Wealth creation needs to be top of economy minister's agenda

If Scotland is to be prosperous, possibly even able to stand on its own two feet at some point, some creative thinking about wealth creation is long overdue to ensure future success.

David Watt, executive director of the IoD in Scotland. Picture: Contributed

This might be part of the remit of the new economy minister, a role created by splitting John Swinney’s past portfolio into finance and economy, and one which is very welcome.

Such a move by the Scottish Government bodes well for the future, and builds hope that we will see the Government really focus on economic growth and building a strong economy. We also hope that the finance minister will focus on efficiency savings as well as spending.

Planning for the future is key, and all of the new cabinet will need to contribute constructively to building the future economic success of the country.

So the new economy minister might want to start with this thought, which is counter-intuitive to most politicians: by far the best way to fill the coffers is to create an environment that makes individuals richer, and attracts more wealthy people. If that happens, the tax take will go up, both from those individuals and the people they employ.

Wealth creation actually enhances the public purse as well as the personal one. But what does wealth creation actually look like on the ground? It comes in many forms – many of which can be supported by Government.

Eradication of poverty and access to education are key. There is definitely a cycle to be broken which business and the economy will benefit from. Confidence and spending are the backbone of a strong economy, and who knows what can come of freeing people from drudgery and giving them access to the tools to make a bright future – space to move forward, create and develop fresh ideas perhaps?

And, we need to figure out ways to keep talent here. Both our own home-grown workforce, but also those that come to study here and are then sent away, armed with ambition and fresh thinking, once their education is done.

Investment in better collaboration within sectors and in creative ideas that enable small businesses to flourish will also make a huge difference. Flashes of brilliance happen daily at a micro level, but harnessing their energy and applying these ideas on a grander scale could help to put Scotland on the map.

For example, a new innovation park planned at Edinburgh’s Queen Margaret University has turned the traditional business property development model on its head. With short leases and flexible space, alongside access to collaborative partners in academia and business, the initiative will make it easier for Scottish food and drink SMEs to move forward on their own terms. From this, 13,000 jobs are expected to be created – think about what that could mean if a simple idea was replicated across Scotland, or across different sectors.

These are not the only ways to create wealth, but they are starting points, and significant enough for a new minister for the economy to hang their hat on. I would really urge the new minister to consider devising a long-term economic strategy for Scotland that covers issues such as these.

Government has long focused too hard on spending and taxing, and ignored the bit in-between – the wealth creation that feeds both ends of the finance spectrum.

Create more wealth and it’s there for taxation, but it is also fuelling spending. With some detailed planning and some certainty about the future, businesses will perform better, create jobs and play their part in driving the economic machine, and we will support them throughout the journey.

• David Watt is executive director of the IoD in Scotland