So, exactly who’s in charge here?
10 Jun 2007
This article by Bill Jamieson appeared in Scotland on Sunday on 10th June
“LOOK on my works, ye mighty, and despair” was the cry of Ozymandias. Utter confusion, however, might be the response of Finance Minister John Swinney as he wrestles to make sense of the lines of communication within Scotland’s economic policy process.
In creating the new Ministry for Finance and Sustainable Development has he swept away the problems of the past? Or are there latent problems here that will come to light and frustrate him?
I owe this splendidly convoluted organogram* of Scotland’s economic policy making under the previous administration to Professor Brian Ashcroft, doyen of Scotland’s economists and director of the Fraser of Allander Institute. Ashcroft, in turn, is believed to have gained revelatory inspiration on his construct over the kitchen table from his wife Wendy Alexander, the former tour de force Enterprise Minister and now Swinney’s ’shadow’.
The organogram has the surreal grace of Salvador Dali without the melting clocks. He first unveiled this work in a paper to a meeting of the Policy Institute in February. Was this really what was at the heart of Smart, Successful Scotland? The audience gasped.
Alas that evening, the diagram appeared so briefly on the PowerPoint screen that attempts to capture its richly crafted detail in written note were frustrated. But now it has been reproduced in a Policy Institute publication carrying the graphics with which Ashcroft’s talk was so richly illustrated*. The diagram shows the outline of the Strategic Framework for Economic Development. It embraced Smart Successful Scotland and incorporated subsequent changes in policy. The Department for Enterprise and Lifelong Learning sat at the centre, feeding out and into the operating plans of Scottish Enterprise and Highlands and Islands Enterprise (HIE).
How is this organogram useful? It is more important for the connections it doesn’t show as for the ones it does. Its seeming complexity is not the point. While there does seem to be a confusing cluster of conflicting departments and competencies, it is the separateness and lack of connection that was Ashcroft’s central criticism. While the previous administration insisted that the economy was its “top priority”, it lacked impetus and cohesion across so many separate bodies. A strategy intended to deliver connectivity seemed to lack connectedness at the heart. This loose amalgam of policy-making bodies gives an impression of immense busyness and purpose. But a core aim such as economic growth would be difficult to enforce. As the diagram shows, there is much that lay outwith the Enterprise Department.
So who’s in charge? On the left of the organogram there are UK institutions, including the Treasury (linked to the EU), the DTI, energy bodies, research councils etc. The Treasury plays a key role orchestrating economic policy. In the centre there is the Scottish Executive, the Enterprise and Lifelong Learning department and Scottish Enterprise, but with a whole range of functions from finance to planning to education outside the principal economics department in Scotland - Enterprise and Lifelong Learning. “There is,” declared Ashcroft, “an apparent lack of coordination of policy towards the economy. I would ask the question, ‘who decides oneconomic policy? Who is responsible on a day-to-day basis, embracing the co-ordination of policy towards business, housing, the labour market, transport, regulation and planning?’”
So what is there of value here for the new SNP administration? It has already scrapped the old regime and created its new super finance ministry. But has this effectively solved the problem? Or has it embedded previous disconnections, ones that are now less visible? The difficulty it faces is in sorting out clear lines of reporting and responsibility, particularly given the broader departmental remit of responsibility for the whole economy, not just enterprise. This seems to fix the problem of policy disconnection. But does it? For example, where does the final responsibility lie for driving through the city regions strategy? With Scottish Enterprise? With the new city collaboration agency? Or the new Department for Finance and Sustainable Development?
Similarly, what policy force is given to the aim of creating a knowledge-driven economy with the universities, training agencies and skills academies playing a bigger part? What will be the linkages to drive that policy through?
Another problem with the new administration’s structure is that it does not seem to recognise or enshrine a Treasury ‘challenge function’ similar to that at Westminster. This was an evident weakness of the old order. “We have a weakly developed finance department,” said Ashcroft, “which does not play the role of challenge.” It is a criticism that a number of commentators have taken up: that the finance department, as a disburser of funds to spending ministries, should rigorously challenge and question spending commitments and budgets, to ensure proper budgetary control and value for money. It should not be encumbered by its own spending sub-departments which create a built-in conflict of interest.
But this is what the new administration appears to have done. Tempting though it has been for the SNP administration to create a new finance super ministry, it appears to have compounded this very problem by amalgamating several spending responsibilities within the overall remit of the Finance Minister. Auditing and spending are rolled into one. How can he be credibly both Swinney the poacher and Swinney the gamekeeper? Ashcroft’s paper, together with that of Professor David Bell, provides a well researched - and searching - assessment of the policy issues that now face us. The professors argue that, overall, the economy here is performing fairly, but there are weaknesses to be addressed in productivity. The papers present real and urgent challenges to the new administration and parliament. The problems are more than policy making structure. But unless the structure is right, what else can come right?
*The organogram and papers are available from the Research & Publications page of this web site.