Manufacturing
Our next item of business is a debate on motion S2M-3497, in the name of Murdo Fraser, on the decline of Scottish manufacturing.
Scottish manufacturing is in crisis. Since 1997, we have lost nearly 100,000 jobs in the sector. According to the Scottish Council for Development and Industry, exports have fallen below £15 billion in value for the first time in a decade. The Scottish Executive must stop sitting on its hands and start taking action to address the decline in our manufacturing base.
Let us start by separating reality from mythology. It is part of the mythology of Scottish politics that manufacturing declined under the Conservative Government. In fact, the opposite is the case. According to figures produced by the SCDI, the value of manufacturing exports rose year on year from 1979 to 1997. In 1979, at today's prices, the figure was £3.5 billion; in 1997, it was £19 billion. Those are the facts, despite the nonsense that is put about by our political opponents about the decline in our manufacturing base during that period.
Particularly during the 1990s, Scottish manufacturing saw growth at high levels. The value as a percentage of Scottish gross value added rose year on year between 1992 and 1997. The percentage has fallen substantially in each year since. There was a net gain of more than 5,000 manufacturing jobs in Scotland during the last year of the Conservative Government, whereas the most recent figures show a catastrophic loss of nearly 20,000 jobs in a year. Yes, there has been a dramatic decline in manufacturing, but not on the watch of the Conservatives. It has come on the watch of the Executive and it is the Executive that must be held accountable. If the current rate of decline continues, Scottish manufacturing may well disappear altogether within 10 years.
It is depressing, but not surprising, to see that the Executive's amendment contains no recognition of the sector's problems, such as job losses, competitive pressures and the fall in exports.
Will the member take an intervention?
The Executive does not have the first idea how to deal with those problems, but perhaps a reluctant ex-member of the Executive will give us an idea.
If the Conservatives are so concerned about manufacturing, why did the word "manufacturing" not appear in their general election manifesto in 2005, their European election manifesto in 2004, their Scottish Parliament election manifesto in 2003 or their general election manifesto in 2001?
Wendy Alexander clearly has far too much time on her hands if she spends her waking hours reading our old manifestos. We are committed, as we have always been, to growth in the Scottish economy and Scottish businesses. We do not need to spell that out in detail in relation to every sector in order to make the point.
We believe that Scotland requires a strong manufacturing base and that the decline in manufacturing is driven by a lack of competitiveness on the part of the Scottish economy.
Is it Conservative party policy that Scotland should have fiscal autonomy in order to redress that lack of competitiveness?
I have a sense of déjà vu. As Mr Ewing knows, we have debated the point endlessly. My party and I accept that there is a case for looking at the powers of the Scottish Parliament. At the moment, we are not convinced that fiscal autonomy is the right option, but there is a debate to be had on the matter and we will be happy to engage in that debate in the months ahead.
We accept that Scotland cannot compete in terms of price with countries such as India and China, but we are hampered by the unduly high cost base in Scottish manufacturing. The 2005 United Kingdom competitiveness index, which has been produced by the University of Sheffield, shows that Scotland has fallen four places since 1997, from fourth to eighth out of 12 regions of the UK. That can only be a direct result of the Executive's decisions.
The SCDI states that manufacturing exports peaked in 2000. That is the year in which the Executive increased business rates. As we have heard many times in the chamber, Scottish businesses have paid an extra £838 million since Jack McConnell abolished the uniform business rate and increased business rates to a higher level than applies down south. I am pleased that a cut in business rates has been announced, but it is disappointing that the cut is to be staggered. The Executive should bring the entire cut forward to April 2006 so that business rates in Scotland match those in England. That would deliver a real boost to the competitiveness of Scottish manufacturing.
Scottish manufacturing companies also suffer from higher water bills than those paid by their counterparts down south. BP at Grangemouth pays nearly twice as much as would an equivalent plant south of the border. It is time to move Scottish Water into the private sector, to make it more competitive and to reduce the costs to Scottish businesses.
We have to tackle regulation. People in business regularly complain that they are hampered by red tape. Our new Minister for Enterprise and Lifelong Learning says that he understands the position, but it is time for him to deliver. We need an enterprise minister who really believes in slashing red tape and allowing businesses to compete more freely.
The member talked about the impact of regulation and what the Executive is doing about that. Does he agree that the World Bank and the Organisation for Economic Co-operation and Development regard the UK's regulatory regime as one of the lightest in Europe?
We know that the European economy as a whole has not performed particularly well, so perhaps Europe should not be our model. It is disappointing that the Executive rejected many of the Subordinate Legislation Committee's recommendations on the regulatory burden.
We need to examine the size of the public sector in Scotland, which stifles private sector activity. We are familiar with the comments of the chairman of Scottish Enterprise on the matter and there is a growing consensus that the way to grow the private sector is to start reducing the burden of the public sector.
Under the Executive, the decimation of Scottish manufacturing continues apace. Unlike the happy years of Conservative government, when Scottish manufacturing went from strength to strength, all we have seen during the past six years is a sad story of decline. It is time for the Executive to stand up for Scottish manufacturing and take the necessary steps to turn the situation round.
I move,
That the Parliament notes with concern that the value of the manufacturing sector fell every year between 1997 and 2002, having previously risen year-on-year between 1992 and 1997, and that nearly 100,000 manufacturing jobs have been lost since 1997; further notes with concern the recent findings of the Scottish Council for Development and Industry that exports have fallen below £15 billion in value for the first time in a decade; believes that Scotland can benefit from a solid manufacturing base as part of a diverse and modern economy, and therefore calls on the Scottish Executive to take the action required to increase the competitiveness of the sector by taking measures such as reducing red tape and the size of the public sector, privatising Scottish Water, encouraging greater participation in vocational training at further education colleges and bringing forward the promised business rates cut to April 2006.
We are always pleased to have an opportunity to talk about manufacturing in Scotland, no matter how incongruous the source of the debate. Unlike the Conservatives, we regard manufacturing as important. We mention it in "A Partnership for a Better Scotland".
Murdo Fraser talked about the Conservatives' record but, contrary to what he said, manufacturing output measured as a percentage of gross value added fell between 1988 and 1997 from about 24 per cent to 22 per cent. Murdo Fraser did not mention employment but, during the same period, the number of jobs fell by 155,000. That figure is significant because of the difference in unemployment under the Conservative and Labour Administrations; since the creation of the Scottish Parliament, we have created more than 155,000 new jobs—that is, more than the number of jobs that were destroyed by the Conservatives during their tenure.
We are talking about manufacturing. Even if it is the case that we lost 155,000 jobs during the 18 years of Conservative government, is the minister proud of the fact that the Executive has managed to lose 100,000 jobs during the past six years?
When we talk about manufacturing, it is important to put the matter in context. I do not disagree that manufacturing's contribution to the economy has declined since 1998 but, during the same period, Scotland's economy has grown by nearly 14 per cent in real terms. That rate of growth is not matched by many of our competitors. Manufacturing productivity remains 25 per cent higher than productivity in the rest of the economy, which reflects the fact that the sector is at the forefront of adopting innovative business practices to eliminate waste. There are still significant gains to be achieved in that area.
Manufacturing accounts for 15 per cent of Scotland's gross domestic product and employs approximately 250,000 people. Those are impressive statistics, but many commentators—people such as me and Wendy Alexander—believe that traditional measures no longer accurately capture the complexity of manufacturing in advanced economies in the 21st century. Understanding manufacturing is much more complex than simply talking about production, as Murdo Fraser does.
In our advanced global economy, successful manufacturing companies engage in various parts of the manufacturing process, such as research and development, product design and development, marketing and aftercare. They specialise in complex systems integration and systems management across a global supply chain as well as, or in place of, production.
Will the minister explain why, if everything is so rosy, his figures show that manufacturing declined from 22 per cent of GDP in 1995 to 16 per cent in 2002? The trajectory suggests that the figure is now about 12 per cent. How can that be considered a success story?
I am trying to explain that measuring manufacturing production simply by GDP does not take account of the whole manufacturing process.
You have one minute.
One minute?
Manufacturing sectors have necessarily undergone a period of transition. That is not in dispute. They have had to adapt, innovate and transform to meet the challenges of globalisation and competition from low-wage economies such as those of Asia and eastern Europe, and they continue to do so. Jim Mather and Murdo Fraser talk about decline, but in a modern and innovative economy it is misleading—and it does manufacturing industry a disservice—to refer to job losses in production and pretend that that tells the whole story. It does not.
I have a whole lot of things that I would like to say about what we are doing in the Scottish economy to assist manufacturing, but I will keep that for summing up. Suffice it to say that there is no use pretending that Scotland's economy can be immune from the global economic trends to which I have referred. We should concentrate on creating the right conditions for manufacturing and business. We have done that and it is set out in "The Framework for Economic Development in Scotland" and "A Smart, Successful Scotland". Manufacturing must continue to focus on productivity. Our success will be evidenced by the fact that our economy continues to grow at a rate in excess of that of the rest of the United Kingdom, and our employment figures continue to rise. Many of our key competitors dearly wish to be able to say the same thing.
I move amendment S2M-3497.3, to leave out from the first "with concern" to end and insert:
"the important role that manufacturing plays in creating a diverse and growing Scottish economy and supports Scottish manufacturers adopting innovative and modern approaches to face the challenge of global competition; supports the move to higher value and quality products, and further notes the range of measures brought forward by the Scottish Executive to support manufacturing: investing in transport infrastructure and the skills of our people, creating the right environment by reducing business poundage rates and establishing a Scottish Manufacturing Advisory Service to support and encourage Scottish manufacturing industry to adapt to the global competitive environment."
I rise to engage in a debate that I am not sure is entirely serious. It seems to me that this might be more of a Tory attempt to clear the decks and mark the arrival of a new leader, and to have previous convictions taken into account. The Proclaimers should be here today to sing "Letter from America":
"Methil no more
Irvine no more.
Bathgate no more
Linwood no more".
I could go on to talk about Corpach, Ravenscraig and so on. We are essentially reflecting on a 20-year Tory era in which 240,000 jobs were lost in Scotland between 1979 and 1997.
Although the Executive amendment is worthy, it is also pretty complacent. In my intervention on the minister, I said that the Executive is even marking down manufacturing in the way that it calculates GDP. Manufacturing is being materially de-emphasised. To the Scottish National Party it is ironic that the decline happened between 1973 and 2005, the era in which we have been denied the chance to implement Scotland's wealth and have been unable to exercise our right over the oil, to move ahead and to have the economy that we should have.
There is a pattern of behaviour in which the distortions that were made in the past are continuing. The minister commented that Scotland is outperforming the rest of the UK in terms of our GDP—what rubbish! We have indexed our 2000 and 2001 GDP figures and done the same with the UK economy figures. If we had indexed the Koh-i-noor diamond and my SNP badge each to equal 100 at 2002, then monitored their progress, the lines would converge at that time and diverge very little thereafter. Such indices give no reflection of value and it is a major fault of the Government that it continues to twaddle data that are so distorted.
Our economic failure and the contraction in manufacturing are due to the simple failure to create the conditions for growth. That is why we have lost manufacturing muscle, ownership, and research and development and the potential spin-offs. We have lost potential clusters and, time after time, the reports show that competitiveness has been eroded.
There has been a consolidation of UK ownership, as happens in a branch economy. There has also been a failure in the Tories' artificial temporary boost of foreign direct inward investment policies which, through loans and low-cost premises, brought inward investment that did not stay here in the long term.
The hierarchy of responsibility can be clearly seen by anyone who studies the likes of W Edwards Deming, the guy who turned round manufacturing and industry in Japan. Deming is particularly interesting because he discovered that responsibility lies with management. Management dictates recruitment, the definition of processes, the raw materials and the suppliers. If that is true for the management of a factory, it is also true for the management of a country. This country has failed in its operation because our branch economy leaks into other economies and does not allow us to grow and build our base.
We should examine the current outlook. The Confederation of British Industry forecasts contraction. In business rates and Scottish Environment Protection Agency and water charges, our businesses face higher fixed charges than do businesses elsewhere. The net effect is a massive series of conversions. Lord Vallance, the former chairman of Scottish Enterprise, is coming round to our opinion that we must have the economic powers to move forward.
Where would we have been if we had been able to start that process in 1973? If we had matched Norway's growth, we would have £46 billion extra flowing through our economy and 815,000 additional people living and working in Scotland. Each man, woman and child would be £5,300 per annum better off.
The focus now should be on creating a new magnetic north called Scotland that attracts business and wealth. The only way of doing that is for the Parliament to step up and grab the same powers as the Latvians, Estonians, Irish and Czechs have. Anything else—
No, you must finish now.
Anything else is flawed and we will continue to see the flow of flawed data.
I move amendment S2M-3497.1, to leave out from "having previously" to end and insert:
"considers that this was partly the result of the failure of earlier policies which attracted many foreign direct inward investors who did very little research and development in Scotland and which on their own were neither sufficient nor a substitute for real economic power and the full ability to compete, and therefore calls on the Scottish Executive to recognise this fact and the evidence that makes the status quo untenable and damaging to Scotland."
Until now, I never believed P G Wodehouse's comment to the effect that it was never difficult to tell the difference between a Scotsman and a ray of sunlight, but I now realise that he must have been describing Murdo Fraser and Jim Mather.
Mr Fraser's motion on the current state of the Scottish manufacturing industry neatly tries to deflect from the Tories the blame for the damage that they did to that sector and to the economy as a whole from 1979 until they were belatedly ousted from power. He might have been too young to see the damage that was done by the Tories to industry in the 1980s or to feel its consequences, but the manufacturing decline was triggered by the last Tory Government. Perhaps Mr Fraser can say why investment in manufacturing was lower when the Tories left office than it was when they entered it.
Rather than concentrate on that, I will concentrate on the good news for the future of Scottish manufacturing. The decline that was brought about by extensive restructuring in the sector has bottomed out and the sector is expected to grow again as of next year, as it started to do this year.
The Fraser of Allander Institute commentary on manufacturing for the first half of this year found an increase in business confidence; a rising trend in orders, in the level of work and in investment; and a crucial strengthening of employment in the sector. It is on that basis that the institute expects the situation to turn round by next year.
I am sorry that there was no Tory representation at this morning's launch of Scottish Enterprise Fife's annual report. Those who attended heard the chairman, Fred Bowden, state:
"There is a real sense of optimism in industry."
The Scottish Executive consulted manufacturing to find ways to support restructuring and development of the industry and those efforts have been welcome and successful. The lean manufacturing initiative that was launched last year by Jim Wallace helps to strip out costs from businesses and aids their competitiveness.
"Efforts to encourage manufacturers to participate in ‘Lean Management' have yielded significant benefits for those involved. The Initiative supported by Scottish Enterprise is now being rolled out across the country and will provide excellent opportunities."
That is not my comment but that of the chief executive of Scottish Engineering, Peter Hughes. He also welcomed the opportunities that exist via the Executive's green jobs strategy, which links our concern for the environment with the rise in new markets in sustainable industries. It is a unique strategy that will give Scottish manufacturers a cutting edge in that emerging field, particularly in renewable energy.
Interestingly, in the same publication that carried the comments of Mr Hughes, the Conservatives' former leader pledged that they would stop
"spending tax payers' money in pursuit of never ending ‘strategies' and ‘launches'".
The Executive has been listening to business; the Tories have not.
We should never forget that Scotland has a better record of innovation and invention than any other similar-sized country in the world. That has been true for more than 200 years and the Executive is creating opportunities for invention to flourish in the marketplace.
On a final point, I would like to combat the gloom that we have heard this morning by referring to a report of the Small Business Research Trust. That report stated categorically that small businesses in Scotland were outperforming those in the rest of the UK, including London, when it came to investment, sales and creating employment. The report, which was the second-largest ever commissioned in the UK, pointed out that in the second quarter of this year, 30 per cent of Scottish businesses were increasing the number of jobs and, in addition, 36 per cent were investing more in their businesses than were businesses south of the border. The news gets better—or worse for Tory and SNP members—because more than half of Scottish businesses in that category reported a rise in their sales.
You must finish now.
In fact, predictions based on results so far suggest that we will see an end this year to the decline of manufacturing. The long-term future is bright.
We move now to the open debate, but I will not be able to call everyone. There will be a strict four minutes for speeches. That means four minutes maximum.
I will focus on my constituency's manufacturing sector, which in many ways faces in microcosm pressures that are felt in the industry in Scotland as a whole.
In Ayrshire, more than one in five workers is employed in the manufacturing sector and some 34 per cent of the area's turnover—compared with a Scottish average of just 21 per cent—comes from manufacturing. One need only look in and around the area that I represent to see evidence of Scottish manufacturing's decline. We have seen many closures: the Ailsa-Troon shipyard; the Volvo factory in Irvine; the Compaq computers factory; and the Ayr stamp works. The list goes on. According to Scottish Enterprise Ayrshire, no fewer than 85 manufacturing companies in Ayrshire have closed over the past four years, with the loss of almost 7,500 jobs.
There are many reasons why Ayrshire's manufacturing sector is suffering, some of which are beyond the Scottish Executive's control. For example, there has been an increase in competition from the far east, the Indian sub-continent and eastern Europe, where the labour costs of the well-educated and appropriately skilled workforce are cheaper. However, other issues that affect Scottish manufacturing industry's competitiveness lie very much within the influence of Government at UK and devolved level. As I argued in the chamber a few weeks ago—and as others have mentioned—the minister's stated intention of reducing business rates in Scotland to the levels that are enjoyed by firms south of the border is welcome, but the reduction cannot come soon enough for businesses in my constituency. We could do with lower business rates now rather than in 2007-08.
In addition, recent studies have shown that an underdeveloped transport infrastructure and high transport costs are a major stumbling block to business expansion. In recent years, many local companies have raised with me the issue of spiralling utility costs such as water bills, which for a number of firms have been hiked by Scottish Water by 300 per cent and more. Clearly, such costs have a major impact on the ability of the manufacturing firms to compete and to invest.
It is extremely worrying that the Fraser of Allander Institute's most recent survey on behalf of the Scottish Chambers of Commerce indicates that Scottish investment in research and development and in developing new markets and products continues to decline. To survive and compete in an increasingly competitive global marketplace, Scottish manufacturing must play to its strengths and innovate. Sadly, firms face such a fight to keep their heads above water because of the high business costs that are levied by the Scottish Executive and Scottish Water that they are required to sacrifice future investment for present survival. Who can blame them for doing so?
Of equal concern is the worrying lack of new business start-ups in Ayrshire. The only way to boost start-ups is to create an environment that is conducive to the spirit of entrepreneurship, which has long been part of the Scottish character.
However, the news from Ayrshire is by no means all bad. Larger businesses such as Goodrich Ltd, GE Caledonian Ltd and BAE Systems aerostructures division in Prestwick have demonstrated that there is still a place for high-tech, high-skilled precision engineering jobs in Scotland.
My hope is that the minister will reflect on the warning signs that are evident in our manufacturing sector. He must act now to ensure that many more firms in Ayrshire and throughout Scotland are set free to invest, compete and succeed.
I welcome the opportunity that the debate provides to discuss aspects of Scotland's manufacturing future that members of other parties might inadvertently overlook, such as sustainability and social justice.
All parties share common ground in recognising that Scottish manufacturing has declined in recent years and that the value of Scottish exports continues to fall. Every manufacturing job that is lost is a devastating blow for the individuals concerned and for their families. The parallel growth of Scotland's service sector is scant comfort for those who have spent a lifetime in manufacturing.
Although we share many of the concerns of Murdo Fraser and his colleagues, we disagree with their preferred solution to the problem. We do not agree that improving Scottish competitiveness requires the dismantling of the public sector and the watering down of business regulation. In the annual league tables that are published by the World Economic Forum, three of the four most competitive countries on the planet are—as Murdo Fraser will be aware—Scandinavian states. By our standards, those are high-tax economies, but the citizens of Finland, Sweden and Denmark enjoy a comprehensive welfare state and public services of which the rest of the human race can only dream. Clearly, a strong public sector and a competitive economy are not mutually incompatible, in spite of what the Tory motion implies. We would go as far as to suggest that only high levels of social justice among the workforce can deliver high levels of productivity and efficiency.
In addition to maintaining Scotland's traditionally high levels of Government expenditure, the Scottish Executive should use its powers to develop the manufacturing potential of new sustainable industries. The zero-waste sector has enormous job-creation potential, which would be good for the environment and for the economy. Not only is redesigning waste out of our society possible—make no mistake about that—but it will create employment and improve our competitive advantage. Likewise, the radical improvements in energy efficiency that we so badly need could provide spin-off benefits in employment opportunities for workers.
As has been pointed out in the chamber many times, Scotland is ideally placed to develop a world-beating renewables industry. The manufacturing jobs that previously supported the offshore oil industry are readily transferable to the fabrication of the renewable energy devices that will power Scotland's future. Those industries would be good for the environment because they would help to tackle climate change. They would also be good for social justice because they would provide jobs in some of our most deprived rural areas and help to build a sustainable economy.
Will the member take an intervention?
I am sorry, but it is a short debate.
You have one minute.
It is strange that the Tories seem to have such a negative reaction to the renewables industry, especially the onshore wind sector. How can Murdo Fraser's lament for Scotland's manufacturing industries be reconciled with his knee-jerk opposition to an industry that offers so much promise? If the onshore wind industry falters, the prospects for offshore renewables will be gravely diminished.
We must grasp the opportunities and fulfil all the potential that a sustainable Scotland presents. We can do that without pulling the rug from beneath the vulnerable by undermining the welfare state and watering down effective business regulation.
Today's motion is fascinating because, for the first time in a decade, the Tories have had the courage to offer their previous economic record for debate. For the past decade, the only thing to be heard from a Tory about the two recessions, the double-digit inflation, the record unemployment, the 15 per cent interest rates and the doubling of the national debt was, "It wisnae me."
Will the member give way?
I am sorry—I am pushed for time.
Today, we have two new Tory leaders on show. In the south, the two Davids—David Cameron and David Davis—both claim "It wisnae me" when they are asked about the Tories' economic record. However, in Scotland, the Tories' new top team are rather different. Annabel Goldie, who was deputy leader of the Scottish Tories throughout the 1990s, made not a whisper of dissent during that time. Murdo Fraser was then the full-time right-hand man to Michael Forsyth and was previously chairman of the young Conservatives. He was a Thatcherite true believer throughout. Neither of the Scottish Tory twosome can credibly claim, "It wisnae me."
Therefore, it is all the more interesting that, in its first debates, the new Tory team wants to laud the Tories' record. In fairness, that record leaves little to choose from. If they rake around the statistical residue of their 20 years, they cannot choose growth, employment, inflation or wealth so they have alighted on the decline of manufacturing.
For the record, one statistic that Murdo Fraser omitted to mention is that manufacturing's share of the Scottish economy fell more during the years of Tory rule than it has under the stewardship of the Scottish Executive and Scottish Parliament. Instead he offered one statistical gem from his hero Michael Forsyth's halcyon reign. What accounts for it? Was it Tory policy? Was there an upturn in manufacturing all over Britain? No—it was limited to Scotland. Of course, that upturn was due to Locate in Scotland successfully attracting major electronics companies. Although the Tories hastened the losses of Ravenscraig, Linwood, Corpach, Caterpillar, Bathgate and so many others about which we have heard from members of other parties, Locate in Scotland did a job for this country. So why is there no mention in the motion of Locate in Scotland or its successors? That is no accident. The reason is that the only budget in the entire £25 billion that the Executive spends that the Tories want to halve is that of Scottish Enterprise and Locate in Scotland's successors.
As the 1980s and 1990s wore on, Locate in Scotland privately begged the then Scottish Office under Michael Forsyth for a change in strategy. Ask George Matthewson, who went on to build the Royal Bank of Scotland into the giant that it is today. However, Michael Forsyth was increasingly determined to buy jobs at any price. We saw less and less of the strategic investment that allowed Locate in Scotland to bring in Compaq but we saw more and more companies like Chunghwa Picture Tubes. In the Tories' dying days, £30 million was cynically offered to a questionable company peddling outdated technology—the classic screwdriver plant—that was always likely to go as quickly as it came. However, Michael Forsyth's Scottish Office was intent on financing any scheme in the futile hope that it could hold back the tidal wave of demand for devolution. Against advice, the Tories gambled with taxpayers' money and lost.
For 10 years, the Tories have had the humility to hang their heads in shame. They gave up trying to sell a strategy of low skill, low tech and low wages to the Scots. Let us hope that the rise of Murdo Fraser, Michael Forsyth's mate, does not herald a return to the same sorry short-termism that so scarred Scotland's economy in the past. The new—
Ms Alexander, I said that you had a strict four minutes. We must move on. After Kenny MacAskill has spoken, there may be a brief moment for Christine May.
I welcome the debate. However, as other members—especially Ms Alexander—have commented, it is ironic that it has been initiated by the Tories. Scottish manufacturing did not just haemorrhage under the Conservatives—it was crucified. That carried not just an economic cost, but a social cost for many of our communities; when the Conservatives look at the statistics, they forget that whole communities were fundamentally damaged. Some changes that occurred may have been inevitable, but the Conservatives made them with cruelty and without taking cognisance of the social costs. In many communities, whole generations—not just young men, but old men who could not adapt to the new service sector—were left to wither on the vine. The Conservatives created a vacuum that allowed long-term unemployment and heroin to enter the veins of many communities. Today we face the social consequences of their economic policies.
Will the member give way?
Not at the moment. I have far too short a time and the member has had an opportunity to speak.
There are points that must be made. Of course our service sector is doing well. However, it is not old fashioned to say that manufacturing matters. A few years back, it was perceived as almost de rigueur to say that manufacturing did not matter and that it was all about the service economy and tourism. However, the two sectors are not mutually irreconcilable and should not be placed in opposition to each other. Of course we should be proud of our financial services and of the Royal Bank of Scotland, which has become the biggest business in Scottish history. We welcome that, but manufacturing and services are not in conflict. Tourism, our biggest industry, is important, but we also need a manufacturing base.
There has been globalisation, and some industries were always going to suffer because of competition from south-east Asia, the Indian subcontinent and, in more recent years, eastern Europe. However, there is still a place here for manufacturing. We must address our current position. It is not just a matter of bandying about statistics on who did what in the 1970s, 1980s or 1990s—fundamentally, the question is about where we will go from here.
I take issue with Mr Arbuckle, who talked about the event involving Scottish Enterprise Fife. I was not there, because to some extent I have no locus in such matters. However, I hope that Superfast Ferries was mentioned, because that is part and parcel of what is happening in our manufacturing base. Superfast has seen growth both in its figures for tourists visiting Scotland and in freight, so why has it reduced its service? It has done so because it cannot make the same profit margin on the North sea route between Rosyth and Flanders as it can between Germany and Finland. That is the case because the Finnish economy is fundamentally booming, whereas the Scottish economy, if not flatlining, is staggering along. Why does Finland, which stands on a more northerly latitude than Scotland—the latitude of Tampere, where Nokia is based, is akin to that of Orkney—manage to compete, in many cases in manufacturing, when we do not? We must learn lessons from that.
New opportunities are arising for us in photonics. Recently I met someone who told me that we may have missed out in silicon glen, as compared to silicon valley, but we have an opportunity in photonics. No sooner had he told me that than I opened the Saturday morning business pages of The Herald to see that a new research and development company based in Scotland, with indigenous talent, had gone into liquidation. Manufacturing matters. We must stop looking backwards and establish a position.
I say to Murdo Fraser that fiscal autonomy is fundamental. At the end of the day, what matters for a manufacturing base is a competitive economy; the Superfast Ferries situation testifies to that. We need to have the powers and the imagination to move forward. I am conscious of the time, Presiding Officer, so I will stop there.
I am obliged to the member, but I am afraid that I cannot call Christine May. I offer my regrets to her and to Frances Curran.
This has been a most interesting debate. I take the opportunity at the start of my speech to congratulate Murdo Fraser on his elevation to the position of deputy leader of the Scottish Conservative party.
Not yet.
We assume that it is a done deal.
It has been an interesting debate, but I am afraid that it has essentially been backwards looking. As has been pointed out, if we try to take a single snapshot of the Scottish economy using just one series of statistics, we will not get an absolutely accurate picture. I would rather look at where we are today compared with where we were when I started my working life back in the 1970s.
In the Highlands, one reason why the downturn in work at the Nigg yard has not hit the economy of Easter Ross and east Sutherland as we feared it would is that the economy is fairly buoyant and new jobs have been created. That is a tribute to Highlands and Islands Enterprise. I am not in the business of gratuitously knocking Scottish Enterprise, which seems to be the fashion in the newspapers these days. That is an easy call for journalists. HIE has been doing well and the jobs are there. As some members have pointed out, the debate is not just about manufacturing; rather, it is about taking an holistic view of the economy, including tourism—in which there have been two successful years—and the service sector.
Recently Digby Jones appeared on "Question Time", on which he provided a brilliant snapshot of the global economy and what this country should be doing in it. The global economy affects everything that we try to do. I recommend that members download and read his contribution, because it is very interesting.
Andrew Arbuckle was right to refer to renewable energy. Shiona Baird, in a good speech, also mentioned it. It would be a major mistake for us not to pick up that ball and run with it. Opportunistic people who object to onshore wind power for the sake of it are not very clever. The Enterprise and Culture Committee, of which I am a member, conducted a full inquiry into renewable energy, and I commend its report to members.
We are talking about the enterprise culture. I am sorry that Christine May did not get an opportunity to speak, because as members of the Enterprise and Culture Committee both of us visited Sweden and Finland. Kenny MacAskill and others referred to the Finnish economy, but that economy has some fundamental problems. It would be very much in Jim Mather's interest for him to take note of that. First, Finland has a built-in high rate of unemployment, but it cannot fill jobs in certain sectors. In those areas, it is looking to countries such as Estonia and Lithuania. Secondly, we were told repeatedly in both Sweden and Finland that the level of income tax is crippling and is reckoned by industry to be having a fundamental effect. The same is true of Norway. Let us not deny that. The Scottish National Party extols the virtues of Finland and Norway, but the challenge is for it to respond on the issue of income tax. Perhaps Jim Mather or Fergus Ewing will return to that point.
John Scott was right to refer to the importance of transport infrastructure. We have great cause to be pleased with what has been invested in rail and road in the Highlands. I hope that the same will happen in John Scott's Ayr constituency and I appreciate what he said.
In a characteristically strident attack, Wendy Alexander had a go at Murdo Fraser, but surely the point of view from all parties is that we are not doing so badly and we should look forwards instead of backwards. We can go on about the oil in the 1970s, but it does not mean a damn to my children and grandchildren.
Perhaps inevitably, the debate has tended to focus on the past rather than on the present or the future. I will address what the Scottish National Party thinks we should do for the present and the future. It is undoubtedly the case that Scotland is part of the global economy, which has introduced changes that we can ignore no more than Canute could ignore the tide.
However, there are clear and present dangers for the Scottish manufacturing sector. The first is the cost of haulage, which is higher in Scotland than in the rest of the UK, and substantially higher in the UK than in the rest of Europe. That has been given effect because our Scottish Chancellor of the Exchequer, Gordon Brown, gives the advantage to hauliers from the continent.
Will the member give way?
Of course not.
Those continental hauliers travel through Dover taking advantage of the fact that every litre of fuel they buy costs 20p less. It is a form of fiscal sadism whereby a UK chancellor gives an advantage to Germans, French and other Europeans to come over here with lorries and tanks that can carry 1,360 litres, drive 2,400 miles, rarely get stopped by the Vehicle and Operator Services Agency and undercut haulage here. All manufacturing industry relies on haulage. The situation I describe is an outrage.
The previous answer to the problem was lorry road-user charging, but that was abandoned by new Labour because of the horrendous cost that was predicted correctly by Professor Alan McKinnon of Heriot-Watt University. However, the new Labour Government admitted that there was a problem and that the lorry road-user charging was a solution to that problem. Now that it has abandoned LRUC, what does new Labour say about the advantage that Gordon Brown gives to foreign haulage and, by definition, foreign manufacturing companies? Not one word.
I was privileged to listen to Jeanette Anderson, the managing director of First Engineering, deliver a compelling and cogent address in this chamber four or five weeks ago. Her point was that whatever the Scottish Executive cannot do, what it should do is to focus on delivery. However, that is what it has not done. If we look at the delay in the M74, the dithering in the various rail projects and the seemingly endless statements and press announcements, we do not see much action. If the Scottish Executive were a firm of solicitors, it would be called Dither, Swither and Blether. What the Executive should do is listen to the Civil Engineering Contractors Association and the Institution of Civil Engineers. They say that it should create a preparation pool of work so that if a contract such as the M74 is delayed, others can be brought into its place. The Executive should sort out the quagmire of quangos that are supposed to be responsible for delivering transport projects.
As I am in my last minute, it would be churlish of me not to congratulate Murdo Fraser on his elevation to deputy leader of his party; I wish him well. However, I find it a bit disappointing that his former robust espousal of the cause of fiscal autonomy is today no more. Instead of that strong Murdo Fraser whom we used to know, who was not afraid to speak out and voice his views, what did we get today? We got equivocation on fiscal autonomy and uncertainty so that we do not know whether he is for it or not. Sadly, the Murdo Fraser whom we used to know has sputtered and stuttered like a car that has run out of fuel.
I am indebted to my colleague Wendy Alexander for reminding us of the Tories' record in Scottish manufacturing and, indeed, of Murdo Fraser's record. It is sometimes difficult to keep up as the Tories try to position themselves as the friends of manufacturing and Murdo Fraser tries to reinvent himself as the junior half of the dream-on ticket, as we might call it.
The motion is wrong, as is the amendment that does not seek to amend the statistics in the motion. Manufacturing GVA has not been in continuous decline since 1998 as was suggested. Between 1998 and 2000, GVA rose by almost 5 per cent. It is only post-2000, following the slump in electronics to which Kenny MacAskill and others referred, that manufacturing's contribution to the economy declined.
It is important to acknowledge global change and not to let it cloud our view of the vibrant manufacturing sector that exists in Scotland today. I agree with Fergus Ewing that the debate has focused unfortunately on the past and has not looked to the future or the present. Against that backdrop, I tell members that we have seen strong growth in other areas of industry between 1998 and 2004. For example, refined petroleum products and nuclear fuel grew by almost 20 per cent, chemicals and man-made fibres grew by 8.5 per cent, and the food and drink and tobacco industries grew by 5 per cent. That shows that restructuring can make a positive and important impact on key manufacturing sub-sectors in Scotland.
I remind Parliament that before Wendy Alexander was born, manufacturing in Scotland started to go into decline—it has not just happened in the past 10 or 20 years. I used to work in engineering; despite the occasional buck in the industry, it has been in a state of terminal decline since the 1960s.
Thanks very much. That was a self-inflicted injury, minister, which comes out of your speaking time.
It is self-evident that I do not agree with John Swinburne. I tried to make my point by exemplifying sectors of the manufacturing economy that have grown because they have restructured, developed and adapted to the global economy to show positive results.
The same applies to exports. The contribution to the economy by the general decline in manufacturing exports that Murdo Fraser referred to, like the result of global restructuring in electronics, masks a significant variation in the industry. Chemicals, coke, refined petroleum products and nuclear fuel grew by 10 per cent between 1998 and 2004, as did exports of transport equipment. Over the same period, exports of food and tobacco increased by 23 per cent. Therefore, to talk about a general decline in exports masks the fact that certain sectors of our manufacturing economy are doing well, thank you very much, because of the successful business environment that we have created and our investment in skills and infrastructure.
I want to concentrate on those areas in my remaining couple of minutes. We give support to the manufacturing sector and I suspect that that is what people are more interested in out there in the real world. We give that support through a range of measures: through the biggest investment in infrastructure in decades; by creating the right business environment, as I mentioned; and by freezing non-domestic rates in real terms and aligning them with the UK to give us a domestic advantage.
We are also making a massive investment in skills and learning. We are offering direct investment aids to help transform business, such as regional selective assistance, the SMART, or small firms merit award for research and technology, and SPUR, or support for products under research, programmes and the Scottish co-investment fund. We engage directly with Scottish business to help to minimise the regulatory burden, not just on our legislation, but more important, at European Union and UK level. We will support the first national conference on manufacturing later this month. We are committed to introducing a Scottish manufacturing advisory service to assist manufacturers, as we did south of the border where the service gave £100,000 of add-on value to all contributors.
That is how we intend to support the manufacturing sector and that is what the manufacturers want to hear from us in the Government. We intend to deliver that agenda.
Phil Gallie will close the debate for the Conservatives. I can give you only six minutes, Mr Gallie.
Thank you, Presiding Officer.
I listened to Allan Wilson and heard him try to bring in positive aspects at the back end of his speech. He had a chance to address such issues in his amendment, but as far as I am concerned his amendment simply went on the defensive and refers to matters that are irrelevant in many ways. It refers to
"higher value and quality products",
but if we are to achieve those we must ensure that companies in our traditional industries, such as small engineering, processing and production companies, are kept in business.
Earlier in the debate, John Scott gave us a list of problems that such industries have faced. Many of the problems do not just come from the global economy but from Government-imposed legislation and regulation. Allan Wilson said that decline had occurred only since 2000 and that there had been an upturn between 1998 and 2000. I suggest that that was perhaps a carry-over from the previous Government. However, the one point that no one can dispute is that since 2000 it has been the Scottish Executive's responsibility to address the problems. If Allan Wilson is correct in saying that there was a decline between 2000 and 2004 or 2005, he should look again at who is responsible for that.
I am somewhat disappointed by the debate overall, but I congratulate Fergus Ewing on his closing remarks, with the exception of his comments on fiscal autonomy, and Jamie Stone on his speech. Unlike other speakers, they were at least positive and did what the debate has been all about, which was to try to address the issues that we must address if Scotland is to go forward for the future.
Wendy Alexander totally disillusioned me. I have the greatest respect for her and her knowledge of the economy, but what we got from her was a diatribe of negatives, looking back over the past eight years. That is not what we wanted in this debate.
Will the member take an intervention?
I will let Christine May intervene in a minute. I appreciated very much her earlier intervention in which she pointed out that the UK's position in Europe is relatively good. However, if she looks at the UK's position on a global scale, she will find that its position is pretty bad. To my mind, that demonstrates the drag that the EU is on Scotland's economy and other aspects.
I thank Phil Gallie for giving way. On the list of achievements, why did none of the Tory speakers refer, for example, to the uplift of 8 per cent in electronics manufacturing? Why did nobody talk about businesses that are succeeding—for example, Diageo, Babcock and Raytheon Systems—because of the Scottish Executive's policies?
Christine May is not only blinded by Europe, but deafened by it. If she had listened carefully to John Scott's speech, she would have heard many positive points being made. Perhaps she will read them in the Official Report tomorrow.
Shiona Baird presented the best case for socialism that I have heard in Parliament since it started. She should perhaps think about her roots and about where she will go in the future. She talked about energy efficiency, which is an important topic. I had a 28-year involvement in industry, which ended about 15 years ago, and I can tell members that during that time management and industry across the board were concerned about energy efficiency. They were concerned not just for the good of the planet, but for the good of the companies, which needed to make savings and get an advantage. On energy for the manufacturing, production and processing sectors, I go along with Christine May's view on the Lisbon agreement. There is a need to ensure that our industry has cheap and sustainable energy resources. What we are doing at present—for example with the wind generation agenda—adds to the costs for industry and individuals and threatens the security of supply.
I do not have time, Mr Ruskell.
John Scott spoke about Ayrshire. We in Ayrshire, and people in East Lothian and Dumfries and Galloway, played a wonderful role in securing stable energy supplies over the years at Hunterston, Torness and Chapelcross. I point out to members that, if they look at the world economy, they will find that the growing economies—for example, China and India—are beginning to expand their nuclear programmes. It is sad to me that we have lost great engineering companies such as Foster Wheeler, John Brown, Weirs and, to some extent—it is still here—Howdens. They would have had the potential to get involved in the nuclear industries in various countries, but we have lost that advantage. Scotland and the UK were world leaders in nuclear engineering, but where are we now? We are inward looking and we threaten the future, from an energy supply viewpoint, of all small and large manufacturing and engineering companies.