Just 70 firms account for half of Scotland’s exports, without the spirit of co-operation the nation will be disadvantaged in critical economic areas, believes Brian Wilson.
This week’s export statistics carried the usual mixed bag of information which, not unreasonably, the Scottish Government did its best to put a positive spin on.
International Exports Still on the Rise was the press release headline.
Well, up to a point, Lord Copper. More objectively, the Fraser of Allander Institute described the latest figures as “disappointing” with an overall drop of £4 billion in 2016. We continued to sell more (61 per cent) to the rest of the UK than to the rest of the world. Growth of just 1.6 per cent in international exports was “below historical levels”.
Not mentioned in the Scottish Government press release was the target set in 2011, which was to increase the value of exports by 50 per cent by 2017. Instead, in real terms, it has barely moved. Like most such targets, this one served the purpose of creating the impression of action while the follow-through has been less than dynamic. More serious than the dubious value of target-setting is the question of why Scotland continues to struggle as an exporter – a factor which contributes to our low growth rate and all that flows from it. The starting point should be to acknowledge the scale of the challenge and use every tool at our disposal to tackle it.
The underwhelming reality of Scotland’s exporting record is counter-intuitive. We think of ourselves as great traders with the world. We have the bedrock of Scotch whisky, which is by far our biggest export by value. We have the offshore oil and gas sector which has done a splendid job over the past 20 years in internationalising itself. Further down the chain, things start to go wrong.
READ MORE: Scotland suffers £4 billion export fall
Just 70 companies account for half of Scotland’s exports. They include great businesses and ambassadors. We just don’t have enough of them. Less than five per cent of exporters in the UK are Scottish-based. The priority for Scottish exporting must be to encourage more companies to take the first steps and if that could be achieved, new success stories would soon start to emerge.
I wrote a report on Scottish exporting four years ago which sought to address this fundamental point. The overwhelming feedback from small businesses which were potential exporters was that they found the starting point too confusing. There were too many organisations, too little continuity of advice, too little financial support in the early stages, so they gave up.
None of that should be hard to fix. My recommendation was that there should be a single signpost in each part of the country – call it Export Scotland, a name I thought would appeal. The last thing we need is another quango, so its role would be to co-ordinate the work of current players in the field in order to offer a seamless service – the “outward-facing clarity” which remains elusive. Another key element was that Scottish and UK Governments and their respective agencies need to work together. That should be self-evident but there is little evidence of it in practice. A memorandum of understanding exists which recognises trade promotion as a shared responsibility between UK and Scottish governments. That needs to be acted upon rather than resented or avoided.
The reality is that Scotland’s big exporting sectors – whisky, financial services, oil and gas, aerospace – interact with government mainly at UK level. This is not for any political reason but simply because of scale. The UK is represented in every market in the world and that is what these sectors require. Major exporters have to lobby on trade policy issues which are a UK responsibility.
Scottish Development International is the Scottish Government agency responsible for both inward investment and trade promotion. It does a lot of useful work which should be complementary to what the UK’s Department of International Trade can offer. Both at home and abroad, it makes absolute sense for the two to work closely together.
By its nature, SDI has to set limited parameters. It only operates in a small number of markets and sectors. It can’t do much for businesses which fall outside that matrix. That being the case, it should also be promoting the services which its UK counterpart can offer around the world but there is limited evidence of this happening in practice.
From the other direction, there is a sense within UK agencies that they have been “warned off” being active in Scotland. The result is that Scottish businesses miss out on a lot of schemes and services which are available in principle throughout the UK but of which there is little or no awareness in Scotland. None of this makes any sense.
In a week which has been dominated by arguments about flags, it is maybe time to step back and consider – from any political perspective – whether the constant search for difference between ourselves and the rest of the UK is serving any positive purpose. Flags are mere symbols but trade is about jobs and prosperity. The same arguments apply to industry. Late last year, the UK Government produced an industrial strategy which is of as much relevance to Scotland as any other part of the UK. It will create very large funding packages to support innovation, research and low-carbon industries. In order to compete for this funding, Scottish businesses have to know that it exists.
If common sense applied, the Scotland Office, as a branch of the UK Government, would be encouraged to act as the promoter of all these UK-wide, politically neutral initiatives that could bring benefit to Scotland. Instead, it is subjected to stupid sniping about how much it spends on canapes and demands for its abolition.
Everyone understands that there are widely varying views within Scotland and beyond about our constitutional future but it should surely be possible to put these aside when all the practical imperatives say that Scotland’s urgent interests are best served by doing so.
Without that spirit of co-operation, Scotland will be disadvantaged in critical areas of economic performance. Setting targets does not create a single job but there is a price to pay for not making the best of the constitutional status quo.