WITH an impressive detachment, the deputy first minister John Swinney brushed off last week’s rise in unemployment in Scotland with the customary SNP explanation that it was all the fault of Westminster.
In case you missed it, official figures revealed the number of Scots out of work increased by 18,000 between June and August to a total of 170,000. This leaves Scotland’s unemployment rate at 6.1%, above the wider UK rate of 5.4%.
Swinney’s curt response to the news that unemployment is now higher in Scotland than in Northern Ireland, a traditional UK blackspot for jobs, was to insist his “continued investment” in the nation’s new growth engine, large-scale infrastructure schemes, was being “threatened by the cuts the UK government plans to implement”.
Last year we were all going to be living high on the hog on the back of North Sea oil; now large infrastructure projects will create Scotland’s El Dorado.
The poverty of his argument is laid bare by the inconvenient truth that unemployment in the rest of the UK fell to a seven-year low.
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Moreover, the UK is at last creating permanent jobs — the statistics show the number of self-employed people is 26,000 lower than last year. There was also a fall in the number of people working in part-time jobs because they cannot find full-time work.
But buck passing aside, Swinney’s comment also illustrates he has learnt nothing from his earlier oil-based promises.
Infrastructure spending can provide a fillip to demand and help stimulate economies, but in the absence of meaningful private sector growth — which creates jobs and wealth and the tax revenues that fund “continued investment” in infrastructure — public sector schemes are akin to robbing Peter to pay Paul.
It is private businesses that lead sustainable recoveries, not public sector largesse.
Official figures released last week reveal that at the start of 2015 there were 4.7m private sector businesses in England, compared with 340,000 in Scotland.
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A key measure of the health of the private sector is business density rates. It’s no surprise that London and the southeast of England have the highest business density rates in the UK with 1,434 businesses per 10,000 adults. Scotland comes up woefully short on this measure, with just 767 per 10,000 adults. That’s lower than Northern Ireland (803), and Wales (839).
And while Swinney complains he doesn’t have enough taxpayers’ money to continue his spending splurge, the Scottish economy looks to be sailing towards a perfect storm of rising unemployment and slowing growth.
Add in the harsh reality that economic growth in Scotland was only 0.1% in the second quarter of this year — its lowest level in three years — compared with the UK wide figure of 0.7%, and the direction of travel looks increasingly clear.
Against this backdrop, giving councils the power to cut business rates from the end of this month is unlikely to make much difference. It remains a moot point whether Scotland’s heavily indebted local authorities will actually be in a position to use this power. Cuts to business rates will have to be funded out of council revenues which are already stretched to breaking point.
In between spending last week wrapping themselves in the Saltire, it might have been nice if Swinney or first minister Nicola Sturgeon could have spared a little time in Aberdeen to offer some meaningful solutions to Scotland’s increasingly worrying economic malaise.
Expansion is a gas
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DUNDEE-BASED GA Engineering, which last year agreed to a deal which saw energy- focused private equity group Simmons take a controlling stake in it, looks set to embark on an ambitious acquisition spree.
GA’s deep roots in the city of jam, jute and journalism mean it is also the main shirt sponsor for Dundee United. But the cash injection from Simmons has enabled the engineering firm, which employs about 160 in the city, to finally realise long-held plans to expand beyond Scotland and widen its focus beyond the oil and gas industry.
Last week Gavin Aitken, chief executive of the parent company formed as part of Simmons’ investment, announced the purchase of English oil and gas engineer MKW.
Speaking to me last week Aitken said: “We are looking to build a larger manufacturing platform around GA. We’re an oil and gas fund of course, but in the current market you have to value diversity.
“Consequently, along with energy firms, the kind of acquisitions we’re looking for are companies involved in the aerospace and defence industries.”