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Archives for November 2010

The Princess and the Degree

Douglas Fraser | 07:30 UK time, Monday, 22 November 2010


Princesses have long been more associated with peas than degrees. Kate Middleton's changing that. But does she need a university degree for the job she's just signed up for?

Prince William's future wife has been criticised for failing to use her higher education from St Andrews to get herself a conventional graduate career.

Instead, she's worked for the business run by her mum and dad. And next year, in a sort of a way, she'll be working for her husband's granny.

There's nothing wrong with family businesses, of course. The House of Windsor has been quite a successful one down the years, harnessing the power of globalisation long before the word was invented. In its heyday, it was still referred to as empire-building.

But I ask the question about graduate employment having just read some telling research about the state of Scotland's graduate jobs market.

Frothing coffee

This comes out of the Fraser of Allander commentary. Two pieces of research show that there's a marked mismatch between graduates and the jobs they get.

This isn't about the recession. The research predates that. And it confirms what lots of us can see: that six months after graduating, rather a lot of young people are still frothing coffee at Starbucks, and wondering when they're going to get on with their lives by making use of all those hard-won qualifications and skills.

Only two out of three single-degree graduates have entered a graduate type of job (let's be accurate about this: it was 68% between 2002 and 2007).

What it tells us anew is that three years after that, 80% of graduates have still not matched themselves up with a suitably skilled, challenging job.

Irene Mosca of Trinity College London and Professor Robert Wright at Strathclyde University stress that the figures show Scotland to be in a very similar position to the rest of the UK. Across the UK, 78% of those with one degree were still not in a job that matched the skill level reached after 42 months.

They conclude there's still considerable underemployment, which can't be explained by "life-cycle considerations", by which I think they mean having families, career breaks (obviously without having the career) and caring for other family members.

Four in ten over-qualified

There's a much better match between jobs and those with a second degree. Some 90% were found to be in appropriate jobs after six months, and 91% after 42 months, only slightly below the UK levels. Of course, that means nearly one in ten was not.

"Are over-education and under-employment problems in Scotland?" ask the authors. Their answer: yes.

So is the labour market letting down our young people? Maybe so. But the other way of looking at it is a rather sensitive one. The mismatch may be because it's a mistake to be educating so many people to such a high level.

The issue is taken on in other economic research from John Sutherland, of Glasgow University's Centre for Public Policy for Regions. He's looked across the economy, and (by making extensive use of his own higher education skills) devised a method of seeing if workers are over or under-qualified for the jobs they're doing. This is not just at graduate level, but at five different levels of qualification, starting with none at all.

What he found is that roughly four out of ten workers in Scotland were "over-qualified".

One consequence of this is that people are investing time and effort in getting themselves trained and educated, and not seeing the returns. The government is investing resource in that as well, and if - as seems likely - we're moving to more personal funding of one's higher education, then the burden and cost of that inefficient use of resource will fall across more households.

John Sutherland cites other research, published last year, that finds the jobs being taken up by skilled people don't make full use of the skills they bring, notably in computing.

Emigration culture

He also finds something significant in his Northern Irish figures. In the province, workers are 12% less likely to be over-qualified. Why? Perhaps because those who can't find jobs that match their skills are more likely to leave home to find jobs that do. That emigration is part of the Irish culture.

These different bits of research ask some further searching questions: of labour markets and employers use of their human resource potential: of higher and further education and the suitability of the courses they offer: and the poor transmission belt between government spend on education and sluggish improvement in productivity.

And that highlights one issue that runs through all this research; the definition of a "graduate job" has been carefully assessed by these researchers, but it's clearly open to challenge.

What graduate skills imparted at St Andrews University, for instance, are useful or even essential to being, a princess, or a prince, or a future monarch?

Swinney at the cutting edge

Douglas Fraser | 20:10 UK time, Wednesday, 17 November 2010


Holyrood today heard about one side of the nation's ledger - the side that's intended to get the government through the next election.

The other side was not so obvious in John Swinney's budget statement to MSPs. That's where the cuts come, and what's emerged since he sat down looks a bit less politically attractive.

The largest element of those cuts, or savings, will come in the efficiency drive. That's going up to 3% next year. I'm told that equates to £876m of efficiencies.

That is the big number at the heart of this budget.

Salami sliced

Ministers claim they've surpassed expectations in recent years, when efficiency achievements were recycled within departments.

Now, it seems only councils will be allowed to recycle their savings - as part of their deal with Mr Swinney.

Every other department - including health - will have to get by with the assumption that they're driving their allocations at least 3% harder. Previously, they had a 2% target, and each year you look for savings, they tend to get harder to find.

That answers the question of whether the biggest single-year spending cut, starting next spring, will involve services being axed, or salami-sliced. It looks like thin strips of Italian sausage are on the pre-election menu - £876m-worth of them.

We could have expected housing would take a big hit - it turned out at 19% - because it's so dependent on capital spend, and the capital budget's getting most harshly cut.

Flat screen TVs

Prisons have taken a 22% reduction, despite no sign that prisoner numbers will fall. This suggests they'll be buying fewer televisions for prisoner cells (last week's controversy - apparently flat screens are too good for them). And warders will have less money for rehabilitation.

Somehow, the prison service has to find money for a prison in Grampian, to replace Peterhead and Aberdeen jails. And while it's claimed no spending was expected on that next financial year, where will it come from in subsequent years?

The jail hasn't been included in a list of capital projects to be funded from the revenue budget. While he switched £100m from revenue to capital for next year, the longer-term 'Revenue Financed Investment' programme is one of the more significant new, or reheated, elements in John Swinney's budget.

The idea is a variation on the private finance initiative, but with any profits being recycled. It's a plan that's been a long time coming, but now looks like the only hope for some important projects with a total value of around £2.5bn.

This is how the government intends to fund the Borders railway (around £260m); improvements to the M8, M74 and M73 (£320m); the Aberdeen peripheral road and A90 at Balmedie (c £400m); some school building (£450m); FE colleges in Kilmarnock, Inverness and Glasgow (£300m); and hospital and clinic upgrades (£550m).

The idea is to cap the total amount that will be paid out on revenue funding of new capital projects, at £250m per year, and then to invite private finance to make them happen by coming up with £2.5bn. All this is to be arranged by the Scottish Futures Trust.

Public finance experts don't think anything will happen on any of these projects within at least 18 months. So these projects will have to wait a bit longer than standard procurement - and than some supporters hoped - and will have to pass muster with the bank manager as much as the finance secretary.

Only the select few projects will be directly funded, including the replacement Forth crossing, south Glasgow hospitals and a different category of new schools.

And as for Scottish Water, there's a commitment to ensure it has £700m of capital spend over this and the next four years, but a decision today to cut its allocation from this year's £150m to nothing at all next spring.

Foggy finances

The puzzling bit of the political calculation is how the budget can be portrayed as retaining economic growth at the Scottish government's chief Purpose, with a capital P.

Some of the harsher budgets cuts are for the bits of Scottish government that support the economy most directly; Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and, most notably, university and college funding.

That looks like one area with a lot of potential to cause the government difficulty, as it is cutting higher education by 7%, along with that 3% efficiency requirement, and it claims to have a promise that this won't lead to a cut in the number of student places.

That, in itself, would be quite some feat in one year. But the problem for universities is that they don't know what, if any, funding stream is going to come from students or, more likely, graduates in future.

That foggy financial outlook compounds the problem faced by the whole of Scotland's devolved public sector, in not having budgets beyond next year. Whether justified or not by the electoral timetable, there's no doubt that makes planning very difficult.

Flexibility, or else

Meanwhile, the pay freeze brings Scotland into line with England, but with some paring back of top-paid public servants thrown in too.

Health gets protected, in a sort of a way. Its budget is only up if you ignore capital, and it's still expected to reach those 3% efficiency targets.

Nicola Sturgeon's department is also having to share £70m with councils, to iron out the transition between hospitals and adult social care, which used to be known as bed-blocking.

Public sector unions knew the pay freeze was coming. They didn't sound like they knew how to react. They also face pressure for "flexibility" in their work practices, which may prove at least as hard to negotiate.

One of the bits that's potentially incendiary is a shake-up of teachers' pay and conditions. Councils want to sort out some of the more expensive consequences of the so-called McCrone settlement from 2001. Easy to say you're going to have a review: rather more difficult to get it past the staffroom.

But to help do so, John Swinney was clear that the prospect of compulsory redundancies is being held in reserve.

It was ruled out for the current parliament, and he says he wants to avoid it in the future. But it's no longer guaranteed, and the tactic seems to be that it will be left to others to decide if it will continue.

Health and efficiency

The language of conditionality we repeatedly heard from the finance secretary extended to that threat to unions: agree to a pay freeze and more flexibility, or else compulsory redundancies are waiting for you.

Likewise to the councils: agree to the government's police number targets and the council tax freeze, or else face more than double the scale of cuts.

It sounded like a series of offers that couldn't be refused.

John Swinney is widely recognised, even by his political rivals, as being much too nice to make much of a mobster.

This latest stage of career will require him to be more of a political conjurer.

Budget and ballot box blues

Douglas Fraser | 09:53 UK time, Wednesday, 17 November 2010


It's almost as if there's an election coming.

On budget morning, the SNP is close to a deal with councils that would protect police numbers and freeze council tax, while their opponents are eager to avoid being associated with the impact of the cuts kicking in with the new financial year, a month before election day.

It should be no surprise that the Scottish government wants to protect flagship policies, if only for one year. The health service is getting a softening of the blow, with polls showing that remains the public's choice.

What remains to be seen from today's budget is what they're not protecting. A £300m saving from freezing public sector pay for a year (for those earning above £21,000) only goes so far towards the scale of cuts required, particularly when some public services spending is shifted into the capital budget.

The less politically popular spending heads can expect to see the worst of the squeeze. Apart from police numbers, the justice budget could be one to take a big hit. It's looking particularly ugly for housing too.

Pay and conditions for teachers are going to come under pressure, starting with the budget for staffroom supply staff.

Growth and justice

And what about universities? They are often seen at the heart of any strategy to grow the economy, but the read across from Whitehall's distribution of resources could see them take a swingeing cut.

The difference in Scotland is that there's no plan in place to fill the gap in higher education funding that would be left by that.

That question of where to support economic growth and where to support social justice will be one of the balancing acts John Swinney has to perform with this budget. You can aim to achieve both, but there are trade-offs between them. Social care, for instance, doesn't do much for growth.

Giving only one year's budget avoids having to address that sort of question of longer-term public service reform, of universities and elsewhere.

The Scottish government's argument is that it can hardly be accused of shying away from the difficult choices when next financial year - which it has to address - is going to be by far the toughest of any over the four year spending period.

It also thinks that the election next May should set the direction of the following three years, so the choices should be at the ballot box.

Put another way, John Swinney doesn't want to show his hand any more than his opponents do.

Celtic tax takeaway

What he will want to do, however, is to argue that Scotland could be handling the financial crunch much better if it had more economic and fiscal powers.

The one that has featured most in recent years has been corporation tax. Cut that, and you bring in business, so that total business tax revenue goes up.

That argument has been based on what's happened in Ireland. But there's a bigger story developing in parallel today, about the price Ireland will have to pay for its financial nightmares.

One part of the price is that some other European countries want to force up its corporation tax which, at 12%, has been undercutting competing economies, and is less than half the UK's rate.

If that happens, that key to the Celtic tiger's boom years, and to the aspirations that a fiscally autonomous Scotland could follow, could soon be no more.

Weir in this together

Douglas Fraser | 09:26 UK time, Sunday, 14 November 2010


What would you do if you were starting out on a career now? Or if you're starting out soon, what will you do?

The question was put to me by a colleague recently, anxious about the school subject choices of his teenage son and daughter.

It's not just the prospect of paying big bucks for a university education, which has fast become a given in Scotland as well as England.

It's that looming public sector job cuts make even secure lines of work seem more insecure. There's a sense of the economic ground shifting under our feet.

I had little hesitation an finding answer for my colleague. And it was less than half a joke when I suggested that if you want a secure future, learn about mining, go to Australia and start selling raw materials to the Chinese. And be sure to wear plenty of sunblock.

Clydeside of yesteryear

But there's a shortcut, letting you stay close to home.

Sell mining equipment to the Australian miners and the Chinese nuclear engineers.

That's what Weir Group is doing rather successfully.

Its management have taken an old company, founded in 1875 - one for which my grandfather, Robert Forbes, worked on the Cathcart shop floor, as it happens, retiring just over 50 years ago.

And it's gone on to break the rules of industrial globalisation.

The argument's particularly well made in the Financial Times this week, as London wakes up to the fact that this unexpected newcomer to the FTSE 100 looks strangely like a throwback to Clydeside of yesteryear.

Weir made its money selling pumps for the Clyde's ships.

Tony Jackson's observation in the FT is that pumps were there at the outset of Britain's industrial revolution, and should therefore be expected to be the first to lose out to innovative, cheaper, later developers.

But Weir's confounded such expectations.

It's battled through some corporate scrapes and near-death experiences to build that engineering excellence into a global presence, now providing specialist pumps and valves in mining, power stations and oil and gas.

Loose reins

And as with Scotland's other engineering success stories, it's done so by overseas acquisition, letting the reins sufficiently loose on 40 businesses, operating from multiple centres.

Weir recently opened a servicing centre in Siberia.

It's got 1,000 employees in South America, as many in Africa and again in Australia.

The workforce is now more than 10,000 and growing on the back of completing the purchase of a valves business in India last month.

You can learn more about it from the chief executive himself, Keith Cochrane, who has made a career at top levels in Stagecoach and Scottish Power, and he's done so, unusually, without having to leave Scotland.

He's interviewed on Radio Scotland's The Business this Sunday at 10am, and available for a week after that on iplayer and as a podcast.

Tomorrow's tourism smells sweet... or of sweat

Douglas Fraser | 09:33 UK time, Saturday, 13 November 2010


One of many American reactions to austerity: the luxury boot camp spa resort.

Be tough on yourself, fight the lard, feel the financial burn, and shed both pounds and a lot of dollars.

It's one of the global tourism trends identified this week by Euromonitor's Edinburgh-based tourism expert, Caroline Bremner, in a report for the World Travel Market in London.

That's where I found myself earlier this week, finding out the industry's future, checking out the British offering (relatively modest and geographically patchy), and being staggered by the scale of it - not least the competition between Arab emirates to show off the most opulence.

Staggering too is the scale of the industry's prospective growth in Asia, largely between Asian countries.

The World Travel and Tourism Council forecasts the industry to grow by 4.3% per year for the next decade, implying its share of the global economy will rise to just over 10%.

That brings a seriously large number of jobs. The council foresees some 66 million new jobs as a result, 50 milllion of them in Asia.

Nasal familiarity

The Euromonitor Asian trend of choice is for the nostrils.

Hotels there are investing in pleasing the olfactory end of luxury pampering, pumping soothing or freshening fragrance into public spaces according to taste and time of day.

For some chains, the idea is to create a signature scent, to play to the powerful memory for smell by creating an air and odour of familiarity whenever you walk into one of its many lobbies round the world.

Marriot, however, differentiates smells between its hotels at its airport, city and beach hotels.

Or you can choose your scent from a range of up to five available for pumping into your room.

There's marketing potential there too, including the innovation of a scented billboard.

Japanese technology giant NTT last April trialled a device that emits targeted fragrances from a mobile phone when travel applications are launched.

Don't ask me how, but be aware that the industry is gearing itself up for future customers using much more mobile and social media to access travel bookings and recommendations.

Intelligent furniture

Another survey, to coincide with the World Travel Market, set out the likely shape of the hotel of 2020.

Travel technology firm Amadeus puts together the next decade's themes of austerity, ageing western travellers and the growing dominance of Asian ones, and allies that to technological innovation.

What it arrives at is the prospect of "inter-generational tourism", customer pressure for better layout and accessibility, a hotel room with intelligent furniture, personalised nutrition plans and responsive technologies that cater to individual taste.

It suggests some hotels of the future may be by invitation only, or co-branded with other luxury brands (Edinburgh's Missoni has beaten them to that idea).

To return to the Euromonitor research, it's discerned an opening for stellar tourism in Africa.

If you've ever stared at the unpolluted southern night sky, you'll know it's a bit special.

In South Africa in particular, star-gazing is now a useful little niche with lots more potential.

In the Middle East, the country with unrealised potential is Iraq.

Yes, that's right - a different type of adventure or deprivation experience.

It's already doing a big trade in Shia pilgrims visiting the shrines that dot the Euphrates valley.

Three-quarters of its 1.3m arrivals last year were there for religious tourism, mostly from Iran.

Europeans may find the antiquities as interesting, I was told by the chairman of the Iraqi Tourism Board.

It was making its first appearance among the thousands of exhibitors at the London marketplace, at the stand next to Yemen, though it seemed a tad more focussed on getting investors in hotels than signing up package operators.

There too was a specialist Iraqi insurance provider, with comprehensive coverage for terrorism and hostage-taking. Most reassuring. But no sign of Somalia or Afghanistan this year.

Greece is the word

Coming close to home, what trends are there for Europe? Not many, beyond austerity.

Finding new ways to coax families into travelling with niche products, perhaps.

Big bargains for Middle East investors in London's prestige hotel brands.

And from George Nikitiadis, Greece's deputy tourism minister, an assurance aimed particularly at the British market which sent 2.5m visitors even through the depths of downturn last year.

Greece has 20% of its workforce in tourism, translating 18% of its GDP. Over-dependence on the sector, and on the British, I asked him?

Not dependence, he purred, but a love affair.

And instead of the Brits getting only the sun, sea and ouso, we're to be coaxed into a bit of culture and history too.

Apparently, the Greeks have rather a lot of it, and many of us have failed to notice.

Spreading the company fertilizer

Douglas Fraser | 06:44 UK time, Friday, 12 November 2010


If it's economic growth you want, particularly when government's in retreat, you'd better find the firms to make it happen for you.

Scottish Enterprise has been trying to do just that, commissioning research into what makes a high-growth firm in Scotland.

The results are interesting, if perhaps a bit frustrating for the government's economic development agency.

It turns out high-growth firms are very diverse, across sectors, in different sizes and at varying stages of development.

That is, they don't all fit the image of the funky, Silicon Valley-style, tech start-up.

That makes them all the harder to spot - which is probably the finding that Scottish Enterprise least wanted, because its strategy is about spotting and helping them.

Quite a few of these firms credited government with giving them a hand up, particularly on export advice and training, but only a fifth were "account managed" by SE at the time of the research.

It was not so much frustrating as a little unfortunate that the research was published on the same day it was announced that PWB Health - maker of the Breastlight cancer detection device, and one of the life science firms that SE had backed with more than £1m from its co-investment fund - has been put in administration.

Lumpy progress

So, with the help of the Hunter Centre for Entrepreneurship at Strathclyde University, what more can we say about high-growth firms.

It's probably worth defining them first.

Economists - in this case authors Ross Brown and Colin Mason - agree that firms qualify if they start with at least 10 employees and achieve growth of at least 20% per year over the following three years.

A company can be caught by that definition one year but not the next.

Indeed, that's one of the key and unsurprising findings: very few companies sustain a linear growth path, but instead progress in bursts and lumps.

One such burst can come with a management buyout.

Quite a few of the companies in the trawl had been "incubated" under larger, more slow-moving ownership before being spun out.

Over one-third of these companies are less than 15 years old.

The newest ones, founded within the previous five years and known as gazelles, barely registered.

There were only 25 of them, or 3% of the total. It shows at least some patience is required for take-off.

Big payroll

So the important bit: how many are there? There were 825 spotted between April 2006 and April 2009, though the uneven growth of most companies makes that a moving target.

The total represents only 6% of all Scotland's companies employing 10 or more people.

Comparisons with the UK and Scandanavia have a tiresome habit of making Scotland's company growth pattern look relatively bad, but not this time.

At some points in time, Scotland's been doing better on this count than the UK as a whole, and it's in line with Finland and Denmark.

These Scottish companies have a big payroll, of 500,000.

Far from all of them are in Scotland.

One distinctive aspect of this class of company is that it tends to have a big presence outside Scotland.

It's also likely to be export-oriented, and 39% have their ownership outside the UK.

Private, unlisted ownership accounts for 92% of them.

The diversity is clearest in the sectors covered.

Services dominate, covering a third of this group, and as with the rest of this group, they are biggest in business-to-business sales.

Hospitality, manufacturing and construction were next in line, though much of construction will have fallen into the high-decline category since this research began.

Oil and gas takes a perhaps surprisingly small share, with 27 companies included.

And that image of life sciences being the dynamic force of the new Scottish economy takes a bit of a knock. Only 10 firms made it.

Selling knowledge

And here's perhaps the most significant part: what, if anything, marks them out?

Learning from that would seem to be the place that the high-growth sector can be grown.

The study discerns three themes.

One, they're knowledge-intensive and look for innovative advantage and, two, they identify their workforce as a key source of competitiveness.

Those two attributes link to three: they do business by selling knowledge at least as much as stuff, and by building relationships with customers rather than seeking one-off transactions.

That can include jointly developing solutions to partners' challenges either with that customer or with other such firms.

There's a bit of a contradiction here.

The diversity of Scotland's high-growth firms tells us they can be hard to spot, but once you spot them, you find they have some common characteristics.

Those are characteristics that might be harnessed by others with high-growth potential, as much as by government agency.

And for the government agencies, there's the advice from this study to look beyond high tech, to build relationships, and to be more flexible in their support than they've typically been.

So... time to refresh that business plan?

Shades of economic grey

Douglas Fraser | 22:07 UK time, Wednesday, 10 November 2010


Not so bad as expected this year, but more sluggish thereafter. It's a mixed picture from the Fraser of Allander assessment of Scotland's economic predicament, but most of it is a downbeat grey colour.

Factors worth highlighting from the forecast is that it's not just cuts in government spending on public services that are going to hurt the Scottish economy: it's also the reduction in welfare spend.

Those benefit payments are part of the economy too, of course, and it's reckoned the tightening of the welfare budget could take £2bn out of the economy.

The economic commentary - which comes out three times a year, with the help of Pricewaterhouse Coopers, and carries as much weight as any on the state of the nation - includes analysis of why Scotland's unemployment has gone from being better than the UK average to worse, and worsening.

Possible reasons: unemployment rose faster in Scotland last year while those opting out of the workforce - and counted as 'inactive' - rose faster in other parts of the UK.

But inactivity rose faster in Scotland this year, suggesting unemployment is now on a faster upward trend in Scotland.

There's also the possibility that the figures aren't to be trusted.
The main count is based on a survey, after all, and that comes with margins of error.

Perhaps the most plausible reason for Scotland's unemployment trends is that things have simply turned worse here, at least on the jobs front. The contraction in jobs is a lot greater than the UK's: 4.5% against 2.5%, while inactivity rates have equalised.

The silver lining to this substantial cloud, point out the Strathclyde University economists, is that more job losses imply a rise in productivity, and a rise in Scotland's competitive position is not a bad thing.

No salami-slicing

They've got some interesting observations as well on what the economic outlook should mean for John Swinney, less than a week before the Finance Secretary sets out his budget plans for next year.

First point is that there may be trade-offs between social justice and the declared main purpose of the Scottish government of increasing economic growth. Perhaps because they're economists rather than politicians, they reckon growth ought to get the priority.

What they recommend is a ruling out of 'salami-slicing' budgets - instead making rational calculations based on which bits of spending deliver the best outcomes.

That means ruling out the ring-fencing of budgets such as health or schools - politically attractive, but not a great idea in allocation of increasingly scarce resources. The NHS, it is pointed out, cannot be said to offer the best marginal value per pound spent.

To sustain growth, there's another warning not to do the populist thing by bashing Scottish Enterprise. Returning its role to the civil service hasn't worked in Wales, says Fraser of Allander (no relation), so don't think it will in Scotland either.

Disappointing capital

And what about university funding? Research should continue to get a high priority, says the report, along with policies to boost its commercialisation.

To say that the 38% cut in the capital budget is "disappointing" is something of an understatement. That spend, say the economists, is important to sustaining growth.

So, painful though it might be in burdening public services with more of the cuts, there's the proposal to shift money from resource or revenue spending to the capital account.

John Swinney isn't allowed to shift spending the other way round, but he may take the virtuous route of preserving some of his politically valuable shopping list of capital projects, while asking "efficiency" (or salami-slicing) to take that extra bit of strain.

Shooting the Messenger

Douglas Fraser | 14:19 UK time, Wednesday, 10 November 2010


More tough news in the commercial media sector.

Johnston Press has announced another grim set of advertising figures.

It could be worse for the Edinburgh-based newspaper and online publisher, in that the rate of decline has slowed slightly. The third quarter of this year is down 5%, while it was down 6% for the first half of the year.

The Scotsman's owner, which is the third biggest local newspaper publisher in the UK, says jobs advertising is down nearly 30%, nudged downwards by a fall in public sector recruitment.

That's another company finding that government cuts are hurting. Shares fell 6% to a grim 11p.

That explains why another £20m is being stripped out of costs this year, and a printing plant in Limerick is to join the Edinburgh one in closing.

Across on the Clyde, there's a different problem inflicted by government policy more than government spending cuts.

Jeremy Hunt, the culture, media and sports secretary, has undermined the hopes of STV that it could branch out into independent production.

The idea was that the Channel 3 licences it holds in central and northern Scotland are not going to provide much of a future.

And being in dispute with ITV, its hugely dominant partner in Channel 3 broadcasting, is not helping its case in providing more for network broadcasting - even if there is more commercial life to be found in its murder-strewn Taggart plotlines.

So if STV could be designated as an independent programme-maker, it would be able to bid for the work that the BBC and Channel 4 are required to put out to tender.

The previous Labour government at Westminster thought that would be a good way of helping the survival and reinvention of STV and UTV in Ulster. The regulator, Ofcom, agreed.

But the smaller independent producers disagreed, fearing STV would be too big a competitor when things are already rather fragile for the sector in Scotland.

Jeremy Hunt has agreed with those smaller companies, and today said STV cannot consider itself an independent programme-maker.

The company has already been making some programmes for the BBC - Antiques Road Trip, for instance - and took on Alan Clements, one of Scotland's best-known programme-makers, to lead its drive into the field.

So the knock-back will hurt that plan.

What happens next for STV? It's still waiting to find out what Jeremy Hunt will have to say about the future of commercial television news.

With advertising revenue down, STV says it can't afford to continue meeting its current obligations. So it's waiting to find out if it can either avoid its current obligations or get additional funding for them.

London calling

Douglas Fraser | 07:03 UK time, Monday, 8 November 2010


As a place to work, London doesn't seem to cut it for most people throughout the rest of Britain.

The prospect of all that commuting and cost adds up to only one quarter of people outside south-east England envying those who work in the city.

According to a YouGov poll of nearly 2,400 people in late October, 61% of people prefer their nearest commuter hub as the place where it's best to work.

Those who are most content with their nearest working hub are in Scotland.

Though the sample size requires a statistical health warning, 83% of the Scots questioned rated their nearest town or city as an attractive business location and a good place to work.

It fits with Britain's "mustn't grumble" attitude, particularly when the poll also found some 80% of us are satisfied with the quality of our workplaces. (The main minority complaints from a fifth of respondents: the office building, canteen and lack of lunchtime

National brands

The strong Scottish showing may not have been what Opportunity Peterborough had in mind when it commissioned the poll.

It might have been a bit happier to find market towns within about an hour's train journey of King's Cross had the strongest loyalties.

But the poll brings to mind two factors in the Scottish and British economies that coincided in recent days.

One was the finding of the Office of Fair Trading review of the barriers to entry for new banks in Britain: that the main reason Scots have the disadvantages of a particularly strong banking duopoly is that that's the way Scottish customers choose to make it.

Just as there is an attachment to the cities where we work, we're loyal to Scottish national finance brands, however badly damaged they may be by events of recent years, and however much that limits competition in the sector from which we might otherwise benefit.

The other announcement came from the Prime Minister, in a speech in east London, declaring his intention to make the area into a new Silicon Valley of world-class technology.

This was partly to drive towards some legacy for all the Olympic spend in that part of the city.

It also helps David Cameron in persuading us that he has a plan for replacing all the public sector jobs that are soon to go.

Signs of life science

But it raises serious questions about something that the coalition government at Westminster started out wanting to champion: regional policy.

How does that fit with the emphasis on London's east end?

If London is to get not only the Olympics spend but also the Government's commitment to draw tech companies into a cluster in the area, then what does that mean for encouraging such growth in other parts of Britain?

One thing it suggests is that other parts of Britain, and particularly those with devolved powers, may not have the Westminster government on its side in developing technology clusters elsewhere, so those nations and regions will have to work much harder on their own behalf.

In Scotland, for instance, it punches well above its weight on biotech and life science companies.

PwC has a report out this morning saying there are now 600 such companies and 15% of the UK total.

But the flaws in the business model are becoming more visible, it says, and the research base is moving east (by which I think they mean Asia rather than Shoreditch).

The answer put forward by the accountancy and consultancy giant is much more collaboration across the sector, speeding up time to market, and shifting from development of hoped-for 'blockbuster' drugs to the next challenge for the pharmaceutical industry - individualised medicines.

Up in Big Smoke

That's not made any easier being at the end of a slow-ish economic branch line, or by London attracting such activities.

The history of British economic development keeps returning to the dominance of London and the south-east.

With less manufacturing and primary industries, such as mining, to sustain large parts of the rest of the UK, London seems ever more to use much of the rest of England as the hinterland that sustains it, occasionally benefiting when overheating drives businesses out from the hub.

Scotland is (obviously) further away, and has its own strengths, such as finance or oil and gas, so it is less affected by London's dominance.

But the Big Smoke remains a huge factor in Scotland's economy: acting as a magnet for talented individuals and Scottish headquarters.

It's a complex, problematic neighbour - close enough and big enough to be both a constant challenge and a world-class business opportunity.

If only it offered Scotland's quality of life...

Washington's Too Busy for Scottish Energy

Douglas Fraser | 18:44 UK time, Wednesday, 3 November 2010


Just hypothetically, let's suppose you head the government of a small country that aspires to be "the Saudi Arabia of renewable energy", harnessing its natural advantages, its brainpower and its world-class science base.

And suppose the US Energy Secretary, Steven Chu, comes visiting that small country, bringing with him not only a Nobel prize for physics but also the clout of President Obama's big ambitions to transform America's use of energy by harnessing scientific innovation, helped by a humungous research and development budget.

Don't you think you might be rather keen to meet said Dr Chu to see what potential there might be for collaboration?

I'm told Alex Salmond was very keen, and a meeting was discussed with the Washington administration.

It would have been easy.

Mr Salmond was at the SECC yesterday, speaking at the RenewablesUK conference and announcing a £70m fund to help build infrastructure for offshore developments.

Dr Chu was speaking at precisely the same time, about 100 metres away at the Glasgow Science Centre, on the subject of 'Laser Cooling, Single Molecule Biology and Sustainable Energy Solutions'.

This was at a conference to mark Scotland's contribution to the laser, 50 years after it was first demonstrated, on the day new research showed the industry is worth £660m per year to the Scottish economy, with the laser as the basis for 3,000 Scottish jobs.

Other lectures were entitled 'The Quantum Optics of Stickiness', 'Security, Insecurity, Paranoia and Quantum Mechanics', and 'Looking on the Bright Side of Light'.

But despite their proximity on either side of the Clyde, the first minister and the energy secretary didn't meet, and didn't have an opportunity to discuss co-operation.

Economy Minister Jim Mather was due to have spoken at the conference, but he missed his slot. It seems he was stuck in traffic - which, as metaphors go, isn't a happy one.

I'm told Dr Chu, who received an honorary degree from Strathclyde University earlier today, had too packed a schedule to meet the First Minister, and no, this shouldn't be interpreted as a snub.

So in no way does this have anything to do with an administration in Washington that has its own reasons for wanting nothing to do with the administration in Edinburgh.

And just to be clear, you are not to conclude that the renewable energy sector is paying a price for the release of Abdel Baset al-Megrahi.

Golly Moses, no.

Can oil and water mix?

Douglas Fraser | 22:01 UK time, Tuesday, 2 November 2010


You'd have thought there's plenty space in the North Sea for oil, gas and offshore renewables to live happily together.

With one industry mature and in gradual decline for the next three or four decades, those offshore skills can be shifted to open up the new frontiers of offshore wind and wave power.

The Renewables UK conference at the Scottish Exhibition and Conference Centre in Glasgow today shows plenty potential for transition, with oil and gas expertise looking for ways to get into the new klondyke.

The talk is of energy synergy.

Some in the oil business are not so sure quite how they're going to get sustainable with their power.

It's still not clear where they're going to find the funding stream for the gigantic investments necessary to realise offshore wind's potential. Less so still for tidal and wave power.

From those I talked to, they were hearing lots of talk and big hopes, but not many deals getting pinned down, while the offshore experts wait and see what happens.

Seismic disruption

And what may happen is that the sub-sea hydrocarbon business falls out with those harvesting power above the surface of the North Sea.

Oil and gas companies have licences from the Crown Estate, and many hold back on exploration for the timing and financing to be right.

They are concerned that the disruptive impact of drilling and seismic work may literally undermine the wind industry's seabed foundations, once its installed by the thousands of units.

Environment campaigners today called for the standard Crown Estate clause to be re-drawn, taking away the oil industry's right of pre-emption on the seabed.

The oil industry has suggested that it's aware that legal redress may be necessary if all those turbines start disrupting its exploration and production.

Tight budgets

The Scottish government has today come up with £70m of infrastructure funding to help build the harbours, ports and manufacturing base from which the renewables industry can then operate.

I've been discouraged from asking what secondary priorities for Scottish Enterprise and Highlands and Islands Enterprise are going to have to give to pay for that.

We'll wait and see when those tight budgets become clearer.

Instead, Scottish Enterprise underlines that the "re-profiling" of budget to put the renewables infrastructure fund at the top of its priorities was a boardroom choice.

And the emphasis from First Minister Alex Salmond is on how much more could be achieved if only the Treasury would release £190m of revenue from the fossil fuel levy that's allocated to Scotland, but sitting on account, unused, while Whitehall and Holyrood return to the Labour government's disagreement with the Scottish administration about how it gets released.

Meanwhile, the hope of getting industry to make the transition from one energy boom to another, with an industry summit planned for 17 December, looks a bit more uncertain when people are beginning to look to the courts to protect their interests rather than finding common ground on which to further them.

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