Why Scotland’s economy can be ‘built back better’ after Covid – Benny Higgins

In Scotland, we have embarked on a challenging economic path. It was being pursued before the pandemic, it would have been difficult in any case, and it will be even more demanding of our leadership now. We are setting out to cultivate a dynamic, vibrant economy that creates jobs and attracts inward investment. But we wish to do so by creating a wellbeing economy. That is an economy that is based on fairness, inclusion and sustainability. This is not a soft objective, but high ambition is rarely, if ever, straightforward.

There has been a great deal of rhetoric about ‘building back better’. If we are serious about this, then it will require us to adopt a different approach. Since around 80 per cent of jobs in Scotland are in the private sector – and over 98 per cent of firms employ less than 50 people – we need a thriving SME and entrepreneurial sector. The relationship between business and Scottish Government needs to be stronger and more purposeful to engender a constructive environment. But what kind of economic growth do we want? What kind of jobs do we want?

At the University of Kansas in March 1968, Robert Kennedy famously said: “The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our relationships, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.” These words echo powerfully as we decide what kind of society we wish to build in Scotland.

To build a wellbeing economy, we will require unprecedented collaboration across our society including the public sector, the private sector, the third sector, social enterprise, and the cultural sector. Scottish Government has a vital role, but not just in terms of financial or policy interventions. Government has potent convening powers, and there has perhaps never been a more important time to use them effectively. Now, as ever, there are opposing views on how to build the right kind of society. But let’s not view this as squaring the circle; instead we should show the ambition to develop the coexistence of an economy that grows robustly and one that has the hallmarks of wellbeing. Scotland can be a world leader in a green recovery though development of natural capital and renewable energy. We can also thrive in so many other areas such as life sciences and technology hubs. Let’s focus on education and skills development as a key to resolving inequality.

The Government’s response last week to the report by the Advisory Group which I chaired was welcome insofar as it embraced our analysis and the set of broad recommendations. In particular, it is encouraging that the Government will adopt the ‘Four Pillars of Capital’ approach in conjunction with the National Performance Framework. This approach will enable us to take stock of where the economy and our society stands now, and provide us with a disciplined means of plotting the way forward to a better future. The Government response is simply a first step, however. The real test will be the prioritisation and focus of activity, and the pace of execution. In some areas, such as the development of a Scottish Job Guarantee Scheme for young people, the immediate response is cause for belief. But the reaction to some other recommendations, such as that encouraging Government to convene a targeted approach by banks to strategic forbearance and financial support for businesses, appear on the surface to be more dilatory than we might have expected.

The role of the Scottish National Investment Bank in our economic development framework will be paramount. The historic launch will take place later this year, almost exactly three years after I was asked by the First Minister to draw up an implementation plan to create the institution, and subsequently to be the Strategic Advisor on executing the plan. The Bank will be in safe, professional hands with Willie Watt and Eilidh Mactaggart at the helm. If we had not pursued the building of the Bank with such vigour, we would have had to do so now. The Bank’s unflinching focus on supporting SMEs to scale up and investing in long-term patient capital projects will be an essential component of building a robust, resilient wellbeing economy.

As we steer the country in the most difficult of times, we would do well to recall the words of the American political activist Cesar Chavez,”We cannot seek achievement for ourselves and forget about progress and prosperity for our community … Our ambitions must be broad enough to include the needs and aspirations of others, for their sakes and for our own.”

Benny Higgins, chair of the Scottish Government Economic Recovery Group