Two Scottish government announcements in the past two weeks will have taken many by surprise. The first was the creation of a new advisory panel of business and economic representatives “tasked with creating a fresh strategy for enterprise and skills support in Scotland”.
There are many outstanding names on the panel, the list topped, I am pleased to see, by Wendy Alexander, one of our better enterprise ministers and the sharpest of brains.
The panel also included the indefatigable Liz Cameron of the Scottish Chambers of Commerce, Mike Cantlay of the Scottish Funding Council, Lorne Crerar of Highlands and Islands Enterprise, Bob Keiller of Scottish Enterprise and John McClelland of Skills Development Scotland. How could it possibly fail?
The second, released last week, was the appointment of a team of trade envoys to extend our “worldwide business reach” and “champion international trading”.
Hooray to both, I say. But I also say “surprise”, because after years of hand-wringing about the need for enterprise and skills support in Scotland and the creation of innumerable skills bodies, task forces and exhaustive reports, why is yet another advisory panel deemed necessary? We’re crawling with them.
This seems to be an admission that all those previous earnest endeavours have not proved as successful or effective as hoped. Were there problems of conception or delivery? Have they been able to keep pace with rapidly changing needs and the explosive rise of the digital economy and e-commerce, where Scotland seems to be lagging the rest of the UK?
Then there is the appointment of a team of trade envoys – a markedly belated response coming as it does 18 months after the vote to leave the EU and the clear need “to promote and represent Scotland’s export interests, and strengthen local market knowledge”. Indeed, this was always an imperative even before Brexit. It’s why we created Scottish Development International. Before tacking on another tier of oversight we need to explore our reasons for doing so lest this, too, falls short of expectation.
It is unfortunate that the first meeting of the new advisory panel on enterprise and skills support is scheduled for 13 December – ahead of the Scottish budget the following day and a detailed post-budget assessment by the Fraser of Allander Institute due on 18 December.
There is the raft of measures announced in the UK Budget aimed at lifting skills and adapting to the internet economy. Then there is the pending first report from the Scottish Fiscal Commission.
The advisory panel would arguably need the Christmas and New Year break to wade through all of this fresh data and have the latest facts and figures to hand when it meets.
What we do know for now is that there is a big job to be done. In Scotland growth has been much weaker than for the UK economy for most of the past two years. In contrast, recent Scottish employment growth has been strong and has outpaced the UK as a whole. But earnings and productivity remain weak and we have yet to fully understand how much of the recent growth in employment is sustainable.
Under the new Fiscal Framework, while tax powers have given the Scottish parliament significant new autonomy, behavioural responses by taxpayers may limit some options. And while some are still exercised about the risk of a “race to the bottom” in tax policy, the greater danger is in the other direction – a push to the top, putting Scotland at a competitive disadvantage in attracting skills and enterprise.
Given the hefty Budget financial commitments to education and skills training, the easy response of “spend more money” would be to miss the root of the problem – the fast changing nature of employment and in particular the growth opportunities of an economy increasingly dominated by new technology.
The Office for National Statistics reckons total e-commerce in the UK at more than £500 billion. What of Scotland? A blistering 2012 report by Cambridge-based business consultants SQW for Scottish Enterprise found that Scotland remains “way behind other parts of the UK” in its capacity to exploit the benefits of the e-commerce boom.
Despite a decade of explosive growth, and the presence of exemplary Scottish-based firms such as Schuh, Toolstop, Black Circles and Skyscanner, more needs to be done to meet the specialised demands of e-commerce or the lack of training in the technical, design, marketing, supply-chain management and order-fulfilment skills needed to succeed in a global marketplace.
Back in 2014, John Swinney, then finance secretary, said that Scottish e-commerce was worth £38 billion. But this mouth-watering statistic was extrapolated from ONS figures for the UK. Was our combined trading muscle really delivering £38 billion in sales? The number was viewed by insiders at the time as wildly optimistic.
Peter Mowforth, founder and chief executive of INDEZ, a Glasgow-based e-commerce supplier to more than 30 Scottish companies, was sceptical. Scotland, he says, has significantly lower readings on e-commerce activity and employment than any other part of the UK.
He points to figures from the e-commerce recruitment site Adzuna. This currently shows a total of 8,014 e-commerce vacancies across the UK. London accounts for the lion’s share at 3,272, followed by the south-east at 859 – and Scotland accounts for just 108.
This may be a “demographic” issue. Many e-commerce businesses in Scotland are small – micro companies or self-employed individuals – whose activity and numbers employed fall below the radar for official data.
Another concern is that, despite Scotland’s strong presence in higher education, there does not appear to be a faculty or business school dedicated to this high-growth area.
“Given that e-commerce represents a distinct way of conducting business with its own technology, skills, processes and unique supply chains,” Dr Mowforth notes, “it is worrying that there is not one dedicated course on the subject in Scottish universities and colleges.”
A dedicated sponsoring minister would certainly help. One thing is for sure: in today’s economy e-commerce is a critical pillar for overall economic growth and prosperity. Scotland can’t afford to be left behind. The task force has its work cut out.