CommonSpace columnist and Common Weal director Robin McAlpine examines the role of Scottish Enterprise in recent years and questions how effective it is
WITH so much in Scottish politics just now there is a sense that things could be on the brink of really exciting transformation and change – or could be consumed once again by conservatism, capture by vested interests, risk aversion and mediocrity.
That's why what has really caught my eye this week is the announcement that there is to be a review of Scotland's enterprise and skills agencies. This might sound a bit geeky, but it could prove crucial in where Scotland goes next.
So let me start by saying that I worked closely with Scottish Enterprise for many years – there are good and dedicated people working there. In its early days Scottish Enterprise was regarded internationally as a model of an effective economic development agency. It has produced some decent 'vision' work on what Scotland might achieve and delivers a number of basic but essential services.
It's time to be honest – you'll go a very long way before you will now find someone who has an especially good word to say about Scottish Enterprise.
However, it's time to be honest – you'll go a very long way before you will now find someone who has an especially good word to say about Scottish Enterprise. From the struggling start-up business to the big corporate players (I've been in meetings about Scottish Enterprise with people who run big banks), few people in private think Scottish Enterprise is actually any good.
The fact that quite a few people think it is just a bit mediocre or possibly no more than 'harmless' is one thing – but you are unlikely to be involved in business or economic development circles and not have heard some remarkably strong negative views about Scottish Enterprise.
Many of the comments I've heard about Scottish Enterprise are simply not repeatable for those with a low threshold for bad language. I'm pretty critical of the organisation and I am regularly surprised to be the person in the conversation who is least hostile.
A senior practitioner in economic development this week emailed me saying that Scotland would get more economic benefit if we took their £550m budget and spent it on a big party. I replied that it wouldn't work – they'd spend £1m on booze and canapés and £549m on consultants to design the specification brief for the booze and canapés.
You are unlikely to be involved in business or economic development circles and not have heard some remarkably strong negative views about Scottish Enterprise.
Because that for me is one of the big problems with Scottish Enterprise – it became a complex network of clientelism. In the early 2000s there was a review of a bloated Scottish Enterprise and it was slimmed down. But it was an open joke in development circles that everyone who was 'slimmed down' seemed to reappear as paid consultants on generous contracts.
Scottish Enterprise seemed to me to get caught up in the hysteria of the late 1990s and 2000s – a lot of staff seemed to think themselves much more 'serious' and much more 'important' than mere civil servants. They got to hang around with the 'masters of the universe'. They were Lord Business long before the Lego Movie.
They flew to London a lot. They watched Bloomberg News on monitors, had opinions on the share valuation of FTSE 100 companies, they were the men and women behind the 'wealth creators'. And above all they really, really liked RBS. Really. A lot.
Starting a small business? Trying to grow a business gradually and sustainably? Working in an unfashionable industry sector? It wasn't quite as obvious that they liked you.
But they paid themselves. A small team of senior managers are pocketing £1.2m a year. The staff had to take a 10 per cent pay cut because wages exceeded the acceptable limits on public sector employees – or at least those who weren't the bosses did.
A small team of senior managers are pocketing £1.2m a year. The staff had to take a 10 per cent pay cut because wages exceeded the acceptable limits on public sector employees – or at least those who weren't the bosses did.
I've never met anyone who says 'wow' when you mention the chief exec (unless it's 'wow – is that really what she gets paid?') – yet bonuses seem to keep coming. Along with the £68,000 she gets for sitting on the Board of a private company. How this isn't a conflict of interests is so far beyond me that I don't even know what to say.
(Unless it's to point out that her previous chairperson actually held shares in companies Scottish Enterprise used public money to fund. Honestly, how are we defining corrupt practices these days?)
Half of Scottish Enterprise's 1,400-odd employees earn over £38,000 a year. Fewer than one in six people with jobs in the economy they are 'developing' earn that.
But that's not even the biggest problem. The real problem is that Scottish Enterprise remains largely bought into the dominant, market-driven model of economic development. You know, the one where the public sector isn't supposed to interfere. (Unless it's giving evil accountancy outfit KPMG £1.7m to open a tax-dodging office in Glasgow.)
So why bother funding an agency which doesn't believe that market interference is a legitimate approach to economic growth? Surely interfering in the market is the only thing it can do which isn't nothing at all? So it is obsessed with setting targets and having business plans and providing advice – and it explains why building expensive business parks rings their bell so much.
But that's not even the biggest problem. The real problem is that Scottish Enterprise remains largely bought into the dominant, market-driven model of economic development.
It is explicitly obsessed with fast growth companies irrespective of the economic impact. I asked a senior officer whether he would prefer 10 good companies each employing 30 people with good salaries or one company with 300 people paying low salaries. He told me they were limiting their support to 'enterprises of scale'.
It always seemed to me that their concept of 'the economy' tended to stop at the edge of cities. Towns don't seem to feature highly. Rural economies mystify them. And the idea that they would lead a plan for the transformation of economies in serious trouble (Motherwell and steel, Aberdeen and oil) is for the birds. They'll probably build a business park and print some leaflets.
So I got that email from a few people who are working at the hard end of economic development forwarding news of the review and wondering if this might, finally, be the chance to create the economic development agency Scotland deserves. I'm a little pessimistic – Scottish Enterprise has been tenacious in the past at protecting its own interests.
And yet there is a much better model. We need an economic development agency that works for society, not big business. If there are to be interventions with public money, those interventions must benefit the public. Having seen the Sports Direct/BHS debacle this week surely no-one can still believe that what is good for business owners must always be good for the public.
So we need an economic analysis and a goal – to fix local economies, to rebalance the profile of the national economy towards productive industry and away from speculation and retail, to take no public action which does anything other than close economic inequality, to boost real innovation, to give people a fighting chance of starting a business – and surviving. To stick up for businesses that are owned and run in Scotland.
We need an economic development agency that works for society, not big business. If there are to be interventions with public money, those interventions must benefit the public.
And then we need a mechanism. We've already proposed what this should be. If we have sector forums where industry sectors work mutually (with employees, trade unions, customers, educators, supply chain companies and more) to devise their own plans, we can create active interventions in the economy which actually work.
We don't need more posing in pinstripe, no more gatekeepers, no more networks of clientelism, and sure as hell no more senior staff who see public sector employment as a means of getting rich. We can create an economic development agency that lives up to the reputation of the Scottish Development Agency in the 1980s and Scottish Enterprise in the 1990s.
We can have enthusiastic officer staff trained to support industry sectors in devising their own approaches. We can take cooperative and social enterprise development much more seriously. We can integrate economic development strategies into all government policy rather than living within the narrow world of 'let the market decide'.
Or we can dodge this, keep pretending that everyone thinks Scottish Enterprise is on the right path and just do what we're already doing. This latter course will condemn Scotland to more of the same – in the very month where the consensus of economists around the world finally settled on the belief that more of the same isn't working.
Every time there is a review of Scottish Enterprise it comes out looking the same. And every time the exasperation of people who are trying to build Scotland's economy grows further. The signs that we need to do something else are everywhere.
So what is it going to be this time – transformation or muddle on?
Picture courtesy of Robin McAlpine
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