Investment Conference: Scotland's attitude must change

Rosemary Gallagher on The Scotsman editor Neil McIntosh’s conversation with Alistair Darling about challenges to growth in the UK
The Scotsman Editor Neil McIntosh with former Chancellor of the Exchequer Alistair Darling. Image: Scott LoudenThe Scotsman Editor Neil McIntosh with former Chancellor of the Exchequer Alistair Darling. Image: Scott Louden
The Scotsman Editor Neil McIntosh with former Chancellor of the Exchequer Alistair Darling. Image: Scott Louden

Few people can be better qualified to talk about the UK economy than Alistair Darling, former Chancellor, who also wrote Back From The Brink: 1,000 Days at Number 11covering the global financial crisis which happened during his time in office.

He made a number of critical decisions during that tumultuous period, including the sanctioning of multi-billion-pound bailouts of banking giants Royal Bank of Scotland and HBoS to prevent their collapse.

Hide Ad
Hide Ad

Last week he joined The Scotsman editor Neil McIntosh for a thought-provoking “fireside chat” to bring the Annual Investment Conference to a close. As well as being Chancellor, Darling was an MP for Edinburgh from 1987 to 2015 and a member of the Cabinet from 1997 to 2010.

He is currently chairman of Crosswind Developments, which has a vision to create Elements Edinburgh, including the country’s first digital quarter, on a large brownfield site to the west of the Scottish Capital, creating jobs and providing housing.

McIntosh asked Darling what is likely to come next for the economy which is going through an unsettled time – including the recent failure of the Silicon Valley Bank in the US – and to address concerns that we are heading for a deep and long recession.

According to Darling, there are many differences between the situation now and what was happening in finance around 2007, just before the global collapse. He said: “Firstly, in relation to banks, you need to bear in mind that larger banks are much better capitalised than they were 12 to 15 years ago.”

And, in the US, he explained that bigger banks are now subject to much stricter stress testing than some of the smaller, regional operations. He added that many of the US regulators were around during the global financial crisis of the late-2000s and therefore have an “institutional memory” of what happened then.

Darling also contrasted the many years of relatively strong uninterrupted economic growth that preceded the crisis then to the current picture. He pointed out that annual economic growth has averaged about 1 per cent since 2010. According to Darling, the UK is “limping along”, with a combination of low growth and relatively high debt. In his view “the biggest single problem facing the UK is how to get growth going again”.

He said: “We’ve suffered more than our competitor countries or larger economies. Our economy is a lot smaller than it would have been if we hadn’t done Brexit.”

He added that addressing this growth challenge is key, but said he found it hard to see how the situation will improve any time soon.

Hide Ad
Hide Ad

Darling said that, as a priority, the UK needs to agree a trade deal with the European Union that would remove barriers currently impeding growth.

“One of the biggest things I think the British Government has got to do is to negotiate a new trade deal with the rest of Europe,” he said. However, he warned that such a deal will be difficult for Westminster to reach, partly due to the number of Eurosceptics in government.

Asked about how the Scottish economy is performing relative to the rest of the UK, Darling said that potential investors don’t like uncertainty and he would like to see a Scottish Government more visibly supportive of business.

“Scotland does have a lot to offer in terms of resources, certainly our universities which are turning out very good start-up companies, the potential for fintechs, energy and so on,” he said. “But it needs the attitude to change, it needs things like planning to change. We need to change the culture.”

He would like to see the Scottish Government encouraging people and businesses to come to Scotland, warning: “Edinburgh is at real risk of resting on its laurels.” Issues he highlighted included a move of corporate HQs from the Capital, leaving just brands behind rather than senior people and functions. “We collectively need to build industries, the firms of the future,” he said.

Darling referred to Manchester as a good example of a UK city with an entrepreneurial mindset that is welcoming businesses and encouraging them to stay.

Talk then turned to Crosswind Developments, which is backed by Global Infrastructure Partners in its ambition to establish Elements Edinburgh.

It has a vision of regenerating a large brownfield site into an area with affordable housing, commercial development, retail and leisure, with a focus on the natural environment.

Hide Ad
Hide Ad

But the development has not had planning permission granted and has been stuck in the process of trying to get the go-ahead for some time.

Darling said he was approached five years ago about chairing Crosswind and was told about its ambition to develop an old disused runway which was rapidly becoming overgrown. He was attracted to its ethos of creating a community, rather than just building more houses. “What’s not to like?” he thought at the time.

But, he said Crosswind has been subsequently held up by the Edinburgh City Council and the Scottish Government and plans have not been able to proceed. He warned that the long, arduous planning process could discourage investment in Scotland and lead businesses to look elsewhere in the world.

Darling would like to see an overhaul of the planning system to create a “one-stop shop” to deal with applications which would speed up and simplify the process.

He gave the example of Portugal which he described as keen to open its doors to international investors.

“We cannot be complacent about these things,” he said.

Moving on to questions from conference delegates, Darling said that he did not believe there were too many lockdowns during the pandemic. In retrospect, his view is that lockdown should have come a bit sooner that it did at the start of the pandemic in the UK.

He added that Eat Out To Help Out, which was launched in the summer of 2020 to help get the hospitality sector back on its feet, was “premature”.

As the conversation drew to a close, Darling was asked what he would like to see from the new First Minister. He listed economic growth, changes to the planning regime and more intermediate funding for start-ups.