Thinking differently about the economy

Oxfam Humankind IndexTomorrow, the Parliament holds its first debate on the Scottish Government’s proposed budget for the coming year. Most of the MSPs’ speeches we’ll hear will be about specific taxes or expenditures, but I hope some will take the opportunity to question whether the prevailing economic strategy as a whole is the right one.

We got an insight into how Ministers think about the economy in a Government-led debate two weeks ago entitled “Boosting the Economy”. MSPs were discussing and voting on this motion by John Swinney, the Deputy First Minister and Cabinet Secretary for Finance, Constitution & Economy:

Motion S4M-11993: John Swinney, Perthshire North, Scottish National Party, Date Lodged: 06/01/2015

Boosting the Economy

That the Parliament welcomes the continued growth of Scotland’s economy and the fact that Scotland’s unemployment rate is the lowest in the UK; further welcomes the fact that, since 2007, Scottish exports have increased by a third, business research and development has risen by 29% and that the total number of registered businesses in Scotland has grown by 10%; agrees that delivering sustainable economic growth and addressing longstanding inequalities are reinforcing, and not competing, objectives, and welcomes the actions that the Scottish Government is taking to foster a supportive business environment, invest in infrastructure, support entrepreneurship, innovation and internationalisation, and to help to ensure that economic growth is characterised by income, regional and social equality.

I was hoping to speak in the debate, but I wasn’t called by the Presiding Officer – instead, here are some thoughts on what I think are two vital issues in creating an economy that works for ordinary people: small-business-friendly government procurement, and seeing past GDP figures to measure what really matters.

Human-scale government contracts

42% of private sector workers in Scotland are employed in firms with fewer than 50 employees, and that’s much higher in the Highlands and Islands:

  • Orkney: 72% (the highest in Scotland)
  • Eilean Siar: 64%
  • Shetland: 59%
  • Argyll & Bute: 57%
  • Highland: 50%
  • Moray: 48%

Small businesses are particularly essential if we’re serious about the ambitions in the last line of John’s motion. They have far lower wage inequality than big firms, and being locally-based means they don’t suck money out of regions like the Highlands and Islands and into their headquarters in Edinburgh, Glasgow, London or beyond.

Governments have sought to make public procurement contracts more accessible to small and medium-sized enterprises, with varying success. But what is notable in these efforts, for example the Scottish Government’s Suppliers’ Charter, is that the focus is always on information and process, not on the contracts themselves.

Things like simplified tender processes and adequate advertising of tenders are very welcome, but don’t help much if the job can only reasonably be fulfilled by a large firm. It would be good to see a commitment to delivering more public spending through smaller-scale projects which smaller businesses are able to deliver. That means things like encouraging schools to serve locally-produced food instead of demanding massive bulk orders; or ordering new social housing in tenders of a few houses at a time, instead of massive estates of identikit boxes.

The energy sector has particularly low small-business involvement. Perhaps there was really no alternative to that when it was about oil-fired power stations or nuclear reactors. But our renewable future can and should have a huge contribution from community-scale clean energy facilities. There’s no reason to assume we have to replace giant corporately-owned nuclear power stations with nothing but giant corporately-owned windfarms.

In general, smaller projects have more opportunity for community involvement, provide more local jobs, and have a host of other social advantages over huge contacts. But they do require a bit more work on the part of the government. I think that extra effort is worth it.

Measuring what matters

John Swinney’s motion starts with the ‘growth’ of the economy. For the Scottish Government it is ‘growth’, measured by Gross Domestic Product (GDP), that is the most important measure of economic success or failure. That’s not surprising, because that’s also the attitude of almost every other government in the world. But they’re all wrong.

GDP is a terrible indicator of whether the economy is doing its job, which is delivering the things that people want and need, from physical goods like food and shelter to social ones like security and community.

It measures only the size of monetary transactions in the economy, regardless of what the money was spent on. That means if all of a sudden the number of car crashes doubled, GDP would tell you things were going great – all those repair bills and new cars would ‘boost the economy’. But would people actually be happier, safer, better off?

And because it only measures the bits of the economy that run on money, it pays no attention to the value of the work done by carers, stay-at-home parents, grandparents who babysit or volunteers who run sports clubs – who are all benefiting the real wellbeing of Scots as much as any paid worker.

GDP was never intended to be used as the paramount measure of economic success. Its inventor, Simon Kuznets, recognised the shortcomings I’ve mentioned, and warned that “the welfare of a nation can scarcely be inferred from a measure of national income.”

I give credit to the Scottish Government for beginning to recognise more useful economic indicators, for example including them in the National Performance Framework. But the fact remains that these aren’t mentioned in John’s motion, while the GDP figures are the first clause.

Encouragingly, there are alternatives. Oxfam’s Humankind Index provides an excellent example of how we could measure the performance of the economy in terms of things that actually matter to people’s lives.

It’s difficult to imagine us achieving a country, in John’s words, “characterised by income, regional and social equality” until we make the clear decision that that equality, rather than an abstract and abused 1930s econometric, is the yardstick by which we judge our economic success or failure.

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Speech: Oxfam’s Lift Lives for Good campaign

Photo of luxury yacht, captioned "The 85 richest people own the same wealth as the 3.5 billion poorest people. -- Oxfam"

Jean spoke in the debate on Oxfam‘s Lift Lives for Good campaign on Tuesday 21st January, brought by her fellow Highlands and Islands independent MSP, John Finnie. You can watch the debate on the BBC site (Jean’s speech starts at just over 16 minutes in), read the transcript in the Parliament’s Official Report. Read Oxfam’s full Lift Lives For Good report on tackling inequality and climate change, and please donate to the campaign if you can.

I, too, thank John Finnie for securing the debate. Oxfam’s record in fighting poverty is quite exceptional. As an organisation it has, more than any other, highlighted the work that has yet to be done.

We should celebrate Oxfam’s work in showing that deprivation is not just about money. It is also about mental and physical health, feeling safe and secure, and connectedness to family and community. Oxfam’s work on the Humankind Index, which released its second annual results for Scotland in June last year, gives us a vital way of understanding this complexity. Gross domestic product growth is no good if all the growth goes to the rich, or if wealth is being created only by breaking the backs and spirits of working people.

This week, Oxfam revealed that the 85 richest people in the world own as much as the poorest half of the human race, which is 3.5 billion people put together. The Scottish Government’s stated priority is sustainable economic growth; I hope that, one day, we will see that being extended to include sustainable human wellbeing.

One idea that was raised in a meeting in Parliament last week is worth serious consideration: a universal basic income, or citizen’s income. The amount would be enough to cover basic needs and it would be paid to every citizen without means testing. It would recognise unpaid work such as raising children and looking after relatives, and it would support lifelong learning, reduce inequality and give us a real chance to abolish poverty altogether — a mission that less radical ideas have repeatedly failed to achieve.

Oxfam’s Lift Lives for Good campaign recognises the importance of building skills and community links as well as providing aid. Here in Scotland, two of Oxfam’s partners recognise the importance of wellbeing beyond money. Tea in the Pot, in Govan, helps women who have mental health problems to share their experiences and ideas. Not only does that element of the project help people to fight loneliness and improve wellbeing, but the project also means that people who are normally excluded from decision-making and ignored by officials can work together to make their voices heard and challenge the policies and conditions that damage their wellbeing.

Let us celebrate Oxfam often, but let us work harder on our National Performance Framework and on introducing some of the key elements that people have declared are a priority for them, which are not about getting more money but involve other areas and issues around wellbeing that Oxfam has highlighted.

Motion: S4M-08581: Charity Shops Giving Something Back

Here is the motion that I lodged on Wednesday 11th December:

That the Parliament welcomes Giving Something Back, an independent report published by the think tank, Demos, on the economic and social value of charity shops; understands that there are 900 charity shops in Scotland, which collectively raise over £26 million every year as well as provide 1,500 jobs and 19,200 volunteering opportunities in Scotland; notes that 61% of volunteers asked in Giving Something Back said that volunteering in charity shops had a positive impact on their physical and mental health and over 80% said volunteering improved their self-esteem and confidence; agrees with Demos that charity shops improve community relations and are economically beneficial by helping maintain footfall on Scottish high streets and by offering cheaper goods as the cost of living increases, and agrees that charity shops provide both older and young people in Scotland with invaluable opportunities to learn new skills, improve their confidence, have a new sense of purpose, socialise and meet new people and to ultimately gain experience that can help those seeking a job to find employment.

 

Motion: S4M-08425: Scotland’s Place in Building a Just World

I lodged a motion on Wednesday 27th November, following the release of a report by the Network of International Development Organisations in Scotland.

That the Parliament welcomes the report published by the Network of International Development Organisations in Scotland (NIDOS), Scotland’s Place in Building a Just World; understands that, by acting as an umbrella organisation and offering support with networking, engaging, learning and fundraising, NIDOS strengthens the work of over 100 organisations in Scotland that aim to tackle worldwide poverty and inequality; believes that the work of NIDOS and other neutral organisations is important in stimulating debate on Scotland’s future and in influencing thinking on how best to deliver policies that will aid the progression of social justice in both Scotland and abroad through international development; considers that, regardless of the result of the 2014 independence referendum, the debate about Scotland’s future is important; agrees with NIDOS that Scotland can learn from international development programmes such as what it sees as the Swedish Government’s widely acclaimed policy for global development, and commends NIDOS on attempting to tackle issues related to international development, the economy, financial systems, trade and procurement, finance for development, climate justice, access to resources and global education.

Speech: Women’s Employment Summit

As the deputy convener of the Equal Opportunities Committee, I am pleased to have the opportunity to comment on the women’s employment summit, which I was fortunate enough to attend last month. I am glad that the role of women in the workplace and in wider society has returned to the chamber for debate, although I am saddened to acknowledge the continuing need for such debates.

We have come very far in a very short space of time, but a lot of work remains to be done and I know that the minister Angela Constance and the Government are determined to take that forward. It is important that we lower—and eventually eliminate—the barriers and ceilings faced by women in the workplace, particularly given the recession’s disproportionate impact on them. After all, according to statistics, women are more likely to work part time and to be more affected by Westminster’s welfare reforms.

As I have done in the past, I draw the chamber’s attention to the Royal Society of Edinburgh’s report “Tapping all our Talents”, which sets out a strategy for increasing the number of women working in STEM areas. Produced by a working group that included the inimitable Dame Jocelyn Bell Burnell, the report is a searing indictment of the barriers that are faced by women who wish to study and work in those areas and sets out in stark detail just how big a barrier gender can be to entering certain occupations.

On 2 August, “Women’s Hour” on BBC Radio 4 featured a discussion with Christine Ashton, who has been named as the 12th most influential woman in IT in the UK. She advertised service manager posts, hoping to attract applications from women, but did not receive any. The show-stopper was this: when she readvertised the posts, having dropped the salary by £20,000, many more women applied. We can leave a debate on the issue of reverse psychology for another day, but I think that that anecdote indicates the scale of the problem.

I believe that women will go into politics when women encourage other women to become involved. There is no doubt that they have the skills, experience, ability and talent but without the confidence to apply for posts or to get politically involved or involved in communities, women will remain reluctant. Some of those experiences must be factored into the correction strategy, and I hope that women will inform that process.

In response to Margo MacDonald’s point, I note that in the “Women’s Hour” discussion Christine Ashton said that women comprise 17 per cent of the IT workforce in the UK and 18 per cent of that workforce in Europe. It is clear that this is not just a Scottish problem. However, we should share things as widely as we can, and I was pleased to hear the minister say that that was one of her ambitions.

Members across the chamber will agree that actions speak louder than words. As someone who is always happy to speak on equality matters, I am especially heartened by the Scottish Government’s determination to pick up the baton and put in place a strategy that will complement its work in so many key areas. In the 21st century, gender, age, ethnicity and disability should not prevent individuals from fulfilling their potential.

Motion: Shetland Knitwear

Shetland Knitwear
That the Parliament welcomes the £220,000 investment by Laurence Odie Knitwear Ltd (LOKL) in new machinery and an expansion of its workforce; notes that £76,650 of this has been provided by Highlands and Islands Enterprise and £10,950 by Shetland Islands Council; understands that this is as a result of increasing demand for LOKL’s produce from across the world; acknowledges what it sees as the worldwide popularity and commercial viability of Shetland knitwear, which is worth approximately £3 million to the area’s economy every year; considers this to be a welcome boost to Shetland in times of economic difficulty and a demonstration of the islands’ diverse workforce, and believes that any steps taken to preserve and promote culture and heritage are to be lauded.

Press Release: Jean Urquhart Welcomes Continued Investment in UHI (June 27th)

Jean Urquhart MSP has described the announcement by Cabinet Secretary for Finance John Swinney of £100 million of nationwide capital investment, which includes significant funding for the Highlands and Islands, as a demonstration of the Scottish Government’s economic competency.

Ms Urquhart, one of three region-wide SNP MSPs and a former member of the board of the University of the Highlands and Islands, particularly welcomed the confirmation of a £6 million investment in its Inverness campus.

Commenting, Ms Urquhart said:

“As a Member of the Parliament’s Education and Culture Committee and a supporter of the establishment of the University of the Highlands and Islands, I was certainly pleased at the £6 million boost to the Inverness campus, as well as the £1.5 million infrastructure funding for West Highland College in Fort William.

“This funding has demonstrated the commitment of the Scottish Government to institutions both old and new, and at a time of economic difficulty is very welcome.

“Despite Westminster’s cuts continuing to harm communities across the Highlands and Islands, the Cabinet Secretary’s sound management of Scotland’s budget has created the conditions for additional investment where it is most needed.

 “This programme of investment further shows that Scotland will only function at its best when it has all the economic levers for investment under its own control.”

Press Release: Jean Urquhart Welcomes Super-Fast Broadband (June 27th)

Jean Urquhart MSP welcomed the announcement by Cabinet Secretary for Infrastructure and Capital Investment Alex Neil of a £120 million investment aimed at improving broadband connectivity across the Highlands and Islands.

Coming from a £250 million Scotland-wide fund for improving broadband, the investment will enable Highlands and Islands Enterprise, in conjunction with BT, to roll out a programme of modernisation across the region. The investment will form part of Scotland’s Digital Future Infrastructure Action Plan, which aims to deliver world-class digital connectivity by 2020.

Commenting on this welcome injection of cash, Ms Urquhart said:

“The Internet has revolutionised our world, bringing communities closer together and enabling those in rural or remote locations to access the same information and services as those in urban surroundings.

“Education provision, health care services and businesses across the region will all benefit from this announcement, as will families with loved ones across the globe.

“Access to superfast broadband should not be restricted by geography, and I am delighted that, by directing this cash towards the Highlands and Islands, the Scottish Government is continuing to recognise the specific needs of local communities for Internet services that are as fast and reliable as they are in other parts of the country.”

Speech: Travel and Tourism (June 21st)

I declare an interest as someone with a great many years’ experience in the tourism and hospitality industry in the Highlands. I pay tribute to those who have spoken before me, who have highlighted a number of Scotland‟s attractions, taking us on a kind of verbal tour around the country.

Tourism is hugely important to Scotland as a whole, and comparatively it plays an even greater part in the mixed economy of the Highlands and Islands. That is a part of Scotland with natural beauty and an incredible landscape, which I am sure will feature strongly in the special promotion of the year of natural Scotland, next year.

Mary Scanlon has left the chamber, but I must take issue with some of the things that she said about the Sutherland way. We have to be respectful of the environment that we have in Scotland. We have to be smart about recognising the areas that need to have cafes or facilities, but we also have to recognise the special, wild nature of the land that we have. There are three identified geoparks in Scotland, and they are all in the Highlands and Islands. All of them make specific requests in terms of relevant development. The idea that the north-west Sutherland way should have a string of facilities along it makes my—well, I will say simply that that is wild Scotland.

Scotland attracts visitors from across the world and, in the past couple of years, a growing number from across the United Kingdom. Those visitors help to maintain 25,000 jobs across 3,000 businesses in my region and bring £1.2 billion every year from the region into the economy, and it is the importance of the economy that we are talking about.

By talking about Glasgow attracting conferences, Hanzala Malik reminded me that, on 9 September 1997, which was only two days before the extraordinary vote for devolution, Glasgow hosted the annual congress of the American travel trade, with several thousand delegates. The keynote speaker was Mrs Thatcher, who took the time on “Newsnight” to tell Scots that they should vote no the following Thursday. However, we are grateful that Glasgow has the facilities to take that size of conference.

Scotland is famous for its hospitality and its friendly people. To combat some of Helen Eadie’s comments, I should say that our reputation is deserved. There may be instances such as those that she talked about, but Scotland will never be perfect in everybody’s eyes. It is too easy for someone to go out and find a place that they do not like, but they do not know that, the night before, other people have had a really good time there. The spit-and-sawdust pub can offer up as great a night‟s entertainment for some people as a five-star hotel can do for a different clientele, offering a different service. We have to be careful about how we decide on these matters. We also have to be helpful. Do we want to hammer a business that is probably suffering really badly? It, too, plays a part in the economy and needs help rather than poor recognition.

That people recognise our hospitality and the friendliness of our people is evidenced by the extraordinarily high levels of repeat business that we achieve in Scotland generally and in the Highlands and Islands in particular. The figures are there for everyone to see. Familiar faces of people who have become addicted to holidays here appear regularly. That is still a factor of our industry. I have been in the hotel trade so long that I know the grandchildren of folk who stayed many years before. That is the legacy that we can and should build on. It is ironic, in some ways, that the industry should be sustained by such levels of repeat visits, given that employment opportunities in the industry often seem to be short-term and seasonal.

There have been many changes over the years and the recent festivals that the Highlands and Islands play host to are amazing. RockNess, Loopallu and the Insider festival that was held last weekend and was attended by 1,000 people, who stayed for three or four days, might seem like small beer compared with festivals such as T in the Park, but they are right for that part of Scotland and they are due recognition.

Anyone who has attended some of the smaller book festivals will know that they are hugely personal affairs, and contribute hugely to the economy. More and more are being organised outside what we choose to call the peak holiday period.

Although “Brave”, the now-released Pixar animation, is clearly getting global attention, I would like to thank members who recently supported my motion on the Hansel of Film, which came from Shetland and takes the story of Shetland and small film-makers around the United Kingdom. It is perhaps not the same in terms of marketing, but it is just as important and such projects often capture the imagination of visitors when they come here.

Tourism is an industry that does not stand alone. Like steel making and shipbuilding, it depends on all other sectors in order to flourish. Local authorities have much to contribute by keeping the infrastructure and public facilities open and in good order. The education of our children, especially in music and language, has an enormous role to play. Crofting and fishing are among our main attractions and we should never forget that folk on holiday love to watch folk at work.

Motion:

That the Parliament recognises the achievements of tourism businesses across Scotland in achieving a 14% increase in overnight visitor revenues in 2011; welcomes the new tourism strategy prepared by the industry, for the industry, which focuses on the importance of industry leadership, the quality that visitors encounter across their whole journey in Scotland and using Scotland’s assets to create the experiences that visitors are looking for; commends the efforts of the industry-led Tourism Leadership Group in developing the strategy and recognises the important role to be played by relevant agencies and non-departmental public bodies in supporting the industry’s strategy; renews calls on the UK Government to play its part by devolving air passenger duty and to consider a reduction of VAT rates for the sector; recognises the enormous opportunity for tourism in Scotland presented by The Winning Years and the Disney/Pixar film, Brave, in particular; congratulates Glasgow on its success in winning several additional conferences with the support of the Conference Bid Fund announced in March 2012, and encourages other destinations in Scotland to use the fund to win further business for Scotland.