SNP take note: the way to protect jobs is to look closer to home | Kevin McKenna | Opinion
Scotland’s first minister might be deploying Napoleon’s battlefield maxim in her approach to Boris Johnson: “Never interrupt your enemy when he is making a mistake.” You formed an impression of this with the letter she sent to Johnson after his coronation. “Scottish government analysis shows that a no-deal outcome could cost 100,000 Scottish jobs,” Nicola Sturgeon told him. “Even a free trade agreement could see a fall in Scottish national income of around £1,600 per person compared with continuing EU membership.”
It remains to be seen how the new prime minister will respond, but Sturgeon will have predicted every word of it down to the Latin phraseology. She knows that jobs and the economy will once more be the main battleground on which the next independence referendum will be fought. Johnson will sound warnings about sowing further division during the period of post-Brexit uncertainty, while Sturgeon will say that an independent Scotland within the EU will be the basis of future prosperity.
But simply blaming Brexit for any attendant jobs apocalypse in Scotland won’t cut the mustard. Throughout the SNP’s 11-year tenure in charge of Scotland it has made repeated and rosy predictions of a renewables job windfall that has yet to materialise. Much of this has been due to a failure by civil servants and lawyers to secure cast-iron guarantees linked to permits for global players to exploit Scotland’s bountiful energy resources. For several decades across Scotland and the UK, large-scale infrastructure projects have either failed to deliver their target outcomes or strayed seriously over budget.
According to ukconstructionmedia.com, nearly 70% of construction projects exceed their budgets, while fewer than one in three come within 10% of their targets. Edinburgh’s tram system is a Stygian tale of incompetence and waste. The project was completed in 2014, five years behind schedule, and was described by the ex-chairman of Transport Edinburgh as “hell on wheels”. The council budgeted £545m, but the final figures released in 2017 showed that it had already cost £776m before the first trams had run. The cost of the high-speed rail network HS2 already looks like it was originally calculated on the same fag-packet basis as Edinburgh’s trams.
Recent major technology projects in Scotland will have a chapter of their own when the chronicles of public sector ineptitude come to be written. Audit Scotland has been unsparing in its criticism: the rural payments computer farce went £75m over budget and the NHS 24 electronic nightmare went 73% over budget. The £46m Police Scotland i6 computer farce could have been project-managed by Worzel Gummidge. This one was so grotesquely askew that it had to be stopped. While the cash that was spent was refunded by Accenture, the projected “savings” of £200m evaporated. Outside management consultants are picking over the entrails of that one on the usual per-diem basis.
The levels of complexity in the management process of the big public sector contracts are famous among Scotland’s small and medium-size enterprises. Global contractors know this and play it to their advantage. They go in with a low bidding price, deploy aggressive change control procedures and know that the client expects to pay over the original budget. Perhaps it’s time for the Scottish government to think small in these projects and bring them within reach of the country’s smaller firms. Many have proved management expertise but can’t compete with global outfits.
These projects could be managed in smaller chunks with shorter timescales and simpler targets that require less governance. They could be measured accurately in months and single years and there would be a greater impetus to get the job done efficiently and on time by local companies, as the consequences of failure would lead to grievous damage to their reputations.
Perversely, it seems that the bigger the failure the more likely you are to win larger contracts. Global firms absorb failure and spend millions on PR to entice governments and the business press to look the other way. The Canadian tech giant CGI was kicked out of Obamacare in the US and was implicated in the rural payments chaos but this wasn’t considered sufficient to prevent it winning local authority business in Edinburgh, Glasgow and the Borders. The big global players in technology have preyed on the dripping roast of Scotland’s public sector for decades. Dozens of Scottish firms with skilled workforces have disappeared because they were deprived of the oxygen of access to major public contracts.
The Scottish government claims 30% of the value of contracts goes to small Scottish firms. This is an admission that 70% of an annual £850m annual spend in this sector will probably career over budget and fail to deliver. Ownership has been handed to commercially astute global players with no stake in the Scottish economy, and Holyrood possesses neither the negotiating skills nor the experience to compete with these giants. It’s difficult and dangerous to attempt to prove failure by the contractors when your own governances might not have been watertight.
To borrow from the dismal lexicon of the management consultants’ almanac: it’s time for the Scottish government to change the paradigm. It can take back control of these projects so that they can be used to fertilise the Scottish economy.
• Kevin McKenna is an Observer columnist