We have to get our heads around the fact that this is not a normal crisis. This is an exceptional crisis, with the collapse of demand in the market at the same time as we are getting all sorts of supply chain issues—blah, blah, blah. That is not normal. My criticism of the advisory group on economic recovery’s report is that it is normal—it is extreme orthodoxy. It is exactly what Scottish Enterprise would have done last year.
It is not that the report is terrible, but it does not match the problem. I will give you a couple of examples of what we should be thinking of at this stage. Let us take the indigenous industries. From the very beginning of the crisis, I have been arguing that it is not the fundamental nature of those businesses that is the problem. A lot of the cafes, manufacturing places and service-providing companies will be entirely viable as soon as the pandemic is over. What is causing them deep distress is that, while their income has collapsed, their rents and debts are still being serviced. They are losing income, but they are not being protected from their outgoings. There should have been a rent freeze and a debt moratorium for the period of the crisis. Asking businesses to operate when they are paying their outgoings as though their incomings are still normal is the problem. However, those issues are reserved to Westminster.
We need to do something radical. One suggestion that might be considered is to have a national asset co-operative. That is key, because businesses that can hold their assets will be viable when it is time to reopen. If a cafe loses its chairs, it cannot reopen. We need to protect the assets.
It might be worth looking at whether you can create a national fund that would purchase distressed assets—there is no market for empty cafe or retail space—through a co-operative and hold them. That would need to be subsidised with public money—perhaps for the cost of the assets. That would be for however long we still have to go with the Covid crisis—for nine months only, I hope. At the end of that period, the businesses could either buy back their assets or lease them from the national co-operative. If the measure were backed publicly and by the Scottish National Investment Bank, no viable business need go out of business. Whatever happened at the end of Covid crisis, their assets would still be in place.
I suspect that you are probably understating the degree to which you are all being contacted by local businesses saying, “There’s nothing wrong with my business, so long as I can get customers back in. But I’m going down the tubes, because they’re still taking my monthly rent payments on a business that I can’t operate.” That is one of the key problems.
That is a big idea, which I think would be welcome. It would also have the impact of bringing down commercial rents, which would be helpful for a lot of indigenous businesses, although perhaps not so much for the pension funds. However, right now, my heart lies with the businesses, not the pension funds. No one is coming out of this completely unscathed. I think that the pension funds will survive, so it is more important that we focus on the businesses.
The other thing that we must do—again, I do not think that the advisory group on economic recovery looked at this—is, to be frank, to get our hands a bit dirty. We cannot save everything; neither can we save businesses through macro approaches.
The standard Scottish economic development approach is, whatever happens in one area, to stand 100 yards back, tweak and turn levers and knobs and let things flow into and out of the economy. That is not getting your hands dirty. At this point, you must say that this is not just about hoping that there will be new jobs; we have got to make new jobs. We must take action.
The big and screamingly obvious thing that we have pushed a lot is that we will have to reinsulate every house, fit new heating systems to decarbonise and do an enormous amount of work to move to the circular economy that we must have if we are to meet targets. We have done a lot of work on that—we have published an entire costed green new deal. It will take 25 years to do that work and the biggest barrier is that we massively lack the workforce that we need to do those skilled jobs.
09:15
We produced an economic recovery document called “Resilient Scotland”, in which we said that a value judgment should be taken about the jobs that we want to prioritise. Make, build, grow, do and serve productive things, because they pay well—they are high productivity and high value. Take a value judgment about the jobs that we want to support to recover—such as those in manufacturing and high-quality service jobs—and intervene. The standard practice is not to make a value judgment but to stand back and let the market correct, but this is not a normal market, so we must make value judgments.
Simply and straightforwardly, we should learn the lessons of the past. This is FDR time; this is great depression time. We have had two massive economic crises back to back. We had not recovered from the previous one when we hit the next one. This is a big deal. We must think FDR-ish, and the obvious FDR thing is a green new deal to create an enormous number of jobs. This will pay—[Inaudible.]—if we get this right; it is the right kind of jobs.
I have given two examples. In one, we should intervene because we are making a value judgment about businesses that we want to save; in the other, we are making a value judgment about the jobs that we want and the supply chains in Scotland that will fuel those jobs. They would not be just public sector jobs; they would create big supply chains for the Scottish private sector. We need to look at such scales of intervention.