Economy, Energy and Tourism Committee, 24 Oct 2007

Meeting date: Wednesday, October 24, 2007

Official Report 214KB pdf

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Council of Economic Advisers

Item 5 is the role and work programme of the Council of Economic Advisers. We are delighted to welcome Sir George Mathewson, the chair of the council. Thank you for coming to the meeting. The committee was pleased that when the First Minister announced the council's formation he said that he hoped the council would be happy to give evidence to the Parliament regularly. The committee strongly welcomed the First Minister's commitment in that regard. I invite Sir George to make an opening statement, before I open up the meeting for questions.

Good morning. It is nice to be here. I am delighted to give evidence on the work of the Council of Economic Advisers. I will explain the council's role and what it has been set up to do, and I will run through the membership to give committee members an idea of the calibre of council members and the wide range of interests that they represent. I will cover what was on the agenda for our first meeting and identify key areas of future work.

The First Minister called together a council of economic advisers, with a remit to advise him directly about the best way to improve Scotland's sustainable economic growth. The CEA borrows from various American models, the first of which was launched by President Truman in the 1940s, to give him personal advice on the United States economy. More recently, in 2004, the Governor of California convened a council of leading economists and businesspeople to give him direct advice on the California economy. The federal and state US councils are based on the value of having top-quality advice at the highest level of executive office. I emphasise that the councils do not seek to put economists and businesspeople in the place of politicians; they merely advise when it is helpful.

I must be clear about the CEA's role. The council is not political—as committee members will understand if they consider the council's membership—nor is it a proxy for hard political decisions. The First Minister said when he launched the CEA in June, "Advisers advise; Governments govern." The group can advise the Government on how to improve the country's growth rate and on the potential for greater prosperity, but decisions ultimately lie with the First Minister and his Government.

It is intended that the CEA will meet quarterly and publish an annual report.

The council has 11 members, who are generously giving—I emphasise "giving"—their time to advise the First Minister. Professor Alex Kemp is a leading energy economist at the University of Aberdeen and is well known throughout the world. Professor Sir James Mirrlees is a Nobel prize winner who encouraged economists around the world to consider the moral hazard problem. Jim McColl is chairman of Clyde Blowers and one of Scotland's leading entrepreneurs. Professor John Kay is a former director of the Institute for Fiscal Studies and an extremely thoughtful contributor to international economics debate through his publications, which include regular articles in the Financial Times. He is the leading writer in the United Kingdom on corporate strategy.

Sir Robert Smith is one of Scotland's leading businesspeople and the chairman of an influential group that is dedicated to addressing the challenges faced by young people who are not in education, employment or training. Professor Andrew Hughes Hallett is an international fiscal expert who has advised the World Bank, the European Central Bank and the International Monetary Fund. He is currently professor at George Mason University and visiting professor at the University of St Andrews.

Crawford Beveridge is executive vice-president of Sun Microsystems and former chief executive of Scottish Enterprise. Professor Frances Ruane is a statistical expert and director of Ireland's Economic and Social Research Institute. I hope that she can give us some advice based on Ireland's success. Frances Cairncross is a leading economist and a well-respected author on environmental economic issues. Professor Finn Kydland is another Nobel prize winner, this time for work on dynamic macroeconomics. Coming from another highly successful neighbour—Norway—he can give us first-hand insights into how that country's success, dynamism and prosperity have been achieved.

I emphasise that all those people are doing this work out of genuine interest, a desire to contribute and a wish to see whether the council's work can make a real contribution to Scotland's economic growth.

The council's first meeting was held here in Edinburgh on 21 September, and I am pleased to say that all members, with the exception of Frances Cairncross and Finn Kydland, were able to attend. The meeting's minutes were published on the Scottish Government's website on 5 October.

The first item on the council's agenda was a presentation on the Scottish economy, which was important in setting the scene and allowing members to gain a good understanding of the Scottish economy's recent performance. The chief economist began by setting out the long-term trends before describing more recent trends and the Scottish economy's key challenges to growth, including productivity, participation and migration.

There has been some debate about this, but on growth—the principal area on which the council has been asked to advise—the data clearly show that Scotland's relative growth over the past generation has underperformed that of the UK as a whole and of several neighbouring countries. That holds true despite Scotland's strength in several key industries.

On the basis of that presentation, the council identified a number of key areas that would provide the focus for its future work. I emphasise that individuals in the council are doing a lot of thinking about future areas of work.

The second item on the council's agenda was the Government's economic strategy, which provided the council with one of its key early opportunities to input into the strategy's development and to help to shape the Government's approach to increasing sustainable economic growth. The council provided a number of valuable insights and will continue to advise the First Minister directly on practical measures that can be taken to achieve faster sustainable growth.

At our first meeting, the only specific issue that we addressed in depth was planning. Our discussion focused initially on the fact that, by any measure, the planning system in Scotland has not operated satisfactorily and, indeed, has been a failure. That has had a negative effect on achievable growth in Scotland. As a result, we considered real practical measures that were available to the Scottish Government to remove or mitigate some obstacles to economic growth and we discussed how local authorities and central Government bodies could be equipped and encouraged to weigh economic considerations in making planning policy and taking planning decisions. We felt that local authorities need incentives actively to promote economic development but that such incentives do not exist at the moment. The council also considered what Scotland can learn from other countries' approaches to planning and how the national planning framework could provide the right environment for sustainable economic growth.

Fundamentally, that all boils down to the fact that the planning system has performed very badly. Local authorities need to commit themselves to actively promoting economic growth and they need incentives to encourage them to do so. There also needs to be a better understanding of the bureaucratic blocking of the process. Thinking is still going on about those areas.

In identifying its future work areas, the council picked up on the key challenges that were identified in our discussion on the Scottish economy. It was agreed that the council's future work would focus on: promoting sustainable economic growth over the current parliamentary session, with strategy and policy to achieve the immediate target of matching the UK economic growth rate by 2011, which—on the basis that if nothing is measured nothing is done—was felt to be a reasonable goal; developing Scotland's comparative advantage by looking at the longer-term contributions of key elements, including high-level skills, planning, environment and key sectors; addressing the inhibitors of Scotland's economic growth, such as the problem of economic inactivity; and enhancing Scotland's economic statistics so that we strengthen the basis for the formulation of economic strategy and policy. When one starts to look into the matter, the numbers that are not available are quite surprising. It is important to get a better understanding of all those dimensions.

Those are our conclusions for the moment. I am happy to answer any questions about the council. I might add that I will be happy to return to the committee following the publication of our annual report, to share more information about what we have learned and its implications for the Scottish economy. I stress that I am not here today to give evidence on any particular area of Government policy; that is for Government ministers and officials to answer.

Thank you very much. I will start by exploring the council's remit, which you talked about in your opening statement. I note that promoting economic growth over the current parliamentary session so that we match the UK economic growth rate by 2011 was the top line in your presentation of the council's objectives. How does that relate to the mix of reserved and devolved powers that are available to the Scottish Parliament and Scottish Government? It strikes me that if the UK economic growth rate is the target, by definition monetary and fiscal policy will be of interest to the council. Would that include, for example, the recent changes in the budget to end the tapering relief on capital gains tax, which business organisations have all condemned? Are those things of interest? Do you consider them to be matters of concern for the council?

They are of interest and possibly of concern, but we must immediately deal with those things that we have levers to affect. As the work goes on, it will become apparent that areas that are currently outwith the role of the Scottish Parliament might positively affect the Scottish economy. However, we need focus in this exercise. Currently, we need to focus on the levers that we have.

Should the committee assume that your annual report will be a commentary on the influences that are being brought to bear on different aspects of the Scottish economy?

That is possible, but we have not yet decided what form the annual report will take. We have had one meeting. It was a good and successful meeting, but it was one meeting.

Thank you very much for attending today. As you said, these are very early days as the council has had just one meeting. I certainly welcome your willingness to come back to the committee after the production of the council's annual report. Do you envisage that a visit after the production of each annual report will be how the council engages with the committee?

There would definitely be a meeting after the annual report. One has to keep a degree of flexibility; we are at the start of a road here. A lot of thinking is going on in the council and the people involved have to be given some space in which to do that thinking. That is an important part of this strategic exercise in which it is hoped that we can step out from some of the past thinking. We need to give council members a bit of space.

You were at pains to tell us that the First Minister said that the Council of Economic Advisers advises and the Government governs, but there is going to be some interest in the policy issues on which the Government is going to make decisions. Should the council be held to account on policy issues by someone other than the First Minister, such as this committee on behalf of the Parliament, or should you not be accountable on policy issues?

We will advise the First Minister on the economic impacts of policy issues but, as I have emphasised, we are not accountable for policy. We are only there to advise the First Minister and the Government on what we think will contribute to economic growth.

In the presentation that you were given on the current economic status of Scotland, the tourism industry, which is one of Scotland's most important industries, did not get much in the way of a mention. Does that concern you or do you intend to consider it? I ask that because the committee has already decided that it will conduct an inquiry into tourism in Scotland against the background of the ambitious goal that was set by the previous Administration and endorsed by the current one of 50 per cent growth during the next eight years.

Very few industries were addressed individually at the meeting, and then only in passing. We were dealing with the macro background as much as anything. Tourism is important to Scotland, but there are other major industries that are just as or more important. The health industry makes an extremely important contribution to the Scottish economy. We will definitely look at what is important.

Sir George, in your introductory remarks, you said that the council accepted as reasonable the target of measuring short-term growth until 2011 and seeking to achieve parity between Scotland and UK levels of growth over that period on the basis that if nothing was measured, nothing would be done. Is the council satisfied that that is the right thing to measure?

We are satisfied enough to be going on with, but thinking is continuing in that area.

You will have seen the latest gross domestic product figures that came out this morning, which show that, for the second quarter of this year, GDP growth in Scotland exceeded that of the United Kingdom. How does that impact on your judgment of your target?

A three-month figure would not influence me one way or another.

But you would accept that that is the latest in 12 continuous quarters of above-trend economic growth.

That is positive.

Yes, it is. Your reaction to my initial question was that you were satisfied with the target. Given your answer to the convener's question about the things over which the Scottish Government has leverage and those over which it does not, how useful do you feel it is to advise on that target when many of the levers for influencing the outcomes do not lie in the Scottish ministers' hands?

It is still a useful remit and I would like to think that the council can do some good. In future, we may come up against things that are immutable, but let us deal with what we have at this point in time.

One thing that has been drawn to committee members' attention is the controversy about what is measured in trying to assess GDP in Scotland. Brian Adam mentioned tourism. You will be aware that the UK figures for growth in the hotel and catering sector are far higher than the Scottish figures. Other evidence suggests that tourism in Scotland has grown over the past five years, but that is not reflected in the growth figures. Does that give you any concern for how you apply your remit?

Not really. I have asked for work to be done on refining the Scottish GDP figures, particularly for the energy sector, which also requires definite work.

You said that, in the meantime, individual members of the council are considering how the council's work programme might develop.

That is correct.

Is there collective work going on? In other words, is the Council of Economic Advisers undertaking some work preparatory to your next convening of the group?

Yes.

That is work to examine what should be measured.

One area that people are examining is the measurement of GDP.

I have seen some comments that suggest that nothing new came out of the meeting that you had in September. Does that give you cause for concern?

No, it does not because, as I said, it is difficult for strategic thinking—particularly original thinking that is hoping to push back some of the boundaries—to take place in the glare of public opinion. Not all the conversations around the table were in the minute of the meeting. That is what one would expect, because there were formal and informal discussions, and the minute gave the overall picture of what was discussed. Following the meeting, I was immensely encouraged by the positive attitudes of the participants, who, to a man, felt that the meeting had gone better than they had expected.

In your opening address, you touched on planning. The committee has also talked about that issue. The position was summed up well by one eminent businessman who said that, in Scotland, there seems to be a presumption against development and we need to move to almost having a presumption in favour of it. He backed that comment up with some statistics. There is a target for 80 per cent of planning decisions to be made within, I think, two months—it is either two months or three.

The numbers are appalling.

In Scotland, we are averaging about 44 per cent of decisions being made within that timescale; England is averaging about 74 per cent. Can you expand on any conclusions that the advisers reached or suggestions that they discussed about how to improve that figure?

At the meeting, we established that that was the problem and various things were said. There is scope for taking things forward from this point.

When I ran the Scottish Development Agency, the planning system came as a big surprise to me. It did not seem to matter to local authorities whether economic development was happening. The SDA's role was often to take a proactive view on the assets within an area and create economic value from them. Leith was one such example.

There is a need for what I would call proactive planning—a planning system in which the interests of planning are in creating economic development. That does not mean neglecting all the other considerations in any way. I agree that this is an important area. We must make a thorough analysis, look at the flow charts for how a development takes place and somehow reduce the amount of bureaucracy involved.

Is the issue on the agenda for the next meeting?

Yes.

Can I take it from what you said, Sir George, that Jim Mackinnon, the Government's chief planner, talked about the new planning regime?

Yes, and it was a good presentation.

I realise that the work of the Council of Economic Advisers is at an early stage and that you will consider different aspects of the economy. However, I wonder whether you will look at different parts of the country. There are different problems around Scotland and certain areas have particular inhibitors. As a Highlands and Islands MSP, I am thinking particularly about my area's transport infrastructure.

I heard on the radio this morning that there are plans afoot for a train to go from Birmingham to Paris in four to five hours, whereas it takes me three and a half hours to get from Inverness to Edinburgh, which is about a quarter of the distance from Birmingham to Paris. I am interested in your comments on infrastructure and on whether you envisage looking at that aspect in detail.

We will look at the significance of infrastructure for economic growth. I am sure that we will do so—in time.

Another issue that I picked up on from the briefing papers and from what you said is to do with our unemployment rate. The figures show that the unemployment rate in Scotland is quite low. However, you mentioned that there are many people on incapacity benefit and suchlike, who are not counted for the unemployment figures. That issue ties in with the issue of migration—both immigration and emigration because obviously people leave Scotland as well as come into it. I suspect that many folk who leave are highly skilled people with talents that they can take abroad and make good use of. How might you approach the general aspect of migration and employment?

We discussed the effect of emigration; there is more work to be done on that. There are numbers to be got that nobody seems to have looked at so far. There is emigration of highly skilled individuals, but there is also substantial emigration of retired individuals. Getting a handle on how significant that is will be the first step.

Yes, just drawing together the information.

The information is not necessarily there; that is the case even at the UK level.

That is interesting.

At the end of the day, a balance must be struck between economic and population growth and its effect on the environment. How much of that aspect will come into your thoughts?

We have to keep focused as much as possible on what affects the economy. It is up to the Government to adjust that with regard to political or environmental factors.

It is still morning, so good morning, Sir George. I want to ask you a couple of questions. First, were you consulted on the membership of the council? Secondly, reference was made to the American council, but my understanding is that it comprises a chair, two other members and 20 support staff of economists and statisticians, with no businesspeople involved. What is your opinion of the make-up of the membership of your council?

The council has no representation from other key stakeholders. I draw your attention particularly to the college sector. This committee has recognised, as have previous committees, the important role that the college sector plays in the economy. Further, there is the role of trade unions, which is particularly significant in workforce development.

First, I am very satisfied with the membership—let us get that straight. Secondly, the council's role is not to represent the Scottish community but to develop the best possible economic advice. I understand that another group, the national economic forum, which is still to be formed, will have a representative role and a much bigger membership. That will give people the opportunity through their stakeholders to make their presence felt. However, the council is to be focused as far as possible on giving the best economic and business advice to the Government. That is different from representing groups of people—that is not the council's role.

What was your other question?

Were you consulted?

I was consulted—a lot, actually.

I still disagree, because I genuinely think that one or two sectors are not represented but would be—

Many sectors are not represented on the council.

I accept the point about the economic forum—one question is how you will work with it. The issue is about fair representation. You want to give economic advice, but sectors are missing. We will have to agree to disagree on that.

The best advice will not necessarily be reached by having different sectors put their points of view. That becomes a political issue. We are trying to give the best economic advice, which will include advice on the role of the college sector, as education is a major economic force in the country. Similarly, the health sector is a major economic force. Our role includes giving input on those subjects. Fundamentally, the council exists to give focus and to give the best economic advice that we can.

To follow on from that, I am pleased that you mentioned high-level skills in your introduction and that you have talked about the role of education and skills. What role will your council have with regard to advice on the skills strategy and what input will you have on that? I agree that that is a fundamental issue—the skills of our people are crucial to economic growth. What role will the council have in relation to the skills strategy?

We will not design a strategy for skills development.

That is not what I am asking; I am asking what input you will have on the strategy.

We will emphasise the importance of skills but also the importance of the education sector as an economic entity: it employs a lot of people in Scotland and creates a lot of added value. That is how we come at the issue.

In relation to the science and technology strategy, we have bodies such as the Scottish Science Advisory Committee. What interface and liaison will there be with those other advisory committees?

We have not worked that out yet—I am candid about that. We will consider the whole scientific and research policy. We know how important the matter is to Scotland. I am sure that we will liaise with those committees in due course.

I am sorry that I arrived late for the session.

Until last week, I was formally in charge of regional studies at the University of Tübingen, which is run jointly by the economics and humanities faculties. I am interested in the strategic difference between a Land such as Baden-Württemberg, which has 24 per cent manufacturing, and Scotland, which I guess has about 15 per cent. Is there a point at which that becomes a damaging externality to the development of a modern service economy—not necessarily a manufacturing economy?

I illustrate it in this way: the new railway line to the channel tunnel from London costs £50 million a mile; the German equivalent costs about £23 million a mile; in Spain, the cost is as low as £17 million a mile. How much of that expenditure is generated by the externalities that you complained of, such as the planning process—in brackets, lawyers—and how much is caused by the fact that we no longer have the native capacity to build a technology at that vital stage between innovatory development and mass marketing? That is where the German economy has succeeded brilliantly in the past 20 years. Where should we look in an exploratory way to balance our innovation with the need to get capital into manufacturing adaptive processes at the point where they make maximum returns?

That is a big question. The move towards services has been inexorable.

There are services and services.

David Whitton will remember that I said that 20-odd years ago and the situation is exactly as I said it would be. I am not sure that the process can be reversed because it is on-going. However, that does not mean that manufacturing is unimportant—that must be emphasised too.

We are now in a global economy, which means that ideas and everything else tend to be globalised, so research and development is a difficult area. Although things are going on in Scotland that look good for the future, I cannot answer your question.

As a slight elaboration, the Germans have a word, tüfteln—it is a Swabian word, in fact—which refers to the bit after an invention is made when you play around with it until it gets marketable. It is at that point that something can be sold at a premium price before the Chinese have learned how to do it at 10 per cent of the cost.

It is important that we adapt our service industries to use extremely sophisticated processes, so that we can provide high-value-added services and not—let us put it crudely—call-centre services. The knowledge economy should be in the first rather than the second category. After 27 years in Baden-Württemberg, I have grave doubts about whether Scotland has that ability to tüfteln, or adaptivity, to allow it to get into the high-value-added sector.

That is roughly true because Germany has a long tradition and a network of corporate companies that exist on that basis. However, we have a strong financial sector that is much stronger than Germany's. It is swings and roundabouts and we must play to our strengths.

It is nice to see you again after all this time, Sir George. The last time I was asking you questions was about 20-odd years ago in a different life, I guess.

You said in your evidence to us that local authorities, of which I seem to remember you did not have a high opinion—

It was you who said that.

Okay, maybe I was putting words in your mouth even then. Were you asked to give advice to the First Minister and his Cabinet Secretary for Finance and Sustainable Growth about the break-up of Scottish Enterprise?

No.

I find that a bit surprising given that you are the former chief executive of the SDA, as you pointed out.

First, that is not yet within the remit of the Council of Economic Advisers. Secondly, the council was formed only weeks ago and I presume that the policy was arrived at before then. Let us be clear: I am not an integral part of the Scottish Government; we are advising it on economic matters.

Would your advice have been to give economic development back to local authorities?

What was interesting to me when I had a chat with Scottish Enterprise is that it did not differ materially from what it was asked to do.

This is an area that I have been out of for a long time. I feel that it depends on the scale; there is a case for saying that economic development should be handled locally for small businesses and so on. I do not know what the current position is in local authorities. Again, that is Government policy, which I am not here to comment on.

I accept that the local authority map has changed somewhat, even over the past 20 years, and that the situation might be different now. Responsibility for careers has been taken away from Scottish Enterprise—a different agency will be set up to deal with careers. The committee is examining the skills strategy closely because we do not believe that enough is being done to focus on upskilling the workforce—it is only by upskilling the workforce that we will increase productivity. In your opinion, is it a good idea to take careers out of Scottish Enterprise?

Again, that is nothing to do with the work of the Council of Economic Advisers. Taking careers out of Scottish Enterprise is a big thing; it is probably a good idea. Back when responsibility for careers was transferred in the opposite direction, I thought that that was a bad idea, so if I extrapolate forward from that, it is probably a good idea for responsibility for careers to be removed from Scottish Enterprise.

The idea of giving responsibility for economic development to local authorities as they are currently set up almost takes me back to the days when every time there was a sniff of an inward investment, local authority representatives would jump on the first plane to America to see whether they could get the development in their back yard. You certainly did not fancy the idea of that. Are we going back that way?

I would not think so. International investment is different now.

I want to pursue one of David Whitton's wider points. I assume that the size of the public sector in Scotland will be an issue of importance to the council. Over the next three years, £90 billion will be spent. I understand the difference between Government policy and the economic analysis that your council will undertake, but I guess that the council will engage in a thought process about the size of the public sector and the sheer spend of government—I do not mean just the Scottish Government; I mean government generally, including local government. How will that feature in your thinking? I assume that the size of the public sector is a significant aspect of considering how to achieve our growth-rate targets.

We have asked for more work to be done on the public sector in Scotland to gain a better understanding of it. Size is one issue; added value and effectiveness are others. We have asked for analysis to be performed so that we have a better understanding of the public sector. It is all too easy to jump at the first number that comes out, but that is not necessarily the right thing to do. We must obtain a wider understanding. The size of the public sector varies enormously from country to country.

Absolutely, but I presume that you agree that in the coming weeks, when the Scottish Government makes a spending review announcement, just as the UK Government has done in recent weeks, it will put in place £90 billion of expenditure for the rest of this session of Parliament and that will be that, because of the way in which we settle funding.

I will not comment on that—it is the Government's business—particularly as the council has not discussed the matter. We are analysing the role of the public sector—its size, its efficiency and whether it makes a positive or a negative contribution to the economy.

I am not asking you to comment on Government policy; I am just asking you to consider the scale of that spend. I noticed that you said to Dave Thompson and Marilyn Livingstone that, in the widest context, health and education are key aspects of our economic profile.

Absolutely.

If that is the case, surely the council will have to consider to some extent not Government policy, but the nature of the spend in those areas.

We will certainly seek further understanding and will give the minister our advice in due course.

Thank you. I invite Brian Adam to come back on the evidence.

I was intrigued by some of the things you said. You have indicated that the council will work on areas around statistics. Can you give us a flavour of where that will take us? I was also interested in the points that you made about immigration and the lack of information on the impact it has on GDP. I presume that you were talking about those who retire and go and live in Spain or Bulgaria.

That is one part of it.

Is there any evidence that it has a major impact on the overall economy?

No. We have just started to look at that area so, as yet, no numbers have been collected. I think that it will be difficult to get them.

Can you give us some idea of where there are weaknesses in the statistics across the economy?

I cannot do that at this point.

Is that the kind of thing that we might get when you get around to the annual report?

If it can be done without huge expense, yes.

I am interested in what you are working on and how you set those priorities. You said that the planning system is the only specific area that you addressed in your first meeting and that it is also on the agenda for the second meeting. Why did you think that that was worth prioritising, given that the legislative changes have already been agreed by this Parliament and will come into effect in the next two years?

Because legislative changes are one thing and the practice is another. There can be no doubt that the performance of the planning system in Scotland has been terrible. It was a natural thing for us to consider.

I do not think that anyone disputes the fact that, in some respects, the planning system has been beset by difficulties. That is why there was broad consensus on the need for change, which has been agreed to. Is it your proposition that the change does not go far enough?

The legislative change is one thing; the change in attitudes about what the planning system is there to do is another. That is crucial.

I would not dispute that either, but I am interested in why you selected as your first priority an area in which there has already been a change in law. I recognise that there are things beyond a change in the law that are important, but I wonder whether there are other things that influence economic growth and economic potential that it might be more urgent for you and the Government to consider.

You have to choose something to address at the first meeting and it has to be something you can get your teeth into. The fact that a lot of work has recently been done on the issue is positive rather than negative, as it means that recent studies and numbers are available, which will allow us immediately to identify any failings and get some ideas about how to progress the issue.

Do you doubt the views of some of the stakeholders in the process, including business organisations, that the legislative change that has been agreed will make a significant and positive difference?

I am hopeful that it will make a difference, but I believe that we have also to rethink what the purpose of planning is.

Part of the purpose of planning is to support economic development, but it has other purposes.

Of course. To me, it is about creating economic development, subject to sustainability, the environment and so on, but there is a value in creating economic development that I do not think is necessarily appreciated in the current planning system.

That is interesting.

As I wrote about North Sea oil, I am aware that, early on, there was, generally speaking, an opinion in favour of the acceleration of economic development even where it ran contrary to some planning criteria at that time. Some of the results of that approach were not exactly happy, such as the building of the various yards for the construction of platforms, two of which were never used. There might, therefore, be a certain built-in historical shudder there—

The ones that were not used did not contribute much to economic development, did they? That was the mistake.

I was just thinking that the acceleration of planning permissions in that context did not help us much.

We have certain built-in disadvantages in the system, such as the poor health of the Scots. One area in which we compete successfully with America is weight—it seems that we are heavier than the Americans. The notion of being able to quantify that type of disadvantage—whether it is a planning disadvantage or a health disadvantage in relation to the labour force—seems to be an area of experimental economics that could lead to important conclusions for any political decision maker.

I hear you.

Recently, you gave an interview to The Scotsman in which you said that too much red tape is hampering our economic potential. Will you give the committee some examples?

The planning system is one.

How about managing the national minimum wage? Is that another one?

For anybody who employs anyone, the red tape is horrific. My view is that the Chancellor of the Exchequer should be forced to employ someone personally, and have to fill in all the paperwork. If that were to happen, we would see radical change. I am not sure whether members of the Scottish Parliament employ anyone personally. It is a frightening exercise.

In one way or another, we are all employers, although I am not sure that I fill in the paperwork directly.

We have the Parliament to do it.

I return to what you said about red tape hampering our economic potential. You have spoken about planning, but that is just one area. What other things are relevant?

Employing someone is another area.

So we should have no employment legislation?

I did not say that. That is an absurd thing to say.

I am just asking—

No. We should make employment more manageable and less bureaucratic. Of course, we have to think about how to do that. The amount of paperwork that is required is increasing all the time. That is a fact; it is not debatable.

I do not want to hazard to speak on behalf of the Scottish National Party, but I think I am right in saying that the SNP's policies and the Labour Party's policies are similar in this regard. Both parties have said that our policy when introducing pieces of legislation is one in, one out. I assume that you support that.

I am not in the business of comparing your policies with those of the SNP, or vice versa; I am in the business of looking for a general reduction in the bureaucratic paperwork that is required on a day-to-day basis. One needs only to look at the paperwork to see that it is substantial.

Can I take it from that that the council will commission work on the generality of red tape? If so, I assume that that will include Europe.

We will have to be careful, as we could end up commissioning huge amounts of work. The council has to focus.

Absolutely.

What work will the council do on concentrations of economic activity in Scotland? A lot of emphasis has been placed on city regeneration, which is important, but what work will be done on our towns, which are important economic drivers for Scotland? What are your thoughts on the subject?

My general thoughts are that we must play to our strengths. That is not the view of the council, given that we have not yet discussed the matter. I tend to focus on investment and opportunity, not investment and need. I believe that the role of the politician is to make the balance between those two things.

We have reached the end of our questioning. I thank you for giving evidence to the committee this morning, Sir George. We look forward to the council's further deliberations, its annual report, and to hearing from you again.

Thank you.

Meeting closed at 11:53.