Chapter 8 First Minister's Retrospective
8.1 In the context of the Scottish political environment, Scotland's Council of Economic Advisers has been a ground-breaking development. For the first time since devolution was achieved in 1999, the Scottish Government brought together a group of renowned business leaders and economists, who not only have outstanding expertise and knowledge around the Scottish economy, but also have an exceptional track-record of success in the international environment; which is vital in an ever increasing globalised economy.
8.2 When we first came to power in May 2007 we made our central ambition clear: to create a Scotland where everyone had the opportunity to flourish; and we were committed from day one to delivering this ambition by increasing sustainable economic growth.
8.3 Our immediate task was to articulate this vision to the people and businesses' of Scotland; that's why our first priority was to develop the Government Economic Strategy. This set out our approach to increasing sustainable economic growth, presenting challenging targets and highlighting the outcomes that we as a government, would like to see delivered for the people of Scotland.
8.4 The Council was an invaluable resource which helped shape our thinking around the development of this Strategy. Not only was it a critical sounding board for our thoughts, it also contributed views which helped to develop and shape our thinking on what our priorities should be. Ultimately, this process delivered the over-arching strategic direction for this government and our associated agencies.
8.5 Not long after we delivered the Strategy we were presented with the greatest challenge that the Scottish economy has faced for a generation. As a result of a global financial crisis, many of the world's leading economies, some of which were our major trading partners, plunged into recession. Scotland's businesses faced an extremely difficult trading environment which threatened their long-term future. However, by having the Council in place, with several leading businessmen and academics in a position to offer sound strategic advice, we responded swiftly to this highly challenging situation.
8.6 Indeed, with the help of the Council, who emphasised the need to respond to this crisis quickly, we launched our Economic Recovery Plan ( ERP), which was first published in January 2009. The principals of our ERP are aligned to the recommendations of the Council and are wholly consistent with our long-term strategic objectives around increasing sustainable economic growth. For example, we recognised that infrastructure spending was critical to coming through this recession; as such we accelerated our capital spending, which is essential if we are to meet our growth aspirations, a policy which the Council strongly supported.
8.7 The overall economic environment in which we are operating continues to be extremely challenging; however, we have come out of recession and although the path to sustained success will be difficult, we feel that we have the right policies in place to deliver long-term growth to the Scottish economy, which is our primary objective.
8.8 In order to deliver this long-term vision we have sought the Council's expertise and advice. Our Government has responded positively to the Council's recommendations; which have energised our approach in numerous areas. This has included areas like planning, where we are working to ensure that decisions are made quickly, and also on key opportunities for growth like renewable energy. The Council recommends that Scotland should further strengthen our global position by utilising our existing resources and boosting our comparative advantage; which will ultimately result in a sector which the rest of the world looks on with envy.
8.9 We are matching our ambition with action, to make Scotland a European leader in innovation and deployment of low carbon energy. We are embracing the energy-related opportunities presented by Scotland's world leading climate change targets, ranging from Scotland's leading position on carbon capture and storage to our fabulous renewable energy potential. At present Scotland has over 3.8 GW of installed renewable capacity. We are making excellent progress towards the 2011 interim target for renewables to generate the equivalent of 31 percent of gross electricity consumption. Industry estimates suggest that there is over 7 GW of renewable energy capacity already consented, under construction or awaiting construction, in addition to the 3.8 GW already installed. With this progress, we have now increased our target for 2020; for renewable sources to generate the equivalent of 80 percent of Scotland's gross annual electricity consumption.
8.10 Of course, we continue to strive to maximise the economic opportunities from our existing policy levers; however, ultimately, we believe that if Scotland is to reach its undoubted potential, additional fiscal responsibilities will be required. The Council has been a crucial sounding board, both on a theoretical and practical basis, for how we should progress this further. Indeed, the Council has recommended that we should have greater borrowing powers which would allow us to not only finance public infrastructure but also allow Scotland to determine the appropriate split between current and capital expenditure, depending on our prevailing economic context.
8.11 The Council's engagement on this debate has been invaluable in helping my ministers and I develop our thinking on what is the most appropriate course of action. Indeed, the Council has further developed its position around how Scotland would deliver greater fiscal responsibility, ensuring that the Scottish Parliament is as responsible for raising revenues as spending them. Fiscal responsibility is a position which not only we as a government sign up to but also one on which many business leaders, academics and individuals from across the political spectrum are engaged.
8.12 Moving forward, due to the challenging nature of the spending review, the Scottish economy will continue to face difficult economic circumstances. However, I am confident that both our ERP and our Strategy give us a clear direction as we work to foster sustainable economic growth for the benefit of all the people of Scotland. This Council has been an invaluable source of advice, expertise and challenge in developing these strategies to help Scotland tackle these tough times and I would like to thank all involved for their commitment and effort towards making Scotland a country of which we can all be proud.