Humza Yousaf’s industrial strategy was damp squib that suggests SNP need spell in opposition – John McLaren

Having a break from government could actually help the SNP win independence

Humza Yousaf’s industrial strategy speech was another damp squib in the Scottish Government’s ongoing attempts to convince voters that it’s serious about the economy. The claimed “evidence-based” approach is hollow. The focus is on one day’s news headlines as opposed to being part of a long-term economic strategy. All of this is self-evident to anyone paying much attention.

First, the facts. Looking backwards, it’s claimed the Scottish economy, in terms of GDP per person, has been growing quicker than that of the UK since the SNP came to office in 2007, ten per cent versus six per cent. Well actually, the comparable data effectively stops in 2019, according to Scottish Office statistics (due to double deflation issues, don’t ask), and the 2007 figures had nothing to do with SNP policies.

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So 2008 to 2019 it is, which suggests a marginally faster UK growth rate – other, equally (in)valid comparisons are available. If such a claim was actually robust then I think we’d have heard a lot more about it over the years. Productivity comparisons in Scotland’s favour are of equally dubious quality.

Humza Yousaf's industrial strategy speech failed to impress economist John McLaren (Picture: Robert Perry/Getty Images)Humza Yousaf's industrial strategy speech failed to impress economist John McLaren (Picture: Robert Perry/Getty Images)
Humza Yousaf's industrial strategy speech failed to impress economist John McLaren (Picture: Robert Perry/Getty Images)

Looking forwards, it’s claimed, with reference to work by the Resolution Foundation (RF), that there could be a £10,000 plus bonus per household if only we were independent like other countries. Yeah, right. Fraser of Allander economists have outlined some of the flaws in this calculation. For example, only one country, the Netherlands, overlaps the Scottish Government’s and the RF’s comparator nations. Furthermore, RF’s analysis highlights that it could take 15 years to benefit by less than a third of its own estimate for potential improvement. Regardless, a calculation is not a remedy.

Rejoining EU an economic trade-off

So, how do we get to these alleged sunny uplands. Yousaf’s speech outlined three essential foundations. First, rejoining the European Union. Fair point, but set out as a pure win rather than the economic trade-off from leaving the British Union that it would, in reality, be. In addition, Scotland would be a net contributor to the EU budget as a whole, rather than a net benefactor from the UK-wide budget. So any beneficial impact of rejoining the EU, whilst simultaneously leaving the UK, at least in the short to medium term, is highly debatable.

Second, new institutions, in particular a ministry to drive industrial policy. Great, how many of these have we had in the UK over the past 50 years that worked? Scotland would be different, would it? Meanwhile, no mention of a Scottish Treasury. Surely the latter would be even more crucial than the former in achieving economic and industrial success – depending on the degree of leeway allowed to it after rejoining the EU – and with the Treasury always having the last word in terms of funding. Can we also be clear over how much of the tax burden the broad shoulders of rich industrialists would be required to carry?

Third, large-scale public investment, funded by setting aside £20 billion of oil revenues into a “special fund”. Passing swiftly on from any discussion of a ‘net-zero Scotland’ commitment, we find that this oil money – such as it is, given that there are no guarantees over price and production levels – will be needed to help fill the expanded fiscal deficit which results from Scotland leaving the UK. So, rather than ‘free’ oil revenues being available to invest, the question, post-independence, would instead be how can we keep public investment at existing levels while transitioning to a ‘manageable’ budget position.

This awkward adjustment period was acknowledged in Andrew Wilson’s Sustainable Growth Commission report from 2018. Since that time, the force of the independence economic arguments proposed by the SNP has weakened rather than strengthened. This hardly engenders confidence amongst unconvinced voters.

Independence papers are uninspiring dirges

Altogether, we have the reality-challenging claim that the current Scottish Government could implement a coherent and effective strategy with respect to industrial development when it cannot, at present, implement one with respect to education – at school, college or university level – or health, over future staffing needs or how to deal with the Covid backlog. Such failings are not about the lack of independence but the lack of a competent government.

A further flaw in the presentation is one that applies to the “Building a New Scotland” series of papers as a whole, in that it reads like a compilation written by uncommitted civil servants who are following a brief, which is then tweaked by political advisors. So we end up with uninspiring dirges that disappear from the public debate overnight. Not dissimilar to the voluminous HM Treasury economic papers defending the Union prior to the referendum in 2014. That is, meant to be influential but not finding an audience.

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Whilst it’s impossible to answer all the questions that could be posed about what the consequences of independence would be – not because they can’t be answered but because each answer begets a further series of questions – it is possible to give reassurance by answering some of the key questions with some integrity, thus building up confidence that those proposing independence are serious in their deliberations and honest, if a tad optimistic, in their analysis. Such an approach can, in turn, instil a more forgiving mindset in the public with respect to some of the unanswered questions.

We’re a long way from that. A reset is needed and that would be best achieved by the SNP being out of office for a while. This offers two benefits. First, a recharging of energy, ideas and personnel and, second, the chance for the other side to mess up instead. Such a ‘break’ could ultimately make the idea of independence more attractive in the medium term. No one likes to lose power but sometimes a step backwards is needed in order to gain new momentum.

John McLaren is a political economist who has worked in the Treasury, the Scottish Office and for a variety of economic think tanks



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