s all about the economy. How are the smaller independent nations going to fare against the larger more integrated economies? And the debate is about how public sector efficiency can help support the creation of work and wealth. In the land that was the home to the enlightenment, surely a proper debate is the least we should expect.

• Donald Anderson is director of PPS Group and a former Labour leader of Edinburgh City Council

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douglas-home rule

Saturday, February 18, 2012 at 09:32 AM

I think,Donald, that you will find the SNP government is desperate for the fiscal powers to allow an environment to grow the economy. Its the Britnats who do not want this, prefering Scotland to have a branch factory economy. Its also a problem that as soon as an indigenous company reaches a certain size, that its owners sell out to the first bid. We need to encourage start-ups, centered perhaps on Universities, with generous grants or loans exchanged for equity. This should be getting done by private money (banks etc) , but isnt. Too many in private commerce seem to have an idea that tax money should come to them rather than public utilities, but they have to be more efficient and cost effective to gain public trust.Too often they make savings by cutting wages and lowering the value of the service they offer.

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allymax

Saturday, February 18, 2012 at 03:36 AM

Pity ye were Labour Donald; time tae repent man!

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allymax

Saturday, February 18, 2012 at 03:32 AM

Article says, "Since the establishment of Holyrood, almost the entire Scottish political debate has revolved around spending money, rather than how we can earn a living in the modern world",......................Yes, I couldn't agree more Donald. And thanks for highlighting it. ...................Holyrood have become a harem of hedonists; free-flowing in their decadent declarations of fascist fancy; I've never seen such self-ingratiated pleased-posturing posse, from those that were elected in 2011. It's like they've 'arrived', and now they can forget about why they are there, and fancy-around, in their 21st century venal vogue, that only they seem to understand...............I blame that guy Miralles; he built a fantastic building, but like them, it's not fir for purpose; it's all about me-me-me-me-me....... ..........Miralles could've just built a plain old building, fir for purpose; for politicians that number those that will judge the judged. But, just like Miralles, they have been stage-struck by the easy-money, awash in the public sector. Who's paying for a 40 million quid building, that costs over 400 million?..................The same mindset these Holyrood politicians have, unconsciously transfers to the public policy they deign to premise; public money being spent on public services, that only feign diligence and duty. ...............Exactly how much money is being spent on Housing Options for the prevention of homelessness, that never really fixes the problem, but the service providers, those that are 'linked-in-tae-ra-loop o' 'partner organisations' public money wastage, always seem to keep coming back for more public money!................Who are these people!.................Time tae get tae work, n' real effective like!..................................Donald, good article, well-enough written, and a good topic; thanks; allymax.

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billalba

Friday, February 17, 2012 at 08:33 PM

#2 why is it only the unionist repeat the propoganda that Scotland is anti success??? I think you'll find that only the SNP in Scotland want everyone In Scotland to be successful...all the unionists appear to say is that Scotland can't be successful.

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bonechewer

Friday, February 17, 2012 at 04:06 PM

The leader of the Labour party in Scotland could do worse than read this excellent article.For too long, Labour's answer to the social problems that we face is to rack up unsustainable public spending to the detriment of the private sector. Fairness and equality are good things , but can only be delivered, in a sustainable way, when the private sector is allowed to flourish. Labour take note.

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Buford Van Stomm

Friday, February 17, 2012 at 02:58 PM

I suggest you investigate the CHP structure in scotland to gather information on thew obscene waste of public cash happening now.

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babydriver

Friday, February 17, 2012 at 01:50 PM

Whatever his politics we need more pieces like this to debate than the usual emotional slop, subsequent hysteria and insults flying backwards and forwards. N Sea oil funding everything - happy days - if only

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Gorgierules

Friday, February 17, 2012 at 01:20 PM

4 Might I suggest you move to England, the land of milk and honey that it is for the private sector, privatisation has been an unmittegated disaster with the PFI contracts etc!

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Rorybone100

Friday, February 17, 2012 at 12:38 PM

Maybe prejudice against the public sector should come to an end. It was private sector that plunged the economy into the ordure it is currently languishing, not government largesse. The tax receipts from RBS when it was flying high have been wiped out several times over.

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Trump'ton

Friday, February 17, 2012 at 12:00 PM

"Scotland will only prosper if we support innovation and clamp down on public spending" Common sense. While I agree completely, it's less of a lightbulb moment, and more of a political stance. Let's go further. It's not the function of government to provide jobs or services. It is the function to govern, and almost all public services can be privately provided for less cost to the end user. Some public services should be maintained, but not ones which hide armies of managers.

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Thomas the Tank

Friday, February 17, 2012 at 09:01 AM

Ah, the Good Old Teflon Don; a 'director of PPS Group' (WTF??) a former Labour leader of Edinburgh City Council (whose maladministration and profligacy - think TRAMS - left the city coffers empty) and whose smug sense of entitlement managed to lose a hitherto safe labour seat in the Scottish Parliament! Why do you think anyone (other than your pal at The Labourman) wants to read your thoughts on anything, Donald?

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Bolshie

Friday, February 17, 2012 at 08:19 AM

It is welcome change to read an insightful and well written article in the Scotsman. The future prosperity of Scotland should be at the forefront of the debate about how the country is governed and we need more articles like this before we sleep walk into independence.

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I AM THE OPERATOR OF A POCKET CALCULATOR

Friday, February 17, 2012 at 06:40 AM

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