Many parties have put the economic recovery front and centre of their offer to the Scottish people in this election campaign. But what are the policies they are actually offering?
Firstly, let’s remember…
Macroeconomic, monetary and employment law policy are reserved to Westminster, whereas the Scottish Parliament has control over economic development, education skills and training, and of course limited parts of the social security system.
This can mean that in broad terms that the Scottish Parliament has more control over the longer-term levers that can influence our economy, such as e.g. investment in skills and training, investment in infrastructure, or support for research and development through our higher education institutions. And of course, the parliament has control over transport and housing, investment in which can both be a stimulus and enabler to growth.
Of course, this does not stop some of the parties from talking about areas that are reserved to Westminster and therefore would require significantly more powers to be devolved to achieve: or of course, in the case of some parties, more significant constitutional change.
This should be considered when we look at the different policies, in terms of what could be deliverable over the next 5 year term and what is in the gift of the Scottish Parliament to deliver given the current constitutional settlement: and what may be more aspirational.
The policies that can influence the type of economy we have, or how we recover, of course cut across many different policy issues. In this analysis, we focus on:
- Support for jobs and training
- Enterprise policies
- The Scottish National Investment Bank
- Good work policies
- Green recovery & energy transition
Support for Jobs & Training
To combat the potential for significant scarring in our economy, all parties have a number of policies to support the labour market – in in particular, to support young people and vulnerable groups. A number of explicit retraining funds have been proposed in order to help those who may need to transition into new careers.
- The SNP highlight their Young Persons guarantee which is designed to ensure that everyone aged 16-24 can participate in education or training, get a job or a place on a formal volunteering programme.
- The Greens would extend this guarantee to those under 30 and those who work in the oil and gas industry.
- The Conservatives set out ambitions to reach full employment in Scotland. Initiatives include a “Right to Retrain Account” which would have £500 a year for every adult, rapid retraining focused on employment opportunities and a network of job security councils to identify jobs for those who lose their jobs – with the initial focus on oil and gas workers.
- Scottish Labour would introduce a Scottish Skills Benefit, for those on furlough or unemployed, to help them retrain (whilst not affecting other benefits). They are the only party to acknowledge the UK Government Kickstart scheme, and would seek to extend it by another 6 months of subsidy, in return for a guarantee from employers of a permanent job at the end of a scheme.
- The Lib Dems support a job guarantee scheme for all 16-24 year olds, and Scottish Training bonds of £5,000 to help people change careers.
Following the establishment of the South of Scotland Enterprise Agency over the course of the last parliament, there seems to be a view across the opposition parties that there is a opportunity to refocus, or even completely reform, the enterprise and economic development landscape.
- Labour would establish a Minister for Entrepreneurship, and look to repurpose Scottish Enterprise as a business recovery agency, creating a separate Scottish Energy Development Agency to focus on renewables and their supply chain.
- The Scottish Greens want to ensure that enterprise funding is targeted at the low carbon economy, and developing green manufacturing supply chain in Scotland.
- The Scottish Conservatives have proposed the establishment of an enterprise agency in every region of Scotland – although they have not said how many agencies this would involve. Interestingly, they have said that they would give the UK Government shared strategic oversight of these agencies with the Scottish Government.
- The Lib Dems want to create a new national programme of internships with small businesses to be run through the enterprise agencies.
There is certainly a theme throughout the economic development and enterprise policies for supporting Scottish supply chains, often (but not exclusively) linked to a desire to focus on a green recovery.
The Scottish National Investment Bank
The fairly newly established Scottish National Investment Bank has been a popular vehicle through which many of the parties plan to deliver their economic policies.
- The Lib Dems want to ensure that the SNIB is investing into low income and rural areas, working in partnership with enterprise agencies
- The Scottish Green s want place based industrial strategies to be developed which can connect to funding from the Scottish National Investment Bank
- The Scottish Conservatives want to use the SNIB to support innovation in the economy, such as in the space sector
- The SNP are planning to launch a £50 National Challenge competition to complement the work of the SNIB
- Labour sets out plans to restructure and refocus the SNIB, to for example introduce a workers ownership fund and (building on the above) to help invest in the Scottish renewable supply chain.
As we would expect, the parties have set out how they would plan to focus infrastructure investment to stimulate the economy, with a lot of focus on infrastructure to support the transition to net zero.
These programmes are accompanied in some of the party manifestos with an estimate of accompanying economic activity or jobs that may be generated. See our article on these estimates and the questions to ask.
In terms of specific commitments:
- The Lib Dems support the recommendations of the Infrastructure Commission to focus on the maintenance of public assets, and want to switch a million homes from gas to heat pumps by 2030. They also want to invest to open railway lines closed in the 1960s.
- The SNP have committed to their “Infrastructure Mission”, which will spend £33 billion over 15 years, which will increase annual investment to almost £7 billion by 2025-26. Also there are specific commitments to decarbonise 1 million homes by 2030, and decarbonise Scotland’s railways by 2035.
- The Greens want to put in place a Green Infrastructure Investment plan, which will draw on £7.5 billion of investment over the next 5 years. This includes £3.2 billion in public transport, and £3 billion in warm and zero carbon homes.
- Labour have committed to retrofit all homes in Scotland to a minimum energy efficiency rating by 2030, and have proposed the end of Public-Private Partnership models of investment
- The Scottish Conservatives have committed to connecting every home and business to full fibre broadband by 2027, and propose the infrastructure Commission should be put on a statutory footing. They also support more action on national EV charging infrastructure and the reopening of railways.
There is definitely a theme in the manifestos to encourage “Fair” or “Good” work. Some of these policies stray into fairly fundamental changes in the operation of our economy, but others are more focussed on choices that could be made around public sector procurement, or conditionality for receiving Government Support.
Two of the parties – the SNP and the Greens – mention the possibility of a four-day week in the future. The Greens support a transition to this model with no loss of pay, whereas the SNP want to explore its feasibility with business. See our article on the 4 day week for a discussion of this.
Green recovery & energy transition
All of the parties focus heavily on the opportunities for green recovery, which, as you can see cuts across the raft of policies presented, particaurly on infrastructure investment. Support for the energy transition also features across the board. There are – as may be expected – differing views on the pace and focus of transition.
The Scottish Greens calling for an end to issuing new oil and gas licences in the North Sea, and to revoke undeveloped licences and review current permits, to the Scottish Conservatives setting out that the North Sea oil and gas has a long future, given that petrochemicals are used in plastics, cosmetics and pharmaceuticals we use.
The other parties sit somewhere in the middle, focussing on the need to support the industry and the North East region through the energy transition.
Oil and Gas extraction and mining support services still makes up a significant chunk of Scotland’s economy: around 8% in 2019, and that is before wider supply chain impacts are included. We saw during the oil price down turn in 2015 the knock on effects that this can have on our economy.
Given the way our homes are currently heated, and the way our transport system currently works, oil and gas is likely to be part of the energy mix for some years to come in Scotland, until we can complete the infrastructure investment required to move completely to low carbon alternatives.
Early signs from the North East in payroll data suggest that area has been disproportionately impacted by the current economic crisis. It is likely therefore that voters in the North East will be interested to know the specifics of plan for transition to ensure they have access to employment and a good standard of living in the future. This won’t just be those who work in the industry directly: the supply chain also needs to be supported to transition.
Much like our manifesto briefs on tax, spend and social security, one of the most striking things about this analysis is the common ground between the parties, with the differences on the main initiatives really being at the margins.
There’s a consensus that we must decarbonise our economy and that significant investment will be required to do this. All agree that we need to invest in adapting or renewing our housing stock and transport infrastructure to achieve this.
There are also specific initiatives on job support, which will be urgently required as we move into the summer and the Job Retention Scheme begins to be rolled back. There is an understandable focus on the young, who have been significantly impacted by the pandemic, and this is right in order to avoid the long-term scarring that can happen if people are unemployed for a long period early in their career. However, others will also lose their jobs and will need support – which could have impacts on other policy areas, such as child poverty rates – see our brief from yesterday.
There are some differences of course – as discussed, parties have different views on the pace of energy transition, and some parties seem more keen than others to create new bodies to help support economic recovery or reshape our economy.
But whatever the outcome of the election, it is clear that the next year will be a difficult one for the economy. Practical and urgent interventions are likely to be required by the new Scottish Government to support the economic recovery and avoid as much long-term damage as possible.
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.