Vision for Scotland’s Future Economy

Alex Rowley MSP speaking to business leaders at CR Smith Dunfermline.
Alex Rowley MSP speaking to business leaders at CR Smith Dunfermline.

I am pleased to be here in Dunfermline at the Headquarters of CR Smith who have kindly hosted this breakfast this morning to allow me to raise with you some issues around employment. Today I want to begin a discussion with business and with civic Scotland on the challenges and opportunities for employability in Scotland. A discussion on how to use the powers we have to shape our economy and as a society to achieve full employment and good employment.

I was pleased to be introduced this morning by Alex Campbell because as he said he is a councillor but he is also a local businessman who built up his business which he has sustained over 25 years employing 16 people and over these years giving 5 young people an apprenticeship that led to them having a trade in car mechanics.

CR Smith has been in operation since the 1970s during which time it has employed thousands of staff across Scotland and currently employs over 400 people.
Across Scotland there are local businesses, as well as larger companies like CR Smith, who are household names that are the backbone of the Scottish economy and our drive for full and good employment will not be achieved without their support, their drive and their determination.

And that is why, at the heart of Labour’s ambition for full and good employment, must be a new partnership – a partnership which recognises that government on its own cannot, and will not, achieve either full or good employment.

Over the coming months we are to broaden our discussion to look at a number of areas including how we support people furthest away from the labour market to get to a point where they are able to enter and participate. It cannot be right, and it is not right, to simply write off a section of society as unemployable. So there needs to be an anti-poverty strategy that puts employability at its heart.

This week here in Fife we had the publication of a report from the Fairer Fife Commission set up by Fife Council and I commend them for having the insight to establish such a commission which has recognised the importance of skills and employment to tackling poverty.

I am always mindful that throughout the history of the labour movement whether it was the Jarrow Marchers, the upper Clyde sit-ins or the miners’ dispute of the 1980s, these people did not campaign and march for benefits they marched for jobs. And we must be far more ambitious today for all people to get jobs.

Here at CR Smith there is a model of a company putting its resources into dedicated staff to assist people move towards work through their Hand Picked Programme which has seen 75 people get a job since 2011, and they run four academies a year helping young people build their confidence to get into work. This is just one company but imagine what can be achieved if more got involved.

Last week I visited the Prince’s Trust in Glasgow and met a group of young people who had completed a four week training programme with BAE Systems on the Clyde, and I was told by the Training Manager that many would now get interviews with the company. A whole string of companies have now signed up to offer similar in work experience and this is another example of what can be done in partnership between the third sector and employers.

I also recently met with Barnardos and Action for Children Scotland to hear their proposals for employability support through the work programme which will come under the powers of the Scottish Parliament from next year. Their whole focus is to help disadvantaged young people overcome personal barriers and move into training leading to jobs and business start-ups.

We share their view with our message that there can be no one left behind. Our ambition is for full employment and to achieve this we need an anti-poverty strategy sitting at the heart of government driven by a partnership of government at every level, employers, trade unions and the third sector, with skills and employability at its heart.
But we also need government intervention to support job creation and retention, particularly in areas of decline such as in manufacturing.

The decline in manufacturing across the UK and particularly in Scotland has been, and remains, an economic and social disaster as the latest steelworks crisis highlights. Its erosion over the last 35 years has blighted Scottish communities and plunged generations of families below the breadline.

However, it cannot be a case of exclusively blaming Westminster because the Scottish Parliament has had the opportunity to be strategic about supporting the sector over this last sixteen years – and all parties have fallen far short from offering a vision for the future of manufacturing.

Manufacturing employment in June 1999 stood at 320,000 – 13.1 per cent of the Scottish workforce – whilst the latest statistics show that by 2013 it had fallen by 124,000 to 7.3 per cent of the Scottish workforce.

Manufacturing still matters to Scotland’s economic revival and there are success stories such as the building of hybrid technology buses in Falkirk, and the new opportunities that present themselves with the construction of the Glasgow Airport rail link, and also the 35,000 projected jobs in the renewables industries across the UK.

It is briefly worthwhile re-emphasising the Alexander Dennis example in Falkirk as it shows how strategically targeted public investment can boost manufacturing growth. The ‘Green Bus’ Fund resulted in 90% of the orders placed for hybrid buses being confirmed for production at Dennis. Previously the company and its workforce were emerging from a 3-day working week.

So how do we ensure more success stories? This is where the concept of sector forums can provide the platform for the creation of more manufacturing success stories like Alexander Dennis. It is an opportunity to be strategic and look at a series of issues including supply chains, productivity, skills levels, procurement and wages.
Delivering a manufacturing strategy for Scotland will be essential if we are to truly achieve a balanced and integrated economy. Such a strategy must include looking at how we fairly award contracts and targeted investment in sectors such as construction, transport, general infrastructure, and, the energy sector. This must also support companies of all sizes to access capital which is key for both sustainability and growth.

If we look at European competitors, this is exactly what happens. Governments ensure that companies are supported and that supply chains are vertically integrated and not simply thrown to the mercy of globalisation where so many don’t play by the same rules. So, Scotland has an opportunity to act – and it must – or we will simply celebrate the ghosts of our manufacturing past rather than celebrate a new future.

And looking to the future we must move beyond speaking about what we cannot do to focus on what we can do.

Here in Scotland the Scottish Government already holds economic powers over education, over skills, over transport infrastructure, over planning, over the health of the workforce, over the public sector and its significant role in the economy. Looking forward, as a result of the Scotland Bill making its way through Westminster right now, we will have massive new economic responsibilities. New powers on taxation, how we raise it and so how we spend it. New borrowing powers, and new powers over welfare and employment services.

Now, when it comes to the constitution, I see the Scotland Bill as the next step on the devolution journey and I do believe we should and will move towards a more federal system of government across the UK. But it is also a fact that one million jobs are linked to trade with England so the road to full employment runs not just through Scotland but also through the rest of the UK and indeed the world. And that is why I do say to you we must move beyond the politics of grievance for it has sadly become the excuse to do very little and blame someone else.

I want us to examine the creation of Scottish Strategic Sector Forums, tripartite institutions involving employers, Government and trade unions to look at productivity, procurement, investment grants, competitiveness, and the skills and training (including apprenticeships) needed within the strategic sectors such as energy, tourism and manufacturing.

We need a more focussed and joined up approach to key sectors in our economy and such Forums are one way of achieving this.
A clear policy priority must also be the abolition of youth unemployment making clear we will not accept school leavers from deprived areas being abandoned to life on benefits.

With thousands of children from poorer backgrounds leaving primary school unable to read properly, it is hardly surprising that those same pupils are half as likely to go on to higher or further education with many struggling to make any progress into the labour market. This isn’t just a missed opportunity for them, it is economic potential squandered for the nation.

Education for us is not a social policy, it is our economic policy.

Inequality of opportunity was always a social injustice. In the age of rapid technological change, where those not given the resilience that comes from a good education fall behind, it is both social injustice and economic incompetence to leave so much potential untapped.
This is why Scottish Labour is focussed so heavily on education. Not just seeking to measure the educational attainment gap but to eliminate it. Linking funding to kids from poorer backgrounds wherever they are, handing that funding directly to head teachers in primary schools, starting even earlier with funding into nursery schools before disadvantage gets a grip.

Last week the Chancellor, in his Autumn Statement, announced an apprenticeship levy but how it actually applies, how it is implemented and for what specific purposes in Scotland is as yet undetermined and remains confusing. However, the principle of an apprenticeship levy to be targeted at key industries vital to Scotland’s long term growth and to support SMEs is worthy of support. This could fund ‘Apprenticeship Academies’ – working with private and public sector employers, higher and further education institutions to create academies strategically targeted at future infrastructural projects, STEM jobs and the future economy.

I also want to mention today the exciting new partnerships that are being led and developed by local councils in Scotland who are coming together with Scottish and UK governments, with business and industry around the city regions to drive those regional economies. These bodies are positioned to drive Scotland’s economy at the regional level and will play an increasingly powerful role moving forward.

There will be bigger challenges to jobs in the future than we have seen already – 3D printing, artificial intelligence, driverless delivery. But the opportunities will be just as big from industries we cannot even guess at.

Some have always viewed such change with fear, others with excitement and optimism. Keynes predicted that technological change would have resulted in a 15 hour working week for people in just 15 years’ time. That may be optimistic but we can make sure that the new opportunities of economic growth benefits employer, worker and government.

It is both daunting and exciting. We are better placed to take advantage than most, particularly because we have the chance to do things differently in government in Scotland.

So there are many challenges ahead.

We remain some way off full employment in Scotland. The latest employment statistics bear this out:

  • Unemployment grew by 11,000 of which 9,000 were women
  • Growth in jobs lags behind the rest of the UK
  • We’re now one of only 3 nations/regions not to have recovered jobs lost since the recession
  • And of course we have a particular challenge in the oil sector and its supply chain, with 65,000 jobs estimated to have been lost as the low oil price takes its toll

These are challenges, but they are challenges that are best met by a collective approach bringing all of Scotland’s expertise and talent together to work together and to focus on the issues at hand.

One area that has underpinned growth in Scotland is public sector investment in infrastructure, and with the additional borrowing available this is an area set to continue into the future. This morning I have written to the Minister for Housing in Scotland setting out a number of steps that need to be taken sooner rather than later to ensure that we move house building forward at a pace that is needed to address the housing shortage whilst at the same time provide training, much needed skills and jobs.

Nicola Sturgeon confirmed to Parliament last week that her party is committed to building 50,000 houses for rent in the life of the next Parliament. My own party supports this but as I found out in Fife when the council committed to building 2,700 houses over 5 years there are many barriers such as planning, supply of land and a gap in skills and supply of materials.

I am therefore asking the government to take the following steps:

  • Set up a partnership with local government to drive a national plan for house building into each local authority area.
  • Carry out an audit of all land within the public sector in Scotland.
  • Require each local authority area to establish a Housing Board that will work with developers to oversee and deliver new house building in each area, will consult with local communities and will begin the planning process for establishing mixed housing developments that will deliver both public and private sector housing across Scotland.

Housing is one area which we can and should address now as the gap between housing need and supply is bad for people and bad for our economy. It drives up prices and inflates rents in the private sector.

  • There were 150,000 households on local authority housing waiting lists across Scotland as at 31st March this year.
  • As at 30th June this year there were 10,666 households in temporary accommodation.
  • Between 1st April 2014 and 31st March 2015 councils received a total of 35,764 homelessness applications.
  • Every 18 minutes a household in Scotland is assessed as homeless. That is 81 a day.
  • Over 1 in 10 households in Scotland are affected by dampness or condensation (or both).
  • 940,000 households are in fuel poverty in Scotland – 39% of all households.
  • 75,000 households are overcrowded in Scotland.
  • Homeless children in temporary accommodation missed an average of 55 school days, equivalent to a quarter of the school year.
  • Over the last 10 years, the number living in the private rented sector has doubled to 368,000.
  • The number of households in poverty in the private rented sector has also doubled in the last decade to 120,000.

I suggest that these statistics should galvanise government and society into action.

But there are also the economic benefits of action. 15,562 new homes were built in Scotland in 2014 which created £3.2 billion Gross Value Added to the economy, supported 63,260 jobs in the industry including 380 apprenticeships, 200 graduates and over 1,000 16–24 year olds employed.

If we can increase the supply to pre-recession levels of 25,000 homes per year, this would generate a £1.9 billion increase in economic output with 38,000 extra jobs, £84 million more tax paid nationally and over £50 million investment in local infrastructure.
As they say where I come from it is a no brainer.

Thank you for coming today and I hope we can develop this discussion moving forward and create a debate across Scotland about the kind of economy and society we want for the future moving forward.

I would thank again CR Smith who, as I said, is a company who gives time, energy and resources to helping others and I applaud the work they do.

Post Author: Alex Rowley