Scottish public sector spending boosts economy

Research challenges business assumptions

UNISONScotland has launched a report that provides evidence that challenges the claim that public sector spending in some way 'crowds out' private investment.

This dogma has been widely promoted by the Scottish business sector and parroted by some elements in the media.

Matt Smith, UNISON's Scottish Secretary said "UNISON has long been clear that the public sector is an important driver of the Scottish economy, rather than the drain that the CBI and the Chair of Scottish Enterprise claim. Despite very public statements from them and their allies in the press no evidence has ever been advanced to back up their case.

"UNISON therefore commissioned independent research to investigate the evidence. It found that not only was there little or no evidence to back the 'crowding-out' theory on the contrary the public sector had a key role to play in promoting many aspects of economic growth."

The research was carried out by Dr Andy Cumbers, and Kean Birch of the Centre for Public Policy for Regions (CPPR) a joint research initiative of Glasgow and Strathclyde Universities.

It points out that internationally there is no pattern of relationship between economic growth and the size of the public sector. High performing economies have both high levels of government expenditure (Sweden, Finland, Norway) and low levels (Korea, Ireland ­ although Ireland has similar levels to the UK if European funding is included).

It also finds that public sector investment in research and development has been critical in delivering important economic growth in new areas ­ eg IT and telecommunications (Finland) and biotechnology (Scotland).

It also provides basic infrastructure that assists the private sector in developing. Matt said "The public sector provides roads, healthcare, education and training, a legal framework and much other infrastructure without which the private sector would be less efficient. It also spends money in the private sector both through procurement and via its workforce. Now ­ thanks to Dr Cumbers and Mr Birch we know that it directly resources private business.

"It is long past time that business and right ­ wing commentators stopped dogmatic and unevidenced attacks on the public sector, and moved the debate on to a more informed analysis of the interaction between public and private sectors in a successful economy."

The report ­ Adding Value, Public sector spending and Scotland's economic development ­ is available on the UNISONScotland website at www.unison-scotland.org.uk/addingvalue.html

headlines . top