Craig Berry: A roadmap to a more resilient and prosperous Scotland

THE UK’s economic model revolves around short-term profits, driven by the belief that this will create jobs and boost tax revenues.

Underpinning this model are strategies that have incentivised short-term gains at the expense of long-term investments in the productive economy, resulting in reduced productivity, lower wages and adverse effects on smaller businesses and regions outside of London.

This London-centric model has done little to help most parts of the UK, except for London and its surroundings. Scotland’s continued adherence to this model jeopardises our economic interests and development prospects.

Many in the Alba Party believe we must embrace a different approach – an investment-led industrial strategy that puts Scotland on the path to a more resilient and robust economy, encouraging long-term productive investments.

Our vision hinges on three critical, interconnected aspects – global Scotland, domestic Scotland, and our vast wealth of natural resources.

Scotland must recognise the potential of our natural resources.

Resource-based development is crucial for a sustainable and robust economy. Natural resources, when used sustainably, provide a lasting competitive advantage.

They not only create economic activity in their management, extraction and processing, but also create growth throughout the economy by supplying the energy and materials we need for new products. Natural resources remain fundamental to a domestic economy.

To make the most of our resources, we must make a shift away from the financial and retail sectors and invest in energy and resource-based production. This includes everything from agriculture and forestry to energy and land use.

This investment should come from the Scottish National Investment Bank (SNIB), reformed as a mission-led development bank and playing a significant role in providing substantial lending to the Scottish economy. By creating a model that serves the public good, we can pinpoint opportunities that play to Scotland’s strengths and competitive advantages.

“Global Scotland” can harness those advantages through an approach called smart specialisation, which focuses on leveraging our unique strengths and assets.

This means focusing on what we do best and allocating our resources to areas aligned with these competitive advantages.

Scotland can maximise its impact in the global economy through effective investment in industries where we already thrive. However, we must recognise the potential of reducing our reliance on imports. By producing more of what we consume domestically, we bolster our economic resilience and self-sufficiency. This approach not only generates wealth but also improves our trade balance.

But it’s not just about what we produce – it’s how we do it.

We need to build resilience within our supply chains. By bringing enterprises together to plan collaboratively and identify gaps in supply chains, we can fill these gaps domestically, increase the viability of existing supply chain companies and improve our domestic manufacturing.

“Domestic Scotland” should rely on an approach called Local Wealth Building, which focuses on fostering prosperity within our communities by ensuring economic activities generate and circulate wealth locally.

This approach emphasises that not all profits have the same economic impact. It distinguishes between profit extraction and profit re-investment. To stimulate the domestic economy effectively, the focus should be on generating profits that are re-invested within the domestic economy.

Investing in industries within local communities ensures their employees have local economic impact. Similarly, domestic supply chains result in greater profit generated by local enterprises and are recycled within the local economy.

This is about ensuring Scotland has a greater stake in its own domestic economy, as it has become one of the most foreign-owned economies in the developed world.

To prevent promising Scottish businesses from selling out to larger, foreign corporations, we need to create anchoring strategies. This involves imposing conditions on lending from the SNIB, encouraging long-term commitments to Scotland, and developing infrastructure and supply chains that make it advantageous for businesses to stay in Scotland.

The final aspect of this strategy is regional development.

By refusing to replicate the London-centric model, we must also avoid creating a central belt-centric model. Regional disparities currently exist, particularly concerning the Highlands and islands, and this strategy aims to change that.

Regional Development Corporations (RDC), working in tandem with the SNIB, can better target development that caters to local needs. Their remit would be to focus on the development of rapid growth areas – such as housing, energy, forestry, food and construction supply chains – where investment is repaid over the long term.

A Housing RDC would communicate with the local authority on housing needs, then fund the project by approaching the SNIB. The loan would be repaid in the long term through rental income should the RDC retain ownership of the public housing it creates.

Replicated throughout Scotland, this would amount to a large-scale house-building programme that would be a prime driver for the economy, utilising Scottish construction companies, Scottish supply chains and Scottish materials.

The Alba Party can present a compelling vision for Scotland’s economic future with an investment-led industrial strategy. This strategy calls for a shift towards long-term productive investments, harnessing our natural resources and fostering prosperity in our local economies.

We believe this strategy offers a roadmap towards a more resilient and prosperous Scotland, both on the global stage and within our local communities.

It’s a vision that aims to enhance quality of life for all our working people, while fulfilling our obligations to our local economies.

(This article was first published in The National on 10/10/23)