Scottish ministers ‘yet to walk the walk’ on industrial strategy – ex-adviser

Holyrood ministers are “talking the talk” over industrial strategy but are “yet to walk the walk”, a former economic adviser to the Scottish Government has claimed.

Professor Mariana Mazzucato, who served on the Scottish Government’s council of economic advisers between 2015 and 2022, spoke as a new report suggested ministers need an industrial strategy that aims to “awaken the ‘animal spirits’ among domestic firms”.

That study, by the think tank Future Economy Scotland and the Institute for Innovation and Public Purpose (IIPP) at University College London argued that Scotland “cannot rely on making minor tweaks to the status quo”.

It makes a total of 13 recommendations for ministers, including a call to “overhaul” the investment strategies of Scottish National Investment Bank and Scottish Enterprise.

It adds a new state holding company should be set up to manage public assets and acquire stakes in strategic sectors.

In addition the report suggests the First Minister should lead a new Industrial Strategy Council, which would be able to “drive cross-government action”.

Noting that “growing numbers of countries” have introduced industrial policies to respond to 21st century challenges, the report was clear that “Scotland cannot afford to sit on the sidelines”.

It said: “In practice, small economies like Scotland face a stark choice – either act boldly to shape markets, or be shaped by global market forces.”

Meanwhile, Prof Mazzucato said: “Governments worldwide have recognised the need for a more proactive state to address the grand challenges of the 21st century.

“But while Scotland is talking the talk on industrial strategy, it has yet to walk the walk.

“Our report outlines how a mission-oriented approach can catalyse cross-sectoral investment around bold goals, learning from best practice around the world.

“By embracing a mission-oriented approach, the Scottish Government can achieve the ‘fair, green and growing economy’ it has promised – but has yet to deliver.”

With the Scottish Government having published its green industrial strategy in September 2024, the report said this was a “crucial first step towards embracing a more proactive, market-shaping role for the state in the economy”.

But it added: “To achieve the Scottish Government’s vision it must go further to embrace a whole-of-government approach to rethinking the role of the state.”

It also made clear that while attracting “high-quality inward investment” into Scotland “should continue to be a priority”, Holyrood ministers “cannot afford to assume that luring global investors will deliver the necessary transformation”.

Laurie Macfarlane, co-director at Future Economy Scotland and IIPP policy fellow, said: “Too often the Scottish Government publishes well-meaning strategies but then fails to deliver meaningful change.

“It is not enough to simply talk the language of transformative change while making small tweaks to a broken system. The time has come to match ambitious words with meaningful action.

“Our report shows how the Scottish Government can fully harness devolved tools, institutions and resources to drive the structural change Scotland so desperately needs.”