Nighttime economy development isn’t just about tax

Live music venues are asking for better transport links to protect the nighttime economy in Scotland. This is an important intervention for a specific reason – it is an rare demand-led economic stimulus model which is seldom discussed in Scotland. We would do well to learn this lesson.

Very loosely, supply-led or producer-led economic development policies are about making the supplier/producer more capable of selling a competitive product or doing so in a more financially sustainable way. Demand-led policy is about increasingly the ability or desire of the consumer to consumer a product.

This is a substantial ideological split. Supply side economic sees the market as essentially perfect, free, operating as it should at all times. If a business isn't able to compete in a market then that means the problem lies with the business or (more often) the regulatory or tax burden on the business.

The concept of 'market making' – policy specifically designed to increase market size or to better connect markets with producers – is very much absent from supply side economics. Ideologically speaking, for supply side economic the fault is always the government (which sets taxes and regulations) and never the markets (which are always perfect).

Interestingly, burdens on businesses that do not come from government are not considered burdens but simply 'costs'. Energy prices can spike because of oil industry profiteering and this becomes a problem for... government, which is expected to bail out businesses. Likewise, sky-high commercial property rents are 'a fact' while taxes are 'an opinion'.

Yet this distinction is purely ideological and entirely arbitrary. You can be the best live music venue in the world operating in an extremely competitive regulatory environment but if customers can't get to your venue then you cannot succeed. Economic success is the result of the interplay of supply and demand factors, not one or other alone in isolation.

There are lots of policy steps that could help the nighttime economy; accessibility (transport, parking, ease of walking), placemaking (planning, clustering, lighting, policing, shelter for people waiting for transport), costs (commercial rents, energy, supply chains, anti-monopoly policies), market development (promotion, offers, advertising, public subsidy, encouraging group visits) and integration of economy (the ability to eat before and after, affordable accommodation, non-predatory ticketing services).

None of these are straightforward low-tax, low-regulation policies as dictated by supply-side economics. For some venues what might make the difference is legal protection enabling them to switch brewers or other suppliers, or the break-up of vertically-integrated ticketing, or price caps on energy – or better transport links.

This remains the biggest blindspot for economic development in Scotland – it cannot get away from an extremely limited supply-side economic conception of the barriers to better economic development. In fact the ratio of 'demands for tax cuts' in comparison to 'any other policy' in the five years since the pandemic created an existential crisis in the nighttime economic is heavily weighted against 'any other policy'.

An integrated demand-and-supply-side economic development approach is what is known as an industrial strategy and it is an aspect of economic policy which is almost wholly absent in Scotland. We do not stop to look at the wider set of conditions facing an industry, we see every problem as a problem to be fixed by cutting taxes.

Of course, the same people are not asking for taxes to rise on profitable sectors to balance out cuts elsewhere, and then they will claim that Scotland cannot 'afford' public services. But if every view of your society comes only from the view outwards from private enterprise filtered through a frame which assumes tax is the problem, you will find yourself unable to see any path other than tax-cutting and service reduction.

That is why Common Weal has repeatedly called for a development approach to our economy focussed on a sectoral-level industrial strategy, as set out in Sorted.