Plotting Scotland’s unsettled future

 

 

 

Although there are some industries that will have been more intensively affected (the Scottish based seafood and seed potato industries for example) the Scottish experience of Brexit is likely to largely mirror the experience across England and Wales. Industry-specific support aside, how could Scottish policymakers focus their efforts moving forward?

Whilst we share a similar experience of the impact of Brexit, Scotland of course has an added dimension to debates over its future. Scotland’s future relationship with the UK, and by extension the EU, is not settled, and unlikely to be for some time. Whereas policymakers in the UK seem largely agreed that re-accession to the EU is not on the cards, we do not have that certainty in Scotland. This presents opportunities, but also adds to an already present risk of policy making paralysis in the face of so much uncertainty. How do you develop effective economic policy when the economy could change beyond all recognition?

 

Tools to help deal with uncertainty

An unsettled, uncertain future is of course hard to plan for, but there are ways to navigate out of the fog of unanswered questions. Scenario planning, also referred to as strategic foresight, helps to map future uncertainties and to plan responses.

 

Methods like this tackle uncertainty head-on. They try to place the decision maker in a future ten years from now and ask them to visualise future scenarios based on uncertainties that are being grappled with at the present time –  constitutional futures are an example of the type of scenarios that could be analysed.

 

The next step is to think about actions that need to be taken now in order to ensure the full benefits of various future scenarios can be realised. It can identify where actions are high risk, for example, if they only realise benefit in one possible future scenario. Even more usefully, it can identify actions that are common to optimise benefits in all scenarios. These are things which can and should be done with certainty that they will yield results regardless of the future that may emerge.

 

Scenario planning is often used by businesses to help inform strategy and ensure that businesses know what to focus on and are ready to adapt. But it can be used by government, or those who seek to advise government, to help decide on where to focus investment and resources. The UK Government has developed work in this area[i], and the UNDP[ii] has a guide for developing countries who need to be able to move away from ‘borrowed’ futures – those that relate to the past and other places.

For stakeholders in Scotland, this forward-looking approach to understanding where there are opportunities could be very useful and help us get beyond the often binary debates that accompany constitutional questions – nothing is ruled out and all futures remain in play.

 

 

Example: The future of hospitality

Working through this type of process is something that we at the Fraser of Allander have recently seen in practice as part of a piece of work with the hospitality sector[iii]. Employers are facing a lot of uncertainty at the moment, partly as a result of EU exit. Staff recruitment and retention were the key issues that employers wanted to address now and in future.

Four scenarios were built out of two key uncertainties relating to i) energy costs and ii) extent of effective government support for the sector. In each of these, we discussed what would be required to optimise their workforce situation.

 

In some of the more optimistic scenarios (where government support for the industry was effective and/or energy price pressures were low) employers felt it there would be more scope for monetary incentives through pay to support their staff. In a ‘worst case’ scenario with high energy price pressures, and the government not providing effective support, they felt this would be far less likely, but still something that they knew they needed to try and prioritise.

 

In all scenarios, including the best and worst cases, employers agreed that they needed other, non-monetary, support for their staff beyond what was available to them at the moment. This included seeking out creative opportunities for training and development and support. They agreed that they could to do more collectively as an industry, for example, pooling resources with other local businesses to provide training and looking collectively at other issues, such as wrap around childcare solutions.

 

Interestingly, the future constitutional and EU trading position did not feature in the list of uncertainties that businesses wanted to discuss. This tells us something interesting in itself – what may be of interest to government and stakeholders like ourselves may not be something that businesses feel is top of the critical relevance list.

However, it would be interesting to think about adding that uncertainty into the mix. Relaxations on the movement of labour would no doubt ease some of the recruitment issues. But would it change employers’ views on whether improving pay and conditions was the optimal approach? From the discussions we had with employers, it felt like they knew that improved pay and conditions was the optimal strategy regardless of the future because it meant that they were more likely to have an engaged and productive workforce, as well as the moral sentiment of ‘doing right’ by their employees.

Scottish policy aspirations are closely aligned with those sentiments expressed by the employers we engaged with, with Fair Work a pinnacle of the National Strategy on Economic Transformation. However, Scotland’s labour market will look very different depending on the constitutional future. Scotland’s powers regarding the labour market will also look very different, and rules and regulations may also be very different. Are there actions that Scottish policy must prioritise in all those versions of the future to optimise outcomes, and prevent economic harm?  

 

Conclusions

Of course it isn’t all win-wins. There is no question that leaving the EU will leave our economy smaller and less successful than would otherwise have been the case. But rather than dwelling on this ‘borrowed future’, we need to have consensus on how to move forward. That consensus can be especially hard to find when politics in Scotland is often binary and confrontational in nature.

 

But there are optimal solutions around which we should be able to form a consensus, to be pursued regardless of what happens constitutionally. More time spent identifying these and building consensus on the way forward would indeed be time well spent.

[i] Government Office for Science. “A brief guide to futures thinking and foresight.” (2021)

[ii] UNDP. “Foresight Manual. Empowered Futures for the 2030 Agenda.” (2018)

[iii]This is part of the ‘Serving the Future’ project funded by the Robertson Trust. A full report on the Futures work will be available on our website by the end of May 2023: https://www.servingthefuture.scot/

Emma Congreve, Deputy Director and Senior Knowledge Exchange Fellow at the Fraser of Allander Institute, took part in the first workshop of the Royal Society of Edinburgh’s Scotland-Europe Initiative on 9th March, which focused on trade and investment after the UK’s exit from the European Union. The work of others who presented at the workshop showed that the impact on the UK of Brexit on trade in goods, services and labour has been extensive. But how does this relate to Scotland now, and more importantly, what does this mean for the future?

 

First published by the RSE