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The Herald Scotland
3 days ago
- Business
- The Herald Scotland
Can Scotland regain its status as an innovation nation?
About a third of the slowdown in growth is coming from the aforementioned lack of investment, but the rest is linked to something called "total factor productivity". Read more: On that first point, Scotland has for decades had very low levels of private investment, as has the UK which on this measure has been at the bottom of the G7 league table for many years. According to the Productivity Institute in Manchester, UK workers are operating with a third less capital - less software, fewer machines, a lack of R&D and organisational capacity, and so forth - than their counterparts in the US, Germany, France and the Netherlands. Give people fewer tools, and they'll produce less. Those figures were highlighted last week by economist Daniel Turner, head of research and analysis at the Centre for Progressive Policy, who noted that the difference is "particularly stark" in the case of France. "A worker has about half of the stuff with which to produce their outputs if they are based in the UK than if based in France," he said at the Creating the Jobs of Tomorrow conference in Glasgow. "But just fixing that problem of low investment will be nowhere near enough to reverse Scotland's slowdown in productivity because two-thirds of that gap comes from something called total factor productivity. Usually this is what economists attribute to ideas [and] innovation, bot the basic ideas from universities and also how we can make more effective use of production processes, how we design, and how we market our goods." Read more: So, Mr Turner asserted, there is no path for Scotland to return to a high productivity growth economy, and the higher incomes that come with that, without raising the level and quality of innovation across all industries. "This is as near as we get, if you can productivity, as near as we get to a panacea in economic policy because it makes all of the other economic trade-offs that we have to grapple with harder. If we don't fix this is will be harder to raise standards of living, to fund public services, and to create good jobs everywhere." Fortunately, it's not all doom and gloom. Scotland is among the best places in the UK to establish an innovation business, with the university spin-out rate per head of population the highest of any nation or region in the UK. In addition, half of the UK's most active angel investor networks are based north of the border. But each £1 spent on innovation in Scotland via the public sector and higher education generates just £1.46 in private sector research and development, which is about half the rate of the UK as a whole, roughly a third of that of the 38 countries that are members of the Organisation for Economic Co-operation and Development (OECD), and less than a fifth of returns in the US. The first step towards solving this, according to the conclusions from Mr Turner's latest research, is to set out a single Scottish industrial strategy backed by both the UK and Scottish governments. This should focus on a handful of globally significant clusters in sectors such as life sciences, green manufacturing and digital exports. Read more: "The absence of co-ordination, the absence of a shared set of goals over the past few decades has led to this proliferation in Scotland of different agencies, different strategies, different documents, which is not necessarily wrong in and of itself, but in practice what we hear from the business community in Scotland is it's created a bit of a spaghetti junction that people struggle to navigate and negotiate when it comes to accessing public support," Mr Turner said. He added: "As a result Scotland is smaller than the sum of its parts, I think, so there is an opportunity to consolidate, to coordinate, and to start to deliver some of that value for money that is lacking." These consolidated funds should then be directed into "growth zones", a physical campus for innovation investment in Scotland's main urban areas. These zones should be governed by new Scottish combined authorities that would be "clearly attached and to leading that process". "This is based on something like that successful Manchester model that you will be familiar with, and it's not a substitute to cooperation with Holyrood and Westminster - all of that needs to go hand-in-hand, and that's why you need the shared strategy - but it provides a single locus of someone who can go out and champion the growth zone in greater Glasgow, broker deals with multinational companies alongside the trade minister at UK level and in the Scottish Government, in order to bring in that flagship investment," Mr Turner explained. And finally, there should be no complacency in protecting the advantages Scotland already has with its strength in university spin-outs and early-stage angel investment. "At a moment of striated public finances, now is not the time to reduce funding for universities or especially the funding for applied research and innovation and spin-outs that universities have been developing over the past decade," Mr Turner said.
The Herald Scotland
6 days ago
- Business
- The Herald Scotland
Lord Sainsbury: Give Glasgow greater devolved powers
"A major challenge which government faces if it wants to increase Scotland's rate of growth is a way to find and support such clusters," he said. "All the evidence from other countries suggests that the only way to effectively support clusters is to do so at a city region level. Read more: "I appreciate in Scotland, unlike in England, metro mayors have not yet been introduced, but if you want to support high-tech clusters, this is something I think you should seriously consider, with Greater Glasgow being given powers similar to those devolved to Greater Manchester and the West Midlands." Lord Sainsbury was speaking at the Creating the Jobs of Tomorrow conference organised by Glasgow Chamber of Commerce, where he was introduced to the stage by former Labour chancellor and prime minister Gordon Brown. Mr Brown said growth and productivity have been perennial problems in the UK and Scotland, with innovation the key to boosting performance. A new study by economist Dan Turner, head of research at the Centre for Progressive Policy, has suggested this could unlock the creation of hundreds of thousands of high-value jobs. "There are huge sources of innovation and inventiveness in Scotland, just as has been traditional in our history," he said. "The question is can we turn that into scalable companies that stay in Scotland, invest in Scotland, create jobs in Scotland, and Dan's study suggests we could create 300,000 jobs in the next 10 years. "That's 300,000 well-paying jobs, 120,000 in the new industries, the spin-offs in terms of the service sector another 180,000 - that is a possibility if we invest in the infrastructure, the skills, and the development necessary to achieve that." Lord David Sainsbury (Image: Nate Cleary) Lord Sainsbury is a Labour peer and served as minister for science and innovation under Mr Brown and his prime ministerial predecessor, Tony Blair, between 1998 and 2006. He was appointed a life peer in 1997. Lord Sainsbury said there are new opportunities for employment and growth in sectors such as quantum computing, artificial intelligence and biotechnology. "There are economists that will argue that it is investment that is the engine of economic growth, but we have to realise today that capital flows easily around the world, and it flows as it has always done, to where the best investment opportunities are created by innovation," Lord Sainsbury said. "You can sit in London today and you can invest in Silicon Valley, you can invest in practically any country - until recently you could even invest in Chinese venture capital - because that is what modern communication enables you to do. That is why investment is not the real driver of the economy, it's innovation." Among the other speakers was Michael Spence, who won the Nobel Prize in Economics in 2001 for his work in the analysis of markets with information imbalances. Read more: "There are two things that [people] associate with Adam Smith correctly," Mr Spence said. "One the 'invisible hand', which is the market system is a reasonably efficient tool for decentralising and allocating resources. "That actually is not the most important thing that Adam Smith said, but it's the one that neo-conservatives remember because they elevate market systems to the status of a religion, rather than a way of accomplishing economic and social goals. The most important one for our purposes is specialisation. "Adam Smith meant specialisation within an economy, when of course everything that David Sainsbury talked about in the global economy is just the Adam Smith insight writ large, and of course it is the ultimate source of growth. "Without specialisation you don't get scale of spread your activity over too much territory, and you don't get innovation. You get nothing if everybody has to do everything. "The fundamental message I want to deliver today is that's still true, and that growth is fundamentally about specialisation and structural change."
Yahoo
28-02-2025
- Politics
- Yahoo
Breakfast clubs are great news for parents - but they're not a magic fix
In 2015, Anna Whitehouse founded Mother Pukka. Drawing on her experience as a working mother, Anna launched the Flex Appeal campaign to challenge the outdated and inflexible working practices that disproportionately affect women, particularly those with young children. The government has announced 750 schools will participate in a free breakfast club pilot scheme, allowing parents to drop children off 30 minutes before school starts, knowing they will start the day with a proper breakfast. This isn't a silver bullet. It's not a fix-all. And it isn't about grabbing a free slice of toast. But breakfast school clubs are being rolled out in the UK and it is - on some level - good news for many parents. Especially mothers who continue in 2025 to carry the bulk of childcare. For too long, parents have juggled school drop offs with mission-impossible commutes, but there is often no other way - unless you fork out more cold, hard cash, in a cost-of-living crisis. This pilot - landing in April this year across 750 schools - takes away the breakfast club fee and saves parents up to £450 per year on morning childcare. Of course, it's not free in the sense that it's taxpayer's money. But it's support in the right direction. It will enable parents to get back to work, parents who want to work, who have been holding off, papering over the before-and-after-school cracks. It might sound really simple - but that 30 mins can be the difference between making it to work on time or not. Research by the Centre for Progressive Policy estimates that there are 1.7 million mothers who want to do more paid work but can't, due to childcare issues. Those extra hours are worth in the region of £23bn in economic output. I know only too well how hard it is to navigate an inflexible job around being a parent. When I asked to flex my hours to enable me to make my job work around pickup and dropping off my kids, you'd have been mistaken for thinking I was asking for someone to hand-feed me grapes at my desk all day. 'Sorry, Anna, if we make allowances for you, it will open up the floodgates for more parents wanting the same.' My boss and I couldn't see eye to eye on this. Why wouldn't you 'open the floodgates' was all I could think, why wouldn't you let every person manage their time around their own responsibilities? But to my boss, this was an alien concept. While it shouldn't necessarily be the case that we need to introduce schemes like this to placate inflexible workplaces, the reality is that not everybody has flexible working today. If anything, businesses are regressing not progressing. Each week we're seeing more discussion and more dictation from bosses to 'get back to the office' as if play time is over, and now it's time to take work seriously again. The pandemic really showed the power of flex, working from home and working around families kept companies alive during the COVID pandemic, and it also enabled companies to realise that breaking free from the 9-5 works. When you enable people to be in charge of their time and location, nothing falls over, in fact, productivity increases. This is something we are continuing to campaign for - to flip the narrative - why can't we have flexible working as the default? Why does it have to be the exception rather than the rule? The reality is these breakfast clubs will open up the doors for parents, they will enable parents to breathe, to regroup and to bring more flexibility into their school mornings. They will also be a lifesaver for shift workers, NHS workers, doctors whose days don't fit into the 9-6pm cardboard cut out work day. But they are, of course, papering over the cracks of an inflexible system that is still setting mothers up to fail. This new scheme is, rightly, aiming to reach pupils living in the most disadvantaged communities. For many children, this isn't about whether they choose to eat at home or eat at school - it's whether they are able to eat at all. According to the UK government, there were 7.2 million people living in poverty in 2023, a heartbreaking 11% of the population. Many families living in crisis are make heart-wrenching choices that no parent should have to make for their children, often forced to choose heating over eating. A new report from the charity Buttle, which supports families living in crisis, has found that 53% of families are unable to afford enough food and basic nutrition. The impact of living in poverty on educational outcomes are huge - poor living conditions are having a direct effect on children's learning, with many not being able to concentrate or stay awake in class. These bleak realities are the things that you don't see unless you look behind closed doors. But schemes like this will be a helping hand to children for need this additional support, to help them to be ready for the day with food in their bellies. The research on the positive impact on their education has shown to be lasting, and also it will be a helping hand to parents to take away the stigma of needing support in that early part of the day. Making school breakfast available and accessible to every child and parent who needs it will change the script for many families, and will hopefully set the stage for more continued support for mothers, and all parents to enable everyone who wants to work and raise a family to be able to. But time will tell how the pilot rolls out; if 30 minutes is enough, if it's nutritious enough and funded well enough. And whether it's enough for the hungry minds - and stomachs - of the next generation. Read more from Yahoo News Insights: In Syria, I find hope in the lives we save and the children pulled from the rubble As an HIV+ activist, I know drug companies aren't doing enough to end AIDS I'm a student midwife – we need to talk about health inequality
Yahoo
28-01-2025
- Business
- Yahoo
How soaring housing costs have crushed the birth rate
The global financial crisis had an unusual side effect in the UK – it boosted the birth rate. Meltdown in the financial system may not have inspired romance, but it did push the Bank of England to slash interest rates, knocking £4,000 off a typical household's annual mortgage bill. In the three years from 2008, economists Fergus Cumming and Lisa Dettling calculated that these household savings boosted the birth rate by 7.5pc, equivalent to around 50,000 extra babies. 'People responded to this cash-flow boost by having more children,' Cumming and Dettling wrote in an analysis piece for the Bank of England in 2020. Their findings are part of a growing international body of research that suggests housing lies at the heart of a global problem with plunging fertility rates. It is an issue that may matter more in Britain than anywhere else. The post-financial crisis birth rate boost did not last. Official figures show the average number of children born per woman in the UK has halved since 1964 and hit a record low of 1.44 last year. The decline threatens to trigger a looming economic crisis. The escalating needs of Britain's ageing population must be met and paid for by a shrinking workforce, a prospect that is looking increasingly unsustainable. In Britain, the trajectory is more extreme than anywhere else. Between 2010 and 2022, the UK's fertility rate plunged by 18.8pc, the biggest proportionate drop in any G7 economy, according to analysis by the Centre for Progressive Policy (CPP). There could be a simple explanation for our status as an outlier – we have a uniquely terrible housing market. For economists, establishing a causal relationship between access to housing and fertility is a fiendishly difficult business. Randomly assigning housing to families for research purposes would be prohibitively expensive and ethically problematic, says Tarun Ramadorai, a professor at Imperial College. But in Brazil, where housing credit is allocated via a lottery system, this effectively already happens. Instead of taking out individual mortgages from a bank, homebuyers in Brazil get loans using rotating savings and credit association (Rosca) schemes. In the consortium system, members agree to save together for a defined period into a community pot and then use a lottery system to randomly allocate housing finance to a different member each month. Everyone gets the same amount of finance in the end, but most members will see the time needed to save drastically reduced. For Ramadorai, the system presents a huge sample size of anonymised data with random variation in the timing of when they received credit to buy a home. Their findings, which they published in December, are stark. For those aged 20 to 25, obtaining a home increased the probability that their household would have a child by 32pc. It also increased the number of children that they would have by on average 33pc. The reasons seem obvious. Getting access to housing credit through the rosca system reduces families' monthly bills. They are more financially stable, have more disposable income and have more space. Ramadorai and his co-authors found that the impact of gaining housing on fertility was bigger in areas where households were in more crowded conditions or poor quality homes. 'There's the instinct to try and put your children in a higher quality environment.' The study's findings present clear lessons for other countries including the UK, he says. 'We're studying this thing in Brazil not because we are only interested in fertility in Brazil but because it facilitates the conditions for a really careful scientific analysis of the question,' says Ramadorai. 'While there are differences in the specific systems, people are largely the same in different places. They're driven by similar motivations.' In South Korea, which has the lowest fertility rate in the world, a 2024 report by the Korea Research Institute for Human Settlements found that housing was the single biggest factor influencing whether families decided to have children. The institute found that the cost of housing affected 30.4pc of married couples' decisions to have their first child. In the UK, women are not having as many children as they want to. There is a 'fertility gap' of 0.3, says Paula Sheppard, an anthropologist at the University of Oxford. This means that for every three children wanted, only two are born. 'The reason people are not having kids is not because they don't want kids. It's because they don't have the stuff that they need,' says Sheppard. 'That means they end up postponing, postponing and postponing. Then people have kids really late, so they end up having only one or two when actually they wanted two or three.' The role that housing plays is different for different people, says Sheppard. For university-educated women, who were more likely to already have a home, housing was less of a barrier to having children. At the other end of the scale, living in a nice neighbourhood was 'the number one most important factor' for deciding to have a child for non-university-educated men, says Sheppard. This group did not prioritise home-ownership per se, but they cared about where their children grew up. 'They were saying things like, 'I won't have another kid until we can move somewhere nicer. I want green space, fresh air and low crime. I don't want my kids to end up in gangs.' That was much more a thing for them than, say, the size of the house itself,' says Sheppard. Many countries around the world have big problems with housing affordability, but there are several reasons why the UK's housing crisis could be taking a particularly heavy toll on our fertility rate. On average, housing costs in the UK are 44pc higher than in other wealthy nations, according to an analysis of Organisation for Economic Cooperation and Development (OECD) data by the Resolution Foundation. Research by John Muellbauer, an economist at the University of Oxford, shows the price of properties relative to the cost of constructing them is higher here than in any other G7 economy because such a vast proportion of value is sunk into UK land values. Households therefore have to sink more capital into buying a home than in other countries. Our planning rules have also blocked building and mean that, according to the Centre for Cities, we have 4.3m fewer homes than if we had built at the average rate across Europe. This is one reason why house prices have soared in proportion to earnings in recent decades. Even if Labour can follow through with its promise to unblock the planning system and build 1.5m homes over this parliament, the gap will still be huge. Rachel Reeves, the Chancellor, is also ignoring what might be an even bigger problem. 'We have the most regressive property taxation system in the world,' says Muellbauer. Our system of council tax and stamp duty contrasts with the proportional property taxes in place in most other countries, such as the US, and discourages people from moving house, he says. This means our housing stock is used less efficiently. The tax system incentivises older homeowners to continue living in homes that are far larger than they need, for example. These types of properties would be better used as family homes – and may well go some way to encouraging people to have more children. Economists across the political spectrum have long called for a radical overhaul of Britain's property taxes. If Reeves was brave enough to do it, perhaps it could also solve our fertility crisis. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
