It may come as a surprise to some, but the Scottish Government and business have “long worked closely together towards our shared economic ambitions”. So it says in this week’s Government response to the recommendations from the Higgins review, which was set up to determine how the country might possibly extract itself from the economic quagmire of Covid-19.
Led by former Tesco Bank chief executive Benny Higgins, the Advisory Group on Economic Recovery (AGER) was established in April with an impressive line-up of members such as Professor Sir Anton Muscatelli from the University of Glasgow, University of Oxford professor Dieter Helm and Cambridge University’s professor Anna Vignoles. In June, the group published its extensive list of recommendations to “enable a swift economic recovery”, including closing point number 25 which said that the Scottish Government should set out its response to the AGER report by the end of July to “create momentum and build confidence”.
The reply on Wednesday came back: “We accept this recommendation, and have published our response to the proposals at the beginning of August to ensure a robust and full recovery plan is in place. Going forward we will also publish regular updates to ensure that the recovery plan is progressing.”
So a few days late, but five months on from the pandemic taking hold in the UK, let’s not quibble over the finer margins.
Throughout 71 pages, the Government’s response document is littered with talk of comprehensive reviews, exploring options, calls for evidence, defining desired outcomes, taking forward actions, and developing recovery plans. There is also ample space given over to recapping previous spending – both before and after the coronavirus outbreak – on programmes such as Business Improvement Districts, Regional Growth Deals, digital infrastructure improvements, emergency funding support and so forth.
What it is distressingly short on are concrete actions going forward. As a package, it fails to convey any sense of the extreme urgency felt by hundreds of thousands of firms and their employees as the economy struggles to awaken from an induced coma.
There’s no disputing the merit of the broader picture painted in its grandiloquent passages. And as the AGER list of recommendations was lengthy, it was all but inevitable that it would prompt a protracted reply.
In her foreword to the response document, Economy Secretary Fiona Hyslop welcomed the AGER report, while the executive summary notes that “this report should be seen as a broad endorsement of the full suite” of proposals set out by the advisory group. But scroll down to the detailed responses in the annex and it becomes clear that some suggestions are more gladly received than others, or are at risk of death by task force and scoping exercises.
AGER recommendation number nine, for example, says the Scottish Government should deploy its expanding tax powers and business support interventions to enable economic recovery. This “should include targeted use of rates relief”, along with “greater use of conditionality in business support, building on the experience of the Business Pledge and Fair Work First”.
The Government’s response makes no reference whatsoever to the potential use of targeted relief on business rates, one of the single biggest expenses borne by firms and a major contributor to the public purse. It has been widely suggested that this type of intervention may be required in certain sectors such as tourism and hospitality – two of Scotland’s most significant employers – as these industries will be among the last to emerge from the Covid-19 recession.
The Government instead chose to focus on Fair Work First, which encourages employers to adopt equitable working practices by attaching fair work criteria to grants, other funding and public contracts awarded by the public sector. It further highlighted research into the potential application of a similar “green conditionality”.
“We plan to continue to explore the role for bespoke approaches that link business support with climate change objectives, building on our experience with Fair Work and emphasising the need to work in partnership with businesses,” the Government added as it slid by the subject of rates relief.
The main body of the response concludes on the recurring theme of the need for partnership, a point that leading Scottish businessman Sir Tom Hunter made when the AGER recommendations were first published in June.
“To achieve meaningful change, we need to work together,” the Government said. “That means Government and the wider public sector, it means business and trade unions alongside individuals and our communities.”
If the initial reaction to the Government’s take on the AGER recommendations is anything to go by, that partnership could soon face some testing challenges.
“There is much to welcome in the Scottish Government’s response. However, it’s critical that business sees delivery in the next couple of months,” CBI Scotland director Tracy Black said. “Jobs and firms are on the line now, and real urgency is needed to spur a recovery that turns around Scotland’s economic fortunes.”
Or there’s this from the Federation of Small Businesses, which noted that the SME community would “in normal circumstances” have warmly welcomed many of the Government’s commitments: “Few would disagree with many of the identified objectives. For example, for decades FSB has warned that too few local businesses win public contracts ... likewise, action to address both patchy broadband infrastructure and the dearth of digital skills have been on the agenda for many years.
“None of this is in dispute, but what we need to see is some detail about how policymakers will actually achieve these outcomes. These are thorny long-term problems that will take years to fix.”
Meanwhile, the trade union side of this partnership is clearly underwhelmed, with STUC deputy general secretary Dave Moxham maintaining that the report does not match up to the scale of the looming jobs crisis.
“The truth is we need a massive fiscal stimulus and immediate measures to create jobs and redistribute wealth,” he said. “This response fails to deliver on that.”
Throughout this crisis, the First Minister has made clear her more cautious approach when it comes to getting the pandemic under control in this country. Aberdeen has now joined Dumfries and Galloway on the list of areas to go back into local lockdown to control infection rates; others will almost certainly follow.
As unpleasant as it is for those involved, temporary local restrictions are a far better alternative to national ones – the economy simply can’t sustain another widespread lockdown.
But businesses in these areas will require additional financial support. They would also benefit, as the CBI has suggested, from clarity on the “trigger points” that determine when new local restrictions are necessary. Perhaps this should be the Government’s starter for 10 in the quest for practical steps towards economic recovery.
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