The next item of business is a debate on motion S4M-08714, in the name of John Swinney, on Scotland’s economy. Members who wish to speak in the debate should press their request-to-speak buttons now. At this juncture, I remind the open debate speakers that speeches will be limited to five minutes. I call on John Swinney to speak to and move the motion. Cabinet secretary, you have 14 minutes.
15:10
I welcome this opportunity to update the Parliament on the Scottish economy and to lead this debate on the opportunities for strengthening our long-term growth prospects: 2014 promises to be an important year for the Scottish economy. There are clear signs that the recovery is beginning to gather momentum with the most stable, if not the most universally positive, outlook for the global economy since the financial crisis. The year 2014 is also when the eyes of the world will be on Scotland. Events such as homecoming, the Commonwealth games and the Ryder cup will provide a once-in-a-lifetime opportunity to showcase our nation to a global audience and to use that to maximise the benefits to our economy. In addition, of course, in September of this year the people of Scotland will have the chance to decide who is best placed to look after Scotland’s economy in the future and to generate greater economic prosperity and equality through a vote for Scottish independence.
Last month, the Scottish Government’s chief economist published the latest state of the economy report, which documented the relatively positive signs of economic recovery over the past year. Over the year to quarter 2 2013, the Scottish economy grew in each and every quarter. We continue to make progress from the financial crisis, with output in Scotland in quarter 2 now 1.4 per cent below its pre-recession peak and with the United Kingdom in the same quarter 2.7 per cent below pre-recession peak. The labour market has also strengthened over the year; the latest statistics show employment levels in Scotland increasing by 83,000 over the year to August to October 2013 and we still outperform the UK on all the labour market indicators that we observe.
Core business surveys for Scotland, such as the purchasing managers index, report that private sector output continued to expand through the two final quarters of 2013, and confidence is gradually returning to the business sector in Scotland. That is testament to the inherent strength of the Scottish economy and to the measures that have been taken to ensure that the investment that the Scottish Government has at its disposal is used as effectively as possible to support and encourage the growth of the Scottish economy in such difficult circumstances.
Is the cabinet secretary aware that there is currently an industrial dispute pending at the Sullom Voe plant between Petrofac, the contractor for the Total gas plant, and the union? Has he had a chance in his busy day to be in touch with either the contractor or, indeed, the union, given the potential to disrupt what is at the moment the largest civil engineering contract in Britain?
Mr Scott will be aware of the keen interest that ministers take in the issues that affect industrial relations and their impact on the economy, as we demonstrated in the situation in Grangemouth in just the past few weeks, and he will appreciate that ministers will be prepared to do all that we can to bring parties together in all industrial disputes. The primary opportunity to resolve the issues is the direct dialogue between management and the workforce. Ministers will certainly do everything that we possibly can to assist in that respect. If Mr Scott, as a local MSP, has a particular perspective, I will of course be very happy to hear that and to take that forward in any way that we can.
Mr Scott makes an important point about the significance of good, strong and positive employment relations in our economy to ensure that there is the maximum positive benefit for the development of the Scottish economy—that lies at the heart of ministers’ objectives in this respect.
As we embark on an important year of political discussion in Scotland, when there is such a concentration on the points of dispute and debate, it is worth looking at some of the areas that are broadly agreed between both sides of the constitutional argument. We agree that Scotland could be a successful independent country and we agree that devolution and the transfer of decision-making powers from Westminster to Scotland has brought major benefits to people who live in Scotland. The improvements in economic performance since devolution show what can be achieved even with limited economic self-determination.
For example, in 1999, Scotland’s onshore output per head was the fifth highest of the 12 countries and regions of the United Kingdom. By 2012, it had risen to be the third highest behind only London and the south-east. At the time of devolution, Scotland had a lower employment rate and a higher unemployment rate compared with the UK, but our employment rate is now higher and our unemployment rate lower. The lesson that I take from those examples is that, where we are able to exercise self-determination here in Scotland and to take decisions that affect the circumstances and conditions of the Scottish economy, we take wise and beneficial decisions that lead to sustained improvement in our long-term prospects. That should be at the heart of the debate that we face in relation to the referendum on Scotland’s constitutional future and the whole question of vesting responsibility here in Scotland, where we can take a set of decisions that are appropriate and necessary for the economic conditions here.
In the debate today, there will be much discussion of the nature of the economic recovery. The Conservative amendment invites us to applaud the United Kingdom Government for the steps that it has taken in relation to economic policy.
Hear, hear.
I simply say to Mr Johnstone, who is the most audible member on the subject—even from a sedentary position—that the current recovery in Scotland is taking place despite the policies of the UK Government and not because of them. The fundamental mistake that the United Kingdom Government has made has been to prolong the economic difficulty and damage that people in this country have faced. For example, its decision to reduce our capital budget by 27 per cent in real terms over the period 2010-11 to 2015-16 can only be described as one of the worst decisions, as it undermines and impedes economic recovery in Scotland. I go back to some of the arguments that we have had in this Parliament before, when I have advanced the argument about the importance—
Will the cabinet secretary give way?
Of course.
Is the entire economic recovery, then, down to the Scottish Government?
I say to Mr Brown—I have marshalled this argument in the parliamentary chamber on countless occasions—that the Scottish Government has dealt with the circumstances that we have faced as a consequence of United Kingdom Government policy and our task would have been much more practical and easy if we had not had impediments such as a 27 per cent cut in our capital budget imposed on us by the United Kingdom Government.
I hear what the finance secretary says, but he has stood there before and said that the UK coalition economic plan would not work. How does he explain the 1.3 million extra jobs across the UK?
What I have said to the Parliament before is that we needed to have more sustained capital investment to minimise the suffering that people have endured. If Mr Rennie and his colleagues are prepared to turn a blind eye to the volume of suffering that members of the public have experienced through the prolonging of the economic difficulties that we have faced, that is not something with which I want to be associated. I would rather have invested in the Scottish economy and not had to deal with the cuts imposed by Mr Rennie’s Administration.
Of course, different steps could have been taken, because the chancellor has had to take different steps. Compared with his spending plans in 2010, he has had to borrow £197 billion more than was projected, and he has failed to deliver the nearly 6 per cent worth of value in the economy that was predicted in 2010 according to his original plans. When we consider the issues that we face in relation to the condition of the United Kingdom economy and the challenges that we have faced as an Administration, we have tried very hard to focus our economic policy and our investments on overcoming some of the obstacles that have been presented to us by the decisions that the United Kingdom Government has taken.
Over the next fortnight we will discuss the different parliamentary stages of the Government’s budget programme, which is focused on a variety of areas, such as the development of skills, the execution of our capital investment programme and steps to ensure that all aspects of Government policy are focused on economic growth. The programme of policy development that we exercise in our own competence is maximised to ensure that it contributes to economic growth in Scotland.
For example, we have attached a significant amount of attention to ensuring that businesses in Scotland have been able to take forward their investments in Scotland in the knowledge that they operate in the most competitive business rates regime in the United Kingdom. We are very proud of the fact that more than 90,000 small businesses in Scotland can pay either reduced business rates or no business rates. That is a policy commitment that we confirm very firmly to the Parliament today. We believe in our manifesto commitment to support the small business community with the small business bonus scheme and we believe that businesses in Scotland should pay the same poundage that businesses in England pay. Those are important commitments, which ensure that the business community in Scotland is able to plan for the future and invest in its operations and activities. We will continue to assert those things during the budget’s parliamentary passage.
The Government makes it clear that although we can achieve a certain amount of economic impact through the responsibilities that we have, we would want to do more with the greater powers of independence. We would want to focus policy much more by using the tax system to support innovation and the development of new technologies. We would want to ensure that the tax system was integrated and drew together various aspects of corporate taxation with the needs of our economy, and linked together employability, personal taxation and welfare policies in a coherent way. We could ensure that that system operated on a more focused and efficient basis. We could also take steps to support the development of a more integrated global economy, originating from Scotland, with even greater success than we have managed to deliver in the field of inward investment, on which the Government’s record is very strong.
Finally, we believe that boosting participation in the labour market is of fundamental importance to the growth and development of the Scottish economy. At the heart of the white paper that was published in November is the Government’s commitment to expand by a transformational amount the volume of childcare that is available in Scotland. We have explained, through “Scotland’s Future”, how that can be done only by having available the scale of resources needed to redeploy resources that we believe would be better spent in Scotland by investing in childcare, rather than on supporting the weapons of mass destruction that are currently supported by the public finances of the United Kingdom.
Our priority is to use those resources for the maximum economic benefit in Scotland. Within the Scottish Government’s existing devolved competence, we can take some of the steps on childcare that the First Minister outlined yesterday in a fashion that will lead to the creation of an additional 2,000 work places in the childcare workforce in Scotland, through £3.5 million that the Government will make available for the development of the childcare workforce. However, if we want to take forward the type of transformational effects of the childcare approach that we set out in “Scotland’s Future”, we must be able to take strategic economic decisions to redeploy expenditure to support investment in childcare, to support investment in the growth of the Scottish economy, and ensure that the resources and benefits that that generates can be reinvested to invigorate the Scottish economy, deliver growth and deliver new opportunities to the people of Scotland.
I move,
That the Parliament welcomes the positive signs of recovery in the Scottish economy over the past year; agrees that this recovery has been delayed by the UK Government’s economic mismanagement and cuts to capital spending; recognises that Scotland’s long-term potential will continue to be hampered by the large gap between rich and poor, the increasing concentration of economic activity in London and south east England and growing imbalances in the structure of the UK economy, which have been created by successive UK administrations, and agrees that, as set out in Scotland’s Future: Your Guide to an Independent Scotland, the powers of independence will enable future Scottish administrations to build a more resilient and fairer economy by combining powers over employment policy, migration, industrial policy and taxation to secure stronger levels of economic growth and job creation and create a virtuous circle where the full benefits of increased economic growth and participation are available to be reinvested for the benefit of all the people of Scotland.
15:24
The improvements in the employment and economic positions and the signs of economic recovery outlined by the cabinet secretary are very welcome. He wisely described them as “relatively positive”, because to understand the fragility of the economic position we have to look behind the headline figures, welcome as they might be, at the reality of the recovery for many Scots and their families.
The truth is that almost 75,000 more Scots are unemployed than when the cabinet secretary took office. There is a long way to go yet. It is true, too, that too many of the jobs that have been created are insecure, temporary, part-time, zero-hours contracts or simply poorly paid. There are around 250,000 underemployed workers in Scotland, which is about 10 per cent of the workforce, which is an increase of 76,000 since 2008. Those are Scots who are in work but without enough work or enough of a wage to meet their families’ needs, far less their aspirations.
Meanwhile, recent analysis has shown that the proportion of the Scottish workforce earning less than the living wage has steadily increased since 2000; 820,000 Scots are stuck in low pay. Across the piece, the workforce has seen wages fall in real terms in every single month since 2010, with the exception of one.
When we welcome the signs of recovery, therefore, many Scots will be left puzzled because, in insecure, underpaid jobs, with wages buying less every month, it hardly feels like a recovery to them. We know that an economy built on insecure, low-paid, low-skilled jobs is not a sustainable 21st century economy. The Government’s motion implies that it understands that but it also implies—and the cabinet secretary reiterated this—that as a devolved Government it can do little to address that. That is not true. The cabinet secretary and I agree that Government spending is a key lever to stimulate the economy. I certainly agree with him when he says that the UK Government has failed to use those levers as it should have done.
However, Government spending in Scotland is still billions of pounds a year. There is spending on capital projects, but there are also contracts for goods and services and support for economic development. The Government could do much more to ensure that that spending underpins high-quality, properly paid employment. All Government contracts should support jobs that pay the living wage, insist on the creation of local employment opportunities, create training and apprenticeship places and avoid exploitative zero-hours contracts.
Last night and today on television, two of Mr Gray’s shadow cabinet colleagues have outlined Labour’s plans to scrap the small business bonus. How will that help the Scottish economy?
They did nothing of the kind. It is an interesting point, though, because our position has consistently been that the small business bonus is a missed opportunity. It could have been used to incentivise exactly those issues of employment, training and investment in energy efficiency. It is a missed opportunity by a Government that misses so many opportunities.
Will the member give way?
No, I am sorry. Let me make progress. [Interruption.]
Order, please.
It is not enough for the Government itself to pay the living wage and avoid zero-hours contracts. It cannot be right that employers working on a contract such as the Borders railway, which is fully funded by the Scottish taxpayer, use zero-hours contracts, or that universities—recipients of millions of pounds of Government funding—are among the worst offenders when it comes to those exploitative terms of employment.
On the other side of the employment equation, the Scottish Government is, as the cabinet secretary said, responsible for skills and training. There, too, we need to look behind the headlines. We have an apprenticeship programme of 25,000 places, all work based, which is good, but is the balance right? More than half of those are short term level 2 places. Meanwhile, industries such as engineering, construction and oil and gas continually complain that they do not have enough apprenticeship places. Behind the top-line number, we could and should be rebalancing the programme to match skills to jobs in those sectors with the greatest potential to grow our economy.
The Government motion, however, speaks to none of that. Rather, it rehearses the Scottish Government’s single transferable excuse, which is that it cannot do anything until we are independent. It even hints at the argument that the cabinet secretary made, which was that, somehow, there is no real purpose in investing in the major increases in childcare that will help women back to work, because their tax pounds will not come to us. Presumably, that is why the Government does not think that it is worth investing in our colleges either, because young people will only go out and get jobs and send their taxes down to the Treasury in London.
Does Mr Gray believe that Scottish firms should pay more in business rates than firms in the rest of the UK?
No, and nobody has said that they should. [Interruption.]
Order.
From a sedentary position, someone asks where the money is coming from. I am looking at the analysis of the Barnett consequentials. That was the sum of money that we were discussing yesterday, and it is clear to me that, if the Government had chosen not to prioritise free school meals and had instead prioritised its own childcare policy, that would have been achievable.
Will the member give way?
No. [Interruption.]
Order.
The white paper argues that, with independence, the economy will inevitably flourish and, in fairness, it sets out the platform for that boom. It will build on a currency union with the UK; an open border and free movement of people and goods with the rest of the UK; a single UK-wide energy market, with consumers across the UK subsidising Scottish renewable energy; UK-wide research funding, from which we can win more than our fair share; and a single financial services sector, so that Scottish banks can access a home market of 60 million consumers, and a single central bank that will bail them out if needed. We are also told that the rest of the UK will even break the habit of all history and provide us with defence contracts for planes and ships. That is a great platform on which to build economic growth, fairness and prosperity, and it is the one that we have today in the United Kingdom and on which we have built prosperity under devolution, as the cabinet secretary outlined.
Will the member give way?
No, I need to carry on.
On Monday, the Deputy First Minister demanded to know what would happen after a no vote. Here is what will happen. We will keep the pound, the UK financial services sector, the energy market, the Bank of England, open borders across the UK and our defence contracts, including shipbuilding on the Clyde.
Will the member give way?
No.
We will keep all those things that the white paper says are central to our economic prospects. It is a yes vote that would leave us negotiating to get back all those things that nobody except the independence campaign wanted us to give up in the first place.
As an argument, the Government’s position is pretty surreal, but the threat to our economy is genuine—at least, that is what economists say. Late last year, the Financial Times asked 31 economists what the impact of independence would be on the Scottish economy. Twenty-seven said that it would damage our economy. That is what I saw reported over Christmas but, since then, I have read what they actually said. It is worth reading. I thought that I was dubious about the benefits of independence, but look at what those economic experts say: “inevitable uncertainty”; “huge uncertainty”; “massive uncertainty”; “stagnation”; “damaging”; “disastrous”; “unmitigated disaster”; “a catastrophe”. That is not my assessment; it is the assessment of leading economists with no axe to grind.
What does the white paper propose that an SNP Government would do? What is the big economic decision that it would take to change that? It would present big business with a corporation tax cut and leave the people of Scotland to find another £400 million a year in cuts or increased taxes.
As an argument for economic growth, that is absurd. As an argument for fairness, it is utterly ridiculous. As a reason for failure to take the actions that we need right now on the living wage, skills, job creation, childcare and better procurement, it is only an excuse and a poor one at that.
I move amendment S4M-08714.3, to leave out from “welcomes” to end and insert:
“believes that the Scottish Government must act now to secure what is a fragile economic recovery and ensure a secure, sustainable future in which all can share fairly; notes the importance that the Scottish Government’s Fiscal Commission Working Group and Scotland’s Future: Your Guide to an Independent Scotland place on retaining key elements of the social and economic union, including sterling and a single central bank, as well as the ‘significant and complex linkages between households, businesses and financial services operating across the UK’, and recognises that the greatest economic potential for Scotland and its people lies with a strong, devolved parliament using every power at its disposal, including new tax and borrowing powers and maximising the opportunity of shared risk and reward in the United Kingdom.”
15:35
There is a long way to go with economic recovery. There can be no doubt that there will be many challenges ahead and that a number of potential headwinds could yet blow Scotland and the rest of the UK off course. All sides acknowledge that, but from where we stand at the moment, there is a positive story to tell about the economy. The deficit has been reduced by a third, growth has returned, employment is up and unemployment is down.
That, of course, is acknowledged in the report by the office of the chief economic adviser, but the positive story is happening in the UK as a whole, not in Scotland alone, as the Scottish Government would sometimes like us to believe. That is because—as we all know—macroeconomic policy is decided at UK level. However, the Scottish Government would like to give the impression that all the recovery so far is purely and solely down to its actions. I asked Mr Swinney directly whether it was all down to the Scottish Government, and he could not bring himself to admit that even a small crumb of recovery was down to the actions of the UK Government and the Chancellor of the Exchequer—even though all the macroeconomic powers are held at Westminster.
How can Gavin Brown justify the ever-increasing number of food banks and people going to them weekly to be fed?
I have made it clear that we have a long way to go and that there are challenges, but the point that I am making is that the position now is far better than it was a year ago. [Laughter.] Members in the SNP seem to be laughing, but their own chief economic adviser says in his report that the prospects now are far better than they were a year ago.
Will Gavin Brown give way?
I will not give way at this stage.
I will rebut another of the cabinet secretary’s points. He basically said that the recovery would have happened years sooner had the UK Government spent a bit more money on capital investment. However, he ignores entirely the eurozone crisis that engulfed the continent a few years ago, and he ignores the fact—which is contained in his own economic adviser’s report—that the eurozone, with which we trade most, had six consecutive quarters of contraction prior to the second quarter of 2013.
Will Gavin Brown recall one of the major points of debate that he and I had exchanges on during the period in which I was calling for more urgent action and more significant investment in capital expenditure? He replied to those calls by saying that, if we did that, it would spook the markets. The chancellor is borrowing £197 billion more than he expected to in 2010. My argument is that we could have reduced the negative economic impact by an earlier decision to expand capital investment and fund it by borrowing. The chancellor has had to increase borrowing for negative reasons, not positive ones.
As the cabinet secretary knows, over the period of the autumn statements and budgets, the Chancellor of the Exchequer increased capital spend, but when the money was given to the Scottish Government, the so-called shovel-ready projects were not shovel ready. Fifty per cent of them did not even have planning permission and, had the money been given earlier, they certainly would not have had planning permission any earlier.
Surely the best test of the Scottish Government’s ability to deploy capital expenditure is the level of capital underspend that it has had in every financial year, which is very small in terms of the Government’s capital performance. Surely the fact that the Government is able to spend effectively the capital resources that are at its disposal undermines the point that Mr Brown is making.
Three letters—NPD—undermine the entire case that Mr Swinney makes.
Rubbish!
From a sedentary position, Mr Neil shouted, “Rubbish,” when I said the letters “NPD”. He was in charge of it for several years, so we will take no lessons from him. [Interruption.
]
Order, please, Mr Neil.
Let us focus on the chief economist’s report, which was interesting. It was broadly positive and it gave credit to the UK and Scottish Governments, but it also pointed out some of the headwinds that we will face.
You are in your final minute.
With the powers that the Scottish Government has now, it should focus on that.
The report talked about export market fragility. Surveys at the end of last year highlighted it, and the most recent Bank of Scotland business monitor from Monday pointed it out, too. How will the Scottish Government respond to that?
What about the projections in the chief economic adviser’s state of the economy report?
Will Gavin Brown take an intervention?
I am in my last 20 seconds.
Gavin Brown is concluding.
The ITEM club’s forecast—that is only one group and one forecast—is that Scottish growth will be 1.9 per cent in 2013 but will reduce to 1.7 per cent in 2014. The forecast for the UK is 1.4 per cent in 2013 and 2.4 per cent in 2014. [Interruption.] I acknowledge entirely that that is just one projection, but the Scottish Government ought to be looking into the figures and trying to understand what underlies them and why one group of respected economists is making that projection.
You must finish.
The Scottish Government ought to do that now with the powers and resources that it has.
I move amendment S4M-08714.4, to leave out from first “agrees” to end and insert:
“believes that the measures taken by the UK Government to ensure a sustainable economic recovery are showing a positive effect, with growth figures recently revised upward, continued rises in the number of people in work, a fall in unemployment and the budget deficit reduced by a third; recognises that reducing corporation tax to the lowest level in the OECD, scrapping planned rises in fuel duty, raising the income tax personal allowance providing an average tax cut of £700 for 25 million people and taking 2.7 million people out of income tax altogether, and the abolition of employer national insurance payments for young people will help create jobs and assist with economic growth, and calls on the Scottish Government to prioritise the economy by using all levers at its disposal, including scrapping the public health supplement, reversing the decision to charge empty properties at 90% of business rates and implementing a relief scheme for retail properties with a rateable value of up to £50,000.”
I call Willie Rennie, who has a tight six minutes.
15:41
Yesterday, I had to scrap my speech because the First Minister had the discourtesy to announce a very positive policy, so I am grateful to the finance secretary for not inflicting the same burden on me today, although he might not like the speech that I am about to deliver. I warmly welcomed yesterday’s announcement on the expansion of nursery education, in combination with free school meals for the early primary years. As people heard yesterday, I give credit where it is due. Members will not find a fiercer critic of the nationalists when they get it wrong—which happens quite often—but I refuse to condemn them when they get it right. Yesterday, they got it right, so I praised them for doing so.
When I offer my critique of the SNP today, the nationalists might disagree, but they will not be able to accuse me of blind and narrow opposition; that is just not me.
Will Willie Rennie give way?
Is it on the point about blind opposition?
By definition, I cannot do that. Before Mr Rennie moves on to the critique, I will give him a further opportunity to continue in the positive vein. He will have noticed Mr Swinney’s announcement of a further £3.5 million for workforce development in nursery education, so that we in Scotland, with the great advice and support of Mr Rennie, can avoid the problems that have been demonstrated south of the border, where a lot of the preparation could not be done. Will he continue in a positive vein for just a few sentences more?
I am coming out in a rash, but I am happy to continue to praise the SNP for 30 seconds more. However—it is a big “however”—when it comes to independence, the economy and finance, I am afraid that there is a bit more of a gulf between our two parties.
Yesterday’s announcement showed what we can do with devolution, although the nationalists said that it could be done only with independence. Their actions have undermined their case. Really progressive and fair actions are possible only with a strong economic base, and the coalition Government is building a stronger economy. Following the difficult decisions in the early days to bring our finances under control, we are now seeing a return to growth that the nationalists and Labour said would not be possible.
The growth rate is up, the business confidence level is up and the unemployment rate is down. We have 1.3 million more jobs, which is mirrored in Scotland by 110,000 more jobs. That is almost exactly our population share. There is next to no SNP jobs bonus.
On the one hand, the nationalists claim credit for the growing economy here, but on the other hand they say that they do not have the powers to grow that economy. It is just like their criticism of the UK coalition Government policy—they say that the economic policy will not work, then claim credit when it does work.
Will Willie Rennie give way?
I will not, just now.
Let us contrast that economic growth and rising employment with the uncertainty of independence. There is uncertainty over the currency, but we cannot leave the UK and then demand the benefits of the UK. There is uncertainty over the terms of membership of the European Union, but we cannot expect all 28 member states of the EU to agree to every demand on the rebate or even on fishing rights. There is also uncertainty over the affordability of public services; because of our faster ageing population and volatile oil revenues, our finances will be tighter. It was not I who said that—it was the finance secretary himself, in the famous memo that he wrote to the Cabinet.
I appreciate—this is Patrick Harvie’s point—that no one can exactly predict the future. However, with independence we are talking about a whole different order of uncertainty to compound the normal uncertainty that we have in life. I do not want to derail the progress that we are making on the economy at UK level with the uncertainty of independence.
I have always been a pragmatic but strong supporter of the UK. I am a proud Scot and a Fifer who wants to continue Scotland’s enduring relationship with our friends across the UK, whether they are in Liverpool, Manchester or Cornwall, where I lived for many years. I have a vision for a stronger economy and a fairer society—not just for us, but across the UK.
As a Liberal Democrat, I want everyone to get a chance to get on. It is why we have increased the tax thresholds to ensure that people on low and middle incomes can be relieved of income tax. I want to move to a position where people on the minimum wage do not pay any income tax at all. Pensions have increased and nursery education and free school meals have been delivered. Those are the benefits of devolution based on a strong economy.
The Liberal Democrats and the Liberals before us have a long and proud tradition of advocacy of home rule in a federal UK—from Gladstone through Steel to those who made the case that ultimately led to this Parliament—but the job is not done.
I want to see further financial and constitutional powers being transferred to the Scottish Parliament not because I believe in separating power but because I believe in local power. That will be sustainable constitutional reform—a settlement that means we can determine our own destiny on the domestic agenda while sharing risk and reward with the rest of the UK.
Consensus is emerging; the devo more project, the devo plus group, Labour, the Conservatives and the trade unions are publishing plans. I am sure that we will also have the nationalists on board in that growing consensus by the end of the year.
We are building a stronger economy and a fairer society that will give everyone the chance to get on. We are on the right track with the economy. Let us not derail that progress with the uncertainty of independence.
I move amendment S4M-08714.1, to leave out from first “; agrees” to end and insert:
“, including falls in unemployment and rises in employment that match exactly the pattern across the UK; believes that a stable UK Government provided by the coalition in the most challenging financial and economic circumstances has been in the national interest; notes that there are 110,000 more people in employment in Scotland than three years ago and that this figure far exceeds the flagship employment proposals of the Scottish Government; further notes that this is being done while cutting income tax for workers by £700 and increasing the state pension by the highest ever cash amount, and believes that the determined path to a stronger economy and a fairer society is through partnership within the United Kingdom.”
15:48
Satisfying jobs, good affordable homes to live in, clean thriving neighbourhoods to be part of, security and a chance to prosper in life: those are some of the reasons why a vibrant Scottish economy is important. Some people enjoy those things—we are lucky to live in a rich developed nation that has much potential—but many people are left by the wayside. Poverty and inequality still plague us, despite those riches.
My colleague Patrick Harvie said yesterday that none of us has a monopoly on wisdom or concern when it comes to creating a fairer economy and society. That is true. He also argued that independence will give us a chance to imagine a vision and to create a reality for people that differs from successive years in which the ultrarich have become even richer even as the western economy has hit crisis, and in which Governments have punished the poorest people in society through their vision of austerity.
We want something that is different from George Osborne’s “austerity forever” speech on Monday; we want something that is different from David Cameron’s preaching about restraint while surrounded by gold at the lord mayor’s banquet. The genuine alternative to austerity is equality. Scotland is one of the richest countries in the world, but we must tackle the huge inequalities in our wealth, health, gender opportunities and life chances.
We have enough wealth, but it must be distributed more evenly in order to give those who wish it the opportunity to get a better job and more skills and education, and to have a settled family life and the ability to contribute fully to our neighbourhoods. Football is an important part of many of those neighbourhoods, and Greens would like new powers in the proposed community empowerment bill that would give fans the chance to take ownership of their local football clubs and sports clubs. The economic and social benefits of ownership should be made widely available to our communities.
Closing the inequality gap will require action in all the social policy areas that are already devolved, but that is not enough. The Green amendment sets out our reasons for why taxation, industry and employment powers should sit in Scotland. That would give us the chance to create a new approach to the economy—one that provides for everyone to live well.
What could that look like? A resilient sustainable economy would be based on Scottish businesses and small enterprises—not on multinational companies that jump ship for a new tax break. It is based on a diverse network of smaller banks including mutuals, municipal banks, co-operatives and credit unions which exist to serve small businesses and ordinary citizens—not just speculators.
Publicly owned renewable energy companies, co-operatively owned supermarkets, regeneration and development that values people’s participation, renationalised railways, and successful small businesses are all ways of building a robust economy that is controlled democratically, and not by multinational corporate interests. Greens would like the Scottish Government to negotiate to turn the Royal Bank of Scotland’s retail operation in Scotland into a network of local banks, thereby boosting lending to small businesses in every region.
We have to measure what matters. Gross domestic product is not the be all and end all, but too many politicians remain addicted to the impossible goal of everlasting GDP growth at all costs. It is the type of economic activity that matters—not the amount and speed of growth. Oxfam’s humankind index shows that Scottish people prioritise their health, safe and affordable homes, a pleasant local environment and satisfying work. It also shows that although they think that money is important, they do not covet vast wealth; they just value having enough money to participate properly in society.
Some employment figures are improving, which is incredibly welcome for the thousands who are out of work, but underemployment and poverty pay still burden our economy and impact very badly on women and young people, in particular. We must reverse our slide into a low-wage, low-skill economy, as too many people continue to be trapped in poverty despite working very hard.
The Resolution Foundation estimates that the UK would save more than £2 billion a year in welfare payments if the living wage was paid across the private sector. That is because most benefits for people of working age are paid not to the unemployed but to people on low wages. We are, in effect, subsidising corporations that pay poverty wages. An economy that paid fair and decent wages would mean that thousands of people in Scotland could escape the in-work poverty trap and it would increase demand in the economy.
Even with existing powers, the Scottish Government could begin to change direction. For example, the £10 million grant that is spent on subsidising the tax-dodging Amazon would be better spent on growing jobs in Scottish businesses that contribute to our society, no matter how difficult they may find that at times.
Yesterday’s announcement on the extension of free school meals was very welcome, but we must ensure that local food producers benefit from that extra public spending. Bold action in the Procurement Reform (Scotland) Bill could ensure that children in Scottish schools always eat—as far as possible—locally produced beef, pork and chicken from just up the road. Recent freedom of information requests have revealed that some Scottish school kitchens have been serving chicken from Brazil and Thailand. By producing and buying local, we will benefit growers, processes, our environment, our children and our economy here in Scotland.
We need a new economic model that is
“resilient and ... provides for everyone to live well.”
I move amendment S4M-08714.2, to leave out from “stronger” to end and insert:
“a new sustainable and democratically accountable economic model for Scotland that delivers an equal, resilient and locally-based economy and provides for everyone to live well.”
We move to the open debate. The Presiding Officer has already intimated that speeches should be of no more than five minutes. Even with that we are tight for time.
15:54
It was interesting to hear Iain Gray disparage the motion’s contention of positive signs of recovery in the Scottish economy over the past year through the good management of John Swinney and his colleagues. Perhaps he recognises in the motion the reality of Scotland’s inheritance from staying too long in a union that is certainly not working in Scotland’s interests.
The structural problems in the UK economy that came to a head in 2008 have been rehearsed in this Parliament many times. No doubt that will continue this year. It is our view that, if Scotland stays in the union, any benefits of an economic recovery will be more than outweighed by the continuation of macroeconomic and social policies that are neither supported by most Scots nor suited to enabling Scotland to achieve its full potential.
That is especially the case given that it seems clear that a central plank of the UK recovery plan is about reflating the home counties property market, with scant regard being paid to the effects on the rest of the country.
It is not just the Tories who back the coalition policies. Lib Dem Danny Alexander and Labour’s Ed Balls have both made it clear that there is a Westminster consensus on the need for further austerity. Rachel Reeves MP has said that Labour will be tougher than the Tories. She did not mean that Labour will be tough on the people who caused the financial crisis; it is the people on benefits she wants to hammer.
Therefore, regardless of the outcome of the UK election in 2015, I do not think for a minute that there will be a serious attempt to tackle the growing inequality in the UK. The inequality is not just national but regional. Nationally, the top 20 per cent of income earners in the UK earn on average 14 times what people in the bottom 20 per cent earn. Regionally, London and the home counties are like a completely separate economy from the rest of the UK and are set firmly on the path to boom and bust—again—by a Tory party that increasingly represents the interests of only that area.
As I have said before, Westminster’s skewing of economic and fiscal policies to suit the south is matched by a shift of public expenditure from other parts of the UK. Scotland is the worst hit, having lost more than £8 billion between 2008 and 2012, during which time London and the south received an extra £11.5 billion. It is no wonder that Vince Cable likened London to
“a kind of giant suction machine, draining the life out of the rest of the country.”
In September, Opposition members, including the Labour members who voted yesterday against free school meals and increased childcare, will, along with their Lib Dem and Tory partners, recommend to the Scottish people that they vote to endorse continuation of such policies, in preference to Scots taking the power to make their own decisions.
I find that bizarre. We have become used to speakers who back the union emphasising that Scotland faces big challenges, such as the difficult public finances, the overhang of debt—despite 40 years of oil revenues—and a reducing working population. However, such speakers overlook the fact that those challenges are the product of the union and are among the reasons why we need the powers to do things differently.
With the limited powers that are available to this Parliament, the SNP Government has been able to pursue advantages for Scotland, for example by supporting small businesses. That is a policy to which Labour now seems to be opposed: Patricia Ferguson said today that Labour will look again at the small business bonus, and last night Kezia Dugdale talked about business rates levels. We support the renewables sector, which provides more than 11,000 jobs, and we support growth areas such as food and drink, and life sciences.
As the Deputy First Minister said in St Andrews the other day, Scotland has the opportunity to choose between two futures. For too long, and despite its many assets, Scotland has been in decline relative to every country with which it shares a land or maritime boundary. Only with the powers of independence do we have any chance of building a fairer and more resilient economy.
As the Deputy First Minister said on Monday, we know what yes means. We heard some stuff from Iain Gray today. Will he get together with his better together partners and put something in writing, so that the Scottish people can judge what a no vote in September would mean for the future of Scotland?
15:59
The economic case for Scotland staying in the UK is best made by SNP members themselves, because although they say that they want independence, in fact they want to keep the pound, keep the Bank of England, keep UK financial regulation and keep single markets in energy and financial services.
Even those who oppose Scotland’s membership of the UK have, ultimately, had to concede how important it is for the future of our economy. The flaw in their approach, which recognises the importance of those shared institutions, is that in each case we know that we will retain them if we stay within the UK whereas there is, at the very least, uncertainty over our future membership of them if we decide to break away.
It is a flawed approach from a party whose economic prospectus under independence is predicated on tax receipts from a commodity whose levels of profitability are volatile. As a member for North East Scotland, I am the first to champion the importance and success of our oil and gas industry. However, although times are undoubtedly good in the industry now, that has not always been the case and there is considerable doubt over what the price of a barrel of oil will be next year, let alone in 10 years’ time. I hope that we can look to another 30 or even 40 years of production, but it is a finite resource—a fact that is reflected in the increased production costs that the industry faces in the mature fields of the North Sea.
Norway has accumulated a sovereign wealth fund of some £470 billion from its oil wealth. Meanwhile, the UK has built up over £1 trillion of debt and has squandered our oil wealth. Would it not be best if we controlled that wealth?
I will come to the oil fund in a moment. We must remember that Norway has significantly greater resources of oil and gas than we have, but I will return to the issue in a moment.
Before Christmas, I was surprised to hear the cabinet secretary remark that he could not understand how tax receipts from North Sea oil were predicted to decrease at a time of increasing investment in production. He must be aware that the oil that is being recovered from the North Sea now is often from fields that have already been significantly depleted and that it therefore requires far more investment to produce, meaning that the tax take will be less. In that context, tax stability is vital for the industry.
Although I am the first to acknowledge that the UK Government has not always got that right, the white paper has precious little detail on what the tax structure for the industry will be. It cannot provide any details of how the billions of pounds required for decommissioning will be found, although it does say there will be an oil fund even before there is a balanced budget, which makes no sense whatever to me. Although the Scottish ministers might try to spin to the industry that there will be no change in terms of tax, the evidence for that claim is simply not in the white paper. Although the SNP wants the north-east to foot the bill for separation through our oil and gas industry, ministers are failing to provide the investment in infrastructure that our area needs and are actively withdrawing services from Aberdeen—from shutting our prison to reducing local police and fire services.
I agree with much of the cabinet secretary’s analysis of the economic policies of the UK Government, but the referendum is not about one Government, it is about the future of Scotland for generations to come. It was wrong of the UK ministers to cut too deep and too fast, as that approach stalled growth and led to a long period of stagnation in the economy. However, although we have made common cause with the Scottish ministers on the idea of building our way to recovery and investing in recovery, their position on the issue is just not credible, given their disproportionate cuts to the housing budget and their singular lack of success in driving forward projects through their NPD programme.
There is a fundamental incoherence about the SNP’s economic plans for a separate Scotland, which promise higher public spending in a range of areas and a corporation tax cut that would cost hundreds of millions of pounds. It is entirely wrong of the UK Government to pretend that we can cut our way back to prosperity but, equally, it is entirely wrong for the Scottish Government to pretend that we can invest more in public services while cutting taxes for business. That does not add up.
The fact of the matter is that, whatever the colour of the Government at Westminster is, the Scottish Government wants to retain all the key structures of the UK-wide economy— the Bank of England, the pound and financial regulation—even if it means that we have less influence on those key institutions than we had before. That would be the case whatever the political complexion of the Government that was in office in Westminster. We need those institutions because, even in these tough times, the advantages of being part of the bigger, more diverse economy of the UK are clear, and if those advantages are clear to the SNP’s own ministers, I am sure that they will be clear to the people of Scotland as well.
16:04
Iain Gray’s comments took me back to the old adage that we are too wee, too poor and too stupid. I am more optimistic about Scotland’s future through independence, as all the evidence demonstrates that Scotland is a wealthy nation. Indeed, the Organisation for Economic Co-operation and Development estimates that Scotland could be the eighth wealthiest nation in the world.
Scotland’s wealth is also built on solid financial foundations, a diverse economy and substantial economic potential in the new industries, such as biotechnology and renewables, as well as current key sectors such as food and drink, tourism and gas and oil.
Scotland’s economy includes £21.4 billion in construction, an industry that employs 170,000 people; £11.6 billion in tourism, which supports 292,000 jobs; and £39 billion turnover a year in manufacturing with a value added of £12.7 billion and 127,000 people employed.
Scotland also has world-leading expertise in life science, world-class universities—five are in the world’s top 200—a multibillion-pound creative sector, vast energy resources, including oil, gas, tidal and wave, and fishing and agricultural resources. We have also performed strongly as a location for inward investment and have a strong financial services industry.
Scotland’s relative labour market performance has also strengthened. Scotland’s employment rate has been higher and its unemployment rate lower than in the UK as a whole for most of the recent period. Over each of the past 32 years, Scotland has contributed more tax per head of population than the UK as a whole. In 2011-12, Scotland provided 9.9 per cent of UK taxes and received only 9.3 per cent of total UK spending. That means that Scotland would have been £4.4 billion better off as an independent country last year alone.
Our public finances have consistently been healthier than those elsewhere in the UK, giving us a strong platform on which to build economic success and maintain strong services. All that shows that Scotland can easily afford not only to be an independent country but to flourish with independence.
With independence, we could do so many things. We could build a new taxation system that stimulates the economy, builds social cohesion and sustains Scotland’s public services. We could develop a new tax system to boost our economy as well as the key industries, such as our renewables industry where Scotland has 25 per cent of Europe’s offshore wind and tidal energy potential and 10 per cent of Europe’s wave power potential. We could also focus on the Scottish Government’s aim of reindustrialising Scotland. That could see economic, industrial and taxation policies combine to boost our manufacturing sector, pushing it towards the level of manufacturing that there is in Germany, where manufacturing makes up around 21 per cent of GDP in comparison with 12 per cent here. With such a move, we would not only strengthen our industrial base and provide a more balanced economy but generate thousands of jobs.
We could also use the benefits of the taxation system to provide a better social security system—one without a bedroom tax and one that does not aim to be tougher than the Tories, which seems to be the Labour Party’s aim as stated by Rachel Reeves MP, the shadow Secretary of State for Work and Pensions.
With independence, we can send a clear signal that Scotland is one of the most competitive and attractive economies in Europe, with tax rates designed to boost economic activity and support the fast-growing industries that already have a comparative advantage. Corporation tax rates remain an important tool for securing competitive advantage and for offsetting competitive advantages enjoyed by other parts of the UK, notably London.
A debate took place in the chamber only yesterday on Scotland’s future. In the debate, we heard a confused position coming from the Labour benches. A party of so-called principles that once emanated from socialist ideals voting against free school meals highlighted to me everything that is wrong with the Labour Party. To add to its woe, the Labour front bench was on television last night questioning, as did Patricia Ferguson today, the small business bonus scheme that has been a lifeline to many small businesses up and down the country and, as a consequence, our economy. Thank goodness there is growing support in the Labour Party for the Labour for independence banner among people who know that there is a better way for their party and for Scotland.
Although the economy is improving, there are ever-increasing numbers of people going to ever-increasing numbers of food banks, as I have mentioned. Many of those people are the working poor; they are not just the unemployed. In response to Willie Rennie’s comments, I do not understand how that can be a positive. Scotland does not need to be like that. We are a wealthy country and, with power over all financial matters, we can work to alleviate the necessity for food banks.
I urge everyone in the chamber to vote for the motion in John Swinney’s name.
16:09
I was reading about optimism bias over the new year. That is the tendency to expect events and decisions to turn out better than they actually do, from predicting long successful political careers to losing weight in January—a tendency that many of us are prone to, despite the lack of any hard evidence to support such positive expectations. It is a very human characteristic to live in hope and I am sure that, for example, after four years of doom and gloom, many of us will have greeted signs of improvement in the economy with hope, if not optimism.
Optimism bias is a phenomenon that policy makers are specifically warned to be careful to avoid or, at least, to allow for in their forecasts and plans for the future, so it was no surprise that, at the time of the autumn statement, economic commentators at least tried to strike a cautious note, with the Office for Budget Responsibility warning that the upturn in the economy was
“cyclical ... rather than indicating stronger underlying growth potential”
and, furthermore, pointing out that it had been fuelled by low levels of saving rather than by higher levels of income. Even yesterday’s news of an increase in car sales suggested that much of it had been funded by personal protection insurance mis-selling compensation payments, which struck me as ironic, to say the least.
If I have welcomed even modest signs of economic recovery with optimism, the chancellor has grabbed hold of them with something akin to desperation. In fact, as well as trumpeting the success of the UK economy, he now claims that the recent figures prove that austerity works. Given that we have spent four years lagging behind every other developed country, I entirely share the cabinet secretary’s view that if the economy is recovering, that is happening despite the actions of the chancellor and not because of them, but what really worries me—in fact, what strikes me as depressing if not downright dangerous—is the plans that Mr Osborne has outlined for the years ahead, as his vision of further cuts to our public services will be damaging not only to our economy but to our society.
Figures that the OBR released at the time of the autumn statement suggest that the chancellor is en route to cutting back our public services to a level that has not been seen since the second world war—a time before the welfare state was developed. Government spending on public services currently stands at around 21 per cent of GDP but, over the next four to five years, the chancellor plans to reduce that to around 16 per cent of GDP, which not even Mrs Thatcher attempted.
Given that borrowing and therefore debt repayments continue to rise under the chancellor and that he is committed to increasing pensions by at least the rate of inflation, that will put an incredible squeeze on the rest of the public service. In fact, leaving aside our schools and hospitals, we face a vision of a society in which the state will struggle to provide our social services, our roads and our libraries, and in which market forces will be relied on instead to meet our needs. Now, that is what I call optimism bias. Frankly, I for one do not trust market forces to deliver on the public services that many of us rely on. After the collapse of the banks, I barely trust market forces to deliver on the economy.
I do not believe that the state has to run everything or is even the best at running everything, but it is certainly part of the picture. I go further: if we want to learn the lessons of the past four years and build a more sustainable economy, we need to find better ways of building accountability, scrutiny and transparency into our economic decision making, too. Economic decisions are not politically neutral, so it is vital that they reflect the values that we hold dear.
The German economy has been seen as a model of resilience and the cabinet secretary will be aware of the recent McMittelstand conference, which looked at the lessons that we could learn from Germany, which include the need to focus on sustainable, long-term business planning; on locally rooted and owned medium-sized companies; and—most important—on an ethical and values-based approach to employment and conducting business.
During the recession, those companies in Germany coped well and, as a result of schemes such as Kurzarbeit, workers were able to stay in their posts and retain the collective workforce experience while being compensated for reduced hours to fit in with the demands of the company. We should be looking to develop different forms of ownership and to encourage co-operatives, employee ownership, partnerships and so on. Those may seem like radical departures from the way we do things now but, with support from the Scottish Government, such models could be developed in Scotland, too.
What is the job of the Scottish Government in that task? Quite simply, it is to do what it can using the powers that it already has. We are already spending too much time talking about what might or might not happen following a vote in nine months’ time. We know that just some of the problems that people and businesses face in our economy include skill shortages, lack of investment, blacklisting and zero-hours contracts, which are all issues that the Scottish Government can do something about now.
I am relieved that the Scottish Government has decided to act on the scandal of zero-hours contracts and to use the Procurement Reform (Scotland) Bill—
You must finish, please.
However, ministers still seem to think that it is acceptable for billions of pounds to go to large private hubcos that will be entirely exempt from such new measures.
The former chief rabbi, Jonathan Sacks, said,
“Optimism is a passive virtue, hope an active one”,
so, although I remain wary of the chancellor’s optimism bias, I have not lost my hope.
I am afraid that members cannot go over their time. If they do, other members will lose time at the end of the debate.
16:15
Following on as it does from the important and exciting announcements on childcare and free school meals, the cabinet secretary’s further announcement on this issue today is welcome. The importance of these announcements should not be underestimated as part of the Government’s aspiration to fundamentally transform the world of work in Scotland and enhance the part that women can play in that better future for the country.
In Scotland as part of the UK, women’s participation in the labour market lags behind other EU countries. For example, Sweden has the highest rate of female participation in the workforce in the EU and Finland and Denmark, too, are above the EU average. In Denmark, 79 per cent of mothers with children under six work, while in the UK the figure is 59 per cent. I also note that a 1 per cent increase in Scotland’s economic activity rate is the equivalent of an extra 30,000 people in the labour market.
Such policies have a clear impact on gender equality. For example, the top four countries in the World Economic Forum gender gap index are Iceland, Finland, Norway and Sweden, and Denmark, too, is in the top 10. Moreover, our Nordic neighbours are leading the way in standards of care for the elderly, and those countries also have the highest satisfaction rates.
As we can see, our ambitions for an independent Scotland require transformational policies that no Westminster Government has ever contemplated. Indeed, a Scottish Government analysis shows that many women in Scotland are already and will be worse off as a result of Westminster changes to the benefits system. According to an Institute for Fiscal Studies analysis, single female households will lose out most from welfare reforms from 2010 to 2015.
Our opponents say that focusing on childcare is a cynical ploy to woo the female vote for independence, and even today many of them, particularly those on the Labour benches, do not understand the pivotal nature of childcare provision in growing the economy and reducing gender inequality. However, although we have seen that expanding childcare will in itself increase job opportunities, and despite the fact that Professor Ailsa McKay has written that
“Every woman in Scotland should welcome the commitment to a ‘transformative expansion’ in childcare”,
women who are in employment or who want to return to work face other barriers. The women’s employment summit, which was held in September in partnership with the Scottish Government and the Scottish Trades Union Congress, discussed such barriers and, as a result, a number of strands of work are progressing. For example, the Government is funding the women into work project, which tracks the progress of and outcomes for women on employment programmes; the careerWISE Scotland project, which builds on the Royal Society of Edinburgh’s “Tapping all our Talents” report, is working to step up action to encourage young women and girls to consider careers in science and engineering; and the cross-directorate occupational segregation working group, which aims to tackle occupational segregation, has also been re-established.
While those proposals are progressing, the industry sectors are picking up on this issue. As I think Nanette Milne mentioned at question time earlier this afternoon, Aberdeen Journals through The Press and Journal energy supplement and the energy voice website and women in the oil and gas industry are beginning to challenge male chauvinism and domination in that industry. In the renewables sector, the women in renewable energy Scotland forum, or WiRES, has recently been launched with the aim of increasing women’s participation and progression in that industry through networking, mentoring and information sharing. Finally, I welcome the University of Aberdeen’s intention to celebrate this year’s international women’s day by hosting a women’s world event and inviting high-profile women, led by Anne Glover, to inspire other women.
As usual, Iain Gray moans but conveniently fails to mention that employment law, equal pay, the minimum wage and so on still reside with Westminster. We know the dynamic direction of travel with independence; we know the no action that comes from Westminster; and I support the motion.
16:19
I welcome the optimistic predictions that are based on indicators that are outlined in the state of the economy Government report, but note the underlying theme of the fragile nature of the current state of the economy and its recovery that runs through the document. A more optimistic picture is presented, but we must not be complacent because, as the report states, there is
“growing recovery in the UK, US, and more recently in the Euro Area”.
It states:
“sustaining the recovery in Scotland into the medium term will require an improvement in underlying competitiveness, linked to a sustained pick up in productivity and real wages.”
If those aspects fail to pick up, we could easily find the recovery stagnating.
Page 28 of the report states:
“there is still a significant number of people in employment who would like to work more hours.”
I have spoken before in the chamber about the scourge of underemployment and zero-hours contracts, and I still believe that we must tackle that to get our economy back on track. Zero-hours contracts offer insecurity and unpredictability. That often means that the individual is underemployed for a significant period of time, and there is, of course, all the income uncertainty, the turmoil of benefit claims and the arranging of childcare associated with zero-hours contracts, which cause much misery for those who have no option but to accept such work. According to the Office for National Statistics, in 2012 250,000 people across the UK were working under a zero-hours contract. That is the highest number that there has ever been.
The Economy, Energy and Tourism Committee’s underemployment inquiry showed that people want to work more hours, but the opportunities to do so do not exist, and they are classed as being in full-time employment. As of September 2012, there were 264,000 underemployed workers in Scotland, or 10.7 per cent of Scotland’s 2.48 million workforce.
As I have previously stated in the chamber, the Scottish Council for Development and Industry has described underemployment as
“a long-term challenge for the economy of Scotland.”
It is clear that we need to meet those challenges head on if we are to sustain our recovery.
The Procurement Reform (Scotland) Bill gives us the opportunity to tackle underemployment and zero-hours contracts in public-funded contracts. In September 2013, Ed Miliband pledged to ban the exploitative use of zero-hours contracts when Labour returns to government. Will the SNP match that pledge, using the Procurement Reform (Scotland) Bill to lead the way and lay the groundwork for a better and fairer Scottish economy?
On real wage increases, we should support the living wage. I find it disappointing that that is not mentioned anywhere in the Government’s Procurement Reform (Scotland) Bill.
Does the member agree that, if we could push up the statutory minimum wage, that would be even better than the living wage? I think that Alison Johnstone made that point, as well.
We need to have the living wage across the board.
It is all well and good telling us that things will be better under independence, but why should the public believe that, when the Government does not use the powers that it has to protect workers and grow the Scottish economy now?
In uncertain financial times, we need a Government that is committed to looking for ways to grow the economy, not a campaign vehicle. The independence referendum adds another layer of uncertainty. According to the Financial Times 2014 survey, many respondents believed that independence would hurt the Scottish economy and the rest of the UK, and that the current uncertainty about what will happen will undermine confidence in the Scottish and UK economies.
We do not need uncertainty. People are crying out for action now, not in 12 months or even later.
Will the member give way?
I am in my last minute; I am sorry.
Independence is a distraction, not a solution to our economic future. The Government should be using the powers that it currently has to improve the quality of life for all Scots. Therefore, can we get a firm commitment today that the Procurement Reform (Scotland) Bill will be used to tackle underemployment and zero-hours contracts, and to introduce the living wage in public service contracts?
16:24
Perhaps one of the most inspired things that this Scottish Government has done has been to set up the Council of Economic Advisers. No one can doubt the credentials of the council’s members, who include two Nobel prize-winning economists. We can be confident therefore that the Scottish Government has access to high-quality economic wisdom that is both objective and robust. That is why we can be certain that the economic sections of the white paper are carefully crafted; and that is why we can be certain that we have an economic plan in which the Scottish people can be confident. That is also why we can be certain that we have an economic plan that is credible to business and the business community in the eyes of the wider world that is watching Scotland with interest.
However, it is instructive to look at Scotland’s economic performance over the longer term. Between 1997 and 2007 we saw average growth of 2.3 per cent compared with 2.8 per cent across the UK. Since 2007, we have outperformed the UK economy across almost every economic measure. That tells us something about the economic competence of this SNP Government in comparison with its predecessors.
We must consider, too, the background against which that has been achieved, as we have faced the twin challenges of the worst recession in living memory and the economic illiteracy of the Tory Government in Westminster. Any Government can seem to be successful in the boom phase of the economic cycle, as Gordon Brown demonstrated, but it is an inescapable fact, which George Osborne is finding out, that any Government will struggle to reduce its deficit unless the economy grows. By his own promises of deficit reduction, George Osborne has failed and that is why he is now signalling his intention to move into a further phase of austerity plus.
Will the member give way?
I am sorry, but I am short of time.
Against that backdrop, the underlying strengths of the Scottish economy can be seen clearly: oil and gas with 24 billion barrels of recoverable oil and around £13 billion of investment this year; renewable energy with 25 per cent of Europe’s wind and tidal energy resource and 10 per cent of its wave resource; a very significant opportunity opening up with Europe’s most significant carbon capture and storage opportunity in the North Sea; 300 years of coal supplies just as we are poised on a breakthrough in clean coal technology; record exports in food and drink; and a fast-growing life sciences sector. I could go on, but what that amply demonstrates is that we are building a diverse and therefore resilient economy—yet another lesson that the UK Government could learn from Scotland.
Instead, however, the Tory Government is relying on pumped-up property prices to ensure its re-election, with the Nationwide survey suggesting that London property price inflation over the past year has approached 15 per cent. That is a continuation of the uncertain and unsustainable economics that we have seen from the UK Government over many years.
With independence, we could do much more. There is, for example, a cast-iron case for reducing air passenger duty. The increase in VAT alone would pay for that. A similar and robust case can be made for reducing VAT on building repairs, which would pay for itself in increases from other areas of taxation. That is the opportunity that devolution denies us: the opportunity of wisely using fiscal policy to produce both economic benefits and higher returns on taxes; the opportunity to tackle poverty and improve the business climate; and the opportunity to establish that virtuous spiral in which fiscal rewards arise from sound economics and success builds on success.
Scotland’s economy is recovering well from recession. With the full powers of independence, we can look forward to a prosperous future.
16:29
I think that we can all agree with the first few words of the Government’s motion, which are about
“positive signs of recovery in the Scottish economy”.
Indeed, as both Gavin Brown and Willie Rennie said, all the economic indicators are now positive and are much better than many people predicted. This debate is a welcome opportunity to scrutinise the SNP’s judgment on economic issues. That has never been more important, as Mr Swinney and his colleagues are seeking the power to run the economy not just of a devolved country but of an independent one.
If we look at the evidence, the reality is that the SNP got it wrong when it came to predicting what would happen in the economy. For years, it told us that George Osborne's approach would ensure that there was no economic recovery. In speech after speech, the First Minister, Mr Swinney and their colleagues called on George Osborne to change tack and end his obsession with austerity. Time and again, they told us that plan A had failed and that it was time to go for growth. Thank goodness George Osborne did not listen and instead stuck to his guns, as we are now seeing economic growth as a result.
At least some of Mr Osborne’s critics have had the good grace to accept that they made a mistake. Writing in the Independent on Sunday this weekend, Professor David Blanchflower—a man who is often quoted in the chamber by those on the SNP and Labour benches with a love of Keynesian economics—stated:
“I was wrong, I hadn’t expected the economy to grow as much as it did last year or for the welcome drop in unemployment.”
We should remember that this is the man who predicted a triple-dip recession and that unemployment would reach 6 million. Professor Blanchflower got it wrong on all those counts.
Will the member give way?
At least he has had the good grace to accept that he got it wrong. It would be good to hear that from others. Perhaps Mr Mason will oblige us.
I was just wondering whether it is not true that Mr Osborne also got it wrong, because he has had to borrow considerably more money than he planned to borrow.
Maybe Mr Mason missed the eurozone crisis being much deeper than people expected, but my point is absolutely clear. All the predictions of doom and gloom and all the predictions from the SNP of a decade of stagnation have not come true. The SNP should have the grace to accept that.
Let us look elsewhere. Let us look at socialist France, which for years was held up as an alternative to the austerity approach being followed in Britain, Germany and elsewhere. At the start of this year, just two weeks ago, François Hollande, the French President, said that he is now committed to reducing public spending, reducing the deficit and reducing taxation. The critics of austerity have found their cheerleaders, such as Professor Blanchflower and President Hollande, silenced, and they too should have the grace to accept that they got it wrong.
The Government’s motion refers to inequality. A mantra is regularly repeated in the chamber by SNP members who state as a fact that the UK is the fourth most unequal country in the developed world. That is a convenient claim for those who want to be entirely negative about the United Kingdom as part of the unremittingly negative yes campaign for separation, but it is not supported by the facts.
There are different measures of inequality. One measure is inequality of incomes.
Will the member give way?
No. I need to make some progress.
According to figures drawn up by the United Nations, the World Bank, the Central Intelligence Agency and the OECD, in terms of income equality, the UK is ranked 43rd out of 156 countries in the world. In terms of the 34 countries of the OECD, we are ranked 28th, which, according to my arithmetic, does not make us the fourth most unequal.
However, income inequality is only one part of the story. Perhaps more important is the distribution of wealth in society, and here the data tell us something quite different. The “Global Wealth Databook 2013”, which was produced last October by Credit Suisse, puts the UK at 14th out of 34 OECD countries in terms of equality of wealth, which is comfortably in the upper half. Crucially, we are more equal in terms of wealth than France, Germany and Switzerland, and indeed the supposed Scandinavian paradises of Norway, Sweden and Denmark. Those who want an independent country so we can be more like Scandinavia should be careful what they wish for.
Trends are important here, too. Research by both the Office for National Statistics and the Institute for Fiscal Studies states that, over the past decade, inequality of income in the UK has been reducing. An ONS report that was published in July 2013 states that inequality of income in the UK is at its lowest level since 1986. The IFS takes a slightly different approach and states that inequality is back where it was in 2005-06. However, whatever study we use, the consistent message is that inequality is reducing. [Interruption.] SNP members do not like those facts; I can tell that from the murmur that we hear. However, as George Adam said in the debate yesterday, they take the view that facts are unimportant in a debate such as this. I think that we should rely on facts, not assertions. They do not like it.
You must close, please.
They got their call on the economy wrong. Why should we trust them to run an independent country?
I call Colin Beattie, to be followed by John Mason. I am sorry but we are tight for time: you have five minutes.
16:35
The Scottish economy is one of the most fundamental issues that underpins and drives the need for independence, especially when taken in the context of the performance of the UK economy as a whole. The Scottish recovery, which is strongly influenced and guided by the Scottish Government, has its roots in long-term, sustained growth, unlike the rather shaky and uncertain economic management that Westminster has applied in recent years.
This week, the Chancellor of the Exchequer has stated that the UK requires £25 billion of further cuts. Needless to say, he is yet again targeting the most vulnerable in society through shifting the burden of cuts on to the welfare state: half the cuts are expected to come from the welfare bill. Surely that will result in more socially unacceptable measures, such as the deeply unpopular bedroom tax, which, as we know, will be eliminated under an SNP Government in an independent Scotland.
Early December saw the Institute for Fiscal Studies pick apart the chancellor’s budget. The reluctance to implement scheduled increases in fuel duties, combined with factors such as the creation of marriage allowances in the tax system, will add an extra £7 billion of spending in the period from 2015 to 2016. Members will note that that date is after the general election.
Cuts in public service spending are expected to accelerate from 2.3 per cent a year in 2016 to 3.7 per cent a year from then until 2019. Meanwhile, the IFS warns that £750 million of free school meals in England and Wales will be unfunded from 2015. Perhaps Mr Osborne expects not to be chancellor at that point and is leaving that as a problem for the next UK Government to solve. In contrast, the Scottish Government will be introducing properly budgeted and funded free school meals for Scottish schoolchildren in primaries 1 to 3.
The recent increased growth forecast, the IFS states, is merely anticipated growth arriving sooner than expected. In effect, the growth is already forward discounted. That coincides with the British Chambers of Commerce’s report that growth will be hampered in 2014 if the UK Government does not encourage corporate lending. Present artificial blockages on lending to small and medium-sized businesses are restricting essential investment in the likes of new plant and machinery.
Does Colin Beattie agree that it is important to always listen to what the IFS has to say?
The points that I am raising from what the IFS has to say are interesting, because it is very critical of what the UK Government is doing.
I would like to focus on the key successes in the Scottish economy in recent times, which must be considered in the context of Scotland providing 9.9 per cent of UK taxes but receiving only 9.3 per cent of public spending in return. As recently as yesterday, the latest Bank of Scotland business monitor reported a surge in business activity that continued from the summer through the autumn. Thirty-seven per cent of businesses reported rising turnover, while volumes of repeat business continued strongly over the period. To quote Donald MacRae, the Bank of Scotland’s chief economist, the recovery was
“accompanied by high expectations for the next six months”.
When the facts are examined we can see that our economy is fundamentally healthy and strong in its diversity. Our construction industry employs 170,000 people and provides more than £21 billion to the economy, and our tourism industry employs almost 300,000 people and provides more than £11 billion to the economy.
Between 2011 and 2012 we generated £1,700 more tax per person than the UK as a whole, and that has been the case for the past 32 years. We know that Scotland’s deficit is lower than the UK’s, as it stands at 5.4 per cent compared with 8.5 per cent of GDP. Furthermore, our public spending stands at 42.7 per cent of GDP compared with the UK’s 45.5 per cent.
That shows that our public finances are in better order than those in the UK as a whole. An independent Scotland would have the opportunity to start oil exploration off the coast of south-west Scotland, a move that the Ministry of Defence blocked because it would interfere with operations of the Trident nuclear weapons submarine fleet at Faslane. Surely it is more prudent—indeed essential—to boost local economies ahead of dumping in Scotland outmoded nuclear weapons that Scotland neither wants nor needs.
That is all in the context of a deeply imbalanced and unequal UK economy, presided over by Westminster politicians who do not care to dwell on the real issues and instead continue to implement and maintain austerity measures that do nothing but increase inequality and hardship.
Only by taking Scotland’s economy and future back into our hands can we realise this country’s potential. The alternative is stagnation and further fracturing of our society.
16:40
We can start on a positive note. There are encouraging signs in the economy. The recent Bank of Scotland economic update highlighted that GDP had risen for four consecutive quarters and that employment had risen 11,000 in the quarter ending October 2013, with data suggesting that recovery continued into November 2013. It showed that Scotland is in a relatively strong position internationally, with GDP per head eighth highest out of 34 in the OECD. In comparison with the UK, Scotland has been stronger for the past 30 years. The reality is that we have been and are subsidising the rest of the UK.
Other areas are not so positive. I start with population. One of the failures of the UK has been the uneven population growth between England and Scotland since 1707. Not surprisingly, that lopsided population growth is reflected in a lopsided growth of our respective economies.
It is a lot easier to achieve better public services and growth in businesses if our population is growing. Scotland has lost a lot of its population over the centuries, for example through emigration and unjustified war. As a result, we can be considered an underpopulated country. In fact, it is only recently that the population has stabilised.
Of course, immigration needs to be managed, but if we are serious about growing business, the tax base and public services, we really need more people. When I was younger, Scotland had well over 0.1 per cent of the world’s population; we are now well under 0.1 per cent. We cannot afford to keep slipping at that rate.
Another aspect has been the tightening of student visas, with the loss of the post-study work visa. I very much welcome the fact that that could be reintroduced if we controlled immigration.
Among other things, the motion recognises that
“Scotland’s long-term potential will continue to be hampered by the large gap between rich and poor”.
That was explained very well by Alison Johnstone. It is noticeable that, in the amendments, only the Greens left that bit in their proposed amended motion. The other three parties propose to take that bit out of the motion and, as far as I can see, not replace it with anything similar.
It is true not only for Scotland but for the UK, the EU and the world as a whole that the gap between rich and poor damages the economy. As Murdo Fraser has accepted, the UK economy is one of the most unequal in the developed world as far as income is concerned. We rank 28th out of 34 OECD countries, which I reckon makes us seventh worst.
Some feel that closing the gap between rich and poor is a luxury that we cannot afford at the moment.
Does Mr Mason accept the evidence from the ONS and the IFS that, over the past decade, inequalities of income have been reducing throughout the UK?
While I accept that I, too, am using comparative figures, I have a problem with that, which is what I see on the ground. I can go into a restaurant in Glasgow that is packed out with people who have money and are spending a lot of money on nice meals, but I can also go out of my constituency office and see people who are really struggling to live. That is the reality; that is the gap that I am seeing. Although we can make comparisons, there is a gap that I find unacceptable.
Some people may feel that closing that gap is just on the wish list and that we may get round to it eventually if the economy grows a bit more, but I do not believe that that is the case.
Would the member accept that, since coming to power, the SNP has taken £1 billion out of local authority poverty projects by removing ring fencing and taking money from the fairer Scotland fund and other such funds?
What I do know is that, first, when I was in the Convention of Scottish Local Authorities all the parties wanted to stop ring fencing; and, secondly, all that we can really do in this Parliament, with the budget that we have, is move money around. If there is £1 billion less in one place, it will be in the health service or somewhere else—that money has not vanished. If Labour wants to take £1 billion out of the health service, it is up to Labour to put that option forward.
By contrast, as we see in other countries where a few people have all the money in the economy, rich people spend that money differently from the way it is spent if the money is spread around more evenly. If money is spread more evenly, it will boost all of the economy.
The risk that Labour says in its amendment that it wants to share with the rest of the UK is, presumably, the risk that we will have a Tory Government 50 per cent of the time. I find that unacceptable.
16:45
First, I want to congratulate Glasgow City Council on being awarded a city deal. That is a UK Government initiative that allows cities to earn back money that is invested by councils through income tax, corporation tax, VAT and the pay-as-you-earn system, which is more than the Scottish Government is doing to stimulate the economies of our cities. In the absence of such action on its part, the Scottish Government should support cities such as Glasgow, which are doing a lot to improve the job situation and revitalise our industry, which will help to improve our economy.
Although employment numbers are up, they are nowhere near pre-recession figures. I am keen to know what steps the Government is taking to protect people from zero-hours contracts, and I would welcome the cabinet secretary outlining the steps that he has taken and the improvements that he can demonstrate that he has achieved.
The Government suggests that independence will greatly enhance our economy. However, its own white paper suggests otherwise, as the suggestion that we would keep the pound and the Bank of England as the central bank clearly suggests that Scotland’s economy is better placed in the UK. Please, let us not kid ourselves; more importantly, let us not try to kid the people of Scotland. We need to be clear and not mark time. Keeping Scotland on hold is not in anybody’s interests, and I assure members that it is no solution.
We need to be realistic. We have enjoyed more than 300 years of economic unity. It will not be easy to unpick all of the complex links in our economy, and it will not be cost-free or trouble-free.
I have looked through the white paper and seen a wish list, which concerns me. Many of the items on that list have not been agreed or substantiated. There is no evidence to support them, and I do not want to follow the pied piper down a cliff. I do not want a fragile economy; I want a strong economy. I am sure that the people of Scotland agree, so I say “No, thank you” on that point.
I will list some of the issues that concern me, to which there clearly are no answers—the cabinet secretary may correct me if I am wrong.
I understand that the SNP wants to keep the pound, but it has no agreement to do so. It wants the Bank of England to be the lender of last resort, but there is no agreement in that regard. On monetary policy, page 404 of the white paper says that regulation will be discharged by the Bank of England, not by Scotland. The SNP wants HM Revenue and Customs to continue to operate across the Scotland and the rest of the UK for a transitional period after independence, but there is no agreement in that regard.
I am not aware of any agreement for there to be a joint or co-ordinated financial compensation scheme after independence. Is there an agreement with regard to motor service agencies, including the Driver and Vehicle Licensing Agency? I am not aware of one. Where are the services going to come from? I do not know of any agreement on the electricity and gas market, including renewables.
Will Hanzala Malik give way?
Yes.
No, he will not, because he is in his last minute.
You have 30 seconds to go, Mr Malik.
Thank you very much.
What about telecommunications? The list is endless. It goes on and on, and it really worries me.
I saw that we will not be able to do anything about the lottery system. What does that mean? Does it mean that the SNP will not be able to run a menodge? Surely to God it is not suggesting that.
What about passports? The other thing that concerns me is the share of public sector debt. How much will that be? Where will it come from? Who will pay it?
I am sorry to have to stop you, but you must close, please.
I ask the SNP, if it will be so kind, to explain to me how it will provide all those services without agreements in place.
I call Kevin Stewart, who has three and a half minutes.
16:50
I acknowledge the contribution that Aberdeen and the north-east make to the Scottish economy. It is estimated that, last year, oil and gas production contributed around £22 billion to Scottish GDP, but it seems that some members think that oil and gas are a problem and a millstone round our neck.
Decisions taken by Westminster Governments have been a millstone around the neck of the oil and gas industry. There have been 16 substantive changes to the tax regime in a decade, which has stopped development in some areas and caused underperformance in the North Sea basin. That is one of the reasons why we should have control over all of those elements of policy.
Will Kevin Stewart give way?
No, I have three and a half minutes.
Let us turn to some of the things that were said yesterday and today about small business. Some 92,000 businesses in Scotland are benefiting from the small business bonus and providing jobs for many people throughout the country. However, the Labour Party has attacked the small business bonus over the past couple of days. This afternoon, on “Politics Scotland”, when Stewart Maxwell asked:
“would you cut the small business bonus?”
Patricia Ferguson replied:
“We would certainly consider that”.
Although she did not mention the small business bonus per se, last night on “Scotland Tonight” Kezia Dugdale suggested removing funding from support for small business but, today, Iain Gray denied that that was in the Labour Party’s plans.
Those interventions by two front benchers rather call into question the standing and authority of the Labour finance spokesperson and Labour leader. They need to tell the public exactly what their plans are when it comes to small businesses.
The Labour Party has form on the matter because, from 2001 to 2007, business rates in Scotland under the Labour Party were higher than they were in the rest of the UK, costing small businesses some £900 million over the period. Small businesses could have used that £900 million to invest in their businesses and expand them.
Let us not let the Tories off the hook. Between 1979 and 1995, business rates were higher in Scotland than they were south of the border.
Those are the reasons why we need all of the levers of power in the Scottish Parliament to ensure that our economy goes from strength to strength.
I call Patrick Harvie, who has up to six minutes—less would be more, please.
16:54
It is often my way to scatter a generous mix of praise and criticism on all sides of the chamber, so here goes. Mr Swinney was right to be a wee bit tentative in acknowledging signs of economic progress. I think that he referred to stable, if not uniform, progress. However, he immediately started to define progress in terms of GDP growth only. In discussing employment, he focused on overall numbers and not on the nature of employment or issues such as low pay. In talking about the economy’s strength, he saw it purely in output terms.
The problems that Greens see with that economic mindset, which relates to what I call the outgoing economic model, cannot all be fairly laid solely at Mr Swinney’s door. We find little to disagree with in most of his motion and I suspect that he is interested in and at least sympathetic to some of our arguments. However, he continues to define economic success in the terms that are laid down by the economic model that has failed us. Like those in most other political parties, he seems to think that recovery means getting back to business as usual. We have much in common, but we part company as soon as the debate becomes a sterile contest about which Government can more convincingly claim the credit for the most recent GDP figures.
As for the Labour Party’s contribution, Mr Gray recognised aspects of the employment picture that need to be acknowledged, such as underemployment, low pay, zero-hours contracts and insecure conditions, with people facing rising living costs at the same time. He made the case, with which I agree, that a devolved Government’s hands are not fully tied on those matters. I agree with his example of public contracts, and I will support amendments to the Procurement Reform (Scotland) Bill in that regard.
I also agree that, instead of a simplistic and untargeted small business bonus, we could design a business rates scheme that genuinely incentivises ethical practices in business, investment in quality new jobs and local, sustainable and resilient economies. The same case could be made in relation to corporate welfare payments—the Government grants that are too often paid to the likes of Amazon instead of indigenous small businesses, as my colleague Alison Johnstone noted.
We have common ground with Mr Gray on many of those issues, but the rest of his remarks were limited to a simplistic attack on independence. He is perfectly entitled to make that case, and I have no doubt that he does so with sincerity, but I hoped for some unpacking of the comments in his amendment about new powers to achieve some of the things that we want to achieve. I hoped that we would hear more about that after yesterday’s debate. I am not open to the jam tomorrow argument, but many people want to know. It is clear that Malcolm Chisholm wants to know; in yesterday’s debate, he talked about the economic advantages from more fiscal devolution, even if it just means all income tax staying in Scotland. It is clear that there is an appetite for more, even in the Labour Party, but we heard nothing of that today.
The Tory and Lib Dem speeches focused on the shallow argument about whether the UK or Scottish Government can claim the credit for the least impressive recovery from a recession in living memory. Those parties would like Mr Osborne to be hailed for that great achievement. All the while, he plans to raid billions more from the pockets of society’s poorest people. The agenda of the UK Government is clear—to it, austerity is not a necessary evil but the new normal, which involves an ever-smaller public sector and an ever-more denuded welfare state. Those who believe in that agenda should be honest about it and those who claim to oppose it should give up the ministerial cars and join those who seek to bring down that Government as soon as possible.
What was missing from the other parties’ contributions is provided by the Green amendment and was articulated by Alison Johnstone. It is a new, sustainable and democratically accountable economic model, in which we challenge the myopic obsession with GDP at any cost; invest in public services, which we all depend on; and protect small businesses and local economies from the domination of vast multinationals, whether they are in banking, retail, energy or any other sector.
Willie Rennie asked me to accept that a whole new level of uncertainty comes with independence. Few people in the chamber might be open to persuasion on either side of the debate, but I make the case that independence creates a whole new level of possibility—not the guarantee of the more radical agenda that I am suggesting, but merely the possibility. I contrast that with a whole new level of certainty in a status quo that it is time to reject. That is what the opposition to the independence movement represents.
17:00
I thought that Richard Baker hit the nail on the head as regards the argument that independence would bring more freedom and, as Patrick Harvie would claim, more possibility, but that everything would also stay the same—that we would keep the pound, the single market and the common travel area. Apparently, independence would retain all the things that are good about the UK. I thought that Richard Baker made a good speech.
I also thought that the exchange between John Mason and Murdo Fraser on inequality was thoughtful and engaging. Murdo Fraser set out how the claims on being the fourth most unequal country in the modern world were disputed and brought in the welfare arguments. Then we heard about John Mason’s practical experience on the ground in Glasgow.
I think that some of the figures and analysis are wrong but I am dissatisfied with the levels of inequality in the United Kingdom and in Scotland. I want the position to change. That is why—
Will the member give way?
Not just now. The member could turn down the volume a wee bit—I would still be able to hear him.
That is why we are so passionate and why we talk so often about the tax thresholds. It is appalling that people who are on the minimum wage pay income tax. Those people deserve every chance that they can get to move on in their lives. They have made the effort to take a job that is not particularly rewarding or well paid, so why are we taxing them? Instead, we should take them out of the tax system altogether.
Will the member give way?
Not just now.
That is why we are proposing to take the tax threshold up to £12,500—that is why we want to make that change. That is also why I am particularly disappointed in the white paper, which promised so much. It says that we will increase the tax thresholds just by inflation. It does not propose matching what the Lib Dems would like to do across the United Kingdom or recognise the transformational effect that raising those tax thresholds can have on incentivising people into work.
As I said, I thought that that was a useful exchange but, in some ways, it missed the point, which is that we should be prioritising the action that we need to take to reduce inequalities.
I am always fascinated by the nationalist claim that independence will mean that we will be free from the fiscal controls that are imposed by George Osborne, Iain Duncan Smith and the so-called Conservative Government. [Interruption.] We are in it—believe me, we are in it. We feel it. [Laughter.] If we look at SNP policy on independence, we can see that it proposes to wed Scotland to, not remove it from, such a Government. On welfare, for instance, the repeated claim is that £2.5 billion or so—depending on which figures we use—has been taken out of the Scottish economy because of welfare cuts by Westminster. However, the proposals on welfare in the white paper are only to scrap the bedroom tax, the personal independence payment and universal credit. There is no mention of restoring the £2.5 billion—not one mention of restoring the full so-called cut. By my calculation, the SNP has agreed to reverse only 2 per cent of that £2.5 billion cut, leaving 98 per cent of Iain Duncan Smith’s budget cuts in place. If I am wrong, the SNP should tell us otherwise; it should tell us how it will pay for restoring that cut. I have not heard it tell us that.
There is a reason for that issue not being mentioned. The fiscal commission working group report sets out in detail, in the context of the oil fund, the need for an independent Scotland to control spending and follow the same “downward trajectory” as the UK on the control of spending.
Will the member give way?
No.
Therefore, the SNP would match the UK timetable on the reduction in spending. In order to keep the pound, it is also proposing to have a monetary union with the rest of the United Kingdom. It is proposing a fiscal pact. Such a pact would put in the hands of the UK Treasury—in the hands of the George Osbornes of the future—control over Scottish spending.
There are two proposals: one for a fiscal body, which has been set out in detail, and one for a fiscal pact. It is claimed that there will somehow be a massive increase in spending to undo all the evils of the UK Government, but that is just not the case.
Will the member take an intervention?
Not just now.
It is clear that the claims in the wish list that is set out in detail in the white paper are not based on reality.
Patrick Harvie spoke about the need for more powers. We are passionate about having more powers for Scotland—we have a long tradition of committing to that. Alongside many others, we fought for the Parliament, and we want to go further, because we can get the best of both worlds.
Many of the things that the nationalists would like to achieve through having more powers closer to home can be achieved through home rule in a federal United Kingdom. We can choose to do things on the domestic agenda in different ways while sharing with the rest of the UK the risks and rewards—
Linda Fabiani rose—
Will the member give way?
No—I am sorry.
The member should draw to a close.
We can get the benefits and the best of both worlds. That is what we should strive for, and that is why I agree with Patrick Harvie that we should set out more of the detail. We have already done so, and we encourage people to do more in that regard so that we can get a sensible constitutional settlement for the whole United Kingdom.
17:06
There have been some interesting contributions to the debate. As it is the new year, we have a new SNP approach to the Institute for Fiscal Studies. Last year’s demons, who could not be taken seriously because they failed to predict the collapse of the Berlin wall, should now be taken extremely seriously and quoted verbatim by back bencher after back bencher, of whom Colin Beattie was the finest example. I look forward to hearing the SNP quoting the IFS’s analysis in the coming months, all the way to the referendum in September.
The First Minister himself made an interesting contribution on the need for workforce preparation for nursery staff as a result of the extra hours that the Scottish Government is providing. He said that it is very important that we do not implement such things too quickly, and that we have to get the workforce preparation right. Given that the promise on childcare was made in 2007 in the manifesto document on an SNP Government’s first steps, and that it will not happen until later this year, nobody would accuse the Government of doing things too quickly.
I agree that Kevin Stewart’s speech was too short at three and a half minutes. He stated that we could just have an oil fund like Norway and all would be fine. He has clearly missed the latest SNP memo, which says that it will no longer have an oil fund; it will have two oil funds, as one is simply not enough.
Will the member give way?
I will give way in a moment when I have finished my point.
With regard to the Norwegian oil fund, Norway’s onshore tax revenues cover almost all its spending, so the money that it makes from oil is—not in its entirety, but almost—a surplus. It is therefore able to put that money into the oil fund.
Scotland’s position is entirely different. We would be relying on the revenues from oil to fund public spending, and we would still have a deficit in most years.
I said that I would give way to Kevin Stewart, and I am happy to do so.
Thank you. I think that Gavin Brown will find, from looking at the Official Report, that I made that point in questioning Richard Baker rather than in my speech.
On spending our oil wealth on vital public services, would it not be better to spend it on such services rather than on illegal wars and Trident nuclear weapons?
I do not know where the oil fund will go if we are to spend it on everything else, but never mind. I am happy to correct the record: Kevin Stewart made that rather absurd point not in his speech, but in an intervention on Richard Baker. I am glad that we have cleared that up.
Let me come back to some of the most important points. The fundamental point that my party and other parties have made in the debate is that the Scottish Government has the power now to do many of the things that it could and should be doing. We face economic challenges now, but we have headwinds coming in the short and medium term, and we have some leverage that we can use. The Scottish Government is so concerned with the referendum and independence that its eye is not on the ball and we are not doing many of the things that we could and should be doing.
The report by the office of the chief economic adviser was excellent. It made a lot of points, and a lot of the news was positive, as we must all acknowledge. However, it raised issues of concern, on which the Scottish Government needs to focus now. What is the Scottish Government’s response to export market fragility? We have not heard its response yet, although surveys during most of the second half of last year highlighted the danger. The Bank of Scotland business monitor report, which a number of members quoted, said that export activity has been showing a negative trend over the past three months, after a nearly flat performance in the previous three months. Why is that? Maybe it is just a blip, but if it is not, Government ought to be doing something about it.
What about the forecasts? When I mentioned the ITEM club’s forecast, I heard the cabinet secretary shout, “What about Fraser of Allander?” For the record, Fraser of Allander said that there would be growth of 1.3 per cent in 2013 and 1.8 per cent this year; it predicted an increase. However, an equally respected commentator says that the rate will go from 1.9 to 1.7 per cent. Who knows who is right? The point is that if a respected commentator is saying that growth will go from 1.9 to 1.7 per cent, and the same commentator’s projection is that growth in the UK will go from 1.4 to 2.4 per cent, questions must be asked by the Government, and we require a deeper analysis and consideration of whether the Government in Scotland can do something with its levers to try to counteract the effect and ensure that there is an increase in growth.
The state of the economy report made other points. For example, it considered the United States of America interest rate rises that are expected at the end of the tapering off of stimulus activity. What impact will that have on Scottish businesses, given that the USA is our single most important international export partner? What about conditions across the eurozone if growth does not happen there? What will be the impact on the Scottish economy?
We have levers, and there are issues on which the Scottish Government should be focusing. We call on the Government to focus on those issues.
17:12
“No child should be left behind.” That is what the First Minister said when he introduced his youth guarantee—a job or place in education or training for every 16 to 19-year-old in Scotland. That was an offer to Scotland’s youngsters, who, in times of recession, have watched their opportunities evaporate before they have had a chance to take them.
Pope John Paul II told us that there is dignity in work. For our young people there is also dignity in the prospect of work. In times of recession, the knowledge that there are no jobs to go to is distressing, debilitating and destructive. When Johann Lamont came to the Parliament in April last year to question the First Minister on his youth guarantee, she recounted her days as a teacher under Thatcher, when the aspirations and hopes of the young people whom she taught were extinguished by a Government that did not deliver the jobs that the students worked hard to achieve.
Johann Lamont went on to question the First Minister about the 17,000 16 to 19-year-olds in Scotland who had vanished from the Skills Development Scotland system, which is the vehicle for the delivery of the SNP’s offer of a job, training or education for every 16 to 19-year-old in the country. She asked about the 17,000 school leavers whose hopes and aspirations for a career had been guaranteed by the First Minister and the SNP.
Ten months have passed since the youth guarantee was announced—10 months in which the Government could take action and make good on its offer to those 17,000 young people. We are talking about Scotland’s economy, and those youngsters are the hope and future of our economy. However, although over the past 10 months the Government has passed the Scottish Independence Referendum (Franchise) Act 2013 and the Scottish Independence Referendum Act 2013, and has devoted days, weeks and months of civil service time to papers and the preparation of its white paper on an independent Scotland, it has managed to find only 2,000 of the 17,000 youngsters that it has lost from the system.
I think that it is appropriate that I make a point of clarification. Those are not missing youngsters. Skills Development Scotland has increased its endeavours to contact young people who are in need of opportunities, and those are young people whose whereabouts we do not know, despite our efforts. That is one reason why we promoted the Post-16 Education (Scotland) Bill—which the Labour Party failed to support—which is about improving data collection and creating a statutory responsibility to ensure that every agency is signed up to sharing information about providing the best opportunities for all our young people. Why did Labour fail to support the Post-16 Education (Scotland) Bill?
The minister knows very well why we did not support the Post-16 Education (Scotland) Bill—it was a dog’s breakfast of a bill that did not go nearly far enough towards the radical measures that are needed to widen access. She knows very well why we did not support the bill, as we made the case several times. If she is saying that that bill would have found those 15,000 people that her agency, Skills Development Scotland, has failed to find, that is an interesting proposition.
Figures that were released following a freedom of information request in mid-December show that there are still 15,000 school leavers whom the Government cannot find, although that is her agency’s responsibility. Those are 15,000 young people who have not been given the opportunity of a job, training or education that they were promised by the First Minister. At the current rate of progress, it will take six years for the Scottish Government to find those young people, meaning that they may never benefit from that promise of a job or training place.
We debate Scotland’s economy and hear the SNP promise a better future for our young people under independence. Let us take an honest look at our progress. What of the future for our young people under the SNP’s economic vision? The white paper states that the Scottish Government “may” extend its youth guarantee for those aged up to 24. Of course, it is an uncosted policy with no detail of how the money will be raised. Our young people, many of whom will vote for the first time in September, have a real choice to make: they can either put their faith in the SNP or choose to vote for the United Kingdom.
Given the rate at which the Labour Party has abandoned its policies yesterday and today, it will have none left by the end of the week, never mind by the next election.
My question is about tax competition advantage. Did Mr Findlay not blow the gaff yesterday when he said that our corporation tax policy was fine as long as it was a British tax policy and applied across the British Isles? Does that not show that Scotland’s economy can be stronger only with independence?
I do not accept that point at all. Mr Mackay knows well that we think that corporation tax is better charged by the UK on the strength of the whole UK economy. That point is perfectly clear and what Mr Findlay said was perfectly clear as well.
Six months after the referendum, young people in Scotland will have the opportunity to vote for a real youth guarantee as outlined by Ed Miliband, which will see every young person up to the age of 24 who has been out of work for a year guaranteed a job for six months courtesy of a tax on bankers’ bonuses.
Will the member take an intervention?
I will in a minute.
That is a real commitment. It is fully costed and fully funded, and it is ready to be delivered in 2015, six months after the referendum. [Interruption.]
Can we have a bit of respect, please?
I hope that, in her intervention, the minister is able to match that guarantee for people aged up to 24 with a tax on bankers’ bonuses in an independent Scotland. I invite her to do so.
My question to Ms Marra is this: why wait until a young person has been unemployed for a year? That is way too long. Why will she not join the Scottish Government in calling on the UK Government to implement the European youth guarantee now, like every other European country bar the Czech Republic? With the powers of Jobcentre Plus and welfare we could intervene within four months. Other European countries are implementing the European youth guarantee. Why are the Labour Party and the UK Government not supporting it now?
That is enough of an intervention. Miss Marra, you have 30 seconds.
The minister makes the point: she could go a lot further with the powers that she has now. I am asking her—[Interruption.] This is silly, is it? I do not think that this is silly. It certainly is not silly for the young people to whom we are offering a youth guarantee that is costed, fully funded and ready to be delivered by Ed Miliband. [Interruption.]
You must draw to a close, please.
Yes, it will be delivered by Westminster, but the approach is much more radical than what the minister proposes and more radical than what is proposed in the Scottish Government’s white paper.
Thank you very much—that is perfect.
17:20
This has been a very interesting and useful debate. The most stunning revelation was the fact that Ken Macintosh spent his Christmas holidays reading a book about optimism bias. I was very surprised by that because I have always had him among the cheeriest on the Labour benches. I never thought that he had any need for that—perhaps he was reading the book because of a need to temper his optimism. Nonetheless, he brings a ray of sunshine when he makes a contribution from the Labour benches.
Mr Macintosh went on to make a substantial point about the lessons that we can learn in Scotland from the conduct of the German economy and particularly from the McMittelstand conference that took place in Scotland. He also talked about the importance of encouraging diversity of ownership and employment structures in the economy. I make it very clear to the Parliament that that is an area of close interest to the Government. We will shortly be in a position to say more to the Parliament about some of our interest in that matter.
At the heart of the issues raised by Mr Macintosh are important points about enhancing the economic approaches in Scotland that can be strongly influenced by a long-term strategic direction to support a stronger approach to economic development and growth. That fits comfortably with the agenda that the Government has pursued since 2007.
What is the corporation tax rate in Germany?
If Mr Findlay wants to ask me a whole variety of questions having just bounced into the debate—not with the optimism bias of Mr Macintosh but the usual cheerfulness that he brings into debates—he can do so, but had he been here all afternoon he would have heard Mr Macintosh’s thoughtful contribution on German industrial structures.
Maureen Watt also made an important contribution on some of the practical steps that the Government and other organisations are taking to tackle gender segregation in the economy. The Government is keen to make as much progress as possible on those points but, as Maureen Watt made clear, many of the issues of responsibility are reserved to the United Kingdom Government. This Administration would willingly assume those responsibilities to tackle some of the questions to improve Scotland’s economic performance.
Linda Fabiani’s contribution dealt artfully with Jenny Marra’s suggestion that, if people voted no in the referendum in September, they would be able to vote in the spring of 2015 for a Labour Government to change everything and make everything fine. The unfortunate difficulty with that analysis is that Linda Fabiani raised the comments made by Rachel Reeves, a Labour MP who wants to be tougher on welfare and benefits than even the harsh approach of the Conservative and Liberal Democrat Government to which we are becoming accustomed. There is no prospect, even if a Labour Government were elected in the spring of 2015, of a different direction from the hard, unsympathetic, prolonged austerity agenda of the current Conservative and Liberal Democrat Government because of the decisions and commitments that the Labour Party has made to sign up to that approach.
Alison Johnstone and Patrick Harvie raised substantive points. The Government cannot support Alison Johnstone’s amendment, not because of anything that is in it, but because of what it would remove from the text of the Government’s motion as published in the Business Bulletin. I know that Patrick Harvie made the point that I focused on GDP, but I say to him and Alison Johnstone that the approach that the Government has taken on the national performance framework has been designed to allow it to pursue a broad range of indicators on economic, social and wellbeing considerations in our economy, to ensure that we adequately consider all the different factors that need to be looked at in delivering greater prosperity and opportunity for the people of our country.
I thought that Mr Rennie’s speech was the start of a trend and that, after the speech that he made yesterday, he was going to become wholly supportive of the Government—I hope that that is the case. However, he changed tack a bit to talk about the uncertainties of independence. I delicately point out to him that his party is in a coalition Government with the Conservatives, who wish to put to the people of the UK the issue of whether the UK should remain part of the European Union. If Mr Rennie is worried about uncertainty, that is the issue that is causing uncertainty in the business and economic community of Scotland. If he needs any evidence to substantiate that, I suggest that he look at the Ernst & Young UK attractiveness survey for 2013, which concludes that—contrary to the chancellor’s speculation that somehow the independence debate would harm inward investment—Scotland had delivered a “sparkling performance” years after the chancellor said that we would face difficulties as a result of the referendum debate. If anything, the reverse is the case. It would serve Mr Rennie well to have a good look at that survey.
I happen to agree with John Swinney on the referendum on membership of the EU. That is why we are firmly in favour of staying in the EU. I hope that he will join me and others who are in favour of the EU so that we can stay in that structure and can continue to grow within it.
My position on the matter is very clear: I want Scotland to be a continuing independent member of the EU. That is my basic position.
There was a fascinating exchange between Murdo Fraser and John Mason on income inequality, and I thought that John Mason’s response—from the perspective of a constituency member who serves an area of high deprivation—to Murdo Fraser’s point brought to life the contrast that we are all seeing between the wealth that is held in some parts of our society and the acute difficulties that members of the public face in our communities.
This is an area in which we must be extremely careful. The Government statistics on measures of income inequality are driven by the work of the UN human development report. In his paper, “Inequality in Scotland: trends, drivers, and implications for the independence debate”, Professor David Bell of the University of Stirling is highly sceptical about the measures of wealth inequality that Mr Fraser tried to peddle. Professor Bell said that income inequality
“has a clear impact on the ability of individuals to consume goods and services.”
Indeed, the very survey that Mr Fraser cited said:
“The study of global household wealth is at an embryonic stage ... Much work remains to be done to refine the estimates of wealth level by country”,
so Mr Fraser needs to be careful about citing such reports.
In relation to the general tenor of the argument that has been deployed in the debate by Iain Gray, Richard Baker and Margaret McDougall on whether this Government is using the powers that it has at its disposal to deliver economic recovery, I make it clear to the Parliament that we are using every lever at our disposal to deliver economic growth and economic opportunity in Scotland. However, we are crystal clear that there is more that we could do if we had a wider range of financial powers.
If we grew our four largest tax receipts in Scotland by 1 per cent and reduced welfare spending by 1 per cent by getting people into work, it would benefit the public finances by £350 million. Under the Scotland Act 2012, however, only £45 million of that resource would come here to Scotland. If we take steps to boost the Scottish economy, we should be able to retain the proceeds of that wealth and invest it in tackling the very income inequality that Mr Mason talked about and in the issue that should be the challenge and purpose for us all: creating a better future for our society in Scotland.
Thank you. That concludes the debate on Scotland’s economy.
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