How the SNP's public sector reforms can achieve something really important – Mark Kummerer

It will inevitably trigger debate about maps, boundaries, council mergers and which public bodies survive. But from an economic development perspective, there is a more important question: will any new structure make Scotland a better and easier place in which to invest?

For those of us working on the economic case for major projects, this matters. Investors do not experience Scotland one public body at a time. A business considering a significant investment may need planning consent, grid capacity, transport infrastructure, a skilled workforce, housing, local supply chains and community engagement.

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The complex reality facing investors

Responsibility can sit across several councils, agencies and other bodies. To the investor, however, they are all part of one investment decision.

We see this in our own work. In Kintyre, we are advising Southworth Resorts on the economic case around further investment at Machrihanish Dunes. The private investment appetite is there, but realising its full potential is closely tied to connectivity beyond the resort itself: Campbeltown Airport and air services, reliable ferry connections and the resilience of the Rest and Be Thankful road. None of those issues can be solved by the investor alone, yet together they materially influence the scale and pace of investment.

We have seen the same issue around the Moray Firth. Our work has included the economic case for the Buckie Harbour masterplan and assessments supporting major investment at Nigg, including its new quay and the Sumitomo subsea cable factory.

These projects collectively illustrate the offshore energy opportunity and its dependence on ports, grid connections, transport, housing, skills and supply chains which do not stop at local authority boundaries.

Data centres provide another example. Investment can be very large, but deliverability depends on far more than the site itself. Power availability, grid and fibre connections, planning, water, transport and workforce all have to line up. Again, the investor sees one proposition; the public sector too often sees a series of separate responsibilities.

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Bigger not necessarily better

Different investments, different places, but essentially the same issue: economic geography rarely respects administrative boundaries. Labour markets also do not stop at council boundaries. Neither do supply chains, tourism destinations, transport corridors or energy networks.

This is apparent outside the Central Belt, where major opportunities are emerging around sectors like renewable energy, ports, digital infrastructure, tourism and advanced manufacturing. That does not mean bigger government is automatically better government.

There is a genuine risk that larger organisations simply move decision-making further away from businesses and communities. The challenge is not simply to centralise. It is to find the right geography for the right decision.

Some of the best economic development work is intensely local: understanding a town, knowing its businesses and recognising its particular constraints. But while some decisions are genuinely local, others – about major infrastructure, transport, skills, housing markets and strategic investment – often need to be considered across a wider economic area.

That is where the proposed reforms become interesting. The Scottish government has said it wants stronger strategic regions with greater ability to drive economic growth and investment, alongside a Major Projects Office intended to help remove barriers to strategically important private investment. Those could be significant changes, but structures alone will not deliver growth.

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How to lose a major investment

The real test is whether the public sector becomes better at recognising an economic opportunity and organising itself around what is required to realise it. Scotland is not short of opportunities. In many sectors, the ambition of private companies is considerable. The challenge is how quickly infrastructure, skills, planning and public sector decision-making can respond. And speed matters.

Investment is mobile. A company considering Scotland is rarely considering Scotland alone. Capital can move elsewhere in the UK, Ireland or Europe. An investment opportunity delayed for several years can become an investment opportunity lost.

This is why public sector reform should be viewed as economic policy as much as administrative reform. There are potential savings from reducing duplication, sharing services and simplifying organisations. Those savings matter when public finances are under pressure.

But the larger prize is creating a public sector better able to unlock private capital. A major investment can support hundreds of jobs, create opportunities for local suppliers, generate economic output and provide a tax base for decades. Enabling only a handful more of those investments could dwarf relatively modest administrative savings.

A necessary change in culture

There is also an opportunity to make the system simpler from the outside. Rather than asking an investor to understand the responsibilities and boundaries of numerous organisations, Scotland should increasingly be able to say: tell us what you are trying to achieve and we will organise the public sector response around it.

That would represent a change in culture. Swinney described the approach he wants as ‘yes, if’ rather than ‘no, because’. For businesses and investors, that may ultimately prove more important than where the lines are drawn on the next map of Scottish local government.

So as the debate develops, we should resist judging success simply by counting councils or public bodies. Ask instead whether decisions are being made at the right level, whether infrastructure is being delivered more quickly, whether businesses find the system easier to navigate and whether regions are better able to pursue their economic opportunities. And, ultimately, whether Scotland is securing investment that might otherwise have gone somewhere else.

If reform achieves that, it will have done considerably more than reorganise government. It will have helped grow the economy.

Mark Kummerer is a director of economic development consultancy MKA Economics