The State of Britain

A ‘Tony Benn’ approach to industrial policy, a ‘Boris Bridge’ to Ireland and the jump in unemployment the highest in the UK

Reading Time: 4 minutes

The Scottish government’s fondness for 1970s ‘Tony Benn’ style interventions has been exposed by the Auditor General for Scotland in her 2018/19 audit of the Scottish Government’s accounts. Taxpayers have had to write off nearly £140m in loans and guarantees largely to private companies. They include a £45m loan to the Ferguson shipyard on the Clyde, a £21m guarantee repayment fee from Liberty Steel and a taxpayer loan of £37m to the BiFab fabrication company, which is now valued at £2m. Additionally loans of £33m to keep Prestwick Airport afloat are now worthless. The auditor general Caroline Gardner also criticised budgeting at Holyrood, saying there was a lack of detail in the budget plans set out by Scottish ministers, who are taking ‘a step backwards’ with the amount of information they are making available in terms of financial reporting.

The design and build of a new generation of Royal Navy frigates has been won by engineering firm Babcock. The £1.25bn contract for the five Type 31s secures hundreds of jobs at Rosyth in Fife. At £250m, the Type 31 ‘Lidl’ warship is a smaller, cheaper frigate than the Type 26 warships currently being built on the Clyde which are c£1bn each. The winning consortium also includes Thales and BMT, as well as Ferguson Marine, based in Port Glasgow, and Harland and Wolff in Belfast – both of which are currently in administration. The ships will be assembled in Rosyth, with construction work expected to be spread between the other yards across the UK. Work is to begin by the end of 2019, with the first ships delivered in 2023.

Channel 4 News has seen documents showing that the Treasury and Department for Transport have been asked for advice on the possible costs and risks of building a bridge from Scotland to Northern Ireland. Better infrastructure in Galloway suggests a bridge from Portpatrick to Larne is preferable to the shorter Campbeltown to the Antrim coast crossing. At 20 miles long though, the Galloway option would cost much more, c£15-£20bn, but the region does have an existing trunk roads network from the Cairnryan ports to the motorway network. Another complication is the Beaufort’s Dyke, a deep trench where millions of tonnes of ordnance has been jettisoned. Where or who will foot the bill for this project is unclear. Last month, Transport Secretary, Grant Shapps, put the £80bn HS2 project under review. Every Prime Minster wants a lasting legacy.

The Scottish Leather Group, one of the largest leather manufacturers in the UK, will open a new factory in Renfrewshire next year. The new facility will be operational in Paisley by autumn 2020 and will provide high-end car seat upholstery, creating 100 jobs. The firm already has facilities in Bridge of Weir, Paisley and Glasgow.

In Aberdeen, the Arjowiggins Stoneywood paper mill has been sold. In March, administrators said negotiations had ended without a sale, threatening 450 jobs in Aberdeen and over a hundred jobs in the South East of England. The deal has been supported with £7m of funding from Scottish Enterprise. Also in the city, dairy firm Muller will close its distribution, garage, tanker and retail operations blaming the declining consumption of fresh milk. Headcount is 45 but 22 new jobs will be created in central Scotland offering some employees the chance to relocate.

The Clydesdale and Yorkshire Bank is to close its Edinburgh operating centre. The group, which is due to complete its integration with Virgin Money shortly, currently has a headcount of about 9,500 of which c1,500 jobs will go by the end of 2021. Jobs will disappear from the brand and marketing and retail distribution divisions. Virgin Money’s St Andrew Square office in Edinburgh is expected to close by the end of this year with most of the 100 staff relocated to another site in the city. Overall, most of the 330 jobs from the Edinburgh, Leeds and Norwich operations will be redeployed, although there will be some redundancies.

Serco NorthLink has been named as the preferred bidder to continue Northern Isles ferry services. As part of the £345m contract, islanders will get a 20% discount on cabin fares on the Aberdeen-Kirkwall-Lerwick routes from January. There will also be a three-year fares freeze for passengers, non-commercial vehicles and on cabins. Scottish Ministers will retain control of fares and timetables.

Still with Serco, new trains will be introduced on the Caledonian Sleeper’s Highlands services next month, a year late. New trains on the Fort William, Inverness and Aberdeen to London routes were expected first in June, then September, and now mid-October.

The Stats
For the first time, the ONS has published quarterly GDP for the nine English regions plus Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The Scottish figures are compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government. The latest available comparable figures, which are for the year ended 2018, showed Scotland’s economy grew by 1.5%. This ranked the ‘region’ seventh of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4% whilst at the bottom the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the construction sector grew by 0.8% and the services sector grew by 0.5% but the production sector decreased by 0.9% largely due to electricity and the reactors at the Hunterston B station being offline. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked Scotland sixth with growth of 1.4%, which suggests Scotland’s economy has marginally strengthened this year relative to other parts of the UK.

More data from the ONS showed unemployment in Scotland increased by 19,000 to 110,000 between May and July, the uplift of 0.7%, which was the highest in the UK, took the overall rate to 4.0%. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 74.9% in Scotland. UK employment was estimated at 76.1%.

Scotland’s average property price increased by 0.7% to £153.968, which meant annually prices had risen by 1.4%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.