Designing a plan for economic recovery from Covid-19 in Scotland will require a fast-moving and subtle approach which reflects the needs of different city regions, according to a senior figure in the financial services industry.
Reflecting on a recent roundtable of business leaders and policy makers – The Big Conversation: Helping Britain Recover, convened by Lloyds Banking Group, which includes Bank of Scotland and Scottish Widows – Philip Grant, Chair of the Scottish Executive Committee at Lloyds, also believes that the creative, agile approach taken by business in response to the unprecedented shock of the pandemic can support Scotland’s economic recovery.
“It’s too simple to think of the challenges facing our cities as generic; we should be thinking regionally as well,” says Grant, also Chair of industry umbrella body Scottish Financial Enterprise. “One-size-fits-all is not the most effective approach. What is required in Aberdeen is very different, for example, to what Edinburgh needs.”
Grant continues: “Edinburgh has done incredibly well from tourism, but that dependency is working against it now. The underlying strength is there but it needs the market to return. It’s about the absence of tourists and also the disappearance of office workers in the city, the impact of that and how to adapt.
“In Aberdeen, it’s more of a structural and strategic challenge, to build a more diversified economy.”
“There has been a real sense of talking strategically throughout the emergency,” he says. “If we can keep that spirit of collaboration, and build on existing structures like City Deals, we can have an advantage looking forward.”
Grant detected support for the idea of a National Commission for Economic Recovery, suggested by CBI Scotland Director Tracy Black during The Big Conversation, but says it would have to move more quickly and decisively than commissions of the past.
“We have learned a huge amount in the last few months about being agile, resilient and responsive as a business community, and we need to take that into any national commission” he says.
“There is little point in a commission with an 18-month gestation period of deliberation and reporting. If we have a commission, and a desire to seek strategic consensus, we need to be as collaborative, agile and fast-moving as we have been recently.
“And it can’t just be one plan. It perhaps needs key sector recovery strategies within it, and that regionalised strategy too. The danger is that a national approach becomes very macro, and we need to do this differently and creatively.”
Grant believes Aberdeen’s recovery must be firmly rooted in the skills and corporate base the city-region already has, saying: “We cannot take it in a totally different direction; much of it remains within the broad energy envelope, but has diversified from that dependency on the North Sea and North Sea services.
“There is real strength in engineering, services and innovation, which can be harnessed to deliver that renewables opportunity and broader sustainability ambition.”
Grant also stresses the vital need for Scotland to play to its strengths, and support key growth sectors: “We have resilient sectors, like financial services, which are still sustaining significant employment levels, plus high-growth businesses including tech.
“We need to ensure that the whole funding and finance support does not just get caught up in Covid-19,” he says. “It is too easy to think everyone is caught up in recovery mode.
“Businesses continue to have real opportunities and banks will continue supporting customers in their efforts to develop their industries.
“We must support and invest in our strong strategic assets – in tourism, biotech, fintech, North Sea expertise, creative industries, financial services and more.”
Grant suggests businesses also need more support to export: “Maybe there is some kind of forcing mechanism that can spur on those businesses who have the opportunity to export but have chosen not to take it.”
And he insists that the innovation and creativity of the pandemic months has to be retained: “We must harness that for advantage in a ‘normal’ future economy; it will make us much stronger. But, there is still fundamental uncertainty about what the consequences of this period will be – so we firstly need to harness what we have learned to survive and bridge to that future.
“Then there needs to be a national call to hold on to how flexible, agile and creative we have been in business over the last few months, and not let it drift away.
“At Lloyds Banking Group, we are determined not to slip back into how we used to work and used to think. We want to retain changes that helped us, that saw us through some very difficult times. We need to reflect hard on the ‘hows’ and not just the ‘whats’ and ensure we do not settle back into what can be unproductive ways of working.
“Productivity, sustainability and digitisation will all be critically important elements as we emerge from this.”
In terms of sustainability specifically, Grant cautions against losing sight of the long-term to get through the challenges of the here and now.
“The risk is that we miss a cycle of investment of maybe two years,” he says. “In recognition of the role we can play, Lloyds Banking Group launched an initiative to incentivise companies to invest and become greener and more energy efficient – and there is a real appetite more broadly to invest in sustainability and to continue that dialogue.”
“The pandemic has made us all think about issues like what we spend on business travel and how much of that might be irrelevant. We need to maintain those benefits – and not just reset – to ensure we build back better.”