As I See It
BT’s big numbers reveal truth about Scotland’s economy
BT has hit a new milestone after revealing that it now contributes £1 billion to the Scottish economy. In fact, this should come as little surprise. A survey two years ago showed that the company injected more than £930m in wages and spending on suppliers north of the border.
The real significance of this latest research by Regeneris Consulting is how much Scotland’s economy is umbilically tied to big business based mainly beyond its shores.
The days when the banks, insurers, manufacturers and retailers were mainly home grown, domestically managed and Scottish owned are long gone, along with some historic Scottish names. In the telecoms sector alone a number of indigenous companies – Atlantic Telecom, Thus – remain only as names on ageing communications boxes. Even ScottishPower, which owned Thus, is now a subsidiary of a Spanish firm.
Figures show Scotland’s economy on an upward trajectory, and there have been some great successes among our entrepreneurs. But in the bigger scheme of things, the economy’s tartan hue is fading. In political terms, it is pointless trying to pretend that we are somehow doing it for ourselves.
British firms such as BT and Tesco – another massive private sector employer and buyer – together with overseas investors are now accounting for a growing share of Scotland’s gross added value.
While some may regret the loss of “local” power as a result of takeover or displacement of market share, these non-Scottish institutions are the ones which are helping the economy to grow and which need to be nurtured and encouraged.
BT’s impact is bigger than that of the insurance sector, employing 12,400 people directly and it spends £176 million a year with Scottish contractors, £52m up since the 2013 report.
The overall beneficial financial impact of the company in Gross Value Added terms £1,010 million – equivalent to £1 in every £115 of the nation’s total GVA.
As a measure of its growth, this figure has doubled in the last five years. Brendan Dick, BT Scotland director, says there are few organisations in Scotland that have a larger impact on the day-to-day life and future prospects of the nation than BT.
One figure that leaps out is the £502m invested in research and development. This is vital to a country that has made progress in developing a technology sector and has raised its targets for growth. It is too easy to overlook the importance of companies such as BT in underpinning these expectations.
Our report today on investment into the property market reveals that Scotland is now grabbing the lion’s share of overseas investment into the UK outside London – bigger even than the south east (excluding London).
This too is an important milestone and one that should ring in politicians’ ears as loudly as BT’s phones. Investors will only put their money where the conditions are favourable. That means a benign tax regime, a skilled and committed workforce, simple planning regulations and a generally welcoming attitude towards business.
In an interview with Daily Business last week property developer Chris Stewart emphasised the significance of overseas money in fuelling developments in Scotland now that the banks are no longer the primary source of capital. Today’s figures confirm that the country has much to lose if it puts obstacles in the way of these investors who are coming mainly from the US, and increasingly from China.
First Minister Nicola Sturgeon told last week’s Business in the Parliament Conference that she wanted to work with business. This is a sentiment she has expressed on several occasions. Companies will be watching to ensure she sticks to the promise of keeping her side of the bargain.