ÐÏࡱá>þÿ ACþÿÿÿ@ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿì¥Áq` ð¿x.bjbjqPqP .<::R&%ÿÿÿÿÿÿ¤       x4° ° ° 8è  ¬h2$ $ "F F F F F F çéééééé$šh!^  ´F F ´´   F F "444´” F F ç4´ç44  _F  0? ¼LUÉ° Hˆ+ç80h3,`!Ј`!_`! _ˆF Ð4œ´F F F  XÜF F F h´´´´¬¬¬° ¬¬¬° 4R"t      ÿÿÿÿ YES WE CAN Margaret Cuthbert Jim Cuthbert It is now abundantly clear that the UK, and Scotland, face a very severe economic downturn. In our last article in the Scots Independent, we laid the blame for the particular difficulties faced by the UK economy firmly at Gordon Brown’s door. We also argued that Scotland would be much better placed to face the forthcoming economic challenges if it were independent. And we promised to return, as we do now in this article, to the question of what steps the Scottish government could undertake, within its existing powers, to help the Scottish economy. The Scottish government has already outlined a “six-point” recovery plan: the main features of this include proposals to accelerate public spending on capital projects: to stimulate tourism – particularly through the year of homecoming initiative; to improve the availability of affordable housing; to improve energy efficiency in houses; to streamline planning procedures; and a range of measures to improve advice to businesses and individuals. It is fair to say that most media commentators were under-whelmed by these Scottish government proposals – while accepting that the Scottish government had little room for manoeuvre, because it has no power to borrow money, has very limited powers in taxation, and its budget is essentially fixed by the Treasury. There are, however, a number of initiatives which the Scottish government could usefully undertake now, over and above its initial six-point plan, and within its existing powers. It is worth looking first at some general principles which should govern the Scottish government’s approach: There is, of course, an overall need to help those individuals who are inevitably going to suffer badly as the economy worsens in the short term: many of the government’s proposed actions in its six point plan are concerned with so doing. But we also need to make sure that the economy is positioned to take advantage of the upturn when it ultimately comes. It would be a real tragedy, if, during the downturn, we lost for ever those developing high tech companies in which we have invested heavily in terms of intellectual capital. We need to develop our exporting capacity. We need to take account of a likely long term fall in the relative value of sterling. As we argue below, this in itself will present opportunities. It is absolutely clear that the UK, and Scotland, need to change their economic ways in the light of the failure of the City based model. In the UK, we have become accustomed to living off borrowing, ultimately from overseas lenders, and this has contributed to the pervasive view that the most important thing in the economy is consumer spending. We all became familiar, during the apparently prosperous years, with news reports along the lines of “UK economy does well – consumer spending up again.” But as the credit from overseas dries up, we will need to get accustomed to a harsher world where the emphasis has to switch towards creating products and services for export. There are, however, major opportunities for Scotland in this situation. We have already seen a very significant devaluation of sterling against the world’s major currencies, the dollar and the euro: and it seems likely that this marks the movement of sterling onto a sustained lower plateau. This has already made imports dearer, opening up substantial opportunities for import substitution: and it also makes our exports cheaper abroad. In effect, many of our industries have been blighted over the years, because the effect of the City has meant we have suffered from a seriously over-valued currency. A sustained fall in sterling opens up substantial opportunities, not just for advanced technological industries, but also for less glamorous traditional industries including whole swathes of manufacturing, agriculture, fisheries, food, forestry and textiles. Against this background, the following are specific actions which we suggest the Scottish government should take. Public Procurement: (1) Redesign public contracts and invitations to tender to make them more friendly to small and medium sized businesses: for example, large contracts should be unbundled. (2) Maximise the value for money achieved from public procurement. There should be an immediate and critical review of demonstrably poor arrangements like PFI and questionable arrangements like the Futures Trust. A very critical eye should be cast over specific projects which may very well be overblown, such as the second Forth Road Bridge, the Borders railway, and the Edinburgh tram project. Reduce Water Charges in Scotland: As we have argued in previous Scots Independents, water charges in Scotland are too high, and could be significantly reduced on a fully sustainable basis. This would help family budgets and would also give a competitive advantage to Scottish businesses. Effective Help to Businesses in Scotland. (1) If Scotland were independent, then we would want to restructure the tax system to encourage business research and development. A similar effect could be achieved within existing powers by setting up collaborative research arrangements between government, higher education institutions, and industry. The existing Intermediary Technology Institutes (ITIs) should be used to encourage more collaborative research. In addition, the successful Australian co-operative research council (CRC) model should be introduced. This is a proven and cost effective method for stimulating collaborative research, and is of particular potential benefit to a wide range of manufacturing and other industry. (2) There should be a critical evaluation of the cost effectiveness of the business advice given by Scottish Enterprise and Highlands and Island Enterprise, and serious consideration given to shifting the focus more towards technical advice, (as is the approach in Enterprise Ireland). (3) A review of skills training designed to make this much more responsive to industry needs. (4) Initiatives to stimulate specific industries: for example, by encouraging the branding, promotion, and marketing of locally produced food, as is done in Cork in Ireland: Realising the Potential of the Higher Education Sector in Scotland. The Higher education sector is rightly regarded as one of the jewels in Scotland’s crown. There is a need to achieve optimal focus with regard to Scotland’s long term economic strategy, particularly given the higher funding now available in the rest of the UK. There should be a review to establish whether there is scope for rationalising some basic courses. There should also be an assessment of whether the structure of degrees offered matches the needs of the Scottish economy: would it be better, for example, if we had far fewer specialist Honours degrees in subjects such as media studies or psychology, and more emphasis on broad 3 year liberal arts and science degrees in the mould of the traditional Scottish Ordinary degree. Overall, this should reduce wastage, produce a graduate stock with more appropriate foundation for their eventual careers, and free up resources in the sector for research. This should also improve the attractiveness of the sector to students from abroad. Tackle the European Structural Fund Problem: As we have argued in the Scots Independent and elsewhere, the Treasury effectively cheated Scotland of around £1 billion through the way it manipulated European structural fund payments. While officials accept this argument, the Treasury is successfully stonewalling on the question of restitution. The Scottish government now needs to go over the Treasury’s head, to the European Commission and/or to the court of public opinion, to have this injustice corrected. Try to Get Value for Money from Scotland’s Westminster MPs: A whole raft of important issues can only be tackled through Westminster. In the current state of national crisis, it would be a good test to see whether Scotland’s Westminster MPs can rise above narrow Party considerations to lobby effectively on these issues. These issues include: (1) making sure Scotland benefits fully as Alistair Darling loosens his purse strings; (2) assisting with tackling the European Structural Fund problem; (3) putting pressure on the Department of Culture, Media and Sport to make sure that Scotland benefits fully from recent changes to the Big Lottery Fund, which has recently been given responsibility for distributing the money the government has clawed back from dormant bank accounts; (4) making sure that Scotland achieves a better share of Olympics related contracts than its current 1% - again pressure needs to be put on DCMS; (5) changing the rules on European partners in joint ventures, which currently discriminate against Scottish firms compared with, for example, Irish firms; (6) lobbying the Treasury so that the same flexibility on VAT variations can be available in the UK as is available in other EU member states; (7) ensuring that DTI no longer considers Scotland as an add-on when European research priorities are being determined; (8) putting pressure on the Treasury to reform the RAB system of government accounting and the damaging effects of its capital charge. Specific Strategy Studies: There are a number of important areas where specific strategy studies should urgently be undertaken,: to give two examples, (a) on what the best course is for rescuing and developing the Scottish financial services industry, (b) on what transport links are best needed to serve industry. We hope that we have demonstrated above that there is indeed a lot which can be done: but to be really effective such measures need to be embedded in a coherent economic strategy which takes account of the new economic circumstances.     PAGE  PAGE 1   *Ìì ‘ ý ÿ N ‚  Q R ¯ º R S [ e  RqÚ‰ŠÂÃ89(*´îù EMNÄÅÆØÜß„…†Š‹µ¶ÕÛ*2úõðìèìäìàìàìàäàÜàØàÔàØàØàØàäØäÐäØäÌäÌØÌÈÌÐØÌØÌèÌÃèØè¿è¿Ø¿Ð¿»¿³«¦³ hùOÛ6hùOÛh¼4Ò6hùOÛhùOÛ6huG¯hÉ* hý4œ6hUIahÚvh¼C*h'f¥h:V&h¶mhÕJŠh}[’hý4œh‚Kl h:V&5 hMè5 h‚Kl5A *+U V   scŠµIJñòSƆ21÷ïïííííííííååååàààààààààààgd}[’ & FgdÕJŠ$a$gd:V&$a$gd:V&R.w.þþ212\ßàðŒÕ%/\]mn®ÊÏÓ56bf”¡ÍÑ? 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