Highland Economy
We move to item 1, on the Highland economy. I welcome, in Edinburgh, Alasdair Morrison, the Deputy Minister for the Highlands and Islands and Gaelic. In Inverness, by video link, we have Councillor David Green, the convener of Highland Council, and Mr Simon Cole-Hamilton, the director of Inverness and District Chamber of Commerce.
Because of the nature of the technology that we are using, we will have to be quite formal in questioning, as there is a slight time delay in the link to Inverness. We will hear first from the minister. I will then invite Councillor Green and Mr Cole-Hamilton to make opening statements to the committee. We will then move to questions and discussion. I ask the minister to introduce his colleagues and to make an opening statement.
With the permission of the committee, I am accompanied by three officials: George Reid and Jim McCulloch, who is languishing in the gallery, from the enterprise and lifelong learning department; and Archie McCreevy, from Highlands and Islands Enterprise, who will be able to deal with the details of our response measures to the downturn at Barmac.
It goes without saying that I am grateful for the chance to be involved in the discussion today. I am aware that the steady general improvement in economic prosperity that is taking place in the Highlands and Islands as a whole is not reflected in every part, and that there are still areas of particular difficulty. We recognise where those areas are—they range from some of our remotest areas to the fabrication yards at Nigg and Ardersier. We are tackling difficulties with commitment and in a way that takes account of how the Highlands can best adjust to the economic demands of the future.
As one would expect, the rundown at Barmac is occupying a great deal of our time and, perhaps more relevantly, the time of the agencies that are involved in developing and implementing response measures. I believe that it was never an option to sit around and wait—perhaps pray would be a better word—for a global upswing in the oil and gas fabrication sector. The signs are that, if recovery takes place at all, it will not occur in the short term.
Therefore, the Executive and its agencies have faced the task of finding new jobs for those who are being made redundant. While that continues to be a significant challenge, many of the workers are highly skilled and HIE, along with Highland Council and the other partners, is already achieving encouraging results in placing people in new jobs. We have also recognised the contribution that skills training can make to helping people into new jobs and have introduced a range of retraining programmes. Archie McCreevy will be able to assist with the details of those programmes. The Barmac rundown was very disappointing, but the fact that it came as no surprise allowed us to hit the ground running on job placement and training measures.
Bringing investment to the Highlands is proving increasingly successful, which shows that the area is more than capable of holding its own, particularly in information technology. Recently, I had the pleasure of announcing the investment in Mrs Ewing's constituency by Cap Gemini Ernst & Young of almost £12 million, which will bring a staggering total of 725 jobs to an area that needed such a boost.
I will say a few words about the assisted areas map as I am fully aware of the interest and concern that there have been in the Highlands about the proposals for a new assisted areas map. The proposals that the UK Government submitted last year included coverage for all the Highlands, including Inverness and the surrounding area. However, the European Commission would not accept a map that was designated on that basis, so we were forced to revise our proposals. Concern that was expressed about the revised proposals, which were published in April, focused on the exclusion of Inverness, in the light of the prospect of the closure of the Barmac facility. Lest there be any doubt, I can confirm that the Barmac Ardersier yard and its sister yard at Nigg were included in both the July and April proposed maps. Clearly, there has been concern that coverage should extend beyond the narrow confines of the yards. I know that Nicol Stephen has acknowledged the strength of the case for inclusion of a wider area.
Of course, that is a reserved matter. Indeed, it is one on which even Westminster does not have the final say, as the ultimate decision lies with the European Commission. Pending the conclusion of discussions with the Commission, it would not be appropriate to speculate on the final outcome. Representations were received from a number of areas in Scotland, and it is inevitable that some will be disappointed when the map is finally decided. Overall, I am satisfied that the proposals represent a good outcome for Scotland in the context of the severe cuts that are being imposed on the UK and other member states.
That is my opening statement, but I look forward to joining in the discussion. I am more than happy to develop further any of the points that I raised.
I thank the minister for his contribution.
I invite Councillor David Green, the convener of Highland Council, to address the committee.
Councillor David Green (Highland Council):
Madainn mhath agus fàilte gu Inbhir Nis, priomh bhaile na Gaidhealtachd—gu dearbh, an duigh, priomh àite co-labhairt bhideo den Pharlamaid.
Following is the translation:
Good morning and welcome to Inverness, capital of the Highlands—indeed, today, videoconference capital of the Parliament.
Councillor Green continued in English.
You, convener, and your committee are to be congratulated on your innovative initiatives in Scottish democracy. Can you hear me at that end?
Yes.
You are the first committee to take evidence outwith Edinburgh—in the Highlands—and the first committee to use videoconferencing, again in the Highlands. Who knows, next time round you could make me a virtual convener. That would be a new concept in modernising government—a transparent convener.
I hope that copies of our presentation have been circulated—it should last a maximum of 10 minutes. I shall concentrate on the loss of the Barmac jobs, the loss of the Barmac income and the potential loss of assisted area status for Inverness, Nairn, Moray, Badenoch and Strathspey.
The first slide shows a view of Cairngorm, which, it is proposed, will lose assisted area status. It is the heart of the second national park in the Government's proposals and home to the funicular railway, a £14 million public works project. The funicular would not have happened without assisted area status; some workers made redundant from Barmac have found employment on it.
As the minister said, previously the whole of the Highlands and Islands was given assisted area status. Inverness, Nairn, Moray, Badenoch and Strathspey were given special derogation. At the start of the current review, 10 months ago, taking account of sparsity—nine persons per square kilometre in the Highlands and Islands—and the problems associated with that sparsity, it was proposed that the whole area be included in the assisted area.
However, a European rejection of the Government's proposals resulted in a revised scheme. In one fell swoop, 36 per cent of the population of the Highlands was taken off the map. I would argue that the Highlands—excluding the Inverness, Nairn, Moray, Badenoch and Strathspey areas—are bearing an unreasonable share of the burden. A mere three wards have been left in—an insufficient area to cope with the Barmac rundown.
A layman's view in the Highlands is that we are a little surprised about the complex nature of the decision making in that process. I wish to emphasise two things. First, in the past three years, there was leverage of £65 million in those now excised areas. Secondly, in a Department of Trade and Industry press release at the time of the inclusion of the whole area, it was pointed out that the Government could promote changes in the map throughout the five-year duration.
With the exception of the Barmac rundown, nothing has changed since July. We believe that the Highlands have taken a disproportionate hit, representing the loss of quarter of the UK total. As politicians, we will, in our upcoming scrutiny, look for justification for that.
The excluded area is still more sparse than most of Scotland, with a sparsity ratio of 15 people per square kilometre. If we consider gross domestic product, the irony is that the excluded area is now below the 75 per cent threshold that would make it eligible for objective 1 status, which means that it would enjoy automatic assisted area status.
Superficially, the unemployment figures are not too bad, but with Barmac starting to bite hard—250 jobs are going this week and 500 next week, leading up to the whole 2,500 in the next few weeks—the situation will become more serious. The bottom line is that three wards are not sufficient to cover the necessary development areas—it is like one oasis to water the Sahara.
Barmac employees have a huge travel-to-work area. It is difficult to meet the Government criterion of more compact, self-contained areas. If we consider the scale of Barmac and its location, we could argue that it is the biggest redundancy in Britain: 2,500 jobs, with a population catchment of about 250,000—equivalent to 25,000 jobs in Clydeside, with its population catchment of 2 million. Just as important is the £100 million annual spend that will be lost in the next six weeks.
It is not unreasonable to assume that 75 per cent of the Barmac rundown relates to the Inverness and Dingwall travel-to-work area. That means that unemployment would increase from 5.2 per cent to 8.4 per cent. The longer that goes on, the deeper the pain.
Other areas are struggling. Committee members will be aware of the downturn at Hunter's of Brora, which has been compounded because 100 workers from Barmac are also in that area. The area being excised includes places such as Fort Augustus and Moray—not to mention Aviemore, in the centre of the proposed national park—all of which require multi-million pound packages.
My final point concerns the inconsistency. We are using European money to build infrastructure—consider the West Moray park and, to a lesser extent, something similar that we have done in Nairn. Without assisted area status, we cannot put an attractive multi-million pound package together.
We are grateful for the committee's support. We require support in three areas. If we are unsuccessful in ensuring that the whole of the Highlands retains assisted area status, we will ask the committee to help monitor need in the Highlands and Islands and perhaps we will ask it to lobby to change the map.
I can give further details of our planned public works programme, from bridges to revisiting the A96 dualling process. We are looking for support for the local authorities' standing committee on oil fabrication. We have a seven-point action plan, covering issues such as a comprehensive strategy for rejuvenating the oil industry and an oil industry contingency fund.
With that, I hand over to Simon Cole-Hamilton.
Mr Simon Cole-Hamilton (Inverness and District Chamber of Commerce):
Good morning minister, convener, and members of the committee. I am the director of Inverness and District Chamber of Commerce, which is the main business representative body for the town and the surrounding area.
With the crisis at Barmac on our doorstep and the prospect of losing assisted area status hanging over us, Inverness is feeling rather assailed from all sides at the moment. I therefore welcome this opportunity to give you some background on the town and the area, to appraise members of the current economic situation here.
Inverness is contained within the Inverness and Nairn Enterprise area and the Inverness area of the local council, both of which have slightly different borders. Inverness is proud to be the capital of the Highlands and the economic engine for the Highland economy. It is by far the largest town in the Highlands, although, with about 54,000 people, it is small in national terms.
Employment in the Inverness and Nairn Enterprise area is very much dominated by the public sector, retailing and tourism. Indeed, public administration, education and health account for just under one third of our total work force, giving us a high dependency on the public sector.
Retailing, tourism and distribution account for a further 30 per cent of our work force. We have some service sector employment in banking, finance and insurance, but after that, employment in other sectors is comparatively low. We are weak in manufacturing and construction, where we are behind the averages for the Highlands and Islands Enterprise area. Successful inward investment projects over the years have made some progress in manufacturing, but we are still achieving only half the Scottish average in manufacturing: 16 per cent.
Members may have heard it expressed that Inverness is the fastest-growing town in Scotland, in the UK or, I have even heard it said, in Europe. I do not know where those rather extravagant claims come from, but the facts do not seem to bear them out. If we consider population growth in the Inverness area, we are looking at an annual increase of about half of 1 per cent per annum—hardly record breaking. Moreover, if we consider the underlying trends beneath that population growth, we see that it is the older age groups that are rising in number. The population in the younger age groups—44 and under—is falling. In other words, we are failing to retain people when they are at their most productive, in terms of wealth creation and, just as worryingly, in terms of bringing up young families in the area. That is further borne out by falling primary school rolls.
That is a key problem, which we need to address. It shows that we still have a long way to go and much work to do before achieving an adequately strong and diverse business sector that offers the employment and career prospects which our young people expect and deserve.
There is a survey that looks at business profitability across 284 towns and cities in the UK. I have listed the main centres included for Scotland. Profitability measures the profit margin as a percentage of turnover for each business. The UK average profitability is about 5.5 per cent. Inverness is near the bottom of the list in the UK, with business profitability of about 1.5 per cent. We are in the bottom 11 per cent of UK towns and cities and our business profitability is less than one third of the UK average. That reflects the size of our businesses, which tend to be small, the limited markets within our immediate reach and the tighter margins that we trade in because of those factors and the significantly higher operating costs that accompany our location—we are, after all, 160 miles from our nearest mass markets. Many of the towns that are above Inverness in the table are wholly or partly on the assisted areas map.
Inward investment has played an important part in strengthening the sectors in which we are weak and in which we can see significant opportunities. Recently, the Highlands have been successful in attracting inward investment, and a significant part of that is regional aid. Some inward investment has come to Inverness, most importantly Inverness Medical, which is a bio-medical subsidiary of an American company making diagnostic kits. The project started in 1996 and is already into its second expansion phase, leading to the creation of 650 jobs. It is part of a high-tech, fast-growing sector and offers quality employment and career prospects for our young people. It is exactly the kind of investment that the area needs to improve our standards of living and to add more range and depth to our economy. It is also the sort of opportunity that we will lose if we do not have the financial packages that are available with assisted area status. The project was won for Inverness against international competition. How are we to persuade companies that their next expansion should be in Inverness if we cannot offer them the level of financial aid that other places can? Significant opportunities will be lost to the Highlands and to Scotland if we cannot defeat the competition from other countries.
The final slide refers to the gross domestic product per capita. It is not possible to see the situation as regards Inverness itself as it is included with Nairn, Moray, Badenoch and Strathspey. We can see that the gross domestic product for that larger area is only 75 per cent of the EU average. With Inverness being the dominant business centre in that area, one can assume that its GDP will not be terribly different.
Inverness has a long way to go before it can stand on its own feet as a significant contributor to the Scottish economy. Growth has been experienced by certain sectors, particularly retailing. In the vital area of wealth creation, we need to be able to continue to attract new developments, to broaden the base of our economy and to assist our indigenous businesses to expand and develop. The impact of Barmac adds to the complete lack of understanding in our business community of the proposal to exclude a great deal of the Highlands and Islands Enterprise area from assisted area status. We are whole-heartedly behind the campaign to include the whole of the HIE area and believe that it is contrary to the interests of the Scottish economy to have regional aid withdrawn at this time.
I thank the witnesses for their contributions.
As I said, in the interests of the technology, we will have to be clear and formal about how we ask questions and about the witnesses we want to answer them.
The minister mentioned the major investment by Cap Gemini—I believe that he said that it was worth £12 million—which will create 785 jobs. That will go some way towards meeting the displacement in employment caused by the Barmac closure and others. The minister has been generally successful in bringing IT jobs to the Highlands. However, is there a risk that we are placing all our economic eggs in the new economy basket and ignoring the traditional manufacturing base?
The obvious point to make is that the announcement that was made two days ago was very welcome. I know that Mrs Ewing will endorse that. I should clarify that the figure is 725 jobs, rather than 785.
As Mr Cole-Hamilton and David Green have said, we have been very successful in attracting jobs within the new economy. People in the Highlands and Islands have the same aspirations and ambitions as people in other parts of Scotland. As a member representing the area and the minister with direct responsibility for it, I defend our right to try to ensure that the current level of inward investment is maintained.
There is a danger that people will assume that we are putting all our eggs into one economic basket. However, no two information technology centres or call centres do exactly the same work. They have different areas of expertise and work in different fields. We are confident that those working in such centres and those involved in research and development will keep up with the ferocious pace of technological advance. The important thing is that we are attracting substantial amounts of inward investment.
We cannot prescribe one solution for a situation such as that at Barmac. However, the Forres announcement earlier this week is an important part of our efforts to address that situation.
Are you satisfied that the education and training infrastructure is in place to reskill the work force so that it can deal with that major change in the area's employment structure?
Not only am I confident that the area has that capability, but the companies investing in the Highlands and Islands are confident. The Highlands and Islands Enterprise package for the Cap Gemini Ernst & Young investment includes a significant tranche of money for developing skills and inviting those who want to move from another area to retrain and embrace a new way of working and new technologies.
My questions are also directed to the minister. In taking evidence for the first time by video link, we have made a little history today. I am delighted that such a strong case for reinstatement of all the excluded areas in the Highlands has been presented by David Green and Simon Cole-Hamilton. That has been supported by members from all parties, including David Stewart MP.
I would like to draw the minister's attention to the conclusions in the written submission from Highland Council. Does he accept that, given the fragility of the economy of the Highlands and Islands, which is facing the loss of 3,000 jobs, there is a strong case for reinstatement on the assisted area status map of all the excluded areas? Will the minister associate himself with that campaign?
We recognise the merit of the proposals that are being made by the convener of Highland Council and by Simon Cole-Hamilton. We cannot offer a guarantee as to what will happen; as I said in my opening statement, we must defer to Westminster, which must defer to the Commission. At this stage, it would not be appropriate—for a moment I was going to call you Sir David, convener—
Please, do not. I find it impossible to work out how you made that mistake.
At this stage, it would not be appropriate for me to say that the Scottish Executive supports the inclusion of any area on the assisted area status map. The implication of that would be that other areas do not have the same level of support. I hope that Mr Ewing appreciates the difficulty that I have in associating myself with a campaign on behalf of any part of Scotland. That would suggest that the Executive was favouring some areas of Scotland but not others.
We welcome the announcement of any more jobs in the Highlands. However, the Highland economy will not survive on call centre jobs alone, especially given the redundancies that have taken place in an entirely different sector. The second recommendation from Highland Council is that there should be a public works programme. Will you, as the minister responsible for the Highlands and Islands, support that?
Fergus Ewing and I discussed that three weeks ago in Inverness, at the second briefing for Highlands and Islands MSPs. I put on record the mature way in which representatives across the Highlands and Islands have engaged in discussions on Barmac.
I think that there is a feeling that public works are not the answer. The days of public works programmes as a compensation for or in response to closures are long gone. We want to dwell on the fact that there are skills and qualities in the Barmac work force. Our emphasis will continue to be on reskilling and finding sustainable work for those who find themselves redundant.
I thank the minister for his candour, but it is with considerable disappointment that I find that he cannot support the Highlands and Islands case for reinstatement. I hope that we can yet persuade him to do that.
I might not have made myself as clear as I ought to have. It is not a case of not supporting Highland Council; it is a case of not supporting one area against another. That is an important point. It would be bordering on the irresponsible if we aligned ourselves with one area against others that also have legitimate reason for inclusion.
I will address questions first to the minister and then to our friends in Inverness.
Following on from what Fergus Ewing said, it is worth saying that construction workers can make the change from traditional industry to new industries. My constituency of Greenock and Inverclyde had to make that journey when it was decimated by the loss of the shipbuilding industry. Construction workers are highly flexible.
However, one of the challenges that we will face is that construction workers enjoyed high wages in that industry and will want to continue in such employment for a long time. Although the minister and the local authority might not wish to sit on their hands, some of the workers at Barmac might feel that they can do that in the hope that something will come along and that they will win a construction order.
This is an issue not just for the Highlands but for the rest of Scotland. The closure has had an impact on my constituency, as many people in the west of Scotland have travelled to the Nigg and Ardersier yards. As was mentioned, it is questionable whether there will ever be an upturn in the fabrication industry. That problem needs to be faced not just by Inverness, but by the whole of Scotland. We have heard that there is to be a strategic approach to maintaining shipbuilding through the placing of Ministry of Defence orders and so on. What discussions have taken place with UK ministers and the oil companies about construction contracts in future, so that there is a level playing field and we know how many yards are needed in the UK for that work? Discussion could also be about other areas of work that could be linked to construction, such as decommissioning platforms.
I am interested to find out more from our friends in Inverness about the special oil fabrication contingency fund. What do they hope that that will achieve? Who will contribute to that fund?
The oil and gas industry task force was established some time ago. It is chaired by Helen Liddell, and Henry McLeish is its vice-chairman. Within that group there are active discussions and regular meetings with representatives of the oil company in relation to the points that you raised. Decommissioning is one area where they are hoping to make progress.
It is worth putting on record that last night I attended a useful briefing session with the local authority standing committee on oil fabrication. It comprises local authorities from across the United Kingdom, and draws on the expertise of shop stewards from various yards. The committee's view, which I have no reason to doubt, is that currently around 20,000 people are working in the oil fabrication industry. The projection is that that number will soon fall to around 500 people throughout the United Kingdom. But again, as Mr McNeil rightly said, a strategic approach is required. I can assure him that Henry McLeish and Helen Liddell are addressing the issues.
Do you want to reiterate the point for the Highland representatives?
I would have liked some more information on the oil fabrication contingency fund. I am particularly interested in the exit strategies that the companies have in the affected communities. I know that it is good practice in such situations for them to leave something behind. There are issues about land use and about whether the companies are prepared to contribute to the regeneration of those communities. I want to know where we are with that.
Minister?
I thought that that question was being addressed to the Highland Council.
My apologies.
I am happy to respond afterwards.
The council is an active member of LASCOF, which is the local authority standing committee on oil fabrication. It is lobbying Government for an oil contingency fund to retrain work forces and support the transition in the worst-affected communities. There would be a one-off donation from the oil companies as well as from Government. There is a precedent for Government assisting in situations in which there is a huge run-down in the Highlands. We had the smelter run-down in Invergordon in the 1980s, with 750 jobs lost. A £10 million enterprise zone was put in place. In the 1990s, with the rundown of Dounreay and the loss of approximately 1,000 jobs, there was a package of £9 million. We are talking about public work like that as well as an oil industry contingency fund.
The Executive is sympathetic to the proposal that has been made by Jimmy Gray, the unions and various other individuals in relation to the oil fund, and we are taking steps to discuss this matter at a UK level. As chairman of the Department of Trade and Industry oil industry liaison group pilot, Henry McLeish will be pursuing the issue of an oil contingency fund.
My first question is to the minister. According to the copy of Councillor Green's presentation that was circulated, talking about Barmac:
"Pro rata with our economy, it's the biggest redundancy situation anywhere in Britain - equal to 25,000 jobs on the Clyde."
Do you agree with that assessment?
I certainly agree that the Barmac rundown is having a big effect on our economy, but there are encouraging signs, such as the number of people who have been placed in other employment. Sadly, we have to accept that given the global downturn, the Highlands, Nigg and Ardersier—and, in my own constituency, Lewis Offshore Ltd, which I must not forget and which sadly is in receivership at the moment—are having a difficult time, but there are encouraging signs in terms of retraining people and getting them into other employment.
My next question is addressed to Councillor Green and Mr Cole-Hamilton. Mr McNeil rightly alluded to what was possible in the Clyde and Inverclyde areas with the demise of shipbuilding. Are there differences in the Highlands? Of course, in the Inverclyde area we had density of population and a relatively good infrastructure of training and further education facilities, not to mention access to good transport links. Do you take the view that it is going to be much more difficult for your area to regenerate in this challenging situation than it has been for other parts of Scotland?
Yes. It is nice to be able to agree completely with the question. It is always more difficult in the Highland context for any rejuvenation to take place, because of access to markets, distance and the remoteness of communities. It is difficult to get retraining sorted out under those conditions.
Obviously, it will be difficult to absorb that number of people into the economy of the area with any speed. The best way of doing that would be to bring major projects into the area via inward investment.
If that initiative is not pursued as you suggest, do you anticipate further depopulation of your area?
Yes. As the minister said, we are looking for a variety of packages, including public works and a monitoring of the assisted area status, as it will not be easy for the area to adapt to the situation.
Minister, what actions have been taken to address the problems that have been caused by the closure of Barmac and to assist those who will be out of work?
In discussion with Henry McLeish after news of the closure broke, we talked about what might happen in the long term. The oil industry recently faced the problem of oil being priced at $10 a barrel. That has meant that the UK has lost out heavily when seeking investment funds from the major oil companies. The oil price is now $32 a barrel.
Does that mean that there are prospects for new development west of Shetland, where there are oil reserves that would be uneconomic only when oil prices were below $10 a barrel? What are the prospects for such long-term development of the western seaboard that would bring jobs in the area's construction industry?
I will ask Archibald McCreevy, who has been leading our response unit, to talk about the action that we have taken. Archibald is a battle-scarred veteran of fabrication downturns and was actively involved in the downturn at Ardersier four years ago.
The actions that we have taken have been reasonably successful. The downturn has been slower than previously anticipated. To date, between 700 and 800 people—around 40 per cent of those who were laid off—have been placed in other employment. It is worth remembering that the oil fabrication work force is transient. In my constituency, many people who were working at Nigg and Ardersier left, before they were paid off, to work in other parts of the world such as Italy and Korea. Thankfully, they maintain a base in the western isles and have family there. Parallels can be drawn between the way in which they work and the way in which people used to work in the merchant navy years ago.
Mr Archie McCreevy (Highlands and Islands Enterprise):
The first thing that we did was set up voluntary databases in which people could record their details. One database allowed us to develop curricula vitae for them. Another dealt with upskilling and retraining. Some people might want to retrain for jobs outside the industry while others might seek further training to enable them to stay in the industry. Around 2,000 people are registered on the database.
We have set up a training programme that enables people to start off with basic courses such as information technology skills. A short course gives people a safety passport, which is necessary to secure work in the industry abroad, as people have to be able to show that they have been given training in certain areas of engineering safety. Furthermore, we have courses that are tailored to the individual where people can formally upskill; for example, they might be studying for a degree or a higher national certificate. So far we have trained 694 individuals on health and safety passport courses, craft-related courses and IT courses.
We have also introduced a job placement system, which has been very difficult to operate this time because of the points that have already been raised. As there are very few engineering vacancies across Britain—or Europe for that matter—we have been driven to seek placements associated with shutdowns. Those placements are starting to be quite successful in Holland and are reasonably so in Ireland. In the UK, we have already placed people in the BP Amoco plant at Grangemouth, which is currently undergoing maintenance. In addition, one of the enterprise companies is proactively managing a pre-employment training system for people who want to learn IT skills.
I have a question for Councillor Green and Mr Cole-Hamilton. You have argued a powerful case for bringing Inverness and surrounding areas back into the regional selective assistance map. Obviously, the European Commission will closely examine the overall package and might well reject your arguments. However, is there not a strong argument for taking Inverness out of the package and leaving its surrounding areas? A precedent has been set by the Irish, who separated out Dublin and its surrounding areas when they recognised that their arguments for objective 1 would not be successful and succeeded in getting objective 1 status for the west of the country.
It is interesting to hear a Highlands and Islands MSP make that point. I have always argued that the Highlands and Islands together have been stronger as an entity; the areas fought well as a united front to get objective 1 status and worked hard as a partnership with Highlands and Islands Enterprise to get transitional status. I do not think that the arguments to take out the honeypot areas stack up. It is always a very tempting option; for example, we might take out Shetland. However, as I said, the Highlands and Islands is stronger as an entity, and must be argued as such. I do not agree with the argument of considering only prosperous areas. The remote parts of Wester Ross need Inverness as much as Inverness needs them.
There is an established economic principle that successful economic development requires growth centres if it is to succeed. In the Highlands, Inverness plays that central role; if it is not strong, the rest of the area will suffer. We must ensure that main centres are prosperous. Although Inverness is within the transitional objective 1 area, we will lose out on the benefits of that programme if we come out of assisted area status, because the member state will have great difficulty in raising matching funds. If we are considering ways of helping the Barmac situation, Inverness is probably best placed for investment and development to resolve that problem in the shorter term. Taking Inverness out of the equation will compromise the situation and have an impact on the speed with which the Highlands can recover.
I want to bring something else into the equation as a final word on the subject. As a former shareholder of BP Amoco, which makes massive profits from the Government, I believe that the company has a social responsibility to the communities that have underpinned it over the years and should be included in the rescue package for the Highlands.
The last questioner is Margaret Ewing. After her questions, I will give the contributors an opportunity to make some final remarks.
Thank you, convener, especially as I am a visiting member of the committee. I welcome the Cap Gemini investment at Forres. The local enterprise company, the council and I all hope that it will be an example to others on inward investment, not only from companies outside the UK but also more locally, and that that will bring a variety of job opportunities to the area.
I want to return to the question of assisted area status for the Highlands and Islands Enterprise area—it is vital. My years of experience on the European Standing Committee at Westminster is that commissioners do not like to have missing centres in assisted areas maps. If Inverness is taken out of the Highlands and Islands area it is like a doughnut, with a hole in the middle, and weakens our case.
Has the minister had discussions with the Department of Trade and Industry and the Scotland Office on including the whole Highlands and Islands Enterprise area in our recommendations to the commission? We weaken our case if we take the line George Lyon suggests.
I endorse what Mrs Ewing said on the investment at Forres. I hope, as I am sure everyone here hopes, that it will be seen by other companies as an excellent example of the quality and potential of investing in the Highlands and Islands.
I hope I made our position on the assisted area map clear at the outset. We have been in discussion with the commission on that. The first paper was submitted on 10 April and was rejected by the commission. Subsequent representations were made. I assure Mrs Ewing that the discussion continues; we await the commission's response.
Has the whole Highlands and Islands Enterprise area been recommended?
That was the case in the initial submission to the commission but it was—
What is the Scottish Executive doing about it?
The Scottish Executive is, as you would expect, liaising with the Scotland Office. Westminster will be taking the matter forward. I have of course made representations to the commission.
I invite each of the contributors to make closing remarks.
Thank you. I do not want to repeat things said already but I understand that the assisted area status exercise is meant to be about subsidiarity, so we are asking for your measures to relieve the impact of the loss of jobs at Barmac and we are asking you to take our case for assisted area status to the Scotland Office, to the DTI and, if necessary, to Brussels.
This has been the first but, we hope, not the last videoconference. Perhaps we will go north or west next time. Thank you for listening to us. We will be very grateful for your support in monitoring conditions as the Barmac rundown kicks in and in lobbying the DTI and the EC, because we feel that this is the beginning of a trend that is starting to bite very hard in the Highland area. We will be very grateful if you can support the LASCOF initiative, including a special oil fabrication contingency fund.
I am happy to have been part of the discussion today on such an important matter. I recognise and share the concerns expressed by the council about coping with the impact of the Barmac situation. I also recognise the significant role played by the council in partnership with Highlands and Islands Enterprise, the employment services and other agencies, who have been very active and have done superb work in recent months.
I thank Mr Cole-Hamilton, Councillor Green and the minister for their contribution to the committee's discussion. We were asked by the representatives from the Highlands to give a hearing on the case. We have fulfilled our commitment to that this morning and the comments made are part of the record. The committee has taken no decision on a long-term remit on the issue.
We received apologies during the course of the meeting from Margo MacDonald.