Youth job guarantee, fiscal flexibility and investment in green business key to economic recovery, expert panel says
Scotland’s economic recovery plan after the pandemic must prioritise green industries and create a jobs guarantee for young people, a Scottish Government advisory group has said.
The report from the Scottish Government’s independent advisory group on economic recovery made 25 recommendations to “build a robust, resilient wellbeing economy” that mitigates the damage caused by the coronavirus and invests in a “green economic recovery”.
A jobs guarantee scheme to protect 16-25 year olds from a “tsunami of unemployment” is among the recommendations, as is a call for greater fiscal powers for the Scottish Government to inject at least £6bn to stimulate the economy in the coming months.
Chaired by former Tesco Bank chief executive Benny Higgins, the group took over 375 submissions from across civic society to create a report that discusses the role of the public, private and third sector in the economic recovery.
The advisory group said its recommendations were to be seen as “an action list and not just a shopping list” and that the government would have to “create jobs at an unprecedented rate”.
The Scottish Government welcomed the report’s recommendations and said it would make a “full and substantive response” to the report by the end of July.
Speaking at the Scottish Government’s daily coronavirus briefing on Monday, Higgins said the pandemic had “exposed and illuminated” pre-existing problems in the Scottish economy.
The challenges facing the economy before the onset of coronavirus had not gone away, he said, and in the case of Brexit had become “bleaker”.
He said: “Our ambition must be to build a robust, resilient wellbeing economy that can demonstrate strong economic growth that creates jobs and does so with a focus on fairness in our economy. One that is ready for the inevitable next crisis, not the last one.”
In particular Higgins spoke about the need to protect 16-25 year olds from the risk of “long term scarring” from a “potential tsunami of unemployment” by investing in a national jobs guarantee scheme.
He recommended the scheme offer secure employment for a period of at least two years to young people, paid at the living wage.
Higgins also said the current fiscal arrangements between the Scottish and UK governments were “extremely limiting” and recommended that the Scottish Government pursue “greater flexibility” to invest directly in economic stimulus.
Referring to Germany having invested four per cent of GDP in supporting economic recovery, Higgins said Scotland would need the ability to spend at least £6bn for a comparable investment.
The report recommends the UK and Scottish governments accelerate the review of the fiscal framework and ensure it takes into account the circumstances surrounding the pandemic.
Higgins also spoke of lowering VAT across the board,
and especially for the tourism and hospitality sector, and called for tax incentives for small businesses and greater investment in infrastructure.
Economy secretary Fiona Hyslop said: “I would like to thank Benny Higgins, the independent advisory group members and all who contributed to their work in setting out a route to recovery for Scotland to address the economic impacts of COVID-19.
“Scotland, as with other countries, faces enormous challenges, and we need to all work together as never before to ensure our country emerges through this pandemic with a green economic recovery that has inclusion and wellbeing at its heart.
“We wanted the report to be ambitious and far-reaching, and with this strong and comprehensive set of recommendations this has certainly been achieved.
“The report identifies the importance of employment, the environment, education and equality. I agree that each one of these will be vital as we seek to create a society that is resilient, fair, and one in which everyone has the opportunity to be successful.
“We will now develop a detailed response to the report which will be published before the end of July.
“This report represents a clear call to action that goes beyond the Scottish Government and the public sector. We will only be able to build the kind of post-COVID-19 recovery we want with the active involvement of the private, cultural and third sectors and, importantly, the public.
“It is therefore vital that everyone continues to work together in the crucial weeks and months to come to deliver the action Scotland needs to recover from the impact of COVID-19.”
The First Minister, Nicola Sturgeon, said that she saw the report as “a serious and substantive bit of work” and that she agreed broadly with its findings.
She added: “I think it potentially lays the foundations for a much more resilient, sustainable and fairer economy in the years to come”.
The Scottish Greens welcomed many aspects of the report but said that the Scottish Government had to go “further and faster” and place tough climate change conditions on businesses in receipt of support.
Scottish Greens co-leader Patrick Harvie said: “More conditionality in business support is also something we’ve long called for. Every penny of public money must come with a commitment to end insecure and low pay, which is endemic in some sectors, so a bolder approach is needed.
“This report also recognises what the Scottish Greens have been saying for years: that renewable energy is the key to unlocking our prosperity, not oil and gas. That’s why Scottish Government needs to map out how it will invest in this sector, and give an assurance that it won’t be bailing out the polluting industries of the past.”
The Scottish Liberal Democrats said that the report is a “serious bit of work” but that it lacked “ambition”, particularly by not recommending the introduction of universal basic income.
Scottish Lib Dem leader Willie Rennie said: “What this report makes clear is that there will need to be detailed discussions across the whole of the UK.
“The broad shoulders of the UK economy have helped us to support the public through measures like the furlough scheme. We must ensure that we are pulling in the same direction.
“The recovery from this crisis will be long and arduous. For the sake of future generations, we must build a fair and inclusive economy that supports those who have been hardest hit."
Scottish Labour also welcomed the report and praised aspects of it, such as the jobs guarantee.
Scottish Labour leader Richard Leonard said: “The advisers also advocate rolling out the community wealth building approach pioneered by North Ayrshire's Labour council. This is a common-sense approach that can ensure the created by the people of Scotland stays in the hands of the people of Scotland.
“However, the creation of a 'council of business advisers' is insufficient. We need comprehensive and long term trade union and employer engagement at a sectoral level to plan the economy.
"The Scottish Government must waste no more time in establishing a jobs guarantee scheme, which should be tailored to ensure it provide necessary additional assistance for women, young workers and BAME and disabled workers, who are all likely to be hit hard by this economic crisis.
“And it is clearer than ever before that Scotland needs to ditch the SNP's failed 'case by case' approach to industry, and adopt a coherent industrial strategy with a programme for re-building our manufacturing base at its heart."
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