George Kerevan: Scotland needs economic action, not endless plans

Later, as technologies advanced, this country became European headquarters to IBM and the manufacture of computers and semiconductors. The cashline machine was birthed here. It was also a land of inventors giving to the world oil refining, television, radar, wave power, and successful cloning. Not bad for a nation of only five million people perched on the edge of the Atlantic.

Today, Scotland’s industrial prowess is a joke. With the closure announced of our only oil refinery at Grangemouth, we are exposed as an industrial pigmy. Scotland will now import oil refined elsewhere – closing Grangemouth does nothing to reduce CO2 emissions.

It is an old tale. Economic decision-making has long passed from Scottish hands to those of foreign billionaires. Scotland has been well and truly de-industrialised.

There was a possibility – a glimmer of hope – that devolution and the arrival of a Scottish Parliament might have changed direction. Two things happened that destroyed hope. First, as Chancellor of the Exchequer, Gordon Brown deliberately fostered an economic policy which promoted the City of London and financialisation of the UK economy, to the detriment of making real manufactures.

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On Brown’s watch, fully one million manufacturing jobs in Britain and Scotland disappeared, as financial services were deregulated, and a spiv economy promoted. The result was the financial crash of 2009.

At the same time, Holyrood administrations dropped the ball when it came to domestic industrial policy. True, Holyrood’s economic powers were sharply circumscribed by Westminster and the UK Treasury. But what should have been the central focus of Scottish political policy – re-industrialisation – was traded for an emphasis on social fads, redistribution without economic growth, and sheer administrative incompetence.

When the first dot-com bubble burst in 2000, the nascent Scottish high-tech sector imploded and never rose again. Holyrood ignored the problem. Then came the 2009 bank crash. Holyrood ignored the problem. As Scottish economic and productivity growth cratered, Holyrood ignored the problem.

As a result, local manufacturing withered. Since the start of the millennium, a fully third of Scottish manufacturing jobs have disappeared. By 2021, manufacturing employment in Scotland was barely 200,000 out of a total workforce of two and a half million. Today we are down to circa 173,000.

Of course, in the modern world, technology means you can produce much more output with fewer workers. But that is not what is happening in Scotland. Instead, the Scottish manufacturing and industrial production sector is being systematically hollowed out.

Smoke billows from Grangemouth oil refinery (Image: Andrew Milligan/PA Wire) This is instantly apparent if you compare Scotland to similar-sized European economies which exhibit higher productivity rates.

Logically, countries with higher productivity should have smaller industrial employment because they can make more with fewer workers. In fact, we see those other small economies – the most productive ones – have higher manufacturing employment than Scotland.

Denmark, a country with much the same population, has 300,000 manufacturing jobs – fully 50% more than in Scotland. Even Ireland, with a smaller population, has around 275,000 manufacturing jobs. Sweden has twice Scotland’s population but nearly 600,000 manufacturing jobs – like Denmark a 50 per cent increase over Scotland.

In the Swedish case, much of this manufacturing is high end, high value engineering which accounts for a fifth of the country’s GDP – a vastly higher proportion than in the UK or Scotland.

Despite this miserable record, Scottish governments have gone on hiding their heads in the sand. This political myopia is usually accompanied by publishing grandiose economic reports promising the earth but signifying nothing practical by way of concrete action.

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The latest such wishful thinking was published by the SNP government last week – miraculously at the same time the Grangemouth closure was made public. This new document is entitled “A Green Industrial Strategy”.

Anyone who naively thought the Scottish Government already had a green industrial strategy is obviously thinking about the policy document published only last February (“Growing Scotland’s Green Economy”). Why a new plan only seven months later? Call me cynical, but governments measure their response to a crisis in paper, not in action.

This latest document – written in the standard civil service gobbledygook – says absolutely nothing new. It spends most of its time discussing “advantages” of a green transition (which we all know) but there is no concrete action plan.

As ever, the document offers everything to everyone but there is a dearth of actual priorities. Nor is there any examination of why, to date, Scotland has failed to gain any significant number of jobs in the offshore renewables sector.

Once upon a time John Swinney promised 100,000 such jobs. The latest data suggests the reality is less than 10,000. In Denmark, the equivalent figure is 33,000. The idea that we are going to replace lost Grangemouth jobs through a quick “just transition” to a green economy is risible. Wanting does not make it so.

The historic collapse of Scottish manufacturing has two immediate causes. First, a disastrous lack of capital investment in machinery and technology. Investment in Scottish manufacturing as a percentage of GDP is one of the lowest in the industrial world.

Second, the disastrous role played by foreign ownership of Scottish assets, which uses Scottish assets and workers as pawns, and which drains Scotland of profits and wealth. In reality, Scotland has been looted.

The solution to these problems can be found in boosting public industrial investment significantly. Where will the cash come from? The SNP Government has already put public money into its own Scottish National Investment Bank.

But the SNIB is run by ex-bankers who are given no political direction. That could change tomorrow with the stroke of a ministerial pen. It would also be possible for the Scottish Government to create a state energy corporation and transfer to it existing public assets, onshore and offshore.

These assets could be borrowed against to fund future investments, with ultimate ownership retained by the state. Where there is a political will there is always a political way.

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It is vital that the Scottish Government implements a practical industrial policy and does it immediately. It is vital in order to seize the political initiative and wrongfoot the big Unionist parties.

It is vital in order to restore hope and optimism in Scotland and so stave off the rise of Faragism. And it is vital in order to win over those who voted No ten years ago by showing there is an alternative to a UK where nothing works any longer.

De-industrialisation is not and never was inevitable. It was the consequence of decisions made outside of Scotland. As a result, highly paid jobs were replaced by poorly paid ones. Productivity flatlined. Living standards fell.

Wanting re-industrialisation is not nostalgia. It is about wanting to take control of the economy back into Scottish hands and to make life better for ordinary Scots. The loss of Grangemouth has to be made a line in the sand.