“No idea is above scrutiny and no people are beneath dignity.” – Maajid Nawaz
The following are two short articles I had published last week. The first, on Foreign Direct Investment, appeared in The Herald and the second, on Ed Milliband ending oil licences, appeared in The National.
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Scotland must drop its addiction to foreign investment
Ian McConnell’s highlighting of Scotland’s continued dependency on “foreign direct investment” offers a welcome opportunity to once again explain why the policy – supported by multiple Scottish Governments – is acting to the detriment of the Scottish economy.
All investment demands an expectation of a return on that investment and the fact that the investment is coming from outwith Scotland obviously means that those returns must leave via the same route. Scottish Government figures show that since the start of devolution, more than a quarter of a trillion pounds has been net extracted from Scotland and that around £10 billion was extracted from Scotland in the most recent year we have data for. Further analysis by Common Weal shows that as a proportion of our economy, this is the highest rate of profit extraction of any of our peer nations with the exception of a handful of micro-states and tax havens as well as higher than any of the World Bank’s income groups, including the poorest and most indebted nations. Scotland, in that sense, runs an economy with European levels of economic development but with West African levels of foreign exploitation and profit extraction.
This isn’t just an issue of money. Companies that are mobile enough to invest in Scotland are mobile enough to remove that investment unless they get the political kickbacks they want (see the discussions around Scotland’s Green Freeports, for example. Or Grangemouth.) and thus present a direct intervention against our democracy. They also tend to more weakly embed jobs and skills in the economy and are more willing to leave workers on the scrapheap if some other nation decides to attract their “investments” instead of us.
The Scottish Government should drop its addition to FDI and should concentrate on building up domestic sources of investment (starting with reforms to the Scottish National Investment Bank) and should focus not on quick “GDP Growth” and accelerations of shareholder profits but on sustainable development not just of companies but of their workforces and the wellbeing of the communities in which they live.
Ed Miliband’s stance is welcome but it does not go far enough
The news that Ed Milliband has halted new oil and gas licences is a very welcome change of direction for UK politics and effectively brings the UK Government into line with what was the Scottish Government’s policy on new oil and gas in January last year. As it stands now though, the Scottish Government has backtracked on their opposition to new oil and has been extremely vague about the conditions under which it would support a ban. To be clear, it is one thing to state that you’d only support a licence if environmental checkpoints are met but if you don’t state what those checkpoints are or what a properly compliant oil licence would look like, then all you are doing is deferring responsibility for the decision either way.
The Supreme Court’s ruling last month that oil extraction must fully account for all oil emissions is significant here. Until then, a case was being built that a “Net Zero” oil rig would be one that transported workers to and from it without burning fossil fuels (Scope 1 emissions) and was powered by renewable energy instead of a fossil fuel power plant (Scope 2 emissions) but that basically washed its hands of whatever happened to the oil it extracted (Scope 3 emissions). If you bought some of their oil and burned it, that wasn’t their problem. This can no longer be the case and so brings into question the very possibility of a compliant oil rig. The Scottish Government should outright admit that either their support for oil must be ditched, or their remaining climate policies must.
As welcome as Milliband’s decision is, it likely doesn’t go far enough. He’s equally stated that he won’t revoke licences already granted but not yet being exploited nor will he shut down oil wells that are still economically producing oil. Half a decade ago in 2019, Friends of the Earth’s “Sea Change” report found that if the world is to meet its collective climate targets then not only must new licences be blocked and unexploited licences revoked, at least 20% of the economic oil in wells that are currently open must stay in the ground.
A Just Transition for workers is vital and I sympathise with Unite’s “no ban without a plan” slogan, but I fear that the politicians will stick to the easy option of “no ban” rather than what they should do, which is to bring those workers into the room immediately and help them design the plan that grants them the Just Transition they want and deserve before another political deferral forces a chaotic collapse of the oil industry and sees oil workers dumped just like their predecessors in the coal industry were.
