Free market or social democracy? The question no longer applies, says the leader of Scotland’s Independent Budget Review
Crawford Beveridge has learned to strike a balance; a career that has alternated between the private and public sectors, jobs in the United States and Europe, advisory roles on both sides of the Atlantic, dividing family life between Scotland and California.
In 2007, he was appointed to Alex Salmond’s newly-created Council of Economic Advisers (CEA) and earlier this year led the Independent Budget Review (IBR). The former met behind closed doors to offer views on economic strategy to the First Minister, just as the banks were collapsing. The latter consulted widely before presenting the Government with options on dealing with the spending cuts necessitated by the subsequent recession.
Today, Beveridge is still maintaining that balance; the ‘commute’ between San Francisco and Edinburgh, a new non-executive directorship, this time with up-and-coming Glasgow IT company Iomart, and now chairmanship of the second CEA.
When the council first met, no one seriously questioned its collective experience and expertise. But opposition politicians said it was just another form of reflected glory for its creator. Reporters pored over the cost involved in bringing its far-flung members together.
And, perhaps awkwardly for Beveridge, some commentators compared its work unfavourably with that of the IBR’s.
After the council’s last meeting before the Scottish election, The Scotsman’s Bill Jamieson asked: “What was the point of the CEA? Have any of its reports been as useful or as informative as, say, Crawford Beveridge’s outstanding Independent Budget Review? Its facts, figures and findings will stay on my shelves far longer than any set of minutes from the CEA.”
But Beveridge himself dismisses the comparison; the two bodies were very different, he said. The council serves as an economic think-tank for the First Minister and his cabinet, helping to inform policy development. Although it publishes minutes, the meetings are an opportunity for experts in their field to express candid opinions without being characterised as supportive of or at odds with the Government.
The IBR was established with a specific goal; to consult widely and to provide options on how the Government could save £3.7bn. “They are apples and oranges,” said Beveridge, in an interview with Holyrood earlier this month. “The CEA exists to bring diverse thinking to the development of policy. The IBR’s job was to provide ministers and Parliament with options to deal with the constrained budget coming out of Westminster.”
Beveridge views the first council as a success, if measured by the number of its final recommendations which were accepted by the Government (14 out of 18, and partial acceptance of the remainder). “In a sense, though, the real question is did the advice help the Government do anything remarkable in terms of the Scottish economy,” he said.
“And given that our first meeting took place just as the banking system was going into meltdown, the tide was rolling against us and the influence that could be brought to bear in the short term in those circumstances was going to be limited.”
There were, however, some strong foundations laid in key areas of the economy, he said; in financial services and energy, for example, which are now being continued outwith the council. The priorities set by Salmond for the new council are, by necessity, broader and more fundamental; jobs and recovery, internationalisation, and economic levers.
But while Beveridge’s work with the IBR was widely praised, he said the events of the last year – and the challenge of job creation and economic recovery – had forced him to rethink the stark question he posed at the time: “Are we a Scandinavian socialist country which backs wrap-around public services and high taxes to match, or a Singaporean self-reliant nation with rock-bottom taxes?”
As the Scottish Government insisted on maintaining free personal care, concessionary travel and the abolition of prescription charges – at the same time as positioning itself as business friendly, eliminating small business rates and promising low corporation tax in an independent Scotland – it seemed like a fair debating point.
“What kind of country do we want; social democratic or free-market? In hindsight, it was a little naive,” said Beveridge. “I’d started down the same route a while ago with some colleagues here [in California]: ‘You’ve got to decide what kind of country you want to be.’ Now, of course, America is totally polarised. If you ask that question here, the answer is: ‘America is two countries.’ One that is totally free market and small government and the other that is essentially socially democratic.
“What strikes me is that the issues in California and the US – employment, equality – are identical to those in Scotland. The only difference is scale; here [in America] the numbers are much bigger. So I think my original question was a little naive; you would end up with the same kind of polarisation, albeit not perhaps as extreme in Scotland and erring towards the socially democratic.”
Beveridge is a veteran of the technology industry. Born in Edinburgh, he held HR management positions in the US and Europe with Hewlett Packard, Digital Equipment Corp and Analog Devices Inc and joined Sun Microsystems in 1985 as vice-president of corporate resources.
He moved into the public sector in 1991, serving as chief executive of Scottish Enterprise until 2000 before returning to Sun. He became its executive vice president and chairman in Europe, the Middle East and Africa until its recent purchase by Oracle. Today, he is a nonexecutive director of Hitachi Global Storage Technologies, a subsidiary of Hitachi Ltd, non-executive chairman of Autodesk and in September joined the board of Iomart.
Beveridge acknowledges the observation of some economic commentators (John Cassidy, of The New Yorker, for example), that the gap between rich and poor has widened in the US and the UK, countries with market driven economies, while it has narrowed in some of Europe’s social democracies.
He can see it in the dichotomy of San Francisco Bay Area’s fully-booked restaurants and Edinburgh New Town’s busy shops – and the stock market turmoil, faltering growth and worsening jobs figures in the wider economies.
“We are in a new era now and the trick is figuring a way of having enough of a free market to stimulate growth at the same time as providing a safety net for the less well-advantaged,” he said.
“There is no simple answer to what kind of country we want; we want it to grow and we don’t want the poorest in society to suffer. How do we get the balance right between the Government’s work around social equity at the same time as allowing the levers it needs to stimulate growth?”
Council of Economic Advisers
Crawford Beveridge, Chairman
Professor Joseph Stiglitz
Nobel Prize-winning economist Prof Stiglitz was a member of the US Council of Economic Advisers from 1993-95, during the Clinton administration, and served as CEA chairman from 1995-97. He then became Chief Economist and Senior Vice-President of the World Bank from 1997-2000. In 2009 he was appointed by the President of the United Nations General Assembly as chair of the Commission of Experts on Reform of the International Financial and Monetary System, which also released its report in September 2009.
Professor Louise Richardson
Political scientist Professor Richardson is Principal and Vice-Chancellor at the University of St Andrews. Richardson served as Assistant and then Associate Professor in the Harvard Government Department, teaching courses on international relations. Professor Richardson currently serves on the advisory board for a number of institutions in the UK, Ireland, and the US, all furthering understanding of the humanities, political violence, and human rights.
Professor Anne Glover
For the past five years Professor Glover has worked to further enhance Scotland’s reputation as a science nation in her role as Chief Scientific Adviser for Scotland. Professor Glover holds a Personal Chair of Molecular and Cell Biology at the University of Aberdeen, and has honorary positions at the Rowett and Macaulay Institutes. She is an elected Fellow of the Royal Society of Edinburgh, a member of the Natural Environment Research Council, and a Fellow of the American Academy of Microbiology.
Professor Andrew Hughes Hallett
Professor of Economics and Public Policy at George Mason University in the US and visiting Professor of Economics at the University of St Andrews. He specialises in international economic policy and has acted as a consultant for the World Bank, the IMF, the Federal Reserve Board, the UN, the OECD, the European Commission and central banks around the world.
Professor Sir James Mirrlees
Professor Emeritus at Cambridge University and distinguished professor-at-large at the Chinese University of Hong Kong. Sir James was awarded the Nobel Prize for his work on economic models and equations about situations where information is asymmetrical or incomplete.
Chairman and Chief Executive of Clyde Blowers; a company transformed under his leadership into a portfolio of global engineering companies. He also serves as Chairman of the Welfare to Work Forum which has seen 15,000 Scots enter employment.
Professor Frances Ruane
Director of Ireland’s Economic and Social Research Institute and Honorary Professor of Economics at Trinity College Dublin where she was an academic for over 25 years. She is a member of the Royal Irish Academy and has served on a range of national policy boards and commissions in Ireland over the past two decades. She is widely published in the area of international economic and industrial development.