Episode Notes
In the second episode of our Key Figures interview series, we talk to Elizabeth Ashcroft, one of the original editors of our long-running Economic Commentaries. We cover her life, the origins of the Institute, and her thoughts on the rapidly changing economic landscape in Scotland.
Transcript
00:00:07 Mairi Spowage
Hello and welcome to our latest Fraser of Allander podcast.
00:00:12 Mairi Spowage
I’m Marie Spowage, I’m the director of the Fraser of Allander Institute.
00:00:16 Mairi Spowage
And in this podcast we’re going to do something a little bit different from our normal podcast, commenting on what’s going on in the economy or on fiscal events, and we’re going to reflect a bit on the history of the Fraser of Allander Institute.
00:00:30 Mairi Spowage
As you’ll be aware from some of the other stuff we put out recently, the Fraser of Allander Institute is 50 this year, and we’ll be having our celebratory conference on the 18th and 19th of September.
00:00:42 Mairi Spowage
The details of that and how to register for it have gone out on socials, so please sign up if you’d like to come along and help us celebrate the history of the Institute.
00:00:51 Mairi Spowage
As part of this though, I was keen to touch base with people who have been in my role before over the last 50 years and to talk to previous directors of the Institute about what was going on in the Scottish economy when they were director and what their reflections are now about what’s going on in the Scottish economy.
00:01:09 Mairi Spowage
So I’m delighted to say that joining me today is Elizabeth Ashcroft, who was the director of the Institute or involved in the Institute for many years. Welcome, Elizabeth, thank you for joining me today.
00:01:20 Elizabeth Ashcroft
Thank you so much for inviting me.
00:01:22 Mairi Spowage
So just for our listeners then, it would be great to hear a bit more about you and about your background and perhaps what you’re up to now.
00:01:30 Elizabeth Ashcroft
Right, well, my economics background essentially, I’m a regional economist by training.
00:01:39 Elizabeth Ashcroft
I came to that through a rather circuitous route. I was a grammar school person, but then went off with a band and played rock music in the early 60s for the US forces in France and made records for Polydor.
00:02:02 Elizabeth Ashcroft
And so that was great fun, but I realized I couldn’t see myself as a 40-year-old bass player. I had to do something about my future career. So I went to night school, I had a job, and then to cut a long story short, after night school and day release, I went to university when I was about 23, 24.
00:02:28 Elizabeth Ashcroft
And I then went on at Lancaster University to do a degree in economics and politics. And from then I went on to do a master’s degree at Lancaster too with a then SSRC scholarship in regional economics.
00:02:46 Elizabeth Ashcroft
And after that I applied for a post in Glasgow, at what was then the Glasgow College of Technology, which is now Caledonian University. And I taught there for two years and I met a certain character at Glasgow College called Peter McGregor.
00:03:07 Mairi Spowage
Ah, yes.
00:03:07 Elizabeth Ashcroft
And we, so we were quite pals then and still are. And so we, there was two posts available at Strathclyde University, and we both applied for the two different posts.
00:03:24 Elizabeth Ashcroft
And amidst the thousands of applicants, I exaggerate, we both got the role. So we moved over to Strathclyde in October ‘76.
00:03:34 Mairi Spowage
October ‘76. So it was just a year after the institute.
00:03:37 Elizabeth Ashcroft
So it was just a year after the institute, but obviously in the economics department, but we knew of the existence of the Fraser Institute.
00:03:44 Elizabeth Ashcroft
So I then went on, I can talk a little bit about my role in connection with the institute, but I retired, took early retirement in 2007 with re-engagement teaching.
00:04:01 Elizabeth Ashcroft
There was a bit of a hiatus in the commentary, and we managed to get some funding from PWC, and that meant that I was re-engaged as commentary editor again and I continued to do the commentary until 2016.
00:04:18 Elizabeth Ashcroft
Now, as an aside, people need to know. People will know me under a different guise than Elizabeth. And this is because I transitioned my gender fully in 2020, but I began transitioning in 2017.
00:04:34 Elizabeth Ashcroft
This was a problem that dogged me all my life. I had medical treatment right going back to when I was at university. And so here I am as Elizabeth rather than what I originally was, Brian.
00:04:46 Mairi Spowage
Well, thank you for sharing that with us and talking about it. And you mentioned Peter McGregor, who was also a director of the Institute at various times. And just to say that we will be talking to Peter later in the summer as well.
00:05:01 Elizabeth Ashcroft
So I must watch what I say.
00:05:05 Mairi Spowage
Excellent. So you mentioned that you moved over to Strathclyde in ‘76. You were probably involved in lots of different ways over your many decades.
00:05:14 Elizabeth Ashcroft
Yes, I have.
00:05:15 Mairi Spowage
Tell us about the different roles you’ve had.
00:05:17 Elizabeth Ashcroft
What happened was that I was a regional economist and I was teaching regional economics, teaching other course as well, researching regional economics.
00:05:26 Elizabeth Ashcroft
I was focusing largely on the understanding of firm movement across the United Kingdom, modelling that, particularly with Jim Taylor, Professor Jim Taylor at Lancaster University.
00:05:38 Elizabeth Ashcroft
And so that obviously led me into an interest in the Scottish economy, I was in Scotland. And so I did various things. The two key things that stand out was that I was involved with Professor Andrew Bain in a big research project with the then-Scottish office on the takeover of Scottish companies.
00:06:03 Elizabeth Ashcroft
It’s a lifetime interest I’ve had basically in the corporate sector here.
00:06:07 Elizabeth Ashcroft
And so we looked at the takeover of Scottish companies going back 20, 30 years and how that had impacted on the Scottish economy and particularly focusing on the performance and efficiency consequences and potential impact on management and headquarters functions, which is a recurring theme in my work.
00:06:32 Elizabeth Ashcroft
So that was quite important. So I got a fairly reasonable knowledge of the Scottish economy through that process.
00:06:40 Elizabeth Ashcroft
At that time, or around about that time, and obviously it’s a long time ago, so my memory’s a little hazy, but there was this event called the Standing Commission on the Scottish Economy. And the institute was starting to be involved in that. And this was set up by a group of the trade unions by political parties, an attempt to do some analysis of the Scottish economy.
00:07:04 Elizabeth Ashcroft
And so I, for my sins, I got pulled into that and I wrote a large part of the front end of that. And so through that process, I got involved with Professor Eamac Nicol, who was the director at the time, and Jim McGillivray, who was a previous director.
00:07:24 Elizabeth Ashcroft
And so to cut the story short, the Jim Love, there are two Jim Loves that are important in this story, Jim Love Senior, he had been editor of the commentary and he stood down.
He’d already done it for a few years and he wanted to do other things.
00:07:40 Elizabeth Ashcroft
And so in 1986, I was invited to become editor of the commentary with a person called Jim Walker. And Jim is an ex-student of mine but was in the institute, a bright young man. And so we shared the editorship together initially.
00:08:01 Elizabeth Ashcroft
And so my first commentary was in mid-1986. I say my, but obviously I included Jim Walker in that. The Scottish economy was in a pretty bad state. Unemployment rate, I looked back at it marvellously, you’ve got it on the website.
So I looked back at it, the unemployment rate was 13% in Scotland, and it was 11% in the UK. Obviously, we’re talking here about a process of, consequences of a process of de-industrialisation, which was hitting the economy pretty badly, added to which we had the significant monetary tightening by the Thatcher government in the Howe budget, which pushed unemployment up right throughout the United Kingdom and Scotland.
00:08:57 Elizabeth Ashcroft
So what we were seeing then was that the economy was slowing down. Textiles had effectively gone in the traditional industries. Coal was winding up, winding down. There was going to be the big miners strike, which happened in the mid-80s, I think.
00:09:15 Elizabeth Ashcroft
And so the steel industry was tottering along, but it was weakening. And North Sea Oil was starting to pick up from the late ‘70s onwards, North Sea Oil was starting to pick up.
00:09:30 Elizabeth Ashcroft
And that’s why, I was talking to Charlie Woods the other day, he used to be the chief economist at the Scottish Enterprise. And he told me, he wrote a letter and he sent me a copy of it, amazing archives, of the letter he wrote to the FT, pointing out that the market that North Sea Oil had created every year was much larger, or larger, than the investment in the Channel Tunnel, which was something like, about 3.6 billion of orders in 1984.
00:10:06 Elizabeth Ashcroft
So this was a big operation. And he was trying to point out that, hey guys down south, this is something big going on up here, try and take some notice of it.
00:10:16 Elizabeth Ashcroft
We were starting to attract, we’d already attracted electronics in IBM in the late 40s. We were starting to pick up that and that was becoming a focus of policy. So now then, by 1994, 28% of Scottish manufacturing was in electronics plants. And that, was quite a big thing.
00:10:37 Elizabeth Ashcroft
And of course, again, from my research interests, these were all obviously overseas oil plants. So that, so I can talk some more then.
00:10:48 Elizabeth Ashcroft
Of course, what then happened during my tenure was that we had deindustrialization continuing, coal mining disappearing, steel production continued to contract until a major shock was the Ravenscraig closure in 1992.
00:11:09 Elizabeth Ashcroft
Against that background, though, as in all modern economies, the service sector was growing quite rapidly, and that was quite significant.
00:11:19 Elizabeth Ashcroft
And within that, financial services and business services had grown quite significantly from the early ‘60s to almost nothing, to being quite large.
00:11:28 Elizabeth Ashcroft
And the problem was, in my opinion, we were relying on financial services and that would finally come and kick us in the teeth in late 2008, 2009. So that – But linked to this, and again, linked to my research on takeovers, we also started to worry in the, now into the ‘90s, but carrying from the ‘80s, the loss of headquarters functions in key industries, particularly the whisky industry, is almost the whole of whisky, Scottish whisky, moved from Scottish ownership to foreign ownership, Canadian ownership, French ownership.
00:12:14 Elizabeth Ashcroft
That was a massive process and was quite worrying. My research concern was largely on the micro side. Obviously I was doing the macro forecasting and such, but it was quite clear that the Scottish economy was struggling in areas such as research and development, current story probably still, innovation, the business birth rate was a big issue compared with elsewhere, so I started producing papers along with my colleague, junior colleague at the time, Jim Love Junior, on new information, impact on employment, and comparison to the UK and all of that stuff.
00:13:10 Elizabeth Ashcroft
So that, I think, the other thing on the way that sort of stands out during the ‘90s was the macro shocks. And I mean, this is quite important.
00:13:24 Elizabeth Ashcroft
And I think if I can talk about this a little later, it’s how vulnerable a small economy is, because Scotland is a small economy in international terms, to these worldwide, UK-wide macro shocks.
00:13:41 Elizabeth Ashcroft
Because, by definition, a smaller economy is very open, it’s open to trade, it’s open to capital flows, open to labour flows.
00:13:47 Elizabeth Ashcroft
And so what happened was Black Wednesday of September 1992, when the UK was forced out of the exchange rate mechanism, European exchange rate mechanism. They tried to peg the pound to this basket of euro currencies.
00:14:07 Elizabeth Ashcroft
We couldn’t sustain it, and so we came out. Now that generated massive uncertainty.
00:14:14 Elizabeth Ashcroft
There was a recession in early ‘90s, ‘91, 1991, some smallish, but still not as big as later, but still was a recession. That affected economy, unemployment started to rise.
00:14:26 Elizabeth Ashcroft
However, it had a silver lining because the exchange rate had now, sterling exchange rate had now gone fairly low compared to what it was, it was quite a big drop.
00:14:38 Elizabeth Ashcroft
Interest rates were being pushed up to 15% temporarily and then dropped down again.
00:14:43 Elizabeth Ashcroft
And so what happened was that both the UK economy and the Scottish economy started to be enhanced, if you can put it that way, largely through export-led growth, through the exchange rate being more competitive.
00:15:01 Elizabeth Ashcroft
And this was further boosted, in my opinion, by the completion of the EU single market in 1992. And so the opening up fully of that wider 300 or 400 million people market in the EU, and that boosted export over the ‘90s in Scotland.
00:15:22 Elizabeth Ashcroft
I ceased being a director in 1989. So I was editor of the commentary with Jim from 1986.
00:15:34 Elizabeth Ashcroft
Then at some point, and my memory does not serve me well here, Jim left to make money at the Royal Bank of Scotland.
00:15:41 Elizabeth Ashcroft
So I then continued. And in fact, part of the story is – largely, apart from a few relatively brief periods, I edited the commentary from 1986 to 2016.
00:15:52 Elizabeth Ashcroft
Okay, I mean, it’s not wholly true, but I was very much involved with the commentary. And in some sense, I felt quite emotionally committed to it.
00:16:02 Elizabeth Ashcroft
So I was editing the commentary. I was involved in a lot of other things. I was involved in research.
00:16:08 Elizabeth Ashcroft
The institute was a different operation in those days from now. So there was an issue of funding, always an issue of funding. But we’d been initially funded by the Fraser Foundation in 1975. It came to Strathclyde, which is a great coup for Strathclyde.
00:16:30 Elizabeth Ashcroft
Jim McGillivray and David Simpson ran the place. David Bell, major figure, David Bell in this process and also in the Scottish economy, as we well know.
00:16:40 Elizabeth Ashcroft
So that continued, but the funding started to dry up, I think, late 70s. The university then stepped in to fund to some degree.
00:16:49 Elizabeth Ashcroft
But by the time that I took up, that I was in the institute, the funding from those sources, even the university, had diminished almost to zero. And so this was quite a problem.
00:17:04 Elizabeth Ashcroft
And the – and also, the institute was transitioning in terms of its major research function, which initially was input-output analysis.
00:17:16 Elizabeth Ashcroft
And David Bell built the medium-term forecasting model, which we relied on in our forecasting. And that was one of our USPs when we started to compete against the Ernst and Youngs of this world and others, who were doing forecasts in the Scottish economy.
00:17:36 Elizabeth Ashcroft
Because we always said that A, we have got a research-based background and B, specifically what we can do is we can look at the sectoral consequences of forecasts at a quite detailed level.
00:17:50 Elizabeth Ashcroft
And so we produced and published a fairly aggregated sectoral forecast, but we started to charge through our business focus and service for a more detailed sectoral focus, helped by having the input at the table.
00:18:07 Elizabeth Ashcroft
But in intellectual terms, the input-output concept, if you like, was starting to become outdated. There was a move towards computable general equilibrium.
00:18:21 Elizabeth Ashcroft
And so largely led, Peter McGregor by this point was in the institute, he started to lead that with a character who was very important at the start, was a person called Frank Harrigan. And Frank Harrigan, Peter and Frank Harrigan took this forward.
00:18:37 Elizabeth Ashcroft
Then later, Kim Swells, the three of them, took this forward until Frank left and went to, I think, the Prime Minister of the Malaysian government. So it’s an interesting story. I think he was married to a Malaysian woman, but anyway, it’s another story.
00:18:51 Elizabeth Ashcroft
So that, so work started to begin on doing the research on the computable general equilibrium model, and they started to put a bid in under Professor McNichol’s directorship to the ESRC for, I think it was ESRC for funding, quite big funding for the…
There was a modeling funding, I think, group, or line in the ESRC. So they then managed to get this funding, which was a great achievement. Everyone got drunk and some of those.
00:19:28 Elizabeth Ashcroft
So it’s a wonderful achievement. And so that started the process forward.
00:19:34 Elizabeth Ashcroft
Now part of my take for the sort of the user knowledge that we generated was that we were doing research and we spin that off into a knowledge transfer through the commentary, through business forecasting service, through contracts, impact analysis contracts.
00:19:57 Elizabeth Ashcroft
And so we used input-output quite a lot for that. But the problem for us was that it was going to take a long time for CGE to develop to become commercially useful, if you like, intellectually very useful and quite significant.
00:20:15 Elizabeth Ashcroft
And of course, obviously now, I mean, it flowered into all sorts of areas, energy and such, which has been fantastic, and also became very useful latterly for much more considered impact analysis than we could, because we can take prices into the frameworks, previously we couldn’t do that, fixed price impact.
00:20:33 Elizabeth Ashcroft
In the meantime, they had their funding. We were struggling for funds. I mean, it was a difficult period.
So, Ian wasn’t too well.
I’m sorry, I was appointed research director in early 1989. Ian wasn’t too well, so Ian felt he had to stand down. And so, they decided to get towards the end of 1989, they offered me the post of director.
00:21:04 Elizabeth Ashcroft
And so I became director whenever he was, I can’t remember specifically, in late 1989.
00:21:11 Elizabeth Ashcroft
And so the whole, so the job I had really was to, in a sense, not to get on the backs of Peter and the modelling team, and to give them space to do their research, but at the same time to try and bring funding into the institute for other things, and also to try and build something of a core team which could do a lot of sort of near-market stuff, which we needed to do, because I think when you’re running an institute, one of the problems that you have, even if when you’re getting high-level research funds, is that this continuity of contract, because you might get a contract, for two, three years, but then it dries up.
00:21:59 Elizabeth Ashcroft
And then you’ve got to look for more money. But these people have got mortgages and things like that. It’s a really tough job.
00:22:05 Elizabeth Ashcroft
And I think people, and even in the university, I think people appreciated this. And we had good people and we didn’t want to lose them.
00:22:11 Mairi Spowage
Yeah, and you invest a lot in developing their skills.
00:22:13 Elizabeth Ashcroft
Absolutely. And so what was happening here was that I was after I had to go out to hustle for near market work, basically consultancy work.
00:22:24 Elizabeth Ashcroft
And we often then piggybacked with companies like Ernst and Union on lots of projects.
00:22:32 Elizabeth Ashcroft
And it brought in funding, but it obviously dragged the institute away from where it really wanted to be, which was more pure research, applied research, but academic.
00:22:46 Elizabeth Ashcroft
Because this also hanging over our heads, was the research assessment exercise.
00:22:53 Elizabeth Ashcroft
And so what was happening, what started to happen, and I won’t go too much in detail because it’s quite complicated, but what started to happen was that we became self-funding.
00:23:02 Elizabeth Ashcroft
And we became self-funding because we had me as a member of the economics department in the institute, and we had to provide one person’s teaching to the economics department.
00:23:19 Elizabeth Ashcroft
And I think, and the same was to a certain extent, with Peter. I can’t remember at the time exactly, because I remember I had a big fight with the resource and policy committee and finally got a research director’s post again, because when, and classically, when I stepped up, the research director’s post went, you know.
00:23:41 Elizabeth Ashcroft
And so this was quite, this was quite, quite an issue. Eventually, we did get support for Peter, but in the end, the way universities work, that probably devolved back to the economics department to pay for it.
00:23:58 Elizabeth Ashcroft
And so we then had to apply two teaching person years to the economics department. And that was interesting.
00:24:06 Elizabeth Ashcroft
So, but obviously we couldn’t do a full teaching load because if we did a full teaching load, we couldn’t do the jobs that we wanted to do. So we had research assistants working on the different areas. So, and research fellows. So we had to basically get these guys to do the work. Not all of it, but quite a bit of it.
00:24:24 Elizabeth Ashcroft
And that probably led to tensions with people in the economics department because they were thinking, hey, these guys are there, Peter McGregor, Ashcroft, they’re only teaching, so many hours a year, and these young people are teaching on these courses.
00:24:41 Elizabeth Ashcroft
So there was an element of tension here, trying to manage all of that was quite…
00:24:45 Mairi Spowage
It’s just so interesting with some of the things that you’re talking about, and they’re, you know, they’re definitely still, you know, I recognise a lot of it and the challenges of running an institute like this today in academia.
00:24:59 Mairi Spowage
We’re supported really well by the university, who are very proud, I think, to have the FAI at Strathclyde.
00:25:07 Mairi Spowage
But yeah, we’re supported by a lot of different partners. We have diversified our research quite extensively in the last few years, but you know, CGE and IO analysis are still like some of our, at the heart of a lot of our analysis that we do, and they’re important to us and they’re important to me as a kind of economic statistician and a national accountant as the sort of core of what we do.
00:25:30 Mairi Spowage
So it’s just funny how, a lot of the things you’re talking about, would still be on my mind today.
00:25:37 Elizabeth Ashcroft
Well, I think it’s inevitable, really. I mean, I think the difficulty that I think any director of the Fraser of Allander Institute had was, first of all, to convince the university that what we were doing was worthwhile.
00:26:00 Elizabeth Ashcroft
Because there was an element of opportunity cost in that, to the extent that we were working on research for the Scottish economy, this wasn’t always, sometimes it was, but it wasn’t always publishable at a fairly high level.
00:26:15 Elizabeth Ashcroft
And so that didn’t really tick the box of the research assessment exercise. And also our careers were probably dependent upon us publishing.
00:26:26 Elizabeth Ashcroft
So I had to try and keep a stream of micro-based research on takeovers and new firm formation and then latterly innovation and entrepreneurship to try and keep getting put into the research assessment exercise.
00:26:44 Elizabeth Ashcroft
But I mean, the people I picked, the Peter Frank, came brilliant people. They managed also to juggle this issue as well.
00:26:51 Elizabeth Ashcroft
Although they were much more working on first base research, whereas we were just doing a lot of stuff, you know, and a lot of different stuff as well. And so that was quite different.
00:27:01 Elizabeth Ashcroft
And I think we did get, I did get sponsorship in certain areas, you know, big sponsorship for the business survey, I think Deloitte too. And we got sponsorship for the commentary from Business AM, which is a business magazine that are set up, I think it came out every day.
00:27:22 Elizabeth Ashcroft
And that was for one year. That went very well.
We did stuff in Edinburgh for them and all that, but then they went bankrupt, so that went away. And so it was always quite hard.
00:27:32 Elizabeth Ashcroft
And of course, and I have to whisper this softly, but we always struggled with the Scottish Office and even the Scottish executive in trying to get them to realise that they needed a challenge function.
00:27:50 Mairi Spowage
Absolutely.
00:27:50 Elizabeth Ashcroft
They needed a challenge function and that they should support it. Now, they did support us, but they were a member of our business forecasting service. What are we talking about, 1500 pounds a year or something like that?
00:28:02 Elizabeth Ashcroft
We needed more. TSB funded us. I mean, we got a lot of small from where they funded a research fellow for a while.
00:28:09 Elizabeth Ashcroft
We did manage to pull in funding with PWC, funded latterly up, big funding from PWC in between 2010 and 2016 for the commentary. But it was really quite hard.
00:28:22 Elizabeth Ashcroft
So we had to try in a sense and also build up some resources in the general account to try and keep people in place. And that was a massive struggle.
00:28:35 Elizabeth Ashcroft
And also we had to build, try and build our research credentials. So I and Jim, young Jim Love could bid for research grants from the ESRC and eventually we did get a reasonable grant to look at entrepreneurship and such.
00:28:56 Elizabeth Ashcroft
But, but it was very much just for ourselves. It wasn’t enough to really employ, I think we did employ some people, but so anyway, so that was always a struggle.
00:29:07 Elizabeth Ashcroft
On top of that, political process was developing such that we had devolution, and this is towards the tail end of my directorship.
I mean, I finished, I did two terms, it was like five-year terms in those days, so I did two terms and finished in 1999 and Jonathan Ireland took over from me and I moved sideways to become policy director because I’ve always been interested in policy and it was quite a nice move.
00:29:34 Elizabeth Ashcroft
And I think Peter was research director and then that was fairly temporary, but that was the position. And so we were aware that we have the Scottish Parliament coming on.
00:29:50 Elizabeth Ashcroft
What can we do for the Scottish Parliament?
00:29:54 Elizabeth Ashcroft
And the answer was not that much, to be honest, at that point, because we were very much focused on macro stuff. But we didn’t – we had a comment, once upon a time, we had people in the economics department who were knowledgeable and experts about health, transport to a certain extent.
00:30:14 Elizabeth Ashcroft
But in the areas of devolved government, like health, education, transport, we didn’t do anything. And so this was an issue.
00:30:28 Elizabeth Ashcroft
Now, all throughout this period, I flew the flag for the institute, and I suppose my own ego, by, by being invited, I was on the Panel of Economic Consultants for the Secretary of State for Scotland.
00:30:38 Elizabeth Ashcroft
And then I was invited onto the Northern Ireland Economic Council, so I built links with Northern Ireland, and particularly the Northern Ireland Economic Research Centre. I had links with them and did research with them.
00:30:50 Elizabeth Ashcroft
And then when the Scottish Parliament came on, I was invited to be their first finance advisor, probably a mistake on one level, because I’m not really an expert on finance, but anyway… I took the post, but it was quite interesting because it gave me more insights into the policy process, to a certain extent, of the new Parliament, it gave me links into the Parliament.
00:31:13 Elizabeth Ashcroft
So against that background, I was quite friendly with David Bell, a professor at Stirling University in economics and a really good guy. And so we decided we’d like to create the capacity in Scotland to help the Scottish Parliament develop an evidence base.
00:31:36 Elizabeth Ashcroft
And so we put a bid in to the Scottish Funding Council. There was different types of grants, like research development grants that they were offering, which they kicked back, but they offered us funding to do a pilot study. And this allowed us to visit research institutes almost throughout the world. And we split between us to see how they operated.
00:32:04 Elizabeth Ashcroft
Because what we were planning was not like the institute per se, which was, try and get in the best people and do the research that’s the best.
00:32:13 Elizabeth Ashcroft
Here, we were wanting to do targeted research towards the functions of the Scottish Parliament, create evidence, but at the same time try and build capacity in Scotland. So we had a bit of a restriction.
00:32:32 Elizabeth Ashcroft
We wanted to try and spend money on encouraging Scottish researchers to do work on the Scottish economy. And it had to be broader than just the basic economics. It had to include health, transport, education and the other areas.
00:32:53 Elizabeth Ashcroft
So anyway, so we visited, so we split up between us, I went to Brookings and met with people in Brookings. They had a fantastic endowment of about 15 million pounds, you know, you’re just drooling at the thought.
00:33:09 Elizabeth Ashcroft
I went to Dublin, to the SRI there, and talked to their director. And then David travelled to Ottawa. We had links with South Africa, but we didn’t actually go there. And we talked to people in London. And then the crème de la crème was we went to Boston to NBER, National Bureau of Economic Research.
00:33:34 Elizabeth Ashcroft
And Martin Feldstein, who was Reagan’s chief of his economic advisor, head of the economic council, we had breakfast with him in the Harvard Club, which is like, we’ve arrived, guys.
00:33:47 Elizabeth Ashcroft
And we were taken to NBER and sat in a seminar with these top US economists, you know, so it was great. Didn’t really help very much, to be honest, but what happened was that we got some sense of how these organizations operated, because NBER is a bit like that.
00:34:02 Elizabeth Ashcroft
They offer, they have money, they offer money to researchers to do stuff in different areas.
00:34:09 Elizabeth Ashcroft
And so the net result of this, we put another bid in and we got just under 1,000,000 pounds from the Scottish Funding Council to create ScotEcon, you see. And we set that up and it was based jointly here and in Stirling. And so we used to share the beaches with David.
00:34:31 Elizabeth Ashcroft
And we had, so we had staff and we then started to act like a sort of mini research council and we started to push for people to make bids in and around these areas. And we think we funded 70 to 80 research projects.
00:34:47 Elizabeth Ashcroft
We then had to, at the end of this period, we had to get assessed, and I’ve forgotten his name, he was the Vice-Chancellor of Nottingham University but a top economist. He reviewed us and we were A-rated, but we couldn’t get any more money.
00:35:04 Elizabeth Ashcroft
I approached them, it would be the Scottish Executive. I think I got a small amount out, but we just couldn’t get any money. I mean, it was just, there was no real source.
00:35:19 Elizabeth Ashcroft
Maybe I think, if we’d been a bit more fleet of foot, a bit more commercially aware, we could have used that to try and bring in corporates better, you know.
00:35:28 Elizabeth Ashcroft
But so that started to fade away, and then David, great researcher, as he went off and did his stuff, I mean, just moved on. But I always felt very sad about that.
00:35:39 Elizabeth Ashcroft
But what we did do was we, a bunch of us, basically myself, Peter McGregor, Kim Swales from Strathclyde, and Duncan McLennan and many others in Glasgow, put another bid into the funding council, I think that’s right, for another research development grant, which was successful and we created the Centre for Public Policy for the Regions.
00:36:08 Elizabeth Ashcroft
And that was based, it had an office in Glasgow University and it spread across, several people were involved, and we got a list of that, I just looked it out last night.
00:36:24 Elizabeth Ashcroft
But we had people here, I had a researcher that allowed us to do research around new firm formation and such. And so that was quite good.
00:36:32 Elizabeth Ashcroft
And also we started to develop within that, but based at Glasgow, a much more policy focus around looking at the economic policy proposals of the political parties and looking at the budget of the, you know, so that was quite good.
00:36:53 Elizabeth Ashcroft
People like Joe Armstrong, John McLaren were honorary research fellows at Glasgow University. But Richard Harris was the director. And so that was quite an exciting period in many respects.
00:37:09 Elizabeth Ashcroft
However, it again ran up against the issue of what to do when the funding ran up. Glasgow University did help with the funding. Our university, I think, because it was based in Glasgow, didn’t really feel as much commitment to it.
00:37:24 Elizabeth Ashcroft
The other big thing that which followed from that, which I think was very important and I’m quite proud of, was the creation of the Allander series, which we, when Wendy Alexander resigned as minister, there was a bit of a halo effect for her, because she was minister of almost everything, economics, transport, education.
00:37:42 Elizabeth Ashcroft
So we met and we decided that we really wanted to do something to help bring in economic analysis, the best from outside into Scotland.
00:37:55 Elizabeth Ashcroft
And we got Diane Coyle, who’s very well-known and now a professor at Cambridge, but she’d written quite a few books. And we got her largely to, in a sense, do a lot of the, she’s a very good economist, but A, give us insights, but also to do a lot of the writing.
00:38:14 Elizabeth Ashcroft
And so, so and so on that basis we got a lot of funding because a lot of people were willing to support Wendy because you’d just be the industry minister, particularly from the Tom Hunter Foundation. So we got probably more than half a million.
00:38:26 Elizabeth Ashcroft
And that allowed us to bring two Nobel Prize winners, Paul Krugman, James Heckman, and to bring top economists like Ed Glazer, Bormal, William Bormal, who I was a great fan of because I worked in areas similar to him.
00:38:47 Elizabeth Ashcroft
And so, and then we got individual sponsors for each conference. And I think that did have an effect.
00:38:55 Elizabeth Ashcroft
I mean, in certainly areas like early learning and young people, I think that there was quite a big effect. And I think it did help.
00:39:03 Elizabeth Ashcroft
And the other action in all of this, which I should have mentioned, I mentioned the Scottish Executive, Scottish, because this was probably for the Scottish Government.
00:39:14 Elizabeth Ashcroft
The name became government was Scottish Enterprise. We got a lot of support from Scottish Enterprise through key individuals over the years, run both of them particularly, and they supported the business forecasting service.
00:39:25 Elizabeth Ashcroft
They supported the CG model to a certain extent. They commissioned us in quite a bit of work.
00:39:34 Elizabeth Ashcroft
When I stood down for director, they commissioned me to evaluate their business birth rate strategy and all that stuff.
00:39:39 Elizabeth Ashcroft
So there was a great, we had great links with Scottish Enterprise and obviously Charlie Woods as well, who was Chief Economist luckily in my tenure. And so that was essentially it, basically.
00:39:55 Mairi Spowage
No, I mean, there’s a lot of discussion I’ve just discussed with John and Joe over the years as well that you mentioned, the difficulty of ensuring there’s a healthy, I guess, kind of think tank and analysis environment outside of government in Scotland to look at some of these issues.
00:40:12 Mairi Spowage
And many of the funding sources that we are currently part of as the institute have a much more of a UK focus actually, the Centre for Inclusive Trade Policy, the Economic Statistics Centre of Excellence are two centres that we’re a key part of.
00:40:26 Mairi Spowage
You’ve got the Economic Observatory as well.
00:40:28 Mairi Spowage
Yeah, which Strathclyde is a part of, yeah. So there are quite a few of these different initiatives, but quite often they are kind of UK wide and we’re not just bringing our our expertise on regional measurement or forecasting or anything like that.
00:40:42 Mairi Spowage
We’re also bringing the particular, techniques and areas of all the economics that we’re expert in, which is great.
00:40:51 Mairi Spowage
But we have had to diversify that and we do work, I would say, probably a lot more across the UK to, because to a certain extent, at an institute like this, you have to be somewhat opportunistic about the funding you can get and source to sustain yourselves, the sorts of areas that you want to support.
00:41:10 Mairi Spowage
You mentioned parliamentary scrutiny, that’s obviously really important for us to support because the parliamentarians compared to the government ministers are so on the back foot in terms of the analysis support that they have…
00:41:21 Elizabeth Ashcroft
It’s very, very difficult, and I think just even I mean the finance committee is probably one of the best committees really, but they have an advisor and they have the library at the Scottish Parliament and that’s it really.
00:41:34 Elizabeth Ashcroft
And I think, and it actually depends on the people that’s on it. I was really lucky. I had two bright guys, a certain person called John Swinney and Andrew Wilson were on the committee at first.
00:41:47 Elizabeth Ashcroft
So they, you know, as an advisor, you suggest questions, you know. But they were quite capable of having their own questions.
00:42:00 Mairi Spowage
Absolutely. And as a current advisor to the finance committee on budgets, the committee at the moment, which is led by Kenneth Gibson, are very much, they are a really great committee actually, and they’re really on their brief.
00:42:13 Mairi Spowage
And, so, so, you’ve mentioned a lot of the things that you that stand out to you in the Allander series is something that other people, a lot of other people talk about still.
00:42:23 Elizabeth Ashcroft
It was great, both personally, because I met with Paul Krugman and spent the afternoon with him talking about, you know, that was a highlight of my career, and but I feel it was good for Scotland.
00:42:33 Elizabeth Ashcroft
I think it did, but also, raised the profile of the Scottish economy within the economics profession.
00:42:42 Mairi Spowage
Yeah, absolutely. But some of the stuff you’ve talked about, it’s interesting that you can feel when you’re around this sort of discussion for decades, twenty years now since I started working at the Scottish Government, you know, you feel like these sorts of, they come up again and again, these issues with the Scottish economy, particularly this issue about R&D and, you know, the loss of headquarters and so on and the impact that it’s had.
00:43:07 Mairi Spowage
And just, you were mentioning that happening during the early parts of your career at Strathclyde, and it’s continued to happen. And I just wondered, given the turmoil in the economy, the state of the economy right now, has it kind of evolved as you would have thought over the last decade or so?
00:43:24 Elizabeth Ashcroft
Well, in some ways, yes. I mean, the first of all, just it’s easy to focus first on industrial structure and that there have been big changes there, but obviously the, largely a decline in the heavy industries, quite considerably. Electronics peaked. It’s still there, but it’s much less than it was.
00:43:47 Elizabeth Ashcroft
I think that’s important. Oil industry has peaked, you know. So that side of it, and we had this burgeoning growth in financial services in the early ‘90s and whatever, and it ended in disaster.
00:44:02 Elizabeth Ashcroft
we had a flagship, world flagship company in Royal Bank of Scotland. Every meeting I used to go to with the Scottish Office, Scottish Executive on this, that and the other on date or whatever, always had a person from the Royal Bank of Scotland on it. They were really important in the political culture and political economy of Scotland. And all that was swept away in 2008, 2009.
00:44:26 Elizabeth Ashcroft
And I think that was, obviously I have my views about the financial services and the role they play and I’m somewhat negative about it because I feel that elements of it are a casino rather than supporting business and industry, individuals’ investment.
00:44:45 Elizabeth Ashcroft
Now, when in the early ‘80s, one of the arguments that we had to make against the attempted takeover of the Royal Bank of Scotland by the Hong Kong Shanghai HSBC was that this is a local bank and this local bank is very important, not just as an entity, but to the Scottish economy because its bank managers are local and they deal with a lot of local investment decisions, startups and whatever, and they know the area, and that won the argument with a monopolism emergency.
00:45:21 Mairi Spowage
Isn’t that interesting in what’s happened since?
00:45:25 Elizabeth Ashcroft
So what you saw was that this behemoth grew to be a world company and of course it got it completely wrong. And that meant that A, we lost it, we lost terrible credibility as a country and as an economy when that blew up.
00:45:47 Elizabeth Ashcroft
And also through social media and technological change, bank managers have disappeared, largely.
00:45:56 Elizabeth Ashcroft
And so, and this is another part of what I wanted to go on to talk about, because yes, we’ve got nascent industries developing, we’ve got renewables developing, and there’s issues around it, but it could be better, but renewables developing. Tourism is much more important now than it was in the ‘80s.
00:46:20 Elizabeth Ashcroft
And that’s all quite important. But I mean, the problem that we have is just what I’ve alluded to, that the decision makers are not as present on the ground as they once were.
00:46:41 Elizabeth Ashcroft
Now, bank managers are a case in point. But it’s a much higher level than that, and it goes back to takeovers and loss of corporate functions.
00:46:50 Elizabeth Ashcroft
And we’ve lost, well, we don’t really have any major domiciled Scottish corporate anymore. I mean, that’s a world player.
00:47:02 Elizabeth Ashcroft
We have world players in Scotland, like British Aerospace, you know, and they are valuable to the economy, and don’t get me wrong. I’m not against that, we’ve got a nascent, well, we’ve got a nascent defence industry industry buildings growing, we’ve got BACOP, we’ve got BE and that’s good, all the political issues around it, but I mean it is quite important for the economy.
00:47:29 Elizabeth Ashcroft
And anyway, so the point that we come to here is that we’ve lost almost all our corporate headquarters. They’ve all gone.
00:47:41 Elizabeth Ashcroft
As a consequence of this, what’s happening, and I don’t have the data, because the data isn’t good on this, is that we’ve lost large numbers of quality people who might have stayed in Scotland to work at HQ, St Andrew’s Square in Edinburgh, now have to go to London, Manchester even, reduces the human capital available to the economy.
00:48:06 Elizabeth Ashcroft
It also reduces the social capital because these people are actually involved in their communities. It even links to new formation and having people who can be good role models and whatever, to talk to about certain things, spin outs from companies. You get them from the universities.
00:48:29 Elizabeth Ashcroft
Now, this is something that the data doesn’t really, I think, pick up on. And the problem here is that it makes it so much harder for economic policy.
00:48:42 Elizabeth Ashcroft
So if economic policy, how does economic policy work? Well, it offers incentives, doesn’t it, to get people to do this and try and follow a particular path.
00:48:52 Elizabeth Ashcroft
I mean, by and large, we know what causes an economy to grow. We can, you know, we can say it’s, you know, investment, R&D, innovation, human capital, social capital, developing those.
00:49:06 Elizabeth Ashcroft
But how you do it, how you get traction with your economy is actually pretty difficult.
00:49:13 Elizabeth Ashcroft
And if your decision makers are not in Scotland, then all this talk about industrial strategy, it’s meaningless if you don’t ask the question, who are the people that you’re trying to get to?
00:49:28 Elizabeth Ashcroft
And the other thing I feel here, and again, it’s a bit of hobby horse, although I have to hold my hand up and say, when I, when I did retire, when I stopped writing the commentary in 2016, I did sort of move away from thinking about the Scottish economy.
00:49:40 Elizabeth Ashcroft
I’ve been thinking about it for 30, 40 years, you know.
00:49:43 Mairi Spowage
That’s fair enough.
00:49:44 Elizabeth Ashcroft
I wrote a book about being in the band, so it’s on Amazon, but that’s in the story.
00:49:49 Elizabeth Ashcroft
So, but that is fundamentally a key issue that we, that policy needs to try and address again, was how do we get these decision makers here? Or how do we relate?
00:50:01 Elizabeth Ashcroft
Because, well, I would even go as far as to say, and this is probably quite a contentious thing to say, is to offer the hypothesis, is there such a thing as a Scottish economy?
00:50:13 Elizabeth Ashcroft
Because we’re not normally an open economy, which is fair enough. You know, we trade, we have capital and labour flows in and out, and more so the smaller you are.
00:50:26 Elizabeth Ashcroft
But we don’t have the decision makers here, so what policy can focus on is perhaps new firm formation.
00:50:35 Elizabeth Ashcroft
We have one or two good venture capital companies around here, but obviously to get their business like, Scottish equity partners, they’ve got to go worldwide, you know.
00:50:45 Elizabeth Ashcroft
So this is, I think, I don’t hear any of this discussion in the main or whatever.
00:50:52 Mairi Spowage
Because I mean some of the government policies in recent years have been focused on, the fact that we’re good at spin outs and obviously high quality research and stuff like that.
00:51:03 Mairi Spowage
But it’s the scale up that becomes more difficult and then you get, the sort of takeovers that are required or but people feel are required in order to grow. And then, you sort of lose the Scottish roots of the company.
00:51:13 Mairi Spowage
So it’s definitely something that’s, I just don’t think people necessarily know what the right policy is.
00:51:19 Elizabeth Ashcroft
I think that’s right, and I don’t think I know what the right policy is, because I think basically what you have to do is, I don’t, I mean, what I’m talking about here is not about, it’s not about political independence. We’ve lost our economic independence to a large degree.
00:51:37 Elizabeth Ashcroft
Now, the question, I think that the research question is, has it gone beyond a critical point? And I don’t know. I feel it might have done, because we’ve lost all these headquarters.
00:51:50 Elizabeth Ashcroft
And so to have some impact on policy, you have to largely work at the very micro level, or offer incentives to invest, to innovate.
00:52:03 Elizabeth Ashcroft
But the local managers have to go up the line to London or Detroit, or not Detroit these days, but somewhere else to do that, And so I think this is a big issue for us.
00:52:18 Elizabeth Ashcroft
And I think fundamentally it implies that policy has to be joined up with UK, Europe.
00:52:29 Mairi Spowage
Absolutely, and I think when I’ve been in discussions about this sort of area in the last few months, even, at conferences and so on, that comes through a lot, actually, for collaboration across the UK or more widely in order to ensure that we can think about how to really attract the investment we need.
00:52:46 Mairi Spowage
But listen, the time’s against us, but I am, no, it’s been a really interesting conversation.
00:52:54 Mairi Spowage
Was there anything else you wanted to reflect on the current economic conditions or the turbulence of the economy at the moment?
00:53:02 Elizabeth Ashcroft
Well, clearly, I think it’s just to make the same point in other ways, is that the openness of the Scottish economy makes us even more vulnerable to what economists call exogenous shocks, like Trump tariffs, for example, you know? And we are very vulnerable.
00:53:22 Elizabeth Ashcroft
We probably were cushioned a little bit to Brexit because most of our trade was with the rest of the UK. And we had a small proportion of trade with the EU.
00:53:34 Elizabeth Ashcroft
But for me, that was a major shock because I see the growth stats from 1992 when the single market became fully formed. And I suspect our trend growth rate has dropped. It was never much more than 2%. We’re always knocking around trying to do stuff. It was never more than 2%.
00:53:54 Elizabeth Ashcroft
But the Scottish economy was slightly different in the path of its cycle from the UK in that it didn’t contract as much in a downturn and it didn’t pick up as fast in an upturn. And that was clearly evident in 2008, 2009.
00:54:14 Mairi Spowage
Absolutely, yeah.
00:54:16 Elizabeth Ashcroft
And so that’s the thing that worries me. I mean, there’s a lot of turbulence in the world economy. It can affect Scotland more because we are more open than elsewhere, although the UK is…
00:54:35 Elizabeth Ashcroft
I mean, how can the UK have an economic growth strategy when they don’t know whether Land Rover’s going to stay or not, for example? You know, and Lotus is saying that they’re about to leave and go to America, I assume.
00:54:47 Elizabeth Ashcroft
I mean, it’s an almost impossible task for policy where the degree of uncertainty in the world economy and that backwashes into… UK and Scotland is immense at the moment. And so I have a lot of sympathy for our policy makers faced with this background.
00:55:05 Elizabeth Ashcroft
And there are so many more issues. And you are now doing work on disability and such with the levels of inequality are exceptionally high, both in Scotland and in the UK, nearly as much as the US.
00:55:20 Elizabeth Ashcroft
That’s another point which probably has been passed in terms of what is efficient from the point of view of economic performance. You know, we’re too unequal. And we’re too centralized as well.
00:55:32 Mairi Spowage
Yeah, it really does feel like policymakers are in a bit of a bind at the moment.
00:55:36 Elizabeth Ashcroft
It is.
00:55:36 Mairi Spowage
You can see that from the kind of decisions that are being made. U-turns and trying to square these difficult fiscal zones.
00:55:44 Elizabeth Ashcroft
And I think basically what everyone needs a narrative, every policy needs a narrative, every organisation needs a narrative. And it makes it harder to have a narrative, although there isn’t much of one at the UK level anyway, at the moment.
00:55:57 Elizabeth Ashcroft
And this is why, I mean, again, obviously I’m roasting to specters. I always felt that the early 2000s when we had smart, successful Scotland and so there was a narrative there, even with the framework for economic development, in the late 90s, there was something of a narrative.
00:56:15 Elizabeth Ashcroft
I don’t see that in Scotland now, but then again, I have to be cautious here because I’m not as close to it as I once was.
00:56:23 Mairi Spowage
Well, thank you so much for joining us today. What a great conversation. We’ve covered a lot. I think it worked great. But yeah, thank you so much for joining me.
00:56:30 Elizabeth Ashcroft
Well, it’s been a great pleasure, and I wish you every success in the future, which I’m sure you will have.
00:56:35 Mairi Spowage
Thank you very much. It’s, the Institute’s, it’s an honour to be involved in it. The reputation of the Institute’s very precious. And so, yeah, we steward it on, hopefully for the next…
00:56:45 Elizabeth Ashcroft
Well, you’re doing a brilliant job, and I’m fully behind your endeavours in the future.
00:56:51 Mairi Spowage
Thank you very much. We’ll see you again for the next edition of the Fraser of Allander podcast.
00:56:59 Ben Cooper
Hello, 2025 marks a significant year for the Fraser of Allander Institute. Founded in 1975, the Institute celebrates 50 years of leading economic research in Scotland. Given this, we have a series of exciting events and content planned for the remainder of this year to mark this milestone.
This includes our anniversary conference on the 18th and 19th of September this year at the University of Strathclyde’s Technology and Innovation Centre. We have a number of speakers and themed sessions planned for the day in order to highlight the breadth and importance of the Economic Research being conducted across Scotland.
As well as this we have a number of other events planned, including our reception at the Scottish Parliament in December and one at the Scotland Office in London in October.
You’ll also see some unique content published in the coming months, including a podcast series with past institute directors and some articles on the history of the Institute, as well as some other eye-catching covers from some of our reports from over the years in the coming months.
In order to be kept up to date with any of these events and to be the first to know about our 50th anniversary publications, visit our website, fraserofallander.org and you can join our mailing list.
If you are interested in engaging with us also, whether you previously work for or with the institute, why not get in touch? We have a designated 50th anniversary e-mail fraser50@strath.ac.uk.
We hope you’re as excited as we are and look forward to celebrating this exciting milestone with as many of you as possible.
Authors
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.