The economic policy landscape in Scotland

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2018 promises to be an important year for the Scottish economy.

As the analysis in the latest Fraser Economic Commentary highlights, whilst the Scottish economy retains long-term strengths, early indications are that 2018 will be another challenging year.

Clearly Brexit remains the greatest headwind the Scottish economy faces.
We have argued on a number of occasions that the decision to leave the EU will damage Scotland’s long-term growth prospects.

Progress has been made with regard to the transition period the UK and the EU will operate within up to December 2020. But whilst this creates space for further discussion, most of the major economic issues with respect to the UK’s relationship with the EU post-Brexit remain unanswered.

In 2018 businesses will look for much greater evidence that the UK Government has a clear vision for life outside the EU that not only satisfies business but can also secure the necessary parliamentary support.

Designing an approach to policymaking

In recent Fraser Economic Commentary reports we have argued that there is an opportunity to use the challenge posed by Brexit to undertake a fundamental review of economic policy in Scotland.

The Scottish Government has started to set out its emerging thinking, with the creation of the new Strategic Board for Enterprise and Skills and new initiatives, such as an implementation plan for a new Scottish Investment Bank.

But if Brexit is going to make the economic outlook even more challenging than it was already, government policy is going to need even sharper focus. This means targeting resources where they will have the greatest impact and stopping doing things that either do not work or do not provide value for money.

Central to this is an effective strategy and delivery programme.

When first coming to power in 2007, the Scottish Government had one objective – a Purpose of “delivering faster sustainable economic growth” supported by an overarching Economic Strategy. This Purpose was supported by a transparent National Performance Framework that was designed to monitor progress. All parts of the public sector were to be aligned behind this Purpose and single Economic Strategy.

The Strategy explicitly stated that the “call to action for all arms of the public sector to support increasing sustainable growth is not an invitation for a proliferation of initiatives, however well intentioned” that all interventions would be “appraised on the basis of sound analysis and evidence” and that more effective government would assist in “reducing duplication, bureaucracy and overlap across the public sector in pursuit of greater efficiency, effectiveness and, importantly, speed of delivery”.

In contrast, a complex landscape can lead to confusion, a lack of alignment, duplication and weakened accountability. It also makes evaluating what actually works all the more difficult.

Current landscape

10 years later, here is a snapshot of the current landscape.

Across the Scottish Government and its agencies, we now have an Economic Strategy; Digital Strategy; Energy Strategy; Circular Economy Strategy; Climate Change Plan; Trade and Investment Strategy; Labour Market Strategy; Social Enterprise Strategy; Hydro Nation Strategy; Strategy Action Plan for Women in Enterprise; STEM Strategy; Manufacturing Action Plan; Youth Employment Strategy; an Innovation Action Plan; a National Islands Plan; an Agenda for Cities; and even an Arctic Strategy.

Sitting alongside these we have numerous sector specific strategies – including Food and Drink; Tourism; Textiles; and Life Sciences. Not to mention an Infrastructure Investment Plan and an annual budget and programme for government process.

On top of this, most local authorities have their own form of economic development plan; all major sectors have a skills investment plan; there will soon be 7 City Deals; a new regional inclusive growth hub; and an updated National Performance Framework.

All of this overseen by the Scottish Government; Scottish Enterprise; Skills Development Scotland; Scottish Funding Council; Visit Scotland; Highlands and Islands Enterprise; South of Scotland Enterprise Agency; Scottish Futures Trust; Scottish National Investment Bank; and thirty two local authorities.

In turn they are informed by numerous advisory boards including the Council of Economic Advisers; Strategic Board for Enterprise and Skills; five independent boards of Scotland’s enterprise and skills agencies; National Economic Forum; Scottish Leaders Forum; Scottish Business Growth Group; Strategic Labour Market Group; Consumers and Markets Taskforce; Hydro Nation Forum; Inward Investment Forum; Regulatory Review Group; Scotland CAN DO Innovation Forum; Fair Work Convention; Advisory Panel on the Collaborative Economy; and numerous industry groups – such as the Scottish Tourism Alliance and the Financial Services Advisory Board.

Of course, this list does not include the various programmes and activities of the UK Government in Scotland.

Has the Scottish policy landscape become too cluttered in the last decade?
A cluttered policy landscape?

A strategy for 2018?

All of these initiatives are well intentioned.

But is such a structure the best way to support coherent policy intervention in a country of Scotland’s size?

More importantly, where is the evidence that this complex structure has had – or will have – a positive impact on Scotland’s economic performance or deliver the systems-wide reforms required to help meet Scotland’s long-term economic challenges?

Whilst many will undoubtedly have improved Scotland’s economic performance, do we know which ones?

What evidence underpins each initiative and what systems for monitoring, evaluation and feedback are in place to assess their success (or otherwise)?

Strategies and advisory groups are no substitute for good policy delivery based upon evidence and data.

Back in 2007, the Scottish Government promised a streamlined and effective policy landscape for the economy. Ten years later it may be time to look at this again.

Rediscovering a single unified vision for the economy where all policies are aligned might just be the most significant – and effective – step the Scottish Government could take in 2018.

March 28, 2018

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