Value for money

Gordon Brown says he wants to spend his way out of the recession. Where then, should he spend this money? More relevantly to us, how can the SNP best spend Scotland's money in order to kick-start the economy?

There is no one answer to this question. However, we can set three criteria: how do we prevent the unemployment and poverty of a recession in the short term, how do we ensure progress in the medium term and what do we want our society to look like in the long term?

There are some obvious ways in which we can spend that deliver short, medium and long term gains and help to transform our society. After some lobbying by EUSA, for example, the City Council has agreed to work towards giving every Edinburgher free insulation. This helps creates jobs and cut fuel bills and carbon emissions. Likewise, investment in public transport and renewable energy are, I would argue, a good use of this money.

However, on all three measures, there is one investment that is hard to beat. University education delivers huge wins now, in the medium term, and into the future.

The reason why increased government spending is the best way to get out of a recession is, partly, because of the phenomenon known as the multiplier effect. Every pound the government spends can, potentially, deliver spin off wealth. The money invested by a government creates more jobs, which in turn will mean more spending and so on. But the extent of this effect depends on how you spend this money.

The multiplier effect from universities is enormous. The short term impact on the local economy of a pound spent on a university is huge. A recent study by respected economists has shown that a pound invested in our university multiplies up to £2.25 additional wealth in the Scottish economy. A pound invested in banking only multiplies up to £1.50. For every full time equivalent employee of the university, a further 2.05 people are employed in the city. Whilst progress should not be measured through economic growth alone, protecting jobs is crucial at the moment.

A key medium term impact of recession is that people will want to re-train. If the government does not step in to help with the masters programs they want, the medium term progress of our skills based economy will seriously suffer from the lack of versatility in the labour market.

And while higher education is important in the short term, it is vital for the future. It will be highly trained and versatile graduates who will rebuild a new economy and society fit for twenty-first century challenges like climate change, depleting resources and growing wealth inequality.

As we face a global recession, the Scottish Government has a choice about where it is going to spend its money. We do need to spend our way out of this recession; universities and students are one of the best ways to spend this money. If the government ignores this, Scotland will suffer for generations to come.