Scotland's Economic Progress 1951-1960

Gavin McCrone

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000441499
• Edition: 1
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

Originally published in 1965, this book subjected the economic performance of Scotland to close examination. The progress of the Scottish economy from 1951 to 1960 was assessed in quantitative terms and estimates provided of Scottish gross domestic product, income from employment, gross profits and other economic statistics. Chapters are devoted to output and investment in manufacturing in industry and to personal income and expenditure. The results showed the extent to which the Scottish economy lagged behind the rest of the UK, especially during the latter part of the decade.

CHAPTER 1
INTRODUCTION

IN recent years it has become increasingly clear that one of Britain’s major economic pro6blems is the lack of regional balance in the country’s economic performance. It seemed that economic growth was increasingly centred on the Midlands and South-East of England, while some other parts of the country suffered rising unemployment and economic stagnation. Apart from the regional problem, however, Britain itself has had a poor rate of economic growth during the last decade. It may be argued that this is at least partly because the areas where there has been an impetus for growth have had relatively few spare resources, and inflation has therefore been a constant danger. Other regions which have had unemployed resources and a considerable growth potential have lacked the impetus. It may be, therefore, that a positive regional policy could also improve the country’s overall economic position.

A substantial amount has been written on regional economic problems at a variety of levels. Most notable of recent studies have been the two reports on Scotland and Northern Ireland and the White Papers on Central Scotland and North-East England.¹ As a result the main issues of regional policy are now clear and a number of possible approaches to the problem have been canvassed. However, all the studies which have been made so far have been handicapped by a shortage of statistical material. This prevents the analysis of certain problems from being as complete as might be desired; for others it makes analysis impossible altogether. It is therefore scarcely surprising that in popular writings and in common discussion, analysis is frequently replaced by assertion.

¹ Report of the Committee of Inquiry into the Scottish Economy, Scottish Council (Development & Industry) 1961 (Toothill Committee). Report of the Joint Working Party on the Economy of Northern Ireland, H.M.S.O., London, Cmnd. 1835. Central Scotland: A Programme for Development & Growth, Cmnd. 2188, H.M.S.O., Edinburgh. November 1963. The North-East: A Programme for Development & Growth, Cmnd. 2206. H.M.S.O., London. November 1963.

The state of statistical information on the regions varies greatly from one region to another, though on none can it be said to be adequate. Northern Ireland is by far the best supplied, doubtless as a result of its particular system of administration and its geographical isolation. A fairly detailed Census of Production is available for each year, and figures for exports and imports, personal income, industrial production, capital investment and wages and salaries are regularly published.¹

¹ Digest of Statistics, Government of Northern Ireland, H.M.S.O., Belfast. Reports on the Census of Production of Northern Ireland, Belfast.

No such detail is available for Scotland, though the Digest of Scottish Statistics does give much information which is not available for other regions including an index of industrial production.² The Inland Revenue returns likewise provide more information on Scotland than for other regions, apart from Northern Ireland; and the United Kingdom Census of Production contains figures for Scotland and Wales which are not available for the regions of England.³ Scotland also has the advantage, unlike Wales, of being a distinct region for many of the nationalized industries, so that separate figures are more readily obtained from their annual reports than for other areas.

² Digest of Scottish Statistics, Scottish Statistical Office, H.M.S.O., Edinburgh. ³ Reports of the Commissioners of Her Majesty’s Inland Revenue (Annual), H.M.S.O., London. Census of Production, Board of Trade, H.M.S.O., London.

The position for Wales is similar to Scotland, though not quite so good. The Digest of Welsh Statistics provides much useful information, but there is no index of industrial production.⁴ For most purposes Wales is bracketed with England in the Inland Revenue reports; and the nationalized industries in defining the regions of their activities, tend to amalgamate parts of Wales with neighbouring counties of England.

⁴ Digest of Welsh Statistics, H.M.S.O., London.

These three regions are, however, in a far better position than any of the regions of England. For them the provision of statistical information is extremely poor and an analysis of their economic condition is therefore much more difficult. One has to rely chiefly on employment statistics and figures for earnings which have only recently been published, a certain amount of information in the Census of Production and the periodic income censuses published in the Inland Revenue reports.⁵ It is perhaps partly because of the lack of information that the regions of England have had much less written about their economic problems than Northern Ireland, Scotland or Wales.

⁵ Statistics on Incomes, Prices, Employment and Production, Ministry of Labour, H.M.S.O., London.

One of the main statistical gaps for all the regions is the absence of estimates corresponding to national income, gross national product or gross domestic product which might be compared with the National Income and Expenditure Accounts of the United Kingdom.¹ This would provide a way of measuring the relative levels of income and output in the different regions. Without it very little is known of their comparative efficiency or standards of living. If such estimates were produced regularly they could also provide useful information on the economic growth of regions, being much wider in coverage than the indices of industrial production which are at present available for Northern Ireland and Scotland. Furthermore, if the estimates were built up industry by industry they would provide an analysis of the economic structure of regions; and when set beside statistics for employment, they would give comparative figures of output per head in different industries.

¹ National Income and Expenditure, Central Statistical Office, H.M.S.O., London.

The present study presents such estimates for Scotland over the period 1951–1960. Though writing in 1963 it was impossible to go beyond 1960 owing to the lack of published material (the latest Census of Production to be published was 1958). Previous studies in this field include Professor A. D. Campbell’s estimates of Scottish national income over the period 1924–49. For Northern Ireland there are Mr N. Cuthbert’s estimate of private civilian income 1935–6 to 1951–2 and Professor C. F. Carter and Mary Robson’s national income and social accounts for Northern Ireland for 1952; this latter study was subsequently extended to provide estimates of gross domestic product in Northern Ireland covering the years 1950 to 1956. The Welsh studies comprise Professor E. T. Nevin’s Social Accounts of the Welsh Economy, 1948 to 1956, and a separate estimate of gross domestic product in Wales for 1948 by Dr J. Parry Lewis.²

² A. D. Campbell, ‘Changes in Scottish Incomes, 1924–49’, Economic Journal, 1955, and ‘Income’, chap. 5 in The Scottish Economy, edited by A. K. Cairncross, Cambridge, 1954; K. S. Isles and N. Cuthbert, An Economic Survey of Northern Ireland, H.M.S.O., Belfast, 1957, Appendix A; C. F. Carter and Mary Robson, A Comparison of the National Incomes and Social Accounts of Northern Ireland, the Republic of Ireland and the United Kingdom, Journal of the Statistical and Social Inquiry Society of Ireland, 108th Session 1954–5, pp. 62–87; and C. F. Carter, Estimates of the Gross Domestic Product of Northern Ireland, 1950–56, ibid., 112th Session, 1938–39, p. 149. E. T. Nevin (editor), The Social Accounts of the Welsh Economy, 1948–56, Welsh Economic Studies No. 2, University of Wales Press, 1957; J. Parry Lewis, ‘Income and Consumer’s Expenditure’, chap. 8 in The Welsh Economy, edited by Brinley Thomas, University of Wales Press, 1961.

The estimates presented in this book have derived great benefit from these earlier studies; but in scope and form of presentation they differ in some important respects. Because the provision of basic statistical material for Scotland is not as good as for Northern Ireland, it is not possible to construct social accounts for Scotland in such detail as can be done for Northern Ireland without throwing caution to the winds and making a series of very hazardous assumptions. On the other hand it should be possible to present better estimates than for Wales.

In view of this it is perhaps surprising that the most detailed and comprehensive estimates so far published are Professor Nevin’s Social Accounts of the Welsh Economy. These contain estimates of income and expenditure, investment in fixed capital formation and in stocks, current account of local authorities and the revenue account of central government. In fact they follow very closely the pattern of the United Kingdom National Income and Expenditure. They are only able to do this, however, by making a number of seemingly doubtful assumptions. Thus the estimates for capital formation, saving and expenditure, for instance, are very much less satisfactory than one would wish and may actually be misleading.

It may be that it is a mistake to try to follow too closely the framework of the United Kingdom national income accounts in presenting estimates for regions. One of the main purposes of making regional estimates is to draw comparisons with the United Kingdom as a whole; it is important therefore that the figures should properly reflect the regional disparities. Attempts to produce a full set of social accounts for regions are commonly forced to derive many of their estimates from some sort of ratio, such as the population ratio, applied to the national figure. Unless the ratio is a really appropriate one, this type of procedure is apt to destroy the whole purpose of the study. Such ratios may make the region appear to reflect the characteristics of the rest of the nation more closely than is actually the case, and so minimize the differences one is trying to discover. Furthermore, if a fair proportion of the estimates are founded on a rather shaky basis, this may also destroy confidence in the remainder.

In some respects therefore the estimates presented in this study are less ambitious in coverage than the Welsh figures contained in Professor Nevin’s study. On the other hand much more attention is given to comparisons with other regions and with the United Kingdom as a whole. Comparisons between Scotland and other regions have therefore been made wherever possible.

The estimates presented here are not sufficiently comprehensive to constitute a set of social accounts. In some respects it was tempting to try to produce one, but the available data were far from adequate. In the circumstances it seemed much better to limit the study to those estimates which could be presented with a good claim to accuracy.

Even so the methods which had to be used in deriving the estimates were often extremely complicated as a glance at the Appendix will show. It is particularly regrettable that so many Government statistics are not presented on a comparable basis covering a number of years. For example numerous adjustments had to be made to Census of Production figures to get a continuous series of estimates; and one way or another the change in the Standard Industrial Classification caused several months of additional work. Differences of definition between Government departments also tend to produce confusion. It is unfortunate, for example, that differences between the basis of Ministry of Labour figures and those of other departments frequently made certain estimates difficult to obtain and unreliable once they were obtained.

Previous studies have taken national income, gross national product or private civilian income as the cornerstone of their estimates. In this book, however, attention is primarily focused on gross domestic product and its composition rather than gross national product or national income. Gross domestic product may be regarded as measuring the income originating within the region rather than the income ultimately received within the region, which is gross national product. It happens that gross domestic product can be estimated with much more reliability for regions than gross national product, because of the lack of information on flows of property income either into or out of the region. But, apart from this, it is in many ways the more significant figure for studying the economy of a region. For a region it is possible to envisage a much wider divergence between gross domestic product and gross national product than is common for a nation, since a large part of the industrial plant of the region may be owned by outsiders and equally the property income of those within the region may derive in large part from property shares, etc. in other regions. It would thus be theoretically possible for gross domestic product to be falling at a time when gross national product of a region was rising. This is admittedly unlikely, but it seems clear that gross domestic product is the better measure of a region’s economic performance. In this respect, therefore, the present estimates differ from those of Professor Campbell who was concerned with Scottish national income defined as income ultimately accruing to people in Scotland whether from within the region or outside.¹

¹ A. D. Campbell, op. cit.

Another feature of the present study is that estimates of gross domestic product are obtained by the addition of estimates for individual industries. In this it follows the procedure adopted both by Professor Carter and Mary Robson and also by Professor Nevin.² This procedure has the ad...