With hindsight, Cable's deficit reduction plan looks better than Osborne's

Osborne's Plan A required the Chancellor to be lucky - and this Chancellor has not been lucky.

This year I am conducting a little experiment. I have two sealed envelopes in my office drawer. In one is a set of economic predictions made by astrologers at the start of the year; in the other a set of similar predictions made by ordinary journalists with no economic background. At the end of the year I intend to compare such random guessing with heavyweight economic soothsayers such as the Office of Budget Responsibility, the Bank of England, OECD, IFS and any economic think tank bold enough to make medium-term economic predictions on the nation's growth, employment, inflation, and so forth.

My money frankly is on the astrologers. The recent record of medium-term economic forecasting is lamentable - even if we ignore the unpredicted banking crash. What success we have seen amounts to little more than the suggestion that things will move in the direction they seem to be moving.

Now, I do not know if George Osborne trusted too much the entrail examining of economic experts, some of whom are now saying that he shouldn't have done exactly what they hitherto urged him to do. Nor can we be as sure as Ed Balls that the government went "too far, too fast" - particularly as Ed never got as far as telling anyone "how far or how fast" a government should go.

What we all can agree on, though, is that things are not going to plan. Yes, jobs are being created in the private sector, unemployment is not moving upwards, the deficit is down, our export markets are engaging with the emerging economies, inflation is low and our credit good.

However, friend and foe alike acknowledge that the plan hinges on economic growth and there's little positive news yet on that.

I write this as someone who has voted in Parliament for every bit of the Chancellor's strategy and bought into its broad objectives. Government MPs cannot meaningfully adopt an a la carte approach to Budgets. I did not know if it would achieve all its major objectives but I certainly did not know it would not. I do not claim to know how crucial events in the EU have been in derailing that strategy.

What I entirely reasonably claim is that George's plan conceived before the 2010 election and implemented after it was bolder and potentially riskier than that advocated by Vince Cable and the Lib Dem Treasury team. Retrospectively and with all benefits of hindsight, slowing a little the pace of deficit of reduction to better protect economically-useful capital expenditure as suggested by Vince looks as though it might have been a better bet.

It is not that Plan A could not have worked or that the sage of Twickenham was necessarily right. It required though a number of other things to go right or not go badly wrong - for the Chancellor to be lucky - and this Chancellor has not been lucky.

It probably did not help that in act of misguided hubris the Regional Development Agencies were given their marching orders from day one - particularly as the replacement Local Enterprise Partnerships have struggled either to find their feet or get real money flowing through the system. RDAs stood in need of reform but the incoming government's penchant for "radical restructuring" has led in more than one area to a lot of time being wasted doing just that.

One cannot help thinking that much of this is a poisonous consequence of the tribalism that bedevils British politics whereby incoming governments are expected to behave like the Taliban blowing up Buddhas. One hoped that coalition could offset this tendency.

That’s why the reasoned tone as much as much as the substance of Alistair Darling's intervention last week matters. Frankly positioned as George Osborne is between supply-side zealots who see manic deregulation as a cure-all and irritating post match analysis from the Lib Dem benches, anything that makes non-partisan discussion and decision-making easier must be welcome.

For regardless of what party we belong to or what sector of the economy we work in, it is becoming painfully clear that facile and easy solutions to our economic plight are not available and for better or worse - we are all in this together.

John Pugh is the Lib Dem MP for Southport

George Osborne hasn't had any luck. Photograph: Getty Images

John Pugh is the Lib Dem MP for Southport.

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An unmatched font of knowledge

Edinburgh’s global reputation as a knowledge economy is rooted in the performance and international outlook of its four universities.

As sociologist-turned US Senator Daniel Patrick Moynihan recognised when asked how to create a world-class city, a strong academic offering is pivotal to any forward-looking, ambitious city. “Build a university,” he said, “and wait 200 years.” He recognised the long-term return such an investment can deliver; how a renowned academic institution can help attract the world. However, in today’s increasingly globalised higher education sector, world-class universities no longer rely on the world coming to come to them – their outlook is increasingly international.

Boasting four world-class universities, Edinburgh not only attracts and retains students from around the world, but also increasingly exports its own distinctively Scottish brand of academic excellence. In fact, 53.9% of the city’s working age population is educated to degree level.

In the most recent QS World University Rankings, the University of Edinburgh was named as the 21st best university in the world, reflecting its reputation for research and teaching. It’s a fact reflected in the latest UK Research Exercise Framework (REF), conducted in 2014, which judged 96% of its academic departments to be producing world-leading research.

Innovation engine

Measured across the UK, annual Gross Value Added (GVA) by University of Edinburgh start-ups contributes more than £164m to the UK economy. In fact, of 262 companies to emerge from the university since the 1960s, 81% remain active today, employing more than 2,700 staff globally. That performance places the University of Edinburgh ahead of institutions such as MIT in terms of the number of start-ups it generates; an innovation hothouse that underlines why one in four graduates remain in Edinburgh and why blue chip brands such as Amazon, IBM and Microsoft all have R&D facilities in the city.

One such spin out making its mark is PureLiFi, founded by Professor Harald Haas to commercialise his groundbreaking research on data transmission using the visible light spectrum. With data transfer speeds 10,000 times faster than radio waves, LiFi not only enables bandwidths of 1 Gigabit/sec but is also far more secure.

Edinburgh’s universities play a pivotal role in the local economy. Through its core operations, knowledge transfer activities and world-class research the University generated £4.9bn in GVA and 44,500 jobs globally, when accounting for international alumni.

With £1.4bn earmarked for estate development over the next 10 years, the University of Edinburgh remains the city’s largest property developer. Its extensive programme of investment includes the soon-to-open Higgs Centre for Innovation. A partnership with the UK Astronomy Technology Centre, the new centre will open next year and will supply business incubation support for potential big data and space technology applications, enabling start-ups to realise the commercial potential of applied research in subjects such as particle physics.

It’s a story of innovation that is mirrored across Edinburgh’s academic landscape. Each university has carved its own areas of academic excellence and research expertise, such as the University of Edinburgh’s renowned School of Informatics, ranked among the world’s elite institutions for Computer Science. 

The future of energy

Research conducted into the economic impact of Heriot-Watt University demonstrated that it generates £278m in annual GVA for the Scottish economy and directly supports more than 6,000 jobs.

Set in 380-acres of picturesque parkland, Heriot-Watt University incorporates the Edinburgh Research Park, the first science park of its kind in the UK and now home to more than 40 companies.

Consistently ranked in the top 25% of UK universities, Heriot-Watt University enjoys an increasingly international reputation underpinned by a strong track record in research. 82% of the institution’s research is considered world-class (REF) – a fact reflected in a record breaking year for the university, attracting £40.6m in research funding in 2015. With an expanding campus in Dubai and last year’s opening of a £35m campus in Malaysia, Heriot-Watt is now among the UK’s top five universities in terms of international presence and numbers of international students.

"In 2015, Heriot-Watt University was ranked 34th overall in the QS ‘Top 50 under 50’ world rankings." 

Its established strengths in industry-related research will be further boosted with the imminent opening of the £20m Lyell Centre. It will become the Scottish headquarters of the British Geological Survey, and research will focus on global issues such as energy supply, environmental impact and climate change. As well as providing laboratory facilities, the new centre will feature a 50,000 litre climate change research aquarium, the UK Natural Environment Research Council Centre for Doctoral Training (CDT) in Oil and Gas, and the Shell Centre for Exploration Geoscience.

International appeal

An increasingly global outlook, supported by a bold international strategy, is helping to drive Edinburgh Napier University’s growth. The university now has more than 4,500 students studying its overseas programmes, through partnerships with institutions in Hong Kong, Singapore, China, Sri Lanka and India.

Edinburgh Napier has been present in Hong Kong for more than 20 years and its impact grows year-on-year. Already the UK’s largest higher education provider in the territory, more than 1,500 students graduated in 2015 alone.

In terms of world-leading research, Edinburgh Napier continues to make its mark, with the REF judging 54% of its research to be either world-class or internationally excellent in 2014. The assessment singled out particular strengths in Earth Systems and Environmental Sciences, where it was rated the top UK modern university for research impact. Taking into account research, knowledge exchange, as well as student and staff spending, Edinburgh Napier University generates in excess of £201.9m GVA and supports 2,897 jobs in the city economy.

On the south-east side of Edinburgh, Queen Margaret University is Scotland’s first university to have an on-campus Business Gateway, highlighting the emphasis placed on business creation and innovation.

QMU moved up 49 places overall in the 2014 REF, taking it to 80th place in The Times’ rankings for research excellence in the UK. The Framework scored 58% of Queen Margaret’s research as either world-leading or internationally excellent, especially in relation to Speech and Language Sciences, where the University is ranked 2nd in the UK.

In terms of its international appeal, one in five of Queen Margaret’s students now comes from outside the EU, and it is also expanding its overseas programme offer, which already sees courses delivered in Greece, India, Nepal, Saudi Arabia and Singapore.

With 820 years of collective academic excellence to export to the world, Edinburgh enjoys a truly privileged position in the evolving story of academic globalisation and the commercialisation of world-class research and innovation. If he were still around today, Senator Moynihan would no doubt agree – a world-class city indeed.

For further information www.investinedinburgh.com