THERE seems to be some unity amongst Scottish think tanks this week. Sir Tom Hunter’s Foundation and Common Weal are both calling for a new industrial strategy for Scotland. It’s something that will be echoed in party manifestos.
But there is a problem. Calling for a strategy is one thing. Getting one right is another. The Hunter report quite spectacularly misses the point. The demand is that Scotland cut taxes in the future to encourage business expansion. This fails to note that even the current UK Government is now admitting that its tax cuts did not deliver any significant new investment. They're also failing to note that the US is also calling for a 21% minimum global corporation tax rate, which removes almost all scope for manoeuvre on this issue in Scotland. So all they are really suggesting is a plan to cut the taxes of the wealthiest that will just increase inequality in Scotland, whilst requiring government austerity, which is an outcome no sane person wants. The political right is bankrupt of ideas then.
Common Weal dues much better, but I will admit to bias. Common Weal wants a Green New Deal for Scotland, and as one of the authors of the very first proposal for a Green New Deal back in 2008, and as one of those who kept the idea going through the barren years from 2010 to 2017 when no one wanted to talk about this issue, of course I think they are right to demand this.
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That said, I think Common Weal’s plan, good as it is (and it is one if the best of its type) still misses out on providing a reason why Scotland can succeed that forms the basis for a strategy for long-term stability. This cannot be based on tax or regulatory reform, as the right would argue. Nor can it be based on domestic change alone, which is Common Weal’s focus. There has also to be a plan to create international competitive advantage.
In Scotland’s case this is possible, but I can’t recall seeing it explained before. Everyone knows, it seems, that Scotland has an advantage when it comes to renewables. It has just done a year when 97% of its electricity came from renewables, the best in the UK as a whole is just over 60%. That’s a big difference, and it can only get bigger as Scotland invests more in this sector.
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My suggestion is that it should make that investment for a reason. Scotland needs to generate well over 190% renewable power compared to current consumption most of the time in the future. That’s because this ability to generate low emission energy is the basis for Scotland’s prosperity in the years to come. Of course it could simply sell that excess energy, and so answer all the critics who say its currency will have no value.
But it could also do much better than that. Very soon every company in the world will be required to be net-zero carbon. That means they must meet three criteria, the key one of which as far as Scotland is concerned is that all the electricity that they consume must be renewable.
In a great many countries, that goal is going to be very hard to meet. In Scotland it will be possible from local supplies at a time when it remains true that most electricity has to be consumed near where it is generated. And what that means is that Scotland could be a hub for industry that has high electricity requirements. That is manufacturing in the main, but some IT also fits the bill.
Whitelee Windfarm in East Renfrewshire
Scotland has been a manufacturer, but that was largely killed by the Tories under Thatcher and by cheap Chinese labour. But wage rates are not now the key issue: green energy will be. Most in Scotland will not be thinking of manufacturing as its green future, but that may be wrong. We will still need many energy-intensive products, from steel onwards. And available renewable electricity will determine where such industries are located in the future, and where the jobs that they create are also located.
Scotland needs an industrial strategy that explores its unique advantages, generates jobs and creates exports. Sustainable manufacturing, and intensive IT could do that in Scotland in the future. And companies will have no choice but go where the green power is. Carbon regulation will require that. Scotland has no plan to exploit this now that I know of. But if it had it would really have a sustainable industrial strategy. Very few countries will be able to claim that soon. Scotland has a chance to stand out. And it should.
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