[Robin McAlpine Blog] Data centres are for suckers, not a country building for independence

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Data centres are for suckers, not a country building for independence

First published by The National

WHAT do data centres have to do with Scottish independence? A lot. Last week the First Minister told us a moratorium would "send the wrong signals". The signal it would have sent was that Scotland will sometimes side with its communities over the investor class – why is that the wrong signal.

Instead of a moratorium, government is rapidly developing "Flamingo Land" powers which will enable it to overrule local authorities and impose data centres.

That provides your answer. This is all about pursuing Scotland's self-harming Foreign Direct Investment obsession.

To understand what this means for independence, you have to clear from your mind the idea that Foreign Direct Investment is about creating jobs. It is always sold to you as if it means foreign firms building factories in Scotland, but after 30 years of claiming to lead Britain on inward investment, where are all the factories?

That is not the reality of Foreign Direct Investment. What it really looks like is Gresham House. This is a London-based consultancy for the super-rich which sells Scotland's land to oligarchs as an investment portfolio.

It was given £50 million of Scottish public money to do this and is now the second-biggest private landowner in Scotland.

How do the people of Scotland, the communities on or around that land or anyone else benefit from this? They don't. In reality inwards investment has been a fire sale of Scotland's assets – our land, our energy, our business base.

Why are we doing this? Since Thatcher deindustrialised Britain while at the same time fuelling a rapid rise in consumerism, the UK had too little to export compared to what we wanted to import.

That was partly why privatisation was introduced – selling your assets gives you a cash injection that covers the export-import imbalance.

That was meant to be a temporary fix but became permanent. It is what Mark Carney meant when he said that Britain was at the mercy of "the kindness of strangers".

Britain sells assets to cover over its balance of trade deficit. That's why it is Europe's most foreign-owned economy, and Scotland is worse.

Since devolution we have given away a full year's worth of our GDP

The profits made on all these assets go straight out of Scotland and into the pocket of its foreign owners. We give more of our money to the rest of the world every year than the rest of the world gives us back. That is a balance of payments deficit.

An astonishing 6% of Scotland's wealth leaks out of the country annually. That is three times worse than the average sub-Saharan African country. The average EU country is comfortably a net importer of wealth.

Since devolution we have given away a full year's worth of our GDP. This undermines our economy and our public finances, but it has a more concerning impact.

The economic and monetary effects of this balance of payments mismatch is disguised because we're in the sterling zone.

But if we become independent, it is a completely different picture. At that point an extended balance of payment deficit becomes a problem.

The standard response is to press down on your labour costs and devalue your currency to improve your export competitiveness – but you have to be making things to export first.

Which means what our labour market is screaming out for, what our balance of trade strongly implies and what our domestic businesses and our communities are asking for is actually is the same thing.

We need to build up our domestic productive capacity. We need to make and do useful things that other people want. When we "signal'" our openness to inward investment it is a distress signal.

Data centres are for suckers. If you live near a data centre you know you're the peasants of AI. They have almost no productive role in their host economy. They just use our energy doing calculations for American oligarchs. It may be an easy life sending out a market signal and waiting for the money to roll in, but it is an easy life because it is a bad deal for us. You can't signal your way to productivity, you have to get your hands dirty.

An independent Scotland will have to face economic reality like a grown-up nation

We need a major change in direction. We need to adopt a development mindset, to pursue the kind of economy we want, not the one foreign investors will let us have. Which is to say we need an industrial strategy.

I'd love to cover what that means properly but there is only space for some examples. We should look at our natural resources of land, energy and water and work out what industries they can power, with data centres being the worst possible use.

Our energy is the key to our future and should not be given away lightly. So is our land. For example, I'm a big fan of advanced material production – bioplastics, organic fabrics, structural cross-laminated timber, hemp-based insulation blocks, all-wood construction materials.

We can both displace imports (we import 80% of our construction materials, which is daft) and create valuable exports (the market for bioplastics is growing all the time).

But we need to fund and support start-ups, push land reform and change building regulations to drive it. We should focus on core production. We spend billions of pounds of public money on food. Every penny of that should be linked to a development plan to grow and support Scotland's domestic food production industry.

There are lots of those kinds of core products we can support the manufacture of in this way.

We need better finance to support developing businesses. The National Investment Bank should be key but is in a sorry state and needs serious structural reform.

We need much better business support. I'd abolish Scottish Enterprise (the spivs hawking our nation to other spivs) and give the budget to Scotland's local authorities to drive real, regional-based economic development strategies.

We could do radical things. If I had my brave boots on I'd pass a law designating Scotch Whisky as a culturally protected industry with a no-monopoly rule where no-one could own more than two distilleries, and then fund management buyouts from the National Investment Bank and take whisky back into domestic ownership.

I'd be looking for international partners to help us establish and develop an expansive light engineering sector. I'd be investing in innovative platforms such as a "Scottish Amazon" or open-access retail spaces like the wonderful Scottish Design Exchange to boost the development and sustainability of small Scottish producers.

It is time to accept that we left it too late on wind turbine manufacture and can't catch up fast enough to be competitive – but we can focus on the repair, maintenance and remanufacture. Same with solar. We need to be clever.

These are only some examples, but whatever we do, an independent Scotland will have to face economic reality like a grown-up nation.

You can't leak as much wealth as we do indefinitely. So if we are really going to be independent in the next few years, why aren't we acting like it?

A sane independent country would never consider giving so many of its key assets away for so little return. If we're serious, we need to start managing our economy as if we are an independent nation.

That's not happening, and it worries me. Bumbling through each day doing the same thing we did yesterday is not how to prepare for independence.

The inward investment era should come to an end. We should begin an era of real Scottish enterprise.

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