Investment is pouring into British industry, so why is Scotland missing out, asks TERRY MURDEN
Say what you like about Boris, he’s certainly stacking up some impressive numbers on jobs and investment. Against an onslaught of warnings that unemployment will soar as the various Covid schemes wind up, there’s been a constant stream of announcements that is allowing the Tories to show that they really do intend to build back better.
Adorned in white coat bearing his Prime Minister insignia, Mr Johnson toured Nissan’s soon-to-be expanded factory near Sunderland in what was a gesture of support to all the regions who have been promised a “levelling up” of investment.
Nissan’s billion pound eco-car and battery gigafactory was just the latest big-ticket project. In June alone Kraft Heinz has announced a £140m investment in bringing the manufacture of beloved sauces back to Britain, and 500 additional jobs will be created at JCB’s 11 British plants on top of 850 the company has already added this year.
What is conspicuously absent from a list that also includes Roll-Royce (£80m) and Airbus (£40m) is that nothing on this scale has been announced in Scotland. The northern powerhouse – which does not have its own government – is being turbo-charged while Scotland, ostensibly enhanced by its devolutionary powers and its own budget, chugs along in low gear.
The steadily expanding list of successes is in marked contrast to the fear-mongering of the past five years from those who forecast an exodus of companies, investment and jobs as Britain left the EU. Those fears were expressed most loudly by the SNP and its Minister for Grievance Ian Blackford who has barely uttered a word as investment has poured into Britain.
Crucially, the positions being created are not the flimsy, part-time and low paid variety, but well-paid jobs, many of them in industries that will help in the transformation of the economy to a greener future, the sort that Scottish ministers are fond of talking about.
So why is Scotland missing out?
Figures show that the country continues to attract the biggest slice of inward investment outside London – but by definition, these investments are creating wealth that largely returns to the country of origin.
The latest data from EY shows that much of the investment was in digital technology, agri-food and business services. These create high value jobs, but each project is relatively small and the top activities were in boosting sales and service. There is also a growing interest in buying real estate, but this tends to enrich those who own them.
The biggest industrial investments in recent months have been from Belfast’s Harland & Wolff, which put 290 workers back into the BiFab yard at Fife, and the ongoing investment in the North Sea and on the Clyde, largely government supported.
The nearest we’ve come to the sort of private sector investment that was commonplace 20 or 30 years ago was a plan by the Spanish engineering company Talgo to build a 1,000-jobs train factory on the site of the Longannet coal-fired power station. It secured planning consent from Fife councillors in December 2019, since when we’ve heard nothing, apart from varying opinion on whether the investment is conditional on the company securing a contract for HS2.
In the meantime, we’re left with the usual jam tomorrow projects which may or may not create the next big thing – the Michelin innovation park, the national manufacturing institute, a new body to drive new ideas in the oil and gas sector.
The reality behind Scotland’s hopes of rebuilding a manufacturing economy is that the old ones that once made it great have moved away or are not being developed on any great scale. Weir Group, which some of the media continue to refer to as a “Scottish engineering company” these days employs only a handful of staff in an office in Glasgow where once there were several thousand at its plants in Cathcart and elsewhere.
What industry has been a big investor in Scotland in recent years? Scotch whisky distilling – because it has to be in Scotland. Any others? Not really. The result is a country that has become too dependent on tourism and hospitality, which has been brutally exposed in the past year.
The Tories and other opponents of the Scottish government will say that independence is the biggest deterrent for investors. The evidence in the EY report casts some doubt on that argument, though the type of investment that is being made in Scotland is largely in footloose sectors. It is easily transferable. Property investors, for instance, have no geographic loyalty and will go where they can get the best returns.
Investment in a factory is another matter. It is a long-term commitment and requires long-term assurances. The will-they-won’t-they political situation in Scotland is enough to plant a seed of doubt in those companies who now have many options, particularly with corporate taxes being levelled up.
This week the UK government took a big step towards creating its alternative to the EU’s restrictive state aid rules, giving greater freedom to the four nations and regions to subsidise companies. This should help entice more inward investors, knowing they can negotiate a deal without reference to Brussels.
This is an added power for Scotland – not that Mr Blackford and his SNP colleagues have welcomed it – and one that could have helped Holyrood save the Bifab plant. Instead it was a private company from Northern Ireland that came to the rescue. Even so, this was a salvage job, rather than job creation, and the much-promised growth of an indigenous renewables industry still seems a distant hope – with or without new subsidy powers.
While the UK government is assisting industry, Scotland’s obsession with the green agenda has extended to making sustainability a condition for any company getting support from Scottish Enterprise. This objective may be laudable but we have to fear that many firms will find themselves excluded as a result.
A head of steam is now building behind the creation of at least half a dozen battery gigafactories in the UK to follow Nissan’s project. Another company, British Volt, has plans to build one in Northumberland.
A Scottish company, Thurso-based company AMTE Power, is also serious about creating its own gigafactory and recently raised capital on the stock market. This week it announced a tie-up with a partner to build a plant – in Australia. While the company has received grant support from the UK government, one high profile investor – a well-known figure in British industry – said it has had no help from the Scottish government. He said: “The criteria the Greens have foisted on Scottish Enterprise does make it increasingly difficult to fund deep technology investment.”
So is this a case of another one that got away?
In the end, it may be the government in Westminster that saves Scotland’s manufacturing sector from oblivion as it becomes a key factor in the battle over the union. Thus far we have seen little indication that the Tories would encourage such investment into Scotland, but who knows what resistance they are facing? There was no such issue when the Japanese and Americans were pouring money into Silicon Glen in the 1980s, but then the issue of separation wasn’t a factor.
tmurden@dailybusinessgroup.co.uk
Terry Murden formerly held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
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