‘Scotland’s Economic Future: Disruptive Ideas’ is a series of papers conceived and coordinated by Alison Hunter and Fabian Zuleeg – and shared with Sceptical Scot.*
The first of these, by Robert Pollock, urges profound institutional change if Scotland is to master and benefit fully from the transition to a net-zero carbon economy – and draws upon the lessons of offshore wind to point the way forward.
There shall be a Scottish Parliament, the first words of the Scotland Act, is a sentence that twenty-two years on remains implicitly charged with a promise of a new Scotland.
Much has changed since the Parliament’s creation but the seeming potential for profound national advancement carried in this bold assertion seems unrealised. Low productivity, an unbalanced economy, inequality and adversarial national discourse do not indicate that the country has entered a new inclusive epoch of development.
A redesign of Scotland’s institutional system of governance is needed to promote national socio-economic development and a new economic model based on energy transition. Moreover, such reform is required to increase national resilience and responsiveness in a time of profound environmental change. To address the challenges and opportunities of transition to a net-zero carbon economy, key institutional changes to engender requisite collective and collaborative discourse, planning and action are set out here.
Although independence would provide Scotland with additional powers, an evident rationale exists for institutional reform irrespective of the impending constitutional reckoning in order to respond to climate change in a manner that creates a more equitable, sustainable and productive economy.
Although the case for redesign of Scotland’s institutional system is applicable across the policy landscape, the focus here is decarbonisation: a pressing national priority, one that is topical given the Scottish Government’s (SG) establishment of a Just Transition Commission and a 2045 target for net-zero emissions, whilst profound, existential questions about the oil and gas sector loom large.
The Critical Challenge of Institutional Change
Holyrood has not acted as a catalyst for a new unifying consensus or a blueprint for Scotland’s future. However, it could never have been without a parallel redesign of the nation’s wider institutional arrangements. Yet, rather than institutional boldness and innovation, a caution has been displayed, as evidenced by the use of the term Executive rather than Government in the Parliament’s first decade; a tendency towards unsystematic public initiatives and reforms; the absence of a new cadre of public servants who are collaborative system builders; and the continuance of organisational structures that pre-date devolution, such as the 32 unitary authorities and the enterprise agencies.
The Parliament, unaccompanied by a fundamental redesign of the national institutional environment, has found the creation of consensus and collaboration amongst diverse actors elusive. Such collective endeavour is a pre-requisite for national reinvention. Moreover, the Parliament’s inability to foster an inclusive, settled national vision and narrative has been stymied by the predisposition of its dominant occupants to treat the institution either as a means of maintaining the Union (1999-2007) or ending it (2007-2019). These positions have often framed Scotland’s future as being wholly conditional on constitutional circumstance, which subsequently leads to increasingly mono-dimensional, polarised debate. It is a debate with a high opportunity cost. There is little utility in subscribing to a Panglossian worldview and one needs to accept that a debate on Scotland’s constitutional future will consume passions and energy in the coming years. Even so, a collaborative process relating to decarbonisation and the related opportunity for national socio-economic renewal should be simultaneously pursued.
Institutional innovation in parallel with the emergence of disruptive technologies has been an enduring formula for the reinvention of small nations, often in seemingly peripheral positions.
However, some might ask why there is a need to overhaul Scotland’s institutional framework. Such a question exposes a reluctance for significant institutional reform, outside the binary constitutional debate on independence or status quo. Often in public discourse one hears that Scotland’s relatively small size, in terms of population and geography, and distinct institutions, such as law and education, means that it can be fleet of foot and institutionally joined-up and responsive to challenge and opportunity. This is true to a point but, given the nation’s enduring shortcomings, it would be wrong not to question this position. It is one that does not pay due cognisance to the nation’s complex reality and inheritance in terms of culture, class, geography, health, religion, life chances, and empowerment among other factors.
Before devolution such heterogeneity and the institutional deficit to manage it were obscured and mitigated by Scotland’s framing within the larger political structures of the UK and, until the 1960s, the Empire (and, to a lesser extent, the European Union from the 1970s onwards). Moreover, these structures provided an external focus for the energies of Scottish institutional innovators and system builders. Therefore, the national institutional environment that greeted the reconvened Scottish Parliament was not one that was geared for the generation of a shared national vision or the mobilisation and co-ordination of diverse actors required for its attainment. Given this institutional deficit, devolved government has faced an uphill struggle to deliver the new Scottish epoch anticipated by many.
Lessons from offshore wind
The SG has for over a decade prioritised the generation of the nation’s electricity from renewable energy sources. This internationally lauded ambition has been supported by a programme of legislation and policy, notably the commitment to generate 100% of Scotland’s electricity from renewable energy sources. However, despite significant progress towards this target, the projected economic benefits have not materialised.
This is extremely concerning given that previous energy transitions have been catalysts for sustained periods of national development: coal in the Central Belt; hydropower in the Highlands; and oil and gas in the North East.
In terms of offshore wind, only a small fraction of the tens of thousands of new jobs that a publicly funded study in 2010 said could be created has materialised. It is a divergence between forecast and outcome that can be attributed to institutional circumstances.
The broader institutional environment which framed the SG’s offshore wind ambitions was extremely conducive to its agenda (e.g. 2007 EU Emission Targets, 2008 UK Climate Change Act, 2008 Crown Estate seabed leasing round, 2009 UK subsidies for offshore wind projects). This institutionally created opportunity seemed particularly favourable to Scotland, a nation with 25% of Europe’s offshore wind energy resource. Moreover, Glasgow was the base for two of the UK’s principal offshore wind developers, Scottish Power and SSE, the former being the global offshore renewables HQ of its parent company, Iberdrola. In addition, the Scottish university base was seen as a particular asset, with Strathclyde University singled out as the biggest asset for the development of the industry in Scotland.
In response, a number of eye-catching Scottish institutional developments took place. In 2009, The Crown Estate in liaison with the SG identified ten Scottish zones for offshore wind development with the potential to make the nation the largest global generator of offshore renewable electricity. A year later the SG established Marine Scotland, a directorate to facilitate planning and consenting of offshore wind farms. In the same year, it introduced a national infrastructure plan for key offshore wind manufacturing and support sites and a related industrial strategy. Nevertheless, these notable policies were arguably hampered by insufficient pragmatism in their application.
The infrastructure plan offered an extensive list of heterogenous coastal sites which may have kept an optimal number of local politicians content but which failed to send clear messages of prioritisation and intent to investors. Moreover, although Glasgow was the centre of the industry in Scotland, in terms of skills, research and capability, this status was not readily recognised by the SG. The potential success of Glasgow at the expense of east coast locations was seemingly viewed as inconvenient and there was a hesitancy to promote Glasgow as a capital for offshore wind akin to Aberdeen’s position for oil.
Moreover, in terms of industrial strategy, the SG signed five memorandums of understanding (MOUs) with international manufacturing corporations to encourage the location of their new technologies and turbine factories in locations across Scotland. In the event, none of these businesses located manufacturing in Scotland. Although national agencies were activelyencouraging investments via incentives including R&D grants and test facilities, Scotland had limited control over the factor with greatest bearing on corporate decision making: the level of subsidy for offshore wind projects, which regulated the size of the market.
Although there was undoubtedly innovative policy making in Scotland there was a lack of cognisance, perhaps denial, of the asymmetry of power between Edinburgh and London in regard to the development of the offshore wind industry. Moreover, this asymmetry became more acute as UK Governments changed from Labour to the Coalition in 2010 and to the Conservatives in 2015. Over time, the UK subsidy regime on which Scotland’s offshore wind industrial development was dependent was severely reduced.
In addition, an increasing disregard in London for Scottish ambitions was evident, as demonstrated by the removal of Edinburgh’s limited powers for providing targeted subsidies to offshore wind developers. Nevertheless, Scotland did not seem to play its hand in the most advantageous manner.
Despite the SG building strong relationships with utility companies and international manufacturing corporations with a Scottish locus, it never exhibited the same priority in influencing key institutional players south of the border. Even though Scotland’s ambitions required to beframed within the UK electricity market context, there was a seeming absence of a crafted, united tactical response by Scottishactors to this multi-scalar reality. While Scottish civil servants felt that Whitehall was primarily interested in the industry’s development in England, UK civil servants felt that the Scottish Government was ploughing its own course in isolation. Competition rather than collaboration became the seeming default position of both governments.
Furthermore, the ability of Scottish actors to track the debate within Whitehall seemed partial. The Treasury, DECC, BIS, Cabinet Office and DCLG all had differing views on the industry’s development. In effect, UK policy was a Rubik’s cube of horizontal (energy), vertical (industrial) and spatial (regional) policy positions that required to be understood and managed, if not exploited, by Scotland. Many Scottish public servants were slow to comprehend the profoundly negative implications of interacting UK policy changes for a Scottish industrial renaissance based on offshore wind. It is an outcome that implies that the Scotland Office was ineffective in facilitating win-win relations between Edinburgh and London.
In addition to the above, there was partial comprehension of the potential evolution of offshore wind technologies. In turn, theMoUs signed by the SG with the five new entrant manufacturing corporations came to naught, whilst the two incumbents with which the Scottish Government had no MoUs, Siemens and Vestas, captured nearly all of the UK market. Additionally, global supply chains and corporate procurement led to the eventual projects in Scottish waters having limited impact on the Scottish industrial base, as demonstrated by the uncertain fate of Bi-fab and the import of components of a publicly supported floating wind farm.
Critically, as noted earlier, technology when linked with institutional reform can fundamentally re-orientate the fortunes of small economies. Tellingly, this outcome in regard to offshore wind mirrors much of Scotland’s post-war institutional relationshipwith technology. Exogenous technologies, often promoted by international corporations, have been frequently embraced by Scottish public actors with insufficient comprehension or control over their evolution thereby leading to failure (e.g. Chunghwa Picture Tubes, Cadence semiconductors, Intermediate Technology Institutes) and crisis (the demise of Silicon Glen).
End of Part One
*Together with a group of economic experts, policy analysts and commentators from Scotland and beyond, the papers have been developed entirely on a voluntary basis. Each paper presents the views of the individual writer concerning Scotland’s economic future at a time of significant global and domestic change and uncertainty. While covering a wide range of topics from institutional reform to immigration, the papers share a vision for Scotland to make greater strides towards a resilient, economic future.
The papers aspire to the following aims:
- To generate a fresh, apolitical and inclusive debate concerning Scotland’s economic future
- To support the process of new / revised policy adoption and new ‘ways of working’ which can be injected into Scottish life and society, with the aim of generating a better future for Scotland’s citizens
- To focus – at least initially – on a core set of themes linked to Scotland’s economic development and to inject ‘disruptive’ thinking into the debate
Sceptical Scot is publishing these papers in abridged/edited form with the agreement of the authors.
The full versions are/will be available on the Fraser of Allander Institute site
See also: Ben Wray in Common Space on Alister Jack and a £2bn offshore wind farm off the coast of Fife