NICOLA Sturgeon’s speech at Spirit Aerosystems in her native Ayrshire last Thursday let her highlight a particular part of her government’s policy which might have been overshadowed by all the other things she needs to say in presenting her legislative programme for the coming year to Parliament today.

To my mind it represented a promising shift from the line she has followed since becoming First Minister. When she took office she put education at the top of her agenda, but this priority has in practice not produced the results hoped for. Somewhat more nebulous, though perhaps more consistent, has been the chatter about promoting equality in every aspect of Scottish life.

Good luck with education, is all I can say to the First Minister and her government. It is a policy area so hedged round with impenetrable jargon that I have usually fallen asleep after about three sentences whenever I have tried to read up on it. But equality is a prime interest of mine and a constant topic since I started writing this column, mainly because I do not believe SNP ministers have spent nearly enough time thinking about what they really mean by it – which makes it all the more unlikely they will ever find policies able to deliver it.

Loading article content

It is to the good then, after a setback at the UK General Election, that the Scottish Government should be changing its priorities. It is starting to talk about economic growth, which is what will ultimately eliminate poverty if not deliver equality.

The SNP has neglected economic growth since it came to power 10 years ago. It has rather stressed what I would call soft objectives, things like inclusiveness and sustainability – soft because they are impossible to measure and do not as a matter of fact do much to raise the income of this nation and its citizens, which is the aim of economic policy in normal countries. Not least, the actual figures for national income will be an important benchmark by which Scots judge, the next time round, whether they should vote for independence.

There was a welcome boost to gross domestic product in the first quarter of 2017, but unless we can achieve higher growth more consistently, it seems to me unlikely the Yes side will win at the second attempt. However much enthusiasm might be whipped up by campaigners, who will again include myself, the cynical and dispiriting message from the No side will be the more likely to prevail once more: vote for independence if you want to get poorer.

So I consider it an absolute necessity that this negative line of argument should be blocked off before we even begin to think about dates and terms of a second referendum. And I hope Nicola’s speech at Prestwick will help us to press forward to that advantageous position.

But what of its substance? The speech certainly represented an advance on the SNP’s previous outlook, though to my mind there are still weaknesses in its analysis. A glib assumption persists that growth and equality go hand in hand quite readily, whereas in fact they are hard to reconcile.

The reason is simple. A complex national economy is not a structure in which all parts develop at the same rate at the same time. At any given moment some industries are contracting – like North Sea oil just now – and some parts are expanding, like the eternally buoyant computer games. Those contracting industries will have to hold wages steady or even cut them, unless they want to go out of business. The expanding industries can, and should, pay higher wages in order to attract the extra labour they need. In this environment, equality is not easy to establish or sustain.

There is a deeper weakness still in Nicola’s speech. She announced her government was going to give more help to research and development, to financial technology, to carbon capture and storage, to the promotion of electric vehicles and so on, all activities at the cutting edge of economic progress in the first quarter of the 21st century.

There is nothing to be said against any of it – especially at a time when the private sector in fact remains quite depressed and reluctant to invest, given the lack of immediately profitable opportunities. The money for investment has to come from somewhere and if, in the current state of affairs, only the government can provide a kick-start, then so be it. I only hope it will put procedures in place to ensure decisions are made on commercial criteria, rather than by limp surrender to special pleading in the traditional Scottish manner.

BUT in the long run there needs to be a more systematic approach if the country is to raise its modest growth rate. A future Scotland seeking to resume its place in Europe will find two basic models it could follow.

One might be called the Latin model such as, in its most elaborate form, the indicative planning long practised in France and more feebly followed in Italy and elsewhere. In any case it has not turned out much of a success, which is why the moderniser Emmanuel Macron is now President of the Republic. He tells the French their governments have been mistaken.

Civil servants seldom possess the qualities of go-ahead entrepreneurs, otherwise they would not be sitting at their desks pushing paper. The spending of other people’s money – that is, the taxpayers’ money – is often wasteful. In the end, economies run in this way stagnate.

The alternative policy is that of northern Europe, above all of Germany. German industry is among the most successful in the world – especially the famous Mittelstand, or what we call small and medium-sized enterprises.

The success is today maintained against ferocious competition from rising economic powers in Asia. And in Germany it all goes together with a standard of social protection not just infinitely better than theirs, but rather higher than the UK’s too. In eastern Europe, the countries freshly liberated from socialism had little doubt this was the model they wanted to follow.

If we choose the German model then the role of government would be not to dominate and control the economy but to provide the conditions in which private industry can innovate and expand. This means not so much direct official intervention as, for example, a regime of taxation – both corporate and personal – which ensures successful entrepreneurs and their employees reap the rewards from their success.

Last week I was delighted to read in The Herald about the Scottish Family Business organisation, with its collective £16 billion of turnover, its £1 billion of profits and its workforce of 100,000, adding up together to 11 per cent of national output. That these are family businesses presumably means they are also internally financed, from retained profits with perhaps some bank loans, rather than reliant on money from the government. They act as they want, free from any official control, and on the whole they act in the right way. So it can be done, even in Scotland. What we need is to do it more often.

That will require a reversal of some policies followed since Nicola Sturgeon took over from Alex Salmond. He was on the quiet a tax-cutter, with his freeze on the community charge and his reduction in business rates, together with his support (which at the present stage of devolution could not be fulfilled) for lower corporation tax. She by contrast has raised taxes in order to max out public spending. If higher growth is to join the other inspiring projects in her legislative programme, that needs to change. Entrepreneurs encouraged in their efforts and allowed to keep, with warm thanks from Nicola, more of the proceeds of their hard work will create a richer country better able to achieve and afford its ideals of social democracy.