Blog: Are we singing a new song?

29th August 2024

by David Gow, DHI Trustee

"Fings can only get worse," Sir Keir Starmer intoned in the 10 Downing Street rose garden on August 27 in a reverse reprise of Labour's 1997 campaign song . "Before they get better." He added that the UK should "accept short-term pain for long-term gain." It's a tough ask but maybe Scots at least are up for it.

Perhaps, indeed. What emerges from our latest quarterly survey of voter sentiment towards the Scottish Economy, Understanding Scotland, is that Scots are increasingly torn between feeling (a shade) more upbeat and anxious, between modest optimism and continuing pessimism.

Certainly, more than half (56%) of the 2227 respondents to the survey conducted exactly a month after the July 4 General Election still think Scotland is heading in the wrong direction but that's six points down on the record 62% in May while those believing the opposite are up four points at 23%. 

What's more, fears about the cost of living/inflation at 58% are down close to levels last seen in January 2022 (56%), probably reflecting the upturn in earnings and even (some) lower prices. (The survey pre-dates Ofgem's announcement of a 10% hike in energy guide prices). Most tellingly, those thinking that general economic conditions are worse than 12 months ago have fallen to 52% (net) or the lowest level since the survey began in October 2021. Personal negativity is down to 42% from a high of 65% in November 2022 while optimism is up to 15% (net) - hardly a dizzying decline but worth monitoring to see if it upticks

As we and our colleagues at the Diffley Partnership say in the report's intro, "a growing proportion are unsure about the country’s direction, suggesting a populace still searching for clarity in uncertain times." As we point out, there remains a significant sense of precarity, notably among families with children.

Unhealthy options among the poor

More than one in five (22%) is still cutting back on fruit and veg to cut food bills, a bad signal for a nation fighting rampant obesity, while a similar number is reducing meal/portion sizes to save money - the same goal pursued by the 14% skipping meals. It's surely bad news that more than a half (52%) admits to shopping on price rather than health, while a quarter or more is eating processed food and/or cheap food requiring little or no cooking. And we know from here and elsewhere that it's poorer parents, particularly young mothers, who skimp on meals so they can feed their kids.

Financial resilience remains worryingly high among less well-off households. A third of households with children are not confident they could raise £100 in an emergency without borrowing, a level that rises to 58% when the required loan is £500. Inequality may not be a substantial policy issue (at just 8%) but poverty remains among the biggest priorities (27%).

Tax and spend alerts

Ahead of the October 30 Budget (UK) and the Scottish Government's renewed brake on spending, concern about manging public finances is on the up - at 29% compared with 24% a year ago. And a third remains convinced spending on public services is an important issue facing the Scottish economy. Rachel Reeves' "black hole" is clearly and understandably putting the wind up a lot of folk., including actual and/or potential pensioners (a concern for 12% or up three points on May.)

Will hospital consultation/treatment waiting lists come down? Obviously, it's too soon to tell but healthcare and the NHS remain by far the biggest concern (51%) - compared with the mere 8% thinking of the constitution, an issue that does not win elections. Nor, surprisingly, do green/climate change issues (just 11%, down one point on May).

Unsurprisingly, however, immigration and crime are rising up people's political agenda, with the former at a survey peak of 13% (up three points on May) and the latter at a new high of 11% (up two points). The two are often wrongly linked, notably in tabloid media, but both may well prove growing headaches for the new UK government. We shall closely monitor trends here.

Overall, it's clear from this survey that the new UK government and whichever administration emerges from the elections to Holyrood due in May 2026 have a lot to do to convince a sceptical population that those "sunlit uphills" can be glimpsed around the corner. Again, hardly surprising after this dreich summer...

End

Blog: Shaking off our misery?

Blog by David Gow, DHI Trustee

If the public mood in Scotland, as measured by the latest quarterly Understanding Scotland Economy Tracker, is pretty much as bad as it seems, we might as well call off the final five weeks of campaigning in the UK general election and put the politicians out of their misery by voting now. 

After all, there are critical and more exciting events coming up like the opener in the Euros 24: Germany v Scotland on June 14 in Edinburgh's twin city Munich.

The latest tracker certainly paints a sombre picture of how we Scots feel. Almost two in three (62% compared with 58% three months ago) believe Scotland is moving in the wrong direction - the highest level since the series began. And less than one in five (19% compared with 23% in February) think it's heading the right way. These are devastating findings for our political class as a whole (which should read the findings and wake up to reality). 

The reality is that Scots are worried above all by Healthcare/the NHS - 52% view this as the top issue - and the cost of living (40%) though this latter concern is easing though hardly to the point where "turned the corner" talk is credible. And almost one in five (18%) list trust in politics as the critical issue - a number that's rising.

This does not amount to a conducive environment for a bog-standard campaign centred around "tax and spend" policies (like the one we're having now). Scottish voters are more than disgruntled. Their mood may not (or perhaps even may) amount to despair or rage but they certainly need a dose of hope and optimism. And please don't talk about the constitution - only 7% think it the priority issue.

The overall findings gave plenty of food for thought - and lively discussion - at the latest tracker's presentation in the historic home of RBS on St Andrew Square. It was a lovely late spring morning with sun shining through the upstairs windows and birds carolling us but the discussants were reflective, pondering the state we're in - not the one the politicians are peddling elsewhere.

Introduced by Scott Edgar of the Diffley Partnership, the tracker's results were analysed by Sebastian Burnside, NatWest Chief Economist, and João Sousa, Deputy Director at the Fraser of Allander Institute, with a strong emphasis on cost of living issues, labour market developments and fiscal outcomes and outlooks.

This attendee was struck by several things, notably João's point that the rise in average earnings in Scotland, albeit outpacing inflation now, still remains below the increase in prices - i.e., people do not feel and indeed are not better off than last they were when they went to the polls in 2019. Indeed, this is the first time this has happened. The tracker shows Scottish sentiment in line with this: "...economic pessimism may prove hard to shake despite incremental improvements."

Women, especially those with children, are among the most pessimistic.  Even if some of the pessimism has lifted overall only 11% think things generally will improve (be much better or somewhat better) in 12 months' time and, when it comes to personal wellbeing, this rises to just 17%. Still, fewer folk are cutting down on leisure activities to make ends meet or losing sleep over their finances albeit the decline is quite marginal - and three in five Scots are still cutting back on non-essential purchases.

Sebastian intrigued the audience with the bank's internal evidence that its customers are dipping into their savings/deposit accounts when they're forced to make bigger outlays such as repairing the car. Overall, it seems, the struggle to remain on top of the monthly budget is as tough as it can get, notably for lots of younger folk. More than half of Scots (53%) remain dissatisfied with income covering the cost of living.

Campaign mantras such as "change" or "stability" in this context seem beside the point, especially when the fear lurks that the next government will be forced, willy nilly, to raise taxes in order to deal with a worsening UK fiscal position as the IMF and others have warned. It's a frequent message from a weary public when the TV crews conduct 'voxpops' in the pub or coffee shop.

Will the next tracker findings - due in late August or several weeks after the July 4 general election - reveal an uptick in optimism?

Don't hold your breath! It's more than likely that, whatever the outcome, voters will be suspending judgement (as many may do by abstaining and driving turnout down to historic lows) . What they most want is services delivery, not warm promises things can only get better. Are the candidates paying attention on the stump?

Watch the event recording:

Understanding Scotland Economy Tracker - May 2024 Insights

Press Release: Healthcare and Cost of Living Top Priorities for Scots ahead General Election

Latest in the Understanding Scotland Economy Tracker series shows that healthcare and the cost of living remain the top concerns as candidates get set to make their offer to voters for the 4th of July election.

As Scotland gears up for the General Election, the latest survey from the Understanding Scotland Economy Tracker series reveals that healthcare and the cost of living are at the forefront of Scottish voters' minds as they get ready to decide how to cast their votes in July. 

Latest findings from the series show the top two issues for voters in Scotland are:

• one in two Scots (52%) cite healthcare and the NHS

• two in five (40%) the cost of living and inflation is a key issue

Graph to show the top priorities and issues cited in the Understanding Scotland Economy Tracker over time.

A host of other issues remain important to Scots, including poverty/inequality, trust in politics, the economy, and housing, which are regularly selected as top issues facing Scotland by upwards of 15% or more of Scots. However, there are notable changes in prioritisation among these issues, with emphasis on trust in politics rising two percentage points to 18% and emphasis on the economy falling two percentage points to 17%.

The constitution and devolution is reported as a top issue by only 7% of Scots in the latest figures for May 2024.

As parties craft their platforms and campaign messages, these results indicate that healthcare and the cost of living will be key battlegrounds in the upcoming election. 

Scott Edgar, Senior Research Manager at Diffley Partnership, said: 

“With 52% of Scots prioritising healthcare and 40% focused on the cost of living, it's clear that these will be decisive factors in the upcoming election. Parties who can effectively present solutions to these concerns over the course of the campaign are likely to gain a significant advantage at the polls.”

Susan Murray, Director of the David Hume Institute said: 

“These findings underscore the critical importance of healthcare and the cost of living for Scots as we approach the general election in July. Political candidates will need to address these issues head-on if they want to resonate with voters and secure their support”

Ends

Notes to Editor:

Designed by the Diffley Partnership and the David Hume Institute, the survey received 2,275 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 2nd-7th May . Results are weighted to the Scottish population (2021 estimates) by age and gender.

Press Release: Two-Thirds of Scots continue to reduce spending

Latest in the Understanding Scotland series continues to shed light on Scots’ survival tactics during challenging economic times

The Understanding Scotland Economy Tracker survey tracks economic attitudes and spending intentions from more than 2,000 members of the Scottish adult population every 3 months.  The fast turnaround time, this data was collected only two weeks ago, means early identification of changes in trends to support decision-makers.    

The latest insights show two in three Scots (67%) have resorted to reducing non-essential purchases, while significant proportions continue measures such as cutting back on energy use (64%) and leisure activities (62%). Additionally 45% report decreased savings contributions, and over a third are tapping into them for everyday expenses. These coping mechanisms are particularly prevalent among younger age groups, underscoring the disproportionate impact of the high cost of living on  working-age individuals.

The study reveals a cautious outlook among Scots regarding future spending. Both essential and non-essential spending expectations show little change, indicating ongoing caution amidst economic uncertainty.

Furthermore, the latest findings highlight generational divides in priorities.  Healthcare and the NHS are paramount among older age groups, whilst younger individuals are more focused on addressing rising living costs.

The study also reveals growing doubts among Scots about Scotland's trajectory, with the majority (58%) believing that the country is heading in the wrong direction. This marks a three-percentage-point increase from the previous wave and reflects an increasing sense of pessimism about the future.

Mark Diffley, Founder and Director of Diffley Partnership, said:

“The latest findings from our regular Understanding Scotland series continue to shed light on the economic landscape in Scotland today. The fact that seven in 10 Scots think that economic conditions are worse than 12 months ago and six in 10 think conditions will be worse in 12 months’ time, reveal ongoing and widespread pessimism. The data also again reveals the challenges posed by rising living costs and offers a glimpse into the daily struggles of many Scots, particularly those from disadvantaged backgrounds, highlighting that the cost-of-living crisis is far from over in terms of real life experiences.”

Susan Murray, Director of the David Hume Institute said:

“These findings reveal  a stark snapshot of the economic reality  of living in Scotland today. For anyone wanting to improve productivity or economic growth, focus on the number of Scots continuing to lose sleep over their finances, which creeps up another one percent this quarter to 30% and rises to 43% of 35 to 45 year olds. With so many of your workforce affected, we can only hope that things don’t get worse before they start to improve.”

The full report can be found here.

Notes to editors

Designed by the Diffley Partnership, the survey received 2,305 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 1st-5th February. Results are weighted to the Scottish population (2020 estimates) by age and gender.

Press release: Is trust a must for a brighter economic future?

“Trust plays a crucial role in a successful economy.”  says Charlie Woods, the author of the latest David Hume Institute Discussion Paper launched today ahead of an on-line event on Thursday 23 May at 1.30pm. Is this being overlooked by business and political leaders who are seeking solutions to weaker than desired economic performance?

DHI Director, Susan Murray, will be joined in this webinar conversation from New York by Dr David M. Bersoff, from the Edelman Trust Institute, Charlie Woods, the paper’s author, and leading mediator John Sturrock , who works to build trust in negotiations.

David will share the global context on trust from the 2023 Annual Trust Barometer to help explore the relevance of trust to the economy and the labour market.

At a time when the majority of Scots are concerned about household finances, think Scotland is heading in the wrong direction economically and are pessimistic about our economic future, are we paying sufficient attention to the potential of increasing trust to boost economic performance?

David Hume Institute Director Susan Murray says:

“Research shows a strong relationship between levels of trust in society and economic performance with more trusting societies generating more income per person than others. Thinking differently about what helps boost economic performance might reveal we have been looking for too long in the wrong places to find the Holy Grail of a more productive Scottish workforce.”

The webinar is free to watch here.

ENDS

Notes to Editors

• For media enquiries contact Shelagh Young, David Hume Institute, shelaghyoung@davidhumeinstitute.org

• The Discussion Paper: Is Trust an undervalued ingredient for a thriving economy? Is available here

• The 2023 Annual Trust Barometer can be found here

• The David Hume Institute is an independent think tank based in Scotland. The charity was established in 1985 to increase diversity of thought on the economy and related public policy. Find out more on our website

Press release: Scots continue to cut spending

22nd November 2022

New research published today by the David Hume Institute and the Diffley Partnership on economic attitudes and behaviours has revealed widespread pessimism about Scotland’s economic outlook.

• 9 in 10 Scots (93%) believe general economic conditions are worse now than they were this

  time last year and 77% believe the situation will deteriorate further over the coming year. 

• 6 in 10 people (62%) are planning to spend less on restaurants and hotels and 58% are

  planning to cut down on leisure and culture spending over the next 12 months.

• Almost 1 in 2 (48%) plan to spend less on clothing and footwear.

• 7 in 10 (68%) already report not turning the heating on when they otherwise would have

  and nearly 1 in 5 (17%) of people have skipped meals to save money

• Intentions to cut spending have increased for every good and service listed in the survey

  since Understanding Scotland began, posing a big challenge for the Scottish economy and

  particularly the hospitality sector.

The new Understanding Scotland polling has found that 8 in 10 (79%) of people view the economy as it is currently organised as working primarily in the interests of the wealthy, while 65% of people feel their financial situation has worsened over the past year.

Wrong direction?

Just under half of people (49%) believe that things in Scotland are heading in the wrong direction, the highest percentage providing this answer since Understanding Scotland was launched last year. Dissatisfaction with income levels remains high, with almost 1 in 2 (46%) of people dissatisfied with their income level and a further 55% dissatisfied with their income’s ability to cover the cost of living.

People from the most deprived areas are also being increasingly pushed into financial precarity. One in five (20%) have had to borrow money from family or friends and 19% have used a buy-now-pay-later scheme when they otherwise wouldn’t have. This is despite 22% of this group having changed or looked at changing jobs to earn more and 15% trying, unsuccessfully, to take on more hours/paid work.  

During these tough times, 2 in 5 (40%) of people have reduced their donations to charity, while rising prices and inflation are pushing 1 in 5 (22%) of people to cut down on portion sizes to save money.

People from the most deprived areas plan to reduce spending on essentials further this next year: almost 2 in 5 (37%) plan to spend less on eating out and household goods and services (38%).

Parents feel the pinch

Parents, in particular, are feeling the pressure of current economic turmoil: almost 2 in 3 (64%) are dissatisfied with the ability of their income to cover the cost of living and nearly 3 in 10 (28%) reflect that their current financial situation is much worse than it was 12 months ago. This pressure has resulted in more than 1 in 3 (35%) of parents losing sleep due to stress or anxiety about personal finances and higher percentages of parents reporting borrowing money from family or friends and using credit cards or buy now pay later schemes than people without children.

Amidst predictions of further tough times to come following the Autumn Statement, these statistics raise questions of how much worse things can get and how current economic conditions will impact other issues of rising concern among survey respondents, such as poverty and inequality and healthcare and the NHS.

Reflecting on the findings, Mark Diffley, founder and director of Diffley Partnership who conducted the research, said:

“The public in Scotland continue to have widespread concerns about both the of the state of the economy and their ability to cope with the ongoing cost of living crisis.

Although concern and anxiety are widespread, we continue to see those in the most precarious situations feeling most vulnerable and ill prepared, particularly those who live in the most deprived parts of Scotland.

Despite a modest fall in pessimism about the economy over the next year, policymakers and business will be concerned with the finding that spending on non-essential items, like leisure, eating out and holidays, is likely to fall significantly over the coming year.”

Susan Murray, Director of the David Hume Institute, who helped to develop the survey, added:

“The cost-of-living is continuing to have prolonged effects in the ways in which people are choosing to spend their money. Hospitality and culture industries are being hit hardest as people cut back spending due to rising food and heating costs.

Although Scots are less pessimistic about the state of the economy next year, we are still witnessing significant financial stress among families with more than one third of parents losing sleep due to financial stress.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,191 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 3rd - 8th November. Results are weighted to the Scottish population (2020 estimates) by age and sex.

2. About Understanding Scotland: Understanding Scotland is a high-quality quarterly survey that delivers insights into Scottish behaviours and attitudes towards society, the economy and the environment. The survey fills a vital gap in research, providing the socioeconomic insights and indicators needed for effective decision-making, with regularity and timeliness.

Blog: A View from the Lab

by Shelagh Young, Engagement Lead, David Hume Institute

25th September 2022

Friday’s “fiscal event” has proved to be a powerful curtain raiser for new research we are launching later this week exploring how ordinary people are coping with growing risks to their financial wellbeing.

If you feel like a rat trapped in the Trussonomics laboratory unsure whether the trickle down drug will cure your financial ills, you are not alone. The markets have already announced their damning verdict on the risks being taken with the UK economy as the pound tumbled and money was sucked out of pension funds at a rate which will have a substantial number of people rapidly recalculating their retirement plans.

Even impartial commentators such as the Institute of Fiscal Studies, have referred to the UK Government’s decisions as a gamble. Chancellor Kwasi Kwarteng maintains that the tax cuts will benefit everyone while others have named it a “budget for the rich”. 

However it is described, the facts are clear. At the sharpest ends the tax cuts announced will give the average FTSE100 CEO a return of £162,500 a year while the Resolution Foundation has calculated the annual benefit to the poorest fifth of households at just £90. That staggering difference means the difference between paying your energy standing charges for just four months while the richest receive a tax cut worth more than 99% of the UK population are paid in a year.

The risks to the Government are obvious - electoral success in 2024 surely lies in ensuring that their hoped for economic growth meets the needs of our struggling NHS and social care systems as well as enabling people outside the top 1% to feel their living standards are protected. The risks to the rest of the population vary. Most obvious are reduced returns from pensions and other investments if markets slump further and the spectre of further austerity measures if the large scale public borrowing is not mitigated by growth.  

One tiny part of this unprecedented low tax, high spending, banker’s bonus bonanza of a budget provided a clue as to who is most at risk if the gamble doesn’t pay off. The decision to require low paid part-time workers who receive income top-ups through Universal Credit to seek more paid working hours. 

In August we surveyed how people in Scotland are responding to the cost of living challenge. 9% had already tried and failed to find more hours of work. The devil will be in the under-researched detail, but it is interesting to know why people cannot find more paid work when businesses are crying out for staff. Is it well-known barriers such as the fact that hospitality requires evening work which doesn’t fit with caring responsibilities or that wages are too low to cover the costs of additional child or elder care? This is the type of evidence that should be driving the Government’s policy. Instead, our poorest households are being forced into the vanguard of an unprecedented experiment.

The “fiscal loosening”  prescribed by Kwasi Kwarteng is based on the belief that low taxes and a small state are the treatment for fuelling growth.  Unlike the markets, business organisations have welcomed the approach but if the rest of the lab rats had been given a vote would they have chosen to test this risky drug?

Press release: nine in ten Scots anticipate a recession and worsening inflation

Press release from the David Hume Institute and the Diffley Partnership

30th August 2022

Overwhelming majority say UK and Scottish governments have done too little to help with soaring prices, as nine in ten Scots anticipate a recession and worsening inflation.

New research produced in partnership between the David Hume Institute and the Diffley Partnership on economic attitudes and behaviours has revealed widespread anxiety and pessimism about Scotland’s economic outlook.

• 8 out of 10 people are cutting down on non-essential items and leisure, and over a quarter of people are skipping or cutting down on meals to save money

• 3 in 10 people in Scotland are now losing sleep over their finances

• The overwhelming majority think support from the UK (89%) and Scottish (73%) governments thus far has been insufficient

The Understanding Scotland survey found that 87% of people in Scotland expect the soaring cost of living to cause a recession, and more than nine in ten expect things to get worse before they get better.

Despite households’ best efforts to cut their outgoings, the support on offer from governments is widely seen as inadequate. 64% of people report feeling worse off now than over the past year, and 57% say their income does not satisfactorily cover their cost of living, rising to 73% and 71% respectively in the most deprived neighbourhoods.

Eighty per cent of people have cut down on leisure and/or non-essentials, and over a quarter of people are skipping or cutting down on meals to save money. Despite these efforts to economise, including by foregoing basic necessities, 89% and 73%, respectively, say that the UK and Scottish governments have done too little to help.

There is particular hostility towards energy companies: 95% of people think they have done too little to help people cope with rising prices, and a fifth of people think that the single biggest cause of soaring inflation is companies maximising their profits. This is only just behind the war in Ukraine at 21%, and ahead of pandemic-related supply chain issues at 12%.

Rising prices, in the absence of further support, have seen large numbers of people pushed into greater vulnerability and riskier behaviours. Two in five have depleted their savings, and over a third (35%) have taken on debt and/or borrowed money. The latter figure rises to 44% in the most deprived neighbourhoods, 20 percentage points higher than in the most affluent. 

The impacts of soaring prices are not being felt equally across society. Rather, they are hitting the already vulnerable hardest, with 73% of people in the most deprived fifth of neighbourhoods reporting that they feel worse off now than over the past year, compared to 60% in the most affluent areas.

While 80% of people believe that salaries and wages should rise in line with inflation, only a third say they would feel comfortable asking their employer for a pay rise and far fewer - less than 7% - have actually done so. Women, young people, and those in part-time work - already more likely to be in low-paid positions - are especially uncomfortable doing so. The ‘wage-price spiral’ counterargument - that higher wages only serve to drive up demand and inflation - does not appear to have much traction, with only 4% of people deeming this the primary cause of inflation. Only eight per cent of people believe that pay should not rise in line with inflation, a tenth of the proportion that said it should.

Reflecting on the findings, Mark Diffley, founder and director of Diffley Partnership who conducted the research, said:

“It is unusual to see the public mood being so unambiguously bleak. Financial pressures and anxiety at soaring prices are widespread across society, but particularly acute for those who are already most vulnerable. Across all demographic groups, and especially in more deprived communities, a clear majority are saying that the response to date from the UK and Scottish governments alike are simply not enough.”

Susan Murray, Director of the David Hume Institute, who collaborated on the survey, added:

“Since we started this survey, sadly most people have seen their financial situation deteriorate. With three in ten people now losing sleep due to financial stress, and over a quarter skipping or cutting meals, there are obvious consequences for the economy, labour market and people’s health. Eighty per cent of people have already cut down on non-essentials and leisure, and over a fifth have taken on or tried to take on more work, but it’s still not enough. Despite their best efforts, two-thirds of people say their money simply isn’t going far enough, and most expect things to get considerably worse before they get better. We need a concerted package of targeted support, and we need it now.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,227 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 4th - 8th August. Results are weighted to the Scottish population by age and sex.

2. About Understanding Scotland: Understanding Scotland is a quarterly survey tool measuring the most important facets of our lives and decision-making in Scotland: our society, economy, and environment developed by Diffley Partnership and Charlotte Street Partners. Understanding Scotland: economy is produced in partnership with the David Hume Institute.

Consultation response: public finances in 2023-24

Response from the David Hume Institute to the Scottish Parliament call for views on Scotland’s public finances in 2023-24 and the impact of the cost of living and public service reform.

About our submission

DHI welcomes the opportunity to respond to the Finance and Public Administration Committee’s call for views on Scotland’s public finances 2023-24 and the impact of the cost of living and public service reform.

Central to our work are the people of Scotland, including those who are seldom heard; from different ethnic and cultural backgrounds; different genders, ages and abilities. 

We apply the critical thinking which has long defined DHI to encourage action to address the contemporary issues of our time. 

Our response draws on a range of previous research including:

• The Action Project - the largest multi generational research project in Scotland in recent years heard from over 5,000 people about their thoughts on action to help Scotland build forward better.

• Our 2022 briefing paper on open data, which sets out the lack of progress on open data in Scotland and the cost to the economy and public services.

Summary

We call on the Committee to recommend that the Scottish Government:

• Maintain the essential focus on commitments to reducing child poverty and the transition to net zero is critical to the economy

• Fully implement the Scottish Government’s 2021 benefit take-up strategy

• Recognise that there is little evidence that tax cuts will help with the cost of living or inflation

• Work to reduce levels of ‘inactivity’ amongst those who want to work by reducing barriers to work in order to increase the tax base.

• Fully realise the benefits of their own Open Data commitments to improve public services and boost the economy.

• Better utilise the sustainable procurement duty to deliver national outcomes

Blog: Another strategy launch, will it make a difference?

Blog by Susan Murray, Director, David Hume Institute

2 March 2022

It seems to be the time of year for governments to announce strategies.  However, as our hearts and minds are drawn to events in Ukraine, it can be hard to focus on domestic policy.

Cabinet Secretary Kate Forbes acknowledged world events at the start of the launch of the National Strategy for Economic Transformation (NSET) yesterday.  After months of meetings and consultations, there is a “laser focus on delivery” of Scotland’s new economic strategy.

This is good news but what will be different this time from previous economic strategies?  The biggest difference I observed is the focus on the interconnectedness of different policies and action, along with the role of women.

More women were involved in the development of the strategy and it's clear the government is keen to power up The Double X economy.  What does this mean?  It's not one action but lots of small ones to address structural inequality such as investor bias.

Linked to NSET is another Scottish Government strategy the David Hume Institute has been looking at in partnership with Open Data Scotland.  Our briefing paper on Open Data, released later this week, highlights a 2015 strategy with good intentions but a subsequent lack of delivery.

Lack of open data is a barrier we keep coming up against in our research and, from our conversations, we know that others are too.  Open data is a driver of economic activity estimated to be worth over £2bn to the Scottish economy.  It is fast becoming as much about data as mindset and culture in a country. It is an opportunity but one Scotland is failing to grasp and risks being left behind on.

Open data should be viewed as part of having a global outlook.  It is part of the UN Sustainable Development Goals which are the central operating principle underlying the National Performance Framework.

The UNSDGs are now a common operating language across the world for all sorts of organisations and the good news is the Welsh Assembly and the UK Government are signed up to them too. However, the UK Government Levelling Up strategy only had one mention of them - which seems like a missed opportunity for collaboration on shared goals across the UK.

A recent Westminster environmental audit committee evidence session looking at aligning the UK’s economic goals with environmental sustainability feels very relevant.  It is well worth watching both evidence sessions, including the hard hitting evidence from our partners, the Institute and Faculty of Actuaries.

The content of the evidence session was not new - what feels fresh is that the discussion is at the heart of Westminster at a time when business as usual is not an option. Whether it's the Levelling Up Strategy or National Strategy for Economic Transformation nothing works in isolation as we live in a deeply interconnected world.

So while the many policy brains wade through the reams of paper making up these new strategies, will they make a difference?

The answer to that lies with people – all of us make choices every day that impact on others both at work and in our personal lives.

What’s clear from reading Poles Apart by Ali Goldsworthy, is that everyone reading the strategies is doing so with a lens looking for confirmation of what they already believe. How many of us will change our actions and behaviours at a result of a new strategy - perhaps only time will tell?

DHI: The Movie

Thank you for being part of the Institute's journey in 2021.

This year we published research that brought people together from across Scotland to consider the actions required to move faster towards a more prosperous, sustainable, inclusive and fair country. Over 5,000 people from across Scotland told us their actions to help Scotland build forward better. You can read about these actions - and tell us yours - here.

From how to build A Scotland of Better Places, to delivering multi-year spending plans, and levelling up on Scotland's broadband, these conversations showed the appetite for change and transformation.

Throughout 2021 we have also been expanding our analysis of Team Scotland: diversity of thought is essential to improving productivity and resilience to risk - things that have proven to be essential in the 2020s. This year we turned our attention to actions for business and investment leaders, and Scottish Parliament.

This year DHI have brought you 11 insightful events on the economy, productivity and more. These are all available to watch now on catch up. We particularly recommend our most recent events on political philosophy and the pandemic, and our partnership event with Black Professionals Scotland and the Institute of Directors on how to unlock greater potential in Scotland's economy.

Scottish Government consultation response: tax policy and the budget

In autumn 2021 the Scottish Government sought views on the overarching approach to tax policy, through Scotland’s first framework for tax.

Our consultation draws on:

• The largest multi generational research project in Scotland in the last five years, The Action Project. In 2020-21 we brought together people from across Scotland to consider the actions needed to move faster towards a more prosperous, sustainable, inclusive and fair country.  Over 5,000 people from across Scotland told us their actions to help Scotland build forward better.

• We worked with partners to reach people of all ages and backgrounds across Scotland.  These included U3A, the Scottish Youth Parliament, the Children’s Parliament and local organisations like InspirAlba in Campbeltown and Resonate Together in Alloa. By listening to the many voices and then analysing themes and patterns, WhatsYourAction.scot presents the findings and encourages others to have their say.

• Our 2021 briefing paper on multi-year budgeting, explains how a new agreement on multi-year budgeting between the Scottish Government and Scottish Parliament will help long-term thinking and support a more open conversation about spending plans and investment choices.

• David Hume Institute events and discussions such as Talking Tax with Charlotte Barbour and Dr Arun Advani last year.

Summary

• DHI welcomes the framework.  The clear, accessible language is critical to create more understanding about the important role tax plays in society. Research conversations as part of the Action Project emphasised the lack of understanding of Scotland’s tax powers.

• Having a coherent narrative that joins up tax policy with the National Performance Framework and Climate Change Plan helps businesses and investors plan for the medium term direction of travel.

• Simplification and public understanding are rightly identified as important factors to underpin a fair tax system and are critical to accountability. The framework’s movement away from language like “tax burden” is important for a fresh conversation.

• DHI welcomes the proposed Citizen Assembly on council tax - this is an area that is widely recognised as needing reform but has become highly political. It came up consistently in Professor Duncan Maclennan’s work A Scotland of Better Places. Continuing the status quo indefinitely should not be an option and this work should be expedited.

David Hume Institute gives evidence to Scottish Parliament committee

Susan Murray, Director of the David Hume Institute, gave evidence to the Scottish Parliament Finance and Public Administration committee following its response to the consultation on Public Finances in 2022-23.

The Institute is calling for Scottish Government to:

• Publish draft multi-year spending plans to help longer term planning for service improvement, investment and productivity, and increase transparency over forward planning.

• Publish how it has prioritised for a fair and equal recovery, and provide underlying evidence for those priorities, recognising trade offs between shorter and longer term choices.

• Link budget priorities to the National Performance Framework and the United Nations Sustainable Development Goals (UNSDGs), using them to analyse how the pandemic has affected some groups and communities worse than others.  Continued use of the UNSDGs assists collaboration with other organisations and governments around the world.

• Focus on climate action and a fair transition to net zero, faster delivery of digital infrastructure and measures to directly influence reductions in poverty and promote greater inclusivity.

• Work to improve Scotland’s places by devolving resources and putting more power in the hands of local communities.

• Ensure support for jobs where skills can be developed rather than skills development alone.

• Commit to a full review of the Fiscal Framework which considers external changes including the loss of European Funding and new direct spending in Scotland from Westminster as well as the interactions between both devolved and reserved taxes and social securities.

Scottish Parliament consultation response: Public Finances in 2022-23

Response from the David Hume Institute to the Scottish Parliament call for views on Scotland’s public finances in 2022-23 and the impact of COVID

About our submission

DHI welcomes the opportunity to respond to the Finance and Public Administration Committee’s call for views on Scotland’s public finances 2022-23 and the impact of Covid.

Our submission draws on evidence from:

• The largest multi generational research project in Scotland in the last five years, The Action Project. In 2020-21 we brought together people from across Scotland to consider the actions needed to move faster towards a more prosperous, sustainable, inclusive and fair country.  Through facilitated conversations with over 5,000 people, we identified actions which will help Scotland build forward better.
  

• Working with partners to reach people of all ages and backgrounds across Scotland.  These included U3A, the Scottish Youth Parliament, the Children’s Parliament and local organisations like InspirAlba in Campbeltown and Resonate Together in Alloa. By listening to the many voices and then analysing themes and patterns, WhatsYourAction.scot presents the findings and encourages others to have their say.
  

• Our 2021 briefing paper on multi-year budgeting, which sets out the enabling action needed for the Scottish Government to publish multi-year spending plans.

Summary

We call on the Committee to recommend that the Scottish Government:

• Publish draft multi-year spending plans to help longer term planning for service improvement, investment and productivity, and increase transparency over forward planning.

• Publish how it has prioritised for a fair and equal recovery, and provide underlying evidence for those priorities, recognising trade offs between shorter and longer term choices.

• Link budget priorities to the National Performance Framework and the United Nations Sustainable Development Goals (UNSDGs), using them to analyse how the pandemic has affected some groups and communities worse than others. Continued use of the UNSDGs assists collaboration with other organisations and governments around the world.

• Focus on climate action and a fair transition to net zero, faster delivery of digital infrastructure and measures to directly influence reductions in poverty and promote greater inclusivity.

• Work to improve Scotland’s places by devolving resources and putting more power in the hands of local communities.

• Ensure support for jobs where skills can be developed rather than skills development alone.

• Commit to a full review of the Fiscal Framework which considers external changes including the loss of European Funding and new direct spending in Scotland from Westminster as well as the interactions between both devolved and reserved taxes and social securities.