The Chambers of Commerce are a key part of Scotland’s business eco-system. Their reach into the country’s business community is extensive, and their international connections through the global Chambers network adds immeasurable value to Scotland’s exporting businesses.
That’s why last week I was delighted to meet with a group of senior business leaders from a range of sectors facilitated by Edinburgh Chambers alongside the Director General of the British Chambers Shevaun Haviland. The subject for discussion was the role of a modern industrial strategy in driving forward Scotland’s economy.
Much work has already been done to give direction and clarity to Scotland’s economic ambitions. Our export and inward investment plans underpin successes over recent years – Scotland’s onshore goods exports are growing at twice the rate of the UK and we continue to outperform every other part of the UK except London when it comes to attracting inward investment.
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The National Strategy for Economic Transformation addresses the need for more business start-ups and increasing productivity across Scotland’s regions. And later this month Scotland’s Innovation Strategy will be published, with some key actions to accelerate the conversion of our Universities’ world-leading research into industrial opportunities.
But the bit that is missing is an industrial strategy, knitting everything together to propel Scotland’s key industrial sectors to leading positions on the global stage. Joining up research, skills and investment, with government playing its critical role of giving confidence to business that it knows where it is going and why, and has consistent policies to get us there.
Scotland is a clear gold medal winner when it comes to potential, but delivering on that potential is where we repeatedly fall down, often struggling even to get much beyond the starting line.
Our fast-growing world-leading life sciences and space sectors are something to be proud of, but between them they only comprise about 2% of our economy. Our tech and digital sectors are dynamic and hugely innovative but fall short of what Ireland has achieved with less potential, and we have much to learn from Finland and Estonia. Food and drink performs well, but is overly reliant on one category. Despite enjoying the best waters in the world our aquaculture sector is falling further behind Norway. And our failure to drive home the advantage when it comes to building a world-beating renewables industry is well known.
Yes we have some excellent businesses, many making the transition from fossil fuels, and we have the potential – that word again - to leverage ScotWind to great effect, particularly in offshore floating, but we are far from the dominant position in the sector that Denmark for example enjoys.
So what needs to happen to close that gap?
The first thing is to figure out where to focus. As a country of five million people Scotland doesn’t need to be good at everything, but what we are good at we need to be among the best in the world at. It is fitting that on his tercentenary Adam Smith’s concepts of economic advantage are still of prime importance. The good news is that much evidence-led work has already been done – the nine subsectors identified in the Inward Investment Plan and the key sectoral clusters charted out in the Innovation Strategy point the way.
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The second thing is to partner with industry and put our investment where it matters. Be clear what success looks like – in most sectors it will be about growing Scottish-owned businesses that are global leaders. Inward investment is important – a necessary, but not sufficient, condition for success. SMEs are great, but for everyone’s benefit we need some of them to stop being SMEs and start being the global industrial leaders of tomorrow. That requires raising levels of ambition and supporting high-growth potential businesses to get to a place where they are able to take on the best in the world in their sectors and win.
We need to send clear signals that government is serious about this – substance not soundbites – with coherence in how the public sector supports and facilitates business growth investment. The Scottish National Investment Bank has an important role here, as a bridge to global sources of capital attracted by an industrial environment that clear about where it is going. And it needs to explicitly line up behind an industrial strategy, a tighter focus than its current broad mission based approach.
Skills, as always, is the engine of growth. The work the Scottish Government has commissioned from James Withers on the skills landscape is important. Businesses need to have confidence that our education system is on their side, and that government understands what it needs to do to make that happen.
And the final ingredient of success is stability. Governments are, for the most part, terrible at staying the course. The temptation of being seen to be doing something new is often too much to resist. The lure of a cheap headline today is worth more than solid success into the future. Excellent delivery isn’t exciting, in fact done properly its downright boring – but it’s essential.
Real strategy is about hard choices – not about recycling platitudes to try to keep everyone happy. And it isn’t just the Scottish Government, Westminster had no sooner got its own industrial strategy in place than it was shelved by an incoming Prime Minster looking to make his mark by headlining something different. Long-term perspective is key. Taiwan didn’t become the world leader in semiconductor manufacture overnight. South Korea’s leading position in a range of industrial sectors was build up over decades.
There is no reason why Scotland shouldn’t aspire to a similarly dominant global position in our chosen sectors. We did this in the oil and gas sector half a century ago and in shipbuilding in the century before that. Now is the time to repeat that performance and chart our future industrial success for this century.
Ivan McKee is an MSP and former Minister for Business, Trade, Tourism and Enterprise
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