Why the Scottish Government should be a little more like Margaret Thatcher

This is refreshingly audacious. At almost the same time as delegates arrive for the COP26 conference in Glasgow, the First Minister will be explaining how the Government plans to address challenges of social and economic transformation.

I assume that whoever put together this timing was thinking very clearly that this would allow the Scottish Government to demonstrate the extent to which it differs from the UK Government in its vision, ambition and its responsiveness to the need for urgent action.

That would abandon the cautious incrementalism of the last few years. It may be that I am imposing my impetuosity here but with Green Party ministers (below) in government, and Covid recovery seemingly well under way, it feels entirely natural that this should be the beginning of a new, concerted effort to persuade the electorate that Scotland can, should, and will, be independent.

There is nothing new about the Scottish Government having an economic strategy. Until 2015, they only ran for four years, with their scope and focus gradually changing, so that the strategy embedded the national performance framework in 2007, adopted a low-carbon focus in 2011 and, in 2015, extended the scope from economic performance through a social dimension, and paying more attention to inclusive growth.

Ten years is a long time for any economic plan. There will be so much which happens which cannot be fully anticipated now. Any attempt to develop a detailed plan would fail. Instead, the plan should embed robust principles, which provide a clear vision of the social and economic structures which the Government wishes to foster, together with a coherent framework for action.

There are well-known weaknesses of the Scottish economy. The business birth rate in Scotland is very low. Productivity growth has nearly stalled since the financial crisis. Export performance – except for some bright spots in drinks, hotels, and engineering services – is relatively low.

The overall position of the Scottish economy is that it does about as well as the UK. There are some industries, which have relatively high productivity, mostly in the production sector, and in tradable services, such as finance. High productivity is also concentrated in cities, especially Edinburgh, Glasgow, and Aberdeen.

READ MORE: This is the truth about how Thatcher devastated Scotland

As a base for addressing new challenges, this is not the best possible starting point, but it could also be much worse. The Scottish Government has quite a clear vision. The economic transformation required for decarbonisation will involve the creation of new industries and the formation of new businesses. Encouraging that is the first challenge.

IN addition, these new opportunities will require people with the new skills needed for the new economy to thrive. The Scottish Government wants “good jobs”, with workers having high productivity, high wages and substantial voice and agency within the workplace.

Perhaps most easily overlooked, this new business activity should take place across the country, to reduce regional inequalities. There are specific challenges of rurality and de-industrialisation.

If the strategy is to succeed, the Scottish Government will have to be clear in its own mind how it manages the process of creative destruction. Business capital can be rendered worthless overnight. Processes of invention and innovation bring new goods and services to market, meeting customer needs in new ways.

“Creative destruction” sums up the messiness of economic change. For some, change brings opportunities, and reward; for others it is challenging. Seemingly secure jobs can vanish quickly; seemingly valuable skills suddenly become redundant. Towns which have become dependent on a single industry suddenly lose their purpose.

It is now 50 years since the Upper Clyde Shipbuilders lock-in. It succeeded. But organising labour was not enough to keep British shipyards open for long. Unable to keep up with developments in other countries, they lost their competitive advantage. It took little more than 15 years for almost all of them to be swept away.

If the impact of creative destruction was simply that some investors woke up one fine morning, and discovered that their investment portfolio had suddenly lost half of its value, it would be unfortunate.

The impact of a large business suddenly closing is much worse, of course. Many resources of a business are in its capabilities to adapt to change, and solve new problems; and also in the skills and knowledge of its workforce. All that can easily be lost. That’s the challenge for the Scottish Government. Its caution, its incrementalism point to a strong preference for gradual change, and for continuity, rather than disruption. It perhaps needs to be a little more like Margaret Thatcher in the 1980s.

Believing that successive weak governments, by being unwilling to unleash destruction had failed to make space for creativity, she withdrew public support from much of industry, calmly accepting the consequences, as unemployment soared, and new economic structures emerged painfully slowly.

Mrs Thatcher, like many radicals, had a utopian streak. The appeal of the planner, who wisely anticipates how innovation and invention will affect businesses, and jobs, is just as utopian.

The Scottish Government can probably only be an enabler, bringing together people, and ideas, and finance, encouraging the gradual emergence of a better Scotland – comfortable in its independence.