The depressing predictability of an inevitable economic failure

When should the Scottish Government pay your wages? Who should be left to face unemployment, and who should receive public money to prevent unemployment? On what conditions should any of this be decided? And what outcome is necessary to justify any of this?

These are some of the questions that are thrown up by today's reporting of the loss of a quarter of the workforce at the Alexander Dennis bus manufacturing business. It is hard not to see this affair as a scandal; it is certainly a very significant failure.

The story is consistent; a certain type of business looks like it is going to go into administration with all jobs lost, so the Scottish Government steps in with large amounts of bailout cash to prevent the immediate problem, in the hope that some sort of solution will emerge. It either does or doesn't, but in the process, the government itself seems strangely passive.

The first question is whether there is any genuine strategic intent behind any of this or whether it is all about political optics. The kinds of business that get saved are specific; they tend to be heavy manufacturing with a male-dominated workforce. The McVities biscuit factory in Tollcross in Glasgow employed almost as many people as Alexander Dennis, and no public money was spent preventing its 2022 collapse.

In fact, the money flowed in the other direction – after the decision to close was agreed by Glasgow City Council, the owner made a £1 million donation to the Council. So what's the difference? Bribery? An economic assessment of the plants? The fact that McVities had a largely female workforce?

On the other hand, Prestwick Airport employed half as many staff as either and was fully nationalised. This strongly implies that the key factor in whether a business gets bailed out or not is neither economics nor jobs, but the level of political embarrassment.

At least Prestwick was nationalised and is profitable again (after many years of subsidising losses). It is profitable again largely on the basis of having converted to military contracts, and there are serious questions to be asked about that, given contemporary geopolitics. But at least there was a credible 'out' (eventually).

There seems to have been no credible thinking behind the Alexander Dennis bailout whatsoever, other than the avoidance of negative headlines at a time that was politically sensitive for the Scottish Government. There is certainly next to no evidence of the Scottish Government actually having had a plan here.

In fact, the plan seems specifically to have been to pay wages for long enough for the business itself to come up with some sort of scheme. That turns out to be 'sack a quarter of the workforce, close one of our two factories and retreat into a more limited part manufacturing model'. Did it really require £4 million of public funding to deliver that outcome?

That represents an £11,500 subsidy to every job saved. That might be justified if 'saved' really meant saved and not salvaged, because these are not the same jobs and this is not the same business. This appears to have been a case study example of throwing public money at a problem and then hoping something will come along.

What didn't happen was any obvious coordinated effort in 'market making' – using rapid and decisive action on public procurement to retain this manufacturing business in a state that could actually deliver crucial outputs the Scottish economy needs (EV buses).

This is precisely what Common Weal called for in its Daily Briefing when the news that the plant was at risk was announced. We set out a four-point strategy that could have helped secure and grow the business as it was. Little to none of it was done.

There is something fundamentally corrosive about government politicians being able to spend public money where the primary purpose of the expenditure is to avoid political embarrassment. It was grimly predictable when the announcement was made that we would end up where we have. It was never an economic policy; it was always cynical politicking with an election approaching.

In that previous briefing, we described this all as a 'very specific Scottish failure' and a result of 'Scottish Enterprise Brain' where no economic asset isn't there primarily to be sold to an overseas owner, in bits if need be. We see nothing in the denouement of this affair to alter that judgement.