Friday, 13 June 2014

Industrial Policy - again...

The First Minister will today set out his plans for reindustrialising Scotland. Reading between the lines of last week's Sunday Herald report and listening to this morning's radio coverage it doesn't appear as if the Scottish Government paper being published today will include a great deal that wasn't already been signalled in the White Paper.

Anyway, I think I've said all I want to say on the subject of industrial policy/manufacturing and constitutional change (see here, here and here).

But I thought it might be helpful to set out the scale of the challenge that awaits. Although we hear lots about the sector's strengthening recovery, manufacturing output remains 5% below pre-recession levels and in Scotland its recovery is being sustained by only two sub-sectors: food and drink (including of course whisky) and transport equipment (just less than 1/4 of the size of food and drink).

All the other sub-sectors remain well below pre-recession output levels and, worryingly, some continue to decline.

Now anyone arguing that this failure to 'reindustrialise' or 'rebalance' is all the fault of the Scottish Government is living in cloud cuckoo land: much more relevant are the UK's longstanding structural problems that work against manufacturing (see above links) and, crucially, weakness in key export markets. But therein lies the rub: unless under any constitutional scenario policy is targeted at these structural problems (it isn't currently) and global demand is strong, domestic policy is unlikely to make much difference. Even if policy does improve, the outcomes will be long-term and highly uncertain.

No reason not to do it and I wait with great anticipation to hear the detail of what is being proposed today. As the STUC has regularly stated it's a very good thing that politicians at all levels are taking an interest in manufacturing again. But placing incredibly speculative figures on the supposed per capita financial benefits really isn't helpful. Nor is the use of those silly tropes ('levers', 'blueprints') so beloved of Government which seek to give a veneer of mechanical certainty to the outcomes of long-term economic development policy.

Stephen Boyd - STUC

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