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.


Jean Urquhart MSP, a member of the Scottish Parliament’s Cross-Party Group on Epilepsy, has highlighted Epilepsy Scotland’s call to discover the Top Employer of the Year and encouraged businesses and organisations in the Highlands and Islands to enter.


Jean Urquhart, an Independent MSP for the Highlands and Islands, remarked:  “I’m happy to join the search for the country’s most supportive employers.  They already go that extra mile to help an employee with epilepsy develop their skills and contribute fully to the organisation.  Any workplace, small or large, can enter and the winning employer might be right here in the Highlands and Islands.”


Epilepsy Scotland’s chief executive, Lesslie Young explained:  “One person in 97 has epilepsy.  Many will have good seizure control and epilepsy will not impact on their working life.  But some may need additional support.   So our award, which is unique in the UK, recognises employers who are leaders for their assistance.  Often they don’t think they are doing anything special – but they are!  We want to highlight their standards as an example for others to follow.”


Organisations can also apply for a best practice certificate.  Every workplace following the Equality Act guidelines is eligible.  Displaying this best practice certificate in the workplace shows everyone that employees with epilepsy are as valued as any other worker.  Both employers and employees can nominate their workplace for a best practice certificate anytime and the Employer award by 26 March 2013.



Notes to editor


  1. The Scottish Parliament Cross-Party Group on Epilepsy has the largest MSP membership.  The purpose of this Cross-Party Group is to address the needs of 54,000 people with epilepsy in Scotland.  The Group brings together those interested in epilepsy issues and provides MSPs with information and access to expert opinion.


  1. Epilepsy Scotland works with people affected by epilepsy to ensure their voice is heard.  We campaign for improved healthcare, better information provision and an end to stigma.  We represent one in 97 people with this common neurological condition – that’s nearly 54,000 people – as well as their families and carers.  Our freephone Helpline 0808 800 2200 offers information on epilepsy matters including employment issues as does our website:  The Employer of the Year award and best practice certificate can be downloaded or completed online.


  1. There are two Employer of the Year categories; one for organisations which employ up to 50 people and one for those with more than 50 employees.  The closing date for award entries is 26 March 2013.  It coincides with International Purple Day – a fun day for raising awareness of epilepsy.  The awards will be presented by Cabinet Secretary for Health and Wellbeing, Alex Neil MSP on 25 April 2013.  The Employer of the Year winners will attend the ceremony before a mainly corporate audience attending Epilepsy Scotland’s Glasgow Wag of Wags gala dinner.


  1. This is the fifth Employer of the Year award for epilepsy.  Previous award winners include Harry Gow Bakery (Inverness), DARE hair salon (Aberdeen), Fife Constabulary, CMM Architects (Glasgow), Russell Hamilton Business Systems (Glasgow) and the Scottish Parliament.


  1. For more award details contact:  Allana Parker, Public Affairs Officer Direct line: 0141 419 1701.  Mobile 07884 012 147