The next item of business is a debate on motion S4M-11993, in the name of John Swinney, on boosting the economy. I invite members who wish to speak in the debate to press their request-to-speak buttons. Deputy First Minister, you have 13 minutes but, today, less would be more.
15:05
This is a welcome debate to set out the Government’s actions to achieve our twin objectives of boosting economic growth and tackling inequality.
We enter 2015 on a sound economic footing, notwithstanding the current challenges in the energy sector to which I will return. Our economy has recovered beyond pre-recession levels of output and we have entered a new phase in the economic cycle where we must ensure that growth is both balanced and sustainable, and that the benefits of economic success are shared by everyone.
It is well understood that a strong economy is essential in building a fair and wealthy society. However, the reverse is also true: a society that is fair and equitable underpins a strong economy into the bargain.
A recent Organisation for Economic Co-operation and Development working paper estimated that, between 1990 and 2010, rising inequality in the United Kingdom knocked more than 9 percentage points off total gross domestic product per capita growth. Analysis by the International Monetary Fund has also found that more unequal countries tend to have lower and less durable economic growth. Those studies by respected international agencies suggest that equality and cohesion are good for growth, as well as for individuals.
The challenge that we face is not returning simply to pre-recession levels of growth, but tackling the underlying issues in our economy and labour market, boosting competitiveness and reducing inequality. We want to create a stable and balanced economy that is outward looking, confident and based on the core strengths of our people, and that is innovative and supported by investment.
We are currently updating the Government economic strategy, which I intend to publish in the coming months. The strategy will not only pursue the successful actions that we have already taken, but focus on how we can ensure that the recovery is sustainable and of benefit to all. It will combine the three strategic themes set out in the programme for government of ensuring sustainable economic growth, building a fairer society and tackling inequality, and protecting and reforming public services. In particular, it will set out an economic approach that is focused on tackling inequality, boosting investment and innovation and maintaining a focus on internationalisation.
Scotland’s economic recovery is well established. Our economy has grown continuously for two years, GDP is above pre-recession levels and the economic outlook is the strongest that it has been for many years. Independent forecasts indicate that the Scottish economy expanded by 2.8 per cent during 2014, well above its historical average growth rate.
The recovery has also been evident in the labour market data. Our inactivity and unemployment rates are lower than in any other country in the UK and the employment level has been at all-time records in recent months.
Longer-term trends in Scotland’s economy also show the success of the Government’s approach. Since 2007, the value of Scottish international exports has increased by a third; business research and development has increased by 29 per cent; Scotland is ranked in the top two areas outside London for foreign direct investment in every year; and the number of registered businesses in Scotland has grown by 10 per cent. There is much to be positive about and encouraged by in the economic data as we see it today.
The Deputy First Minister has rightly identified the growth in the economy in Scotland, which has been matched throughout the rest of the UK. He has cited individual programmes that he has promoted in Scotland. Which UK programmes would he give credit to for also boosting the Scottish economy?
Mr Rennie is familiar with my view that the recovery in Scotland has happened despite the activities and the austerity agenda of the United Kingdom Government. In case he has not heard me make that point before, I simply repeat it for the sake of absolute consistency and clarity.
Notwithstanding the economic indicators that are positive, the Government is aware that structural challenges remain within the economy. The recovery has brought improvement in the headline measures of output and employment, but recessions typically leave a structural legacy. That is particularly true in some segments of the labour market, where challenges have arisen or become amplified during the recovery. For example, underemployment remains a continuing concern. Working hours, levels of full-time employment and real wages also remain below pre-recession norms. That is a legacy of the recession, and tackling those issues will provide key areas of focus for this Government.
Of course, those challenges are not unique to Scotland, and it is worth remembering that the Scottish economy has shown resilience in the context of the global recovery. For example, although our youth unemployment rate remains too high at 15.9 per cent, it is lower than the rate in the United Kingdom as a whole and should be viewed in the context of an average youth unemployment rate of around 22 per cent across the European Union and rates in excess of 40 per cent in southern Europe.
Further, in addition to the structural challenges, sector-specific challenges will remain in the economy, as is currently the case in the oil and gas industry, which we have just heard about in the statement from the Minister for Business, Energy and Tourism. Recent volatility and low oil prices have helped to reduce costs for some industries and have provided a boost to households, but they have also caused uncertainty for North Sea operators. Although expectations are for prices to start to rise again, reforms to the North Sea tax regime are required to support long-term growth in the sector.
The 2 per cent reduction in the supplementary charge that was announced by the UK Government does not go far enough in helping the industry, which has seen its competitiveness damaged by a high historical tax burden.
I am sure that, today, we are all in agreement that the immediate responsibility of us all is to ensure that jobs in the oil and gas industry are secure. However, alongside that, we must bear in mind the enormous potential to exploit marine renewables. Will the cabinet secretary briefly outline what will be happening in terms of plans to support that, with regard to transferable skills?
As Claudia Beamish knows, the Scottish Government has pursued a consistent approach in relation to the support of renewable energy in Scotland. In recent months, we have seen mixed news on offshore renewables. We have seen the tidal sector gain in strength and we are confident that the development path of that sector, reinforced by some of the support that the Government is making available and the commitments of many companies and investors—and the fact that some of the projects, particularly the MeyGen project, are emerging into a much clearer form—will lead to significant progress.
As Claudia Beamish knows, the situation in the wave sector has been more challenging. However, the actions that the Minister for Business, Energy and Tourism has taken to establish wave energy Scotland and on Scotland’s intellectual capital and capability to take forward the wave sector and realise its economic benefits will ensure that the sector remains a central part of the Government’s renewables strategy. The policy framework and the financial support that are available from the Government are designed to do exactly that. We will, of course, ensure that Parliament is kept up to date on the steps that we take on wave energy Scotland.
As we consider the challenges that the oil and gas industry faces, I want to assure Parliament and reinforce what the Minister for Business, Energy and Tourism has said by saying that, although the Scottish Government will do all that we can do within the powers that are available to us—whether it is through support for innovation, for skills, for infrastructure or for enterprise—the crucial point that must be addressed just now is the cost base of the North Sea oil and gas sector, and the principal area of public sector activity that can make a difference in that respect is the taxation and fiscal regime that is presided over by the United Kingdom Government.
I hope that, with regard to this debate and the debate that is going on in Scotland at this moment about the oil and gas sector, the United Kingdom Government listens to the clear call that we make today, first, for the introduction of an investment allowance; secondly, for a planned and phased reversal of the increased supplementary charge; and, finally—probably most crucially, in terms of long-term development—for the development of an exploration tax credit to encourage and incentivise development in the years to come. Those measures are essential to the strengthening of the oil and gas sector and to meeting the challenges that we face.
The Government will continue to be supportive of the work of business within our economy and will seek to work with business on many of our shared challenges and priorities.
The Cabinet Secretary for Fair Work, Skills and Training will be taking forward the recommendations of the report of Sir Ian Wood’s commission for developing Scotland’s young workforce, which outlined a range of actions that will be pursued in conjunction with Skills Development Scotland, local authorities and our delivery partners in association with the business community to ensure that we effectively support the development of our young workforce. In addition, the Government will maintain a competitive approach on business rates to provide support to over 90,000 small businesses in our country and to ensure that we have the most competitive framework for business taxation in the United Kingdom.
One of the central features of the Government’s economic strategy will be encouragement for the development of innovation in our economy. Last year’s research excellence framework found that each of Scotland’s 18 higher education institutions undertakes research of “world-leading” quality. That will be central to developing the focus on innovation that will emerge from the Government’s economic strategy. We will also place particular importance on encouraging the internationalisation of the Scottish economy, with Scottish Enterprise and Scottish Development International supporting up to 10,000 more businesses to develop the skills to go international by 2015.
The other element of the Government’s economic strategy that will be fundamental in taking forward our agenda is activity to tackle inequality. What we have seen emerge from the recession are the significant challenges that exist in tackling in-work poverty. The Government is working closely with the Poverty Alliance to expand awareness of and commitment to the payment of the living wage among Scotland’s company base. Evidence indicates that around 80 per cent of those who are in work in Scotland earn more than the living wage, so we owe it to the remainder to improve the quality of their remuneration. I am delighted that more than 90 companies across Scotland are now accredited as living wage employers that pay the living wage, with 32 of them having gained accreditation since the living wage week in November. We are beginning to see the fruits of the collaboration that is taking place between the Government and the Poverty Alliance to raise awareness of the issue.
We all welcome initiatives to promote the living wage and tackle inequality, wherever they come from, but are there clear objectives in the strategy? Does it anticipate a number of employers paying the living wage or a percentage of the remaining people in Scotland not receiving the living wage? Are there such targets that we will be able to monitor progress against, and is the strategy linked to other Government policies such as those to do with the costs of transport and rent?
We have not, to date, set specific targets on the payment of the living wage but we have committed to open reporting to Parliament on the success of our partnership with the Poverty Alliance. I reinforce our commitment to do that, and I reassure Mr McNeil that the Government will put all the energy and pace that it can into encouraging and motivating more employers to sign up to the initiative. We will consider Mr McNeil’s point about our creating a framework around which to do that.
Will the cabinet secretary give way?
The cabinet secretary is in his last minute.
I am happy to give way to Mr Findlay.
You are in your last minute, cabinet secretary.
As I am not allowed to do so now, I will give way to Mr Findlay when I respond to the debate.
In taking forward Mr McNeil’s point, the Government will encourage more companies to sign up to the living wage through the Scottish business pledge that we included in the programme for government. The pledge will encourage more companies, as a consequence of their discussions and work with our enterprise agencies and their being in receipt of support from those agencies, to commit to paying the living wage. That will become a more central part of the dialogue that the Government has with business.
We are seeing progress being made in the development of the Scottish economy, but the Government is determined to ensure that we progress along the route to economic recovery both in a sustainable way and hand in hand with tackling the inequality that exists in our society. That will be at the heart of the Government’s economic strategy, which will be introduced to Parliament in the next few months.
I move,
That the Parliament welcomes the continued growth of Scotland’s economy and the fact that Scotland’s unemployment rate is the lowest in the UK; further welcomes the fact that, since 2007, Scottish exports have increased by a third, business research and development has risen by 29% and that the total number of registered businesses in Scotland has grown by 10%; agrees that delivering sustainable economic growth and addressing longstanding inequalities are reinforcing, and not competing, objectives, and welcomes the actions that the Scottish Government is taking to foster a supportive business environment, invest in infrastructure, support entrepreneurship, innovation and internationalisation, and to help to ensure that economic growth is characterised by income, regional and social equality.
15:19
I welcome the opportunity to participate in this debate in my new brief, and I look forward to working with the Scottish Government and other Opposition parties in the months and years ahead on the challenges and opportunities that face our economy.
There is no doubt that recent times have been tough for businesses across the country. Whether someone is in a large or small business, in manufacturing or in retail, or in urban or rural Scotland, the economic downturn has had an impact. Markets were tighter, turnover declined and the workforce contracted. In short, the economy struggled, businesses suffered and working people experienced the worst cost-of-living crisis in decades.
As John Swinney said, things have improved. I am thankful that the economy is growing. Employment is increasing and confidence is starting to improve. However, there is still a way to go. The statistics in the Scottish Government motion are a little selective and do not measure things over the same period, but let me be generous and not dwell on that. Although overall growth has improved and the economy has continued to recover, the most recent quarter shows a marked slowing down.
Let us recognise the achievements of our businesses in growing our economy, while equally recognising that we have nothing to be complacent about. Despite the growth, the recovery is not shared by everyone who is in work. Too many people are caught in one of the worst cost-of-living crises in decades. There is continuing uncertainty, with zero-hours contracts, low wages and underemployment.
That matters, if we are to address inequality. It is not just a matter of fairness; it is an economic issue. The Organisation for Economic Co-operation and Development, the International Monetary Fund and others point out that countries that have relatively high degrees of wealth and income inequality have lower levels of economic growth. It is in the interests of us all to address the issue. I am glad that the Scottish Government recognises that, but actions speak louder than words. I regret that the Scottish National Party did not take the opportunity to secure the living wage through procurement.
There is no greater danger to our economy just now than the falling price of oil. I will spend my remaining time focusing on that. Without doubt, oil is crucial to the Scottish economy. The United Kingdom is the largest oil producer in the European Union, and the reality is that around 90 per cent of production is here in Scotland. We rely on oil revenues to run our public services, so the price of oil is not abstract but central to our budgets and fundamental to how much we have to spend on public services such as schools and hospitals.
We all spent a lot of time in the past year contesting what oil means for the Scottish economy. I do not want to rerun the referendum debate, but I will make a couple of observations. First, the white paper estimated the price of oil at $113 a barrel. As of yesterday, the oil price fell below $50 a barrel—less than half the estimate.
Let us be clear: oil is not an optional extra that is nice to have. We need it to sustain our spending. Let me share a quotation:
“Scotland has run a net fiscal deficit in 20 of the past 21 years.”
Smaller than the UK’s.
I continue:
“There has only been one year since 1990 when tax receipts have exceeded total public spending. This suggests that over this period North Sea receipts would have been required to fund public services in Scotland.”
Will the member give way?
I heard some SNP back benchers howl in protest. Perhaps Mr Mason will tell me whether those are indeed the words of John Swinney’s senior civil servants in a leaked Cabinet paper.
Does the member accept that it was a mistake not to set up an oil fund, which would have made us less susceptible to ups and downs in the oil price?
All that I will say is that we cannot spend the money twice. I will come on to talk about the oil fund and the resilience fund.
It is clear that, despite the howls of protest from the SNP back benches, the words that I quoted came from the Government’s own civil servants.
Will the member give way?
No. [Interruption.] I will let the minister in later, but he would do well to listen.
What would a halving of the oil price mean for Scotland? A price of $50 a barrel means an 85 per cent decline in revenues—almost £6 billion less on an annual basis, which is another £500 million on top of the figure in the Treasury analysis that was released last week. Members will remember that the Treasury analysis said that there would be a 77 per cent loss in revenue over the first three years of an independent Scotland. I accept that people might not always trust the Treasury, but the Scottish Parliament information centre today confirmed its analysis.
I take no pleasure in that, but if we are to be trusted, and if we are to demonstrate fiscal responsibility, we absolutely owe it to the people of Scotland to think about the issue.
Is not the key issue now not to argue about who was right in the past but to agree what to do right now? In that regard, I do not expect Jackie Baillie or the Labour Party to respond to the proposals that we set out in the statement right now but, as we are planning to attend the summit that they have raised, will she respond to our tax proposals to make it an all-Scotland proposal for the tax measures that are required?
I hope that the intrusion into my time will be reflected, but I am happy to give the minister that commitment, because none of the proposals that he has come forward with is new. We need a greater sense of urgency from this Government to protect the North Sea.
I want to talk about the cost to us. What would having £6 billion less to spend in our budget mean? That figure is more than our total schools budget in Scotland. It is the cost of all the nurses and doctors in hospitals and community health settings. It is the entirety of the infrastructure investment programme for next year. How many schools and hospitals would we need to close?
You must close too.
How many teachers and nurses would we have to make redundant?
Forgive me—your time is not up.
It is fine.
It is that serious. For John Swinney simply to dismiss this as he did earlier, saying that we would not have been independent by now, is frankly laughable. Having said that, I am pleased that both he and Nicola Sturgeon now seem to recognise the strength of being in the United Kingdom.
There are significant employment consequences, too. Oil & Gas UK suggests that as many as 35,000 job losses would occur, including jobs supported by employee spending across the UK. SPICe calculates that 15,750 of the job losses would be in Scotland. That is one in 12 Scottish jobs in the industry, and that does not fully reflect the most recent fall in oil prices. The lower the price, the greater the potential job losses.
Twenty-three years ago today, the closure of the Ravenscraig steelworks was confirmed by British Steel. The challenge that we face in the oil industry today threatens a larger loss of jobs than Ravenscraig. Given the economic devastation that that would cause, I genuinely do not understand the Scottish Government’s reluctance to do anything urgently. This is one of Scotland’s most significant industries. These are exceptional circumstances. The future of families across the north-east and across Scotland needs exceptional thinking.
Will the member give way?
I have taken enough interventions. I am sorry.
To simply say that the matter is reserved demonstrates a Government lacking in ambition. The SNP has been listed missing in action not just by me but by the oil industry. I am always happy to make common cause with the Government, but why were the First Minister and Deputy First Minister not at the oil summit in Aberdeen this week? Why have they not yet confirmed that they will join a cross-party delegation to make the case for help to the UK Government? Will they support Labour’s call for a resilience fund and work with us to put something in place? [Interruption.]
Order.
Laughable rubbish.
Mr Swinney.
It is truly depressing that the Government and SNP tweeters deliberately choose to misunderstand a resilience fund and instead talk about an oil fund. I have had this conversation with John Swinney. He knows fine well that those are two different things. Frankly, with almost 16,000 jobs at stake, they should be ashamed of themselves for playing these games.
A resilience fund would not just be for the oil industry. It is for times of economic shock—exceptional circumstances where there are large-scale redundancies or an unexpected crisis in a particular industrial sector. It would be a sensible intervention on the part of the Government, which should care about sustaining the Scottish economy. I say to the Government, “Don’t spend all your time blaming people—do something.” It is not too late for John Swinney and the SNP to work together with us to deliver this.
Finally, there is the oil and gas bulletin. The Scottish Government published bulletins on a couple of occasions prior to the referendum, but we are advised that there are no plans to produce them in future. Let me ask one simple question—for goodness’ sake, why? Forecasting and estimating such a valuable commodity, which matters so much to our public finances, makes sense.
You must close, please.
The Scottish Government has to stop hiding. Our oil industry is on the brink of a crisis. The Government cannot simply say that a big boy did it and then ran away, because the people of Scotland deserve better.
I move amendment S4M-11993.3, to leave out from “and the fact” to end and insert:
“; recognises, however, that the Scottish Government needs to ensure that the benefits of economic growth improve the prospects of the workforce at large and address increasing inequalities; calls on the Scottish Government to recognise the fundamental importance of the oil and gas industry to the success of the Scottish economy; notes that the current oil price is less than half that predicted by the Scottish Government in its white paper on independence; notes the calls for cross-party talks on sustaining the future of the oil and gas industry, and further calls on the Scottish Government to work in partnership with the UK Government and local government to address the current risks to that sector, to establish a resilience fund to be used in exceptional times of crisis to deal with the consequences on local economies of large-scale redundancies and to publish an updated Oil and Gas Bulletin.”
Before I call Gavin Brown, who will have up to six minutes, I advise the open debate speakers other than those who have already been advised of the cutting of their speeches to three minutes, whose speeches will remain at three minutes, that their speaking time will be reduced to five minutes.
15:30
I welcome Jackie Baillie to her new role and I look forward to working with and against her in the coming months and years. I enjoyed her contribution, but it is certainly a new new Labour when even Jackie Baillie says that we cannot spend money twice. Those are words that I thought I would never hear her utter. My goodness, I am impressed.
I welcome Mr Swinney’s announcement that an updated economic strategy will be published in the coming months. Things have changed since 2011, when the current economic strategy was produced, so it is appropriate for us to have an updated strategy, and I look forward to seeing it. It would be helpful if, when he closes the debate, he could be a little clearer about when we will get that strategy. I hope that it will be a strategy that contains genuinely new initiatives and genuinely new approaches—I hope, in other words, that it will indeed be an updated strategy, rather than one with just a fresh cover and a lick of paint, if you like. I will take it on its merits. I welcome the announcement and look forward to hearing more.
We can support the first half to two thirds of the Government’s motion, in which it makes some perfectly reasonable points about a number of matters, including unemployment, exports, business research and registered businesses. Those items are good news and should be celebrated. We should acknowledge where the economy is performing well.
Over the past year, particularly in the past three months, most of the statistics have been healthy and positive in their own right and have moved in the correct direction. Growth was pretty good for 2014 and it is looking good for 2015; the outlook beyond that is perhaps a little lower. Employment is higher than anyone had anticipated. Unemployment did not grow by as much as we thought it would during the heart of the crisis, but there have been some pretty swift falls in unemployment. Although there is still some distance to go, progress has been good.
Although we have had a lot of positive statistics, I must make the point that Willie Rennie made in his intervention on John Swinney. The Scottish Government has delivered some good policies, such as the small business bonus scheme, but most of the main macroeconomic levers are operated at UK level. Therefore, when there is an upturn and things are going positively, it is right to give credit to the UK Government as well. I know that Mr Swinney is a fair man, who must be itching to make amends for failing to provide such acknowledgement in his speech. I will give way to him if that is what he seeks to do.
Mr Brown is absolutely right—I am a fair man. I put on record the fact that I deeply appreciated the compliment that the Chancellor of the Exchequer paid to the Scottish Government when he said that we were presiding over the most significant employment growth in the UK. I thought that that was a very decent compliment.
Even when he has been asked to make amends and to say something positive about the UK Government, all that Mr Swinney can do is mention something positive that the UK Government said about his Government. Perhaps he will have something more positive to say in his closing speech.
Let us be realistic: the actions of the UK Government have made a significant difference. The chancellor had a tough job to do in holding the line, but we are seeing the fruits of that now and we will continue to do so in the months and years ahead.
One gripe that I have with the Scottish Government is that it paints a good public relations picture when things are going well but ignores bad news to the extent that it does not do anything about it. There are pieces of bad news that have come out over the past few months that the Scottish Government needs to take on board seriously. Its publication “Businesses in Scotland 2014” showed that the number of private sector enterprises decreased by 2.4 per cent between March 2013 and March 2014. Its monthly economic brief showed that the growth gap between the UK and Scotland is probably going to be bigger in 2015 than it was in 2014. In 2014, growth in Scotland was 2.8 per cent compared with 3 per cent in the UK; in 2015, growth in Scotland is projected to be 2 per cent compared with 2.4 per cent in the UK. Therefore, the gap is growing.
We saw a small drop in manufacturing over the course of the year, whereas the UK saw growth of 3.6 per cent and, of course, in the retail sales index, volume and value were flat over the course of the year in Scotland—actually, value fell slightly—whereas in the UK, volume grew by 2.9 per cent and value grew by 1.9 per cent.
I do not put those figures forward to say that the UK is great and to try to paint a gloomy picture; I think that where there is less positive news, the Scottish Government needs to acknowledge it, explain it and, most important, provide some form of response about what it intends to do about it. There may be blips at this stage, but if they are ignored and action is not taken, they can become problematic for our economy.
Much has already been said about oil, but I find it staggering that, in an eight-minute speech of 1,000 words or so, the energy minister did not mention price once. I did not expect him to dwell on price or to make it the key focus of his speech, but not to mention it at all when oil is down at $50 a barrel and may go lower was a little bit unusual.
You must close, please.
I also found it a bit strange that the energy minister criticised the fiscal regime incessantly as the biggest barrier to development although, only a few months ago, the Government policy were we to become independent was to adopt the entirety of the UK fiscal regime on oil and gas and most other things, too.
I am happy to close there.
15:36
I have said before that the way to address inequality is to create a strong and fair economy in which businesses perform exceptionally, which leads to job creation and lower unemployment. Moving people into quality, well-paid jobs should be an aspiration of the Government and business alike.
I note from information that Aberdeen and Grampian Chamber of Commerce provided to me that its 2014 workforce survey indicated that two thirds of businesses in the north-east expected to grow their workforce over the coming 12 months. That is welcome in the context of my opening remarks and the cabinet secretary’s remarks about the increased confidence in the Scottish economy.
I note further from Aberdeen and Grampian Chamber of Commerce’s 2014 oil and gas survey that 29 per cent of operators and 55 per cent of contractors expected an increase in total employment. That was looking ahead to 2015 in November 2014. I am unclear about whether that view has altered significantly as a result of what has happened to the oil price, but we have to bear in mind and reflect on the fact that the oil and gas industry has had low oil prices before and has come back strongly. It was only five and a half years ago, in 2009, that the price dipped below $50 a barrel. We have been in such a situation previously in the north-east, and the oil and gas industry has come back strongly.
On the comments that have been made that the Government’s approach of looking at the fiscal regime is somehow wrong, I will quote from the oil and gas survey’s opening remarks, from the chief executive of Aberdeen and Grampian Chamber of Commerce, Robert Collier. He said:
“We know that the fiscal regime needs to be addressed. Nearly two thirds of respondents told us this—Immediate action from the Government is required.”
Further on, the survey clearly states:
“62% of all firms believe that the government’s top priority should be a revision to the fiscal regime to ensure it encourages exploration and extraction.”
That was before the current dip in the oil price. If it was vital for that revision to happen then, it is surely even more vital for it to happen now.
The Labour Party has put forward proposals. I am always interested to see proposals, but I am unclear about the total sum that would be committed to a resilience fund—if Jackie Baillie wants to say something about that, it will have to wait for the closing speeches. I am also unclear about who the beneficiaries of that sum would be, how that would be determined, whether Labour is looking to have the fund recur annually and, if so, what difficulties might arise from that if Labour is basing it purely on consequentials, which, as we know, require spending to be recurrent rather than to end in a particular financial year.
I will focus on the wider north-east economy and some of the challenges and opportunities that lie ahead. There is a vibrant economy in the north-east. We should not get too bogged down in talking simply about the oil and gas industry, because other sectors are performing exceptionally, such as the life sciences sector in Aberdeen. I have visited a number of life sciences companies in my constituency to see some of the strong work that is being done.
According to Aberdeen and Grampian Chamber of Commerce’s food and drink sector survey, 36 per cent of respondents are exporting, which is up from 29 per cent in 2011, and a further 24 per cent are looking to export over the next two years. We have a strong story to tell about the economy in north-east Scotland and we should not be afraid to tell it.
That said, there have been long-standing challenges relating to the area’s infrastructure. I welcome the investment in the western peripheral route and the Haudagain improvement, which will take place in my constituency. Those measures will be of enormous benefit to connectivity. I have always thought that a third Don crossing would be a vital part of the infrastructure in the north-east and I am glad that the Labour administration in Aberdeen City Council is now behind that completely.
The redevelopment of the terminal at Aberdeen airport is a welcome step, but there are two key issues that need to be dealt with and on which we must continue to press the case. First, we need early devolution of air passenger duty and action to reduce the duty, which causes difficulty in maintaining some routes and attracting new ones to Aberdeen airport. Secondly, we need to continue to have slots at Heathrow for flights from Aberdeen airport, which are vital for businesses in the north-east. I hope that the Government will continue to press that case.
15:41
I welcome the fact that Scotland has the lowest level of unemployment in the UK. That is of course good news, but it would be wrong to think that a lower rate of unemployment tells the full story. In fact, the unemployment rate for men in Scotland is higher than the rate in the rest of the UK, and those aged between 50 and 64 in Scotland are more likely to be unemployed than those in the rest of the UK. That is just one reason why boosting the Scottish economy is so important.
Another key reason is the underemployment rate. According to a SPICe briefing, an estimated 58,600 people aged between 16 and 24 are regarded as underemployed, which equates to about 19 per cent of 16 to 24-year-olds who are in employment. That is an extremely important statistic, as the fact that we are not using our workforce in the best possible way means that our economy is not working to its capacity. Given the importance and significance of that problem, what plans does the Scottish Government have to solve it?
We must have a more concentrated effort on women and employment. The rate of women in employment in Scotland is better than that in the rest of the UK, which is welcome, but there is still a lot more to do. Given that, in 2013, it was estimated that more women than men were underemployed—the figures were 119,600 and 114,500 respectively—we have to begin to address the type of work that is on offer to women. That is of course a historical problem that many Governments have wrestled with, but we are now in 2015 and it is simply not good enough to continue with warm words rather than action.
The fact remains that there is a 17.5 per cent pay gap between men and women in Scotland. That was highlighted today at the joint UK Government and Scottish Women’s Convention gender pay gap event. I hope that from that event comes a solution to that unacceptable statistic.
According to a SPICe briefing on earnings in Scotland in 2014,
“The difference between men’s and women’s pay is ... a complex issue that is difficult to cover using one indicator.”
However, one measure that SPICe uses to provide a useful comparison of male and female pay is hourly pay excluding overtime. That is used because men are more likely than women to be in full-time employment and to work overtime, so annual or weekly pay does not provide a fair comparison. On average, females earn £10.63 an hour, compared with £12.88 for men. Additionally, although median full-time hourly earnings excluding overtime have increased for men and women in Scotland, only men’s earnings have had a real-terms increase.
That is the situation that women in Scotland face today. The majority of those who find themselves in work have less pay than their male counterparts, and that may be compounded by a failure to use them in the correct way, which leads to higher rates of underemployment. As a member of the Equal Opportunities Committee, I have heard evidence from women and representative bodies on the need for more meaningful work for women and for the work that they do to be recognised financially. They were clear that we need more flexible working patterns but that we should not replace the word “flexible” with “part time”.
I urge the Government to produce a plan for flexible working in the public sector for men and women. I believe that, if we had such a plan, our underemployment rates would fall, women would be able to do more hours of work and would not be restricted by part-time hours, and earnings would rise. That would mean that the situation in which 14 per cent of men and 20 per cent of women earn less than the living wage, as was the case last year, was a thing of the past. As a result, we would see great benefits to our economy.
It has been widely reported today, although not on the Scottish Government’s website, that there has been a record underspend of some £440 million by the Government. That is simply unbelievable, given the challenges that many in Scotland are facing day to day.
Of course, having an underspend is not something new. Governments of all natures, local and national, have underspent their budgets in the past. People understand that. However, we do not understand it when we have people queueing at food banks, people unable to heat their homes, a crisis in our national health service and our teachers having to pay for materials for their classrooms while paying more in their pension contributions. The Government has failed to spend the money that it has and has failed to spend it in a considerable way. All of that has an impact on our economy. It is not the way to achieve the social equality that the Government talks about in its motion.
It is clear that that money could have been put to greater use if it had been devolved locally. Given that the Smith agreement recognises the need for greater local devolution to achieve greater empowerment of our communities, I ask the Government what action it has taken on that recommendation and how it will involve our local authorities in plans that it might have started work on.
When I started my speech, I welcomed the fact that our unemployment rates are falling. I welcome that and I wish to see the rates decrease further but, without the ambition and plans to do that, I fear that that might not be achievable, given the other challenges that I mentioned. As a result, our economy cannot reach its full potential. The Government must address that now.
15:46
First, on the carry-forward money from the Scottish Government budget, the Labour group should look to its time in office, when money was put aside every year, never spent and almost lost back to the UK Treasury.
The motion explicitly links the delivery of sustainable economic growth with addressing long-standing social inequalities. That is really welcome because, in this new year of 2015, we have already held debates that are relevant to that very subject—debates on health inequalities and on mental and physical wellbeing.
We know that mental and physical wellbeing is generally reduced the lower the socioeconomic position is. That is why I will comment on Gavin Brown’s amendment, which says that the UK economy is growing. Aye, but for who? Child poverty and inequality rates are on the rise, and a recent report by the OECD made it very clear that growing income inequalities have acted as a brake on economic growth—that has happened under Tory and Labour UK Governments.
The Scottish Government’s approach is much more appropriate on many counts—not least, for example, in regard to the appointment of Harry Burns, the former chief medical officer for Scotland, to the Council of Economic Advisers. The focus on health and wellbeing when considering the economy is welcome, and that appointment is excellent news, because Harry Burns’s knowledge and experience and his deep interest in health inequalities will enable him to provide valuable input into building a strong and sustainable Scottish economy that leads to a fairer and more equal society.
Does the member agree with Gerry McCartney that the quickest way to deal with health inequalities is to introduce the living wage across the board?
I suggest to Mr Findlay that he gets on to his colleagues, who will be talking about the Smith commission proposals, and backs the minimum wage being devolved to this Parliament, because that is a way to really start looking at inequalities.
As I said, the focus on equality as well as the economy is important. We have a good basis on which to build and—what is most important—we have a Government here in Scotland that has an ethos to deliver. We have increased exports by almost a third since 2007, and inward investment is at a 16-year high. We have increased productivity, business research and development spending, and investment in innovation centres. That all links to our communities and to the mainstay of many cities, towns, villages and districts across the country—the mainland and the islands—which is small and medium-sized enterprises: sole traders, entrepreneurs and innovators.
The latest figures show that the number of businesses created in Scotland is up by almost 50 per cent since 2009. That has been helped very much by the small business bonus, which our First Minister has pledged to continue. Those businesses contribute hugely to the Scottish economy by providing services from retail to biosciences and by providing employment of all sorts.
In my constituency of East Kilbride, we have a plethora of businesses of all types: exporters, importers, manufacturers and distributors. That is a good base on which to build not only nationally but locally, as our town makes the transition from new town to major industry employer. A task force has been set up in East Kilbride to look at the situation, but yet again I have been waiting for months to hear from the local authority about how that is going.
You are in your final minute.
There are many ideas for how infrastructure and development can work together. That can involve not just massive infrastructure projects, the success of which has been demonstrated by the Government, but smaller projects with a bit of innovation—possibly on brownfield sites rather than always outside towns—to boost local economies and provide skills and training.
To go back to the Smith commission’s recommendations, I am concerned about what has been given to us on job creation. We are doing good work with colleges and on skills and training. However, although we are getting the ability through workfare to put people into jobs, we are not getting the ability to create those jobs. That is extremely important, and it ties in with the precept in the motion that we are discussing, which I absolutely support. It is about the partnership approach in which the Government, business, trade unions, the third sector and local government all work together for equality and prosperity.
Will the member give way?
The member must close now.
We should be partners and we should work together on that. Equality and the economy should go hand in hand.
I ask for strict five-minute speeches, please.
15:51
The oil industry is a different beast from what it was in the past. It is now a global business with connections around the world. Although we are looking for many of the solutions in the tax base to incentivise exploration in the North Sea and other fields, we must recognise the impact on businesses such as FMC Technologies in Dunfermline and Oceaneering in Rosyth.
I welcome the action that the UK Government has taken. Alistair Carmichael is up in Aberdeen today to meet representatives from the industry and, along with him, I have agreed to attend the oil summit in Aberdeen that Aberdeen City Council has set up.
The UK Government is not just waiting for a summit; we are getting on with action now. Following the Wood review, which the UK Government set up, the recommendations on regulation and tax are being taken forward, and many of the reforms have been announced already. They include basin-wide investment allowances, offshore exploration through seismic surveys, cluster area allowances and a reduction in the supplementary charge. All those areas have been explored already, and further discussions with the industry are under way, with a report due in the spring budget.
Having spoken to Danny Alexander and Nick Clegg in the past few days, I know that the UK Government is seized of the issue and is keen to ensure that the industry continues with the investment that it needs in order to support the jobs that it provides in Scotland.
Will the member take an intervention?
No, not just now.
The UK Government is active. I find it difficult to listen to John Mason implying that we are all idiots for not recognising that the oil price goes up and down when the SNP has been denying that fact for the past three years in its campaign for independence.
I know that it is an inconvenient truth, but the reality is that, if the decision in September had been different, today’s debate would not be just about the jobs issues that we face in the north-east and the rest of Scotland; we would also be facing a financial crisis that would directly affect the public services that every member in the chamber supports. I am grateful that we did not vote yes in September.
The news on the wider economy is more positive. In the liberal centre ground, we know the value of building a stronger economy alongside a fairer society in order to create opportunity for everyone. We are making progress on both aspects. In Scotland, employment is up by 168,000 since 2010, and in the past year alone, the unemployment level has fallen by 44,000. The SNP complains that it does not have the economic powers in the Parliament to make a difference but, as soon as there is any growth, any improvement in employment figures or any reduction in unemployment, it is quick to claim the credit.
The progress in Scotland is matching progress in the rest of the United Kingdom. In the second quarter of 2014, Scottish GDP grew by 0.9 per cent, which matched the growth in the rest of the UK. That was up 2.6 per cent on the previous year, and the figure for the rest of the UK was 3.2 per cent. Those are broadly similar growth figures.
Manufacturing is growing faster than any other sector, and investment is set to increase by 11 per cent this year. The sector is growing faster in the UK than in any other major advanced economy. Britain was one of the countries that were hardest hit by the financial crisis, but it now has the strongest recovery in the European Union and the best recovery in the G7. We have the best job creation rate in Europe; more jobs have been created in the UK than in the whole of the rest of the European Union combined.
The SNP and Labour said that our plan would not work. I am glad that we ignored their advice. It would be to their credit if they were to stand up now and apologise for giving us the wrong advice and if they were to admit that they were wrong, because they were wrong. We have got growth, and 168,000 jobs cannot be wrong.
We have delivered that by making significant investment changes in the UK. Sixty-eight thousand businesses have the national insurance allowance, which is a big business boost for small businesses. Corporation tax is down to 20 per cent. We have made work pay by cutting tax for 2.2 million people and taken 236,000 Scots out of tax altogether. We have given a big boost by cutting regulation and addressing the supply of finance, with the Green Investment Bank and the British Business Bank. On technology, we have invested £1 billion in broadband and mobile infrastructure. The Technology Strategy Board has invested in the Offshore Renewable Energy Catapult in Glasgow.
It would be good if the Scottish Government recognised the progress that the UK Government has made to provide 168,000 extra jobs in Scotland since 2010. That is progress, which the Government should recognise.
15:56
As a starting point, I reflect on the chief economist for Scotland’s report “State of the Economy—December 2014” that was issued towards the end of last year. The opening statement of that report was hugely encouraging. It said:
“Against a relatively subdued global economic environment, growth in output in Scotland in 2014 will record its strongest performance since 2007.”
The same report tells us that, during 2014, in many ways, the Scottish economy
“surpassed pre-recession levels, with continued growth ... rising employment, and falling unemployment and economic inactivity.”
That report’s positive findings were also reflected in recent positive economic reports for 2014 from the Scottish Building Federation, Scottish Chambers of Commerce and the Bank of Scotland.
The chief economist’s report was also right to reflect on the fact that real wages still remain below pre-recession levels. We all recognise that that tells us that while many people and families are prospering in the current economic climate, there are others who are in work and are working hard who feel trapped and frustrated by a life on a low income.
Some of the reports that I mentioned a few moments ago also tell us about some key skills shortages in construction, retail and tourism that could hamper growth in 2015. The findings of the chief economist’s report on real wages in the economy, taken together with the skills shortages that are outlined in the other reports, present a real opportunity for the upskilling of our workforce.
That is not all down to the Government. Companies can help themselves by finding better ways of developing skills within their own workforces in order to help employees to move into more skilled and better-paid jobs. Of course, companies and the Government can work together so that the Government can tailor the interventions that it has at its disposal to best effect. It would be good to hear from the cabinet secretary about what more the Government can do to better tailor its interventions in that area.
From my time in the Government, I know that the cabinet secretary has a strong personal commitment to building a fairer, more sustainable and balanced economy. With that in mind, I want to make a point to him today about how we invest in our infrastructure in the future. I know that the Government will spend about £4.5 billion on infrastructure during 2015-16, and that is certainly something to be applauded.
I also know that it is important to make the big investments—the southern general hospital in Glasgow, the new Forth road bridge and the Aberdeen western peripheral route—that are necessary for making vital and required improvements.
However, I believe from experience in my constituency that we might have more of an opportunity to create the fairer and more sustainable economy that is sought by the Government by shifting the emphasis from capital-hungry big projects to spending on projects that are more modest but which are just as vital. I have seen at first hand in my constituency the transformations that have been achieved by organisations such as Historic Scotland, the Loch Lomond and the Trossachs National Park Authority and Forth Valley College with very modest amounts of capital expenditure. The more modest but nonetheless important projects that those organisations have invested in have, I believe, created more local jobs with resulting significant improvements in the local economy. In the main, those organisations employ more locally based contractors, thereby ensuring greater added value from Government spending for both the local and the Scottish economies.
I do not have as much time as I thought I would have, so I will quickly make two other points. First, we must ensure that rural Scotland benefits as it should from the roll-out of faster broadband speeds. As the cabinet secretary will be aware, I have written to him to express my concern about that and, in particular, to outline what I believe could be done to improve the situation in my Stirling constituency. I look forward to receiving his response.
Secondly, I must highlight the collapse in the price that dairy farmers get per litre of milk. For some, it has fallen from 28p per litre to 18p per litre. I believe that one of the longer-term solutions must be the development of a stronger processing industry in Scotland, which would help to create the more sustainable Scotland that the Government seeks. In this year of food and drink, development of the milk processing sector should be a priority for the Government.
From the series of reports, I think that it is fair to say that the Government is on the right track, but is far from complacent. That is why I warmly welcome the cabinet secretary’s announcement of his intention to bring forward an updated economic strategy for Scotland, which I look forward to debating in Parliament.
16:02
I welcome the fact that we now have growth in the economy and reducing unemployment, and it is a very good thing that more people are in work. However, as always with this Government, it claims credit when things go in the right direction and blames anyone else—indeed, everyone else—when things go in the wrong direction. We have just come through a period of several years in which we heard that growth and jobs could be created only with independence, that a new oil boom was just around the corner and that all would be well in a land where oil would fund the new dawn at $113 a barrel. Today, oil is trading at about $50.
In his predictions, forecasting and overgenerous estimates, the cabinet secretary might well have been listening a bit too much to the former First Minister—a self-proclaimed expert in the economics of oil. After all, Mr Salmond is a man who never sees a molehill without proclaiming it to be Ben Nevis.
However, I digress. This is an important debate, not least because it gives us an opportunity to examine what has happened to the benefits of the growth that we have seen and on which the Government is congratulating itself. Whether those benefits have been passed on to working people is a different matter, because one thing is for sure: they are not being shared fairly. At UK level, we see Osborne redistributing cash from the poor to the rich, with tax cuts for his City friends and benefit cuts for the poor. Across this country, eye-watering record-breaking levels of wealth are being accumulated by the super-rich, while at the same time working people are under immense pressure. Since 2010, wages have fallen in real terms by £1,600 a year, there has been an explosion in food banks, health inequalities are growing year on year and, for many of our people, youth unemployment, underemployment, insecurity at work, unfairness and low pay are still the hallmarks of our economy.
The Scottish Government has failed to take the opportunities that are available to it to create fairer and more secure work, and it has failed to develop redistributive policies that would help to share our economic growth more equitably. We need look only at the rejection last year of all the Labour amendments to the Procurement Reform (Scotland) Bill—the mask slipped during the progress of that bill, all right. When the SNP had the chance to support our amendments that would have ensured that contractors that bid for public contracts would have to pay the living wage, the now First Minister instructed her party to vote the proposal down. When we tried to take action against companies that avoided paying their corporate taxes, the SNP voted that down too, even though SNP members in the UK Parliament had demanded that very action of the UK Government.
The same thing happened to our amendments on ending exploitation by contractors that employ people on zero-hours contracts. Not one of the Government’s back benchers had the backbone to line up with us and vote for amendments that would have helped thousands of ordinary Scottish workers. More faces than Big Ben is what the SNP has.
Will Neil Findlay take an intervention?
I will not, at the moment.
In the past year in Scotland, the number of people who earn less than the living wage has risen by 32,000 to 427,000. Had the Scottish Government accepted our amendments, many of those people would be earning more than they are now. The Scottish Government failed those people. The truth is that this Government talks about growth but never talks about redistribution. The only redistribution that it has in mind is that from the poorer members of society to the already well off. The Scottish Government showed that with its planned corporation tax cut and it is showing it with its continuing underfunding of the council tax freeze, which disproportionately helps better-off people at the same time as councils are left with no option but to cut services.
Will the member take an intervention?
Yes.
Be brief, as the member is in his last minute.
Does Mr Findlay support his new leader Jim Murphy’s membership of the Henry Jackson Society? Would he say that that was a good move?
I thought that we were discussing the economy. Ms White would have made a better contribution by telling us how her Government is going to help the poorest people in our society. That would have been a better intervention.
The reality is that it is only Labour that is proposing redistribution and growth. We will grow the economy by investing in our people and by sharing the benefits more equitably. That is why we will raise the top rate of tax to 50p, why we are introducing the mansion tax, why we will freeze energy prices, why we will offer tax breaks for those who become living-wage-paying employers and why we will tax the bankers to help to create jobs for young people. Those are all policies that the Scottish Government opposes.
16:07
I support the motion. Whatever vision we have for Scotland and whatever hopes we have for people’s health, or for education, social infrastructure or welfare, all roads of course lead to a strong economy: “It’s the economy, stupid.”
Some have argued that the title for this debate should have been “Boosting Scotland’s Economy Further”, because despite the limited economic powers at our Government’s disposal, one cannot deny the relative strength of Scotland’s economic performance: the facts are stark. Even in the current subdued economic and political environment, it is reckless not to recognise that growth in output in Scotland in 2014 was the strongest for seven years. That, along with regularly balanced budgets, means that we now have a labour market that is drawn by rising employment and a situation in which business and consumer confidence is more upbeat, and focused investment offsets difficult trading conditions.
All of that and more in measurable outcomes is married to an environment that has highly skilled people, a wealth of natural resources and international recognition for our innovation. We also have an international brand that is second to none. However, we have a legacy of the recession, as has been said, in that real wages are still below those of 2008 and there is spare capacity in the labour market. I agree that that provides us with a challenge but—more important—it provides us with an opportunity to address an imbalance in the income gap and to close the capacity black hole.
An Organisation for Economic Co-operation and Development report just two months ago indicated that growing inequalities are a brake on economic expansion, so we must have a seismic shift towards a high-wage, high-productivity economy in which there is a clear alignment of activity in both the public and the private sectors with the Government’s national economic strategy. In that regard I, too, welcome the cabinet secretary’s announcement on updating the strategy. We must also consider where employee participation might help growth—not just in financial terms, but in decision-making terms.
So we know what we want to achieve, but we want an answer as to how. If time allows, I will dwell briefly on just a few things that will answer. The small and medium-sized enterprise sector in Scotland is huge: there are 335,000 businesses, 98 per cent of which employ fewer than 50 people, which represents 42 per cent of Scotland’s private sector employment and 24.5 per cent of its turnover. The 46 per cent increase in business start-ups—21,540 in 2013, which was up from 14,725 in 2009—shows that small businesses are rising to the challenge, aided and abetted by the Government’s small business bonus scheme. The Federation of Small Businesses confidence index showed that in quarter 4 of last year, the balance of Scottish small businesses planned to increase capital investment over the next 12 months.
With existing financial support and the encouragement to pursue funding opportunities through the €70 billion horizon 2020 SME engagement scheme, we can support Scotland’s SMEs with greater participation and help in research and innovation. Together with further alignment with the national economic strategy, which I mentioned earlier, and a supportive business environment to grow markets, develop sectors and grow companies—and therefore employment—that makes the SME sector and, alongside it, the third sector, the bedrock of long-term economic and jobs growth.
Other major areas through which we can boost the economy—which we must do to be stronger when the global slowdown reverses, as it will—are capital investment and exports. On capital, we should emphasise more localised spend and encourage councils to consider use of their reserves and disposal of unutilised fixed assets to inject capital and borrowing into local capital spend projects.
We must also use the next period to further internationalise Scottish products and services. For example, we can build on manufacturing exports’ positive performance last year, which was good news for my area of Ayrshire. That performance took place notwithstanding the strength of sterling and the weakness of some markets, which bodes well.
With the right focus and the right alignment, we can and will boost Scotland’s economy further.
16:12
For those who are unemployed and on low incomes, the challenges of the economic downturn have been particularly difficult, but it should be remembered that very few families have come through the downturn unscathed.
This Government regularly hails the benefits of initiatives such as its small business bonus scheme and the new Glasgow city deal, which are designed to encourage an uplift. Indeed, positive aspects arise from such schemes. However, the truth is that they are not enough. Key economies are in the doldrums, concerns remain about Greece and potential impacts on the rest of the EU, there are trade hostilities with Russia and a slowdown in China’s growth, which all add to the lack of confidence that affects international trade.
One direct result of that—to remind the energy minister—is the plunging value of crude oil. Since July, the value has halved to about $50 a barrel. In terms of public tax revenues that is a loss of more than £6 billion per year from public finances: nearly a quarter of the cost of running Scotland’s public services. It is on that basis, as well as appreciating that continued pressure is likely in the longer term, owing to the geopolitical tensions that affect so many regions of the world and the reality that America is becoming a net exporter of energy for the first time in decades, that we need to ensure that we have new ways to boost the economy.
We must involve the private sector in innovation and the application of enterprise, together with the development of new businesses that are ready for the needs of the 21st century world. Unfortunately, there are few signs of the radical changes that we need to see across communities, largely due to the Government's failure to boost confidence by creating an environment that enables businesses to develop and grow.
For many communities across the country, the notion of an economic upswing is an illusion. Employment in those communities is spasmodic, low paid and often in zero-hours and short-term contracts.
The SNP Government must come forward with a plan that reflects the dire need of our people to be employed, while enabling the very vehicle for employment—the private sector—to benefit.
In that context, Mr Ewing may remember that I raised with him nearly two years ago the frustrations that are faced by SMEs in navigating the public procurement process. There are so many different application processes throughout the public sector that small businesses lost days, and sometimes employed “consultants” in applying for contracts, then, after incurring great expense, found that they were either not accepted as accredited contractors—
I am pleased to inform Mr Pearson that the vast majority of contracts that are won in public sector procurement are won by SMEs. Just for clarity, does the Labour Party now support the small business bonus scheme, and should it be continued to the end of the next session of Parliament?
I am afraid that the minister missed the point that I was making about the procurement process. The reality is that many contracts are won by companies from outwith Scotland that use UK or EU support to win the contracts. Contracts are often won by companies that are ill-supported to deliver on those contracts, usually because they offered the lowest price. As a result, they leave behind work that has not been completed to sufficient quality and which ends up being fixed by legitimate, competent and professional local companies, which are left to do difficult work at no profit, when they should have been given the opportunity to win the contract in the first place.
I hope that the minister will assure us that he will give some thought to the procurement process, in order that our local companies, apprentices and communities can benefit from such contracts.
Finally, the Government must give thought to the need for capital support for trade throughout Scotland and Europe. It should give serious consideration to establishing a resilience fund for the future.
16:17
I congratulate the Scottish Government on its ambition to boost our economy further. I say “further” because this Government has been working hard for the past eight years and has had great successes. Scotland’s economy continues to grow and our unemployment rate is the lowest in the UK. Those successes are the result of a Government that understands businesses and uses the economic levers at its disposal.
The north-east knows that it has a great role to play in further boosting Scotland’s economy. With a multi-award winning chamber of commerce, Aberdeen and Grampian have been leading the way for many decades. I thank Rachel Elliott, the chamber’s policy executive, for sending us a copy of the latest oil and gas survey and two recent north-east business week surveys. I apologise to Rachel because I have had several meetings with her and her colleagues at the chamber of commerce and I have always pushed the chamber of commerce to diversify and not always to talk about oil and gas. However, because we are quite short of time today, I might talk only about oil and gas.
The chief executive of Aberdeen and Grampian Chamber of Commerce, Bob Collier, is very clear about the oil and gas sector. He says:
“Although confidence levels are at a 6 year low, the industry has a clear idea of what it needs to do following the studies chaired by Sir Ian Wood and Melfort Campbell.”
I wish that the Opposition would read the surveys provided to us—I do not know whether they read them or even receive them. The number 1 recommendation that the industry wants the Government to act upon, which Mark McDonald spoke about—although he did not say that it was the number 1 recommendation—is as follows:
“We know that the fiscal regime needs to be addressed. Nearly two thirds of respondents told us this—Immediate action from the Government is required.”
What do we get instead? A mere 2 per cent decrease in the tax rate.
Prior to 24 March 2011, the tax rate was 20 per cent, and the Tory Lib-Dem coalition increased it to 32 per cent. We have heard all that before today, of course, and the minister talked about it in his statement, but it needs to be repeated because I do not think that the message is getting through. The two political parties paid the price for that at the 2011 elections. Has the UK Government reversed the increase? No. Instead of decreasing the tax rate, at 30 per cent, it is still 10 per cent higher than it was in early 2011. That is not how to boost growth, but how to destroy an industry. In a few months, the Conservatives and the Liberal Democrats will pay the price at the ballot box for that, just like they did in 2011.
The chamber of commerce oil and gas survey is telling us that confidence about the United Kingdom continental shelf is significantly down in comparison with previous years, with 46 per cent of respondents reporting that they are less confident. In addition, 49 per cent of respondents report that they have been working at or above optimum levels in the United Kingdom continental shelf, which is also down on previous years.
Business confidence is higher in overseas markets than in relation to the UK continental shelf. Those on the Opposition benches fail to understand that we need to be competitive worldwide whatever the price of oil. The Deputy First Minister mentioned internationalisation. We learned that lesson in the 1980s, when the crisis was a lot bigger than the one we have today. Consequently, half of the sector’s sales are abroad.
As Mark McDonald said, the chamber of commerce’s report mentions that half of the operators are reporting a reduction in contractor staff, with almost two thirds expecting further reductions in 2015. There are two points there that many in the chamber fail to understand. First, we have had a skills shortage in the north-east for many years, so many of those contractors were struggling to find staff to work in any case. Secondly, much of the skilled workforce is working abroad. If the UK Government does not act immediately, we are going to lose our workforce, and most of those who come originally from the north-east will end up settling abroad.
Major companies need to be incentivised. We must ensure that the oil and gas industry has confidence. I share the industry’s optimism. It knows the situation that it is facing and is acting on that. I simply ask the UK Government to do the same.
I will vote with the Government and against the Labour Party’s shameful amendment. The North Sea is open for business.
16:22
I am grateful for the chance to participate in the debate, although I fear that I might be painfully predictable. Indeed, just as I mentioned climate change during Fergus Ewing’s oil and gas statement, it is possible that I will have something to say about GDP during a debate on the economy. My boring predictability will not surprise the Deputy First Minister.
The Deputy First Minister set out an argument in his opening speech that is also reflected in the motion—the notion that equality and cohesion are good for growth. In fact, the motion refers to “sustainable economic growth”, and the Deputy First Minister said that such growth and tackling inequalities are not opposites. I will explore whether that argument, which has been growing globally, is useful.
It is certainly a step forward from the central argument in previous generations, when the myth of trickle-down economics was being peddled—the notion that a rising tide lifts all boats. That has been shown to be false not just in this country, but around the world. Far from trickle-down economics, we had hoover-up economics, whereby the wealthiest absorbed the lion’s share of the material and economic proceeds, while the social and environmental consequences of generating that wealth were heaped on those who did not enjoy the proceeds.
Now we have the notion that equality is good for growth and that if we want GDP growth, we need to close the wealth gap—the income gap and wealth inequality. That argument has been advanced not least by Thomas Piketty, Joseph Stiglitz and other significant global figures. It is interesting that the Government seems to be foregrounding that argument. It is one that we tried to draw out in a recent debate on wealth and income inequality.
I would argue that, yes, the argument is a step forward from the trickle-down nonsense that we saw before, but it is only one step forward, and I would like once again to encourage the Deputy First Minister to complete that journey.
It is not just that equality, social justice, wellbeing and environmental protection do not undermine growth rates; it is that there is no simplistic link between them at all. There have been periods of time when GDP grew relentlessly yet there was growing inequality, worsening health and increased environmental destruction and there have been periods of recession, in GDP terms, in which exactly the same problems have continued to get worse. Similarly, there have been periods—good and bad, in GDP terms—in which those problems were reduced by an act of political will. In good times and bad, in GDP terms, it is possible to overcome, tackle and reduce these social problems.
The question is, what matters most to us? Does it matter most that we achieve the wellbeing of our society, its people and the ecosystem that sustains us all, or that we measure the amount of money that is swirling around the economy? That is all that GDP does—it does not tell us how it is being generated, how it is being used or in whose interest the economy is functioning.
The second weakness in the argument that we need equality to achieve economic growth is the question of what happens if we return to a period of lasting economic growth. What happens to the case for building a more equal society, improving environmental protection and achieving the wellbeing of our society if it is predicated on the notion that those things are good only because they are good for economic growth? We will end up losing that argument once again, and the political pendulum will swing back in the other direction. Let us not win the argument for a more equal society simply on the ground that it is the best way of becoming richer; let us argue that a more equal society is an objective in its own right.
The issue comes down to what we believe in and what kind of society we want to build. After that, we can achieve an economy that functions in that interest, and does so within technological limits.
I can give the next two open-debate speakers four minutes each.
16:27
One of the great achievements in the Scottish economy in recent years has been the great uplift in our exports. Of course, Scotland has been an exporting nation for an extremely long time. I remember standing on the shores of Lake Titicaca, looking at the ferry from Peru to Bolivia, which was built on the Clyde. I visited the biggest Buddha in the world, which is just outside Rangoon in Burma, and saw that it sits on a frame that proudly says that it was manufactured in Kilmarnock. Further, everywhere one goes in the world, one finds bottles of whisky awaiting an appreciative audience to drink them. Exporting credentials are long established and exports continue to be an important and growing part of our economy.
Many of my constituents and those of others who represent the north-east export skills that are based on their experience of the oil and gas industry and, whatever the vicissitudes of the short-term difficulties, that will undoubtedly continue. However, one of the things that I am most delighted about is that we are no longer exporting people in any substantial sense. It is quite ironic that the new memorial to the clearances at Helmsdale, which has a little child holding his mother’s hand and looking back down the glen to a place that they will never see again, is within sight of the oil field just off the coast—the Beatrice field, which has, of course, been a pioneer in the offshore wind industry.
The wind industry is going to be an important part of our future. Harbours in my constituency—in Buckie, Fraserburgh and Peterhead—want to get some of the action from offshore wind. However, the UK Government’s dithering delay and damaging changes to the regime put at risk those new jobs, which are long term and sustainable. Even when oil has ceased to be part of our economy, those will be important to us.
I have heard some interesting things in the debate. It is always a great pleasure to hear Neil Findlay speak, if only for the excitement of watching him wrestle with the internal contradictions in the arguments that he puts forward and wondering which side of him is going to win. When he criticises the suggestion that Scotland should have control over corporation tax, as Northern Ireland will before the general election, he ignores the fact that Gordon Brown cut corporation tax more often than anyone. Clearly, given that Mr Findlay criticises Gordon Brown, I can only assume that he is a Blairite.
In my remaining 60 seconds, let me touch on what Mr Findlay said about employment. I am delighted to hear him argue for our having full powers over employment law. I will join him in campaigning for that at every opportunity. His recent campaigning against the policy, however, was not so good.
Jackie Baillie seemed to celebrate the drop in the oil price, although the price that the UK Government was given by the Department of Energy and Climate Change is exactly the same as the one that the Scottish Government used. We hear that, in a year’s time, the price will be back to that level. Nevertheless, the long-term future of oil is as a feedstock for our chemical industries, so we must get off burning it—that is important.
I look forward to future prosperity and growth in our economy.
16:32
A briefing from the Scottish Council for Voluntary Organisations states:
“We are heartened by the Scottish Government’s recent and on-going rhetoric about tackling inequality and appreciating that doing so is part of growing a strong economy.”
It goes on to state that the SCVO
“is keen to hear more about practical measures”
and that it hopes that the debate today
“will highlight some of the ways in which the Scottish Government will look to achieve its aims.”
Sadly, the SCVO will be disappointed, because we have not heard today how the Scottish Government intends to tackle inequality. However, although the Government’s track record over the past seven years has not been very good, I appreciate that John Swinney kicked off the debate by saying that we enter 2015 on a sound economic footing and recognised that the more unequal an economy is, the less successful that economy will be. There is a real opportunity in 2015 to start to tackle inequality in Scotland.
I look forward to the economic strategy that John Swinney talked about bringing forward and updating. I hope that he will not only involve all parties in the chamber but talk to local government and all the partners out there, including the third sector, the SCVO and many more. If we are to create a prosperous and fairer society, we need to start to tackle poverty.
It is worth looking at the Scottish Government’s figures on relative poverty that were produced in 2014. In 2012-13, 820,000 individuals were living in relative poverty in Scotland, which reversed the reduction that we had seen in recent years, with 110,000 more people living in relative poverty compared with in the year before. I suspect that the figures for this year will be even higher, as there is an on-going increase in relative poverty in Scotland. In 2012-13, the rate of people living in absolute poverty increased by 17 per cent, or some 880,000 people. Again, that was an increase on the year before of 100,000 in the number of people living in absolute poverty. We need to be able to attack that.
I suggest to Mr Swinney that he starts looking at policies such as reversing the £61 million real-terms cut in college funding that has been made over the past few years. That would be a positive step, because if we are serious about tackling inequality and poverty, we need to do a lot more to get people the skills that will enable them to get the jobs that are available and that we should be creating.
In-work poverty is a major issue. The Scottish Government’s statistics show that 45 per cent of all people in poverty—nearly half—are in a household in which at least one person is working. More than half of working-age adults in poverty—52 per cent—are in working households. Six out of 10 children in poverty in Scotland—59 per cent—live in a working household. There has been an increase in in-work poverty in the past year.
We need to tackle in-work poverty and raise the minimum wage. I will certainly stand on such a platform as we approach the general election. We need to end zero-hours contracts and raise the living wage, which would benefit more than 400,000 workers in Scotland.
I am afraid that I must ask you to come to a close.
I hope that we can not only grow the economy and celebrate its success but ensure that more and more people can share in that success, by tackling inequality and poverty. This Parliament has the power to do that and we need to get on with it—now.
16:36
As Gavin Brown said, there is much in the SNP motion with which we agree. We agree that we should celebrate the successes of the Scottish economy.
The successes are not limited to Scotland but apply throughout the UK. We have one of the fastest rates of growth in the developed world and we are the fastest-growing major economy in the world today. Since 2010, net employment has gone up by 1.75 million and 2.2 million new private sector jobs have been created, three quarters of which are full time. Inflation is coming down and wages are rising faster than prices.
That is a good-news story. Of course, the SNP likes to claim all the credit for the good news. Christian Allard did just that in his speech. There are at least two reasons why we need to take that with a pinch of salt. First, the SNP has been telling us for years that it does not have the power to make a difference, because it does not have the economic levers, so it can hardly claim all the credit for the success.
Secondly, as Willie Rennie reminded us, the SNP opposed the approach that George Osborne and the UK Government have taken, which has delivered the success. The SNP was not alone in doing that; it stood shoulder to shoulder with the Labour Party in its critique of the coalition Government’s approach. Mr Swinney and Ed Balls could virtually have been twins, so close was their critique of the coalition Government’s approach—[Interruption.] I remember Mr Swinney’s colleague calling for a plan B and saying that the chancellor’s plans would never work. He has been proved completely wrong: they have worked and they have delivered success.
There have been a few flies in the ointment in Scotland, which we should not ignore. The retail figures for Scotland in quarters 2 and 3 last year showed a decrease, although retail figures went up elsewhere in the UK. The Royal Institution of Chartered Surveyors residential market survey showed a decline in property sales in September, which it said was due to market uncertainty. The Federation of Small Businesses confidence survey showed a fall in the final quarter of 2014 that was greater than that in the UK as a whole. That means that Scotland is the third lowest-placed part of the UK for business confidence, behind only the north-east of England and Northern Ireland.
What could be the common factor? Could it be anything to do with September’s independence referendum and its impact on business confidence? The SNP should not claim credit for all the good news when its own obsession has potentially set us back. The Mackay Consultants monthly economic report for December concludes that there are increasing signs that growth in 2015 will be significantly lower than in 2014, and we have not even talked about the oil price yet.
I want to address an issue that the cabinet secretary raised in his speech and that a number of other members, including Alex Rowley, picked up on—the living wage. We agree with the ambition of raising wages and living standards. I do not think that any member in the chamber would disagree with that, but it needs to be done in a manner that is affordable. I will give two examples of industries where there might be difficulties.
The first is the hospitality sector, which is a low-wage industry in many areas. The introduction of the living wage would undoubtedly increase the pay of many of the staff, but if the staff pay goes up, prices will go up, and if prices go up, that will hit people in their pockets and also hit the competitiveness of Scotland’s tourism offer. When we have debates in the chamber about tourism, we always hear that we are already seen as a high-cost destination, so we need to be careful about that.
Does the member agree that, if hotels and other businesses introduce the living wage, they will see a more settled staff and fewer staff moving about?
Indeed. I do not disagree that there would be advantages in bringing in the living wage. All I am saying is that to bring it in too rapidly or without being aware of some of the consequences might turn out to be disadvantageous.
Will the member take an intervention?
No. I want to move on because there is another point that I want to make about the living wage.
The other industry that I give as an example is the care sector. We know that there are many low-paid employees in that sector. Care providers that I speak to say that they cannot afford to pay more and budgets are already tight. In many cases, patients who pay privately are, in effect, cross-subsidising those who are local authority funded. If the Government decides that it wants to pay the living wage, it will have to pay more for care. That will mean funding local government more so that it can pay the care providers more. Let us not suggest that this is a cost-free option for either public spending or household budgets.
Will the member take an intervention?
I think that I am in my final minute.
I am afraid that you are.
What we need is a more competitive Scotland. There is good news out there, but more could be done. We support the small business bonus, which is continuing. We oppose the retail levy, which is now being scrapped—that is good news. There are benefits to retailers south of the border in relation to rates that have not been introduced in Scotland. We are seeing a proposal to reintroduce rates on sporting interests, which would put Scottish rural businesses at a competitive disadvantage compared with the rest of the United Kingdom, and we are seeing rates of land and buildings transaction tax being imposed in Scotland from the spring that, again, will put us at a competitive disadvantage compared with the rest of the United Kingdom.
All those matters are under the Scottish Government’s control and it could be dealing with all of them now if it wanted to do so.
I am afraid that you must come to a close, please.
We have had economic successes, and we have had help to secure those successes from people voting no in the referendum in September. Let us not now put them at risk.
16:43
The debate has been wide ranging, as a debate on the economy should be, but in closing for Labour I come back to the critical issue of the challenges that our oil and gas industry is facing, which is the single most urgent, immediate issue facing the Scottish economy today and is entirely absent from the Scottish Government’s motion on boosting the economy.
SNP ministers will say that oil is a bonus and not the basis of Scotland’s economy, as if that made it all right not to talk about it in tough times. I am glad that Mr Ewing came to the chamber earlier this afternoon to make a statement about oil and gas, reflecting at least some degree of recognition that the industry is indeed of fundamental importance to Scotland’s economy. I was disappointed that he had so little new to say, but the critical thing is that oil and gas are hardly a bonus when the industry accounts for up to one sixth of our GDP and an even larger share of our export earnings.
Some 50,000 men and women work offshore in what can be one of the toughest working environments in the world, especially on a night such as tonight. Many thousands more earn their living in the oil and gas industry onshore and tens of thousands of jobs depend indirectly on the boost to the economy from oil and gas.
I am very grateful to Lewis Macdonald for giving way. To make progress, will Labour support the tax reforms that we have brought forward today, which we believe should be implemented in the March UK budget?
Mr Ewing refers to tax reforms that he has brought forward today, but he will be aware that the tax reforms that he is lobbying for are tax reforms that we are lobbying for, tax reforms that the industry is lobbying for and tax reforms that are supported by trade unions in the sector. The proposition that there should be support for development and exploration and that the field allowances should be reformed is not a new one that Mr Ewing has brought forward, albeit that I welcome his support for those measures; it is a proposition that has very broad support in the sector and the industry.
The point has been made by Mr Ewing and his colleagues that we have seen low oil prices before. That is only too true, but it is too easy to forget just how damaging those falls in the price of oil were for the regional economy of the north-east and for Scotland’s industrial health in general. In the oil price recession of 1986-87, for example, houses that had previously gained in value from month to month suddenly became unsellable and thousands of hard-working people learned for themselves the meaning of negative equity.
Twelve-dollar oil in 1999 was damaging, too, and it prompted the then Labour Government to set up PILOT in recognition of the need for the industry and the Government to work together to overcome the potentially damaging effects of a prolonged period of low oil prices. Mr Ewing is vice-chair of PILOT, so he should be better placed than most to recognise its value.
We know that a low oil price can damage businesses and jobs, and we also know that a responsible Government can make a difference if it intervenes effectively to mitigate the effects. That is why we need the Scottish Government to start by assessing the impact of $50 oil on the Scottish economy and what the impact will be if the price continues to fall and goes down to $40 a barrel or lower. It is a pity that the Government has not taken the opportunity that it was offered this afternoon to provide such an assessment of the wider economic impact, but perhaps Mr Swinney will be able to do so when he closes the debate.
We are not talking about just another cyclical dip in the world price of oil such as those that the Scottish economy has experienced and survived on previous occasions. Wood Mackenzie made the situation clear in its UK upstream review of 2014 and what to look for in 2015, which it published the other day. As Sir Ian Wood did in his review last year, it sets out clearly the challenges that the sector faces now that it did not face in 1986, 1999 or 2008. It finds that future prospects are at risk. At an oil price of $60 a barrel, 80 per cent of unsanctioned projects would fail to generate a sufficient return. It says that there is real concern over future investment, with $16 billion of investment potentially being at risk of cancellation or deferral over the next five years. New unsanctioned reserves of 220,000 barrels of oil equivalent a day could be put at risk by $60 oil.
Those are big numbers, as I am sure that the Government will recognise, even for an industry that routinely invests billions of dollars in order to make big returns in future years. We no longer see a rising graph of production from the North Sea, and there is no realistic prospect of net production going up. A whole series of decisions are being made now in boardrooms around the world about whether to continue production from fields that are in any case in the latter part of their productive life. We know that at least 30 existing fields in the North Sea require an oil price of $50 or more in order to be profitable. If they are not profitable, they will close down, and once a field has been decommissioned there is no going back.
Therefore, we need to intervene. It is right to say that part of that intervention must be fiscal, but we also need to intervene in relation to the economic impact of the type of changes in the oil industry that we are considering today. That is why Scottish Labour has proposed a resilience fund. That fund would not, as has been implied, be just for the oil industry but would operate for any key sector of the economy that faced the risks that the energy sector faces today.
Has Jim Murphy asked Diane Abbott about the new proposal? We would not want to study a proposal that some London MPs would not agree with.
I am afraid that, although Mr Allard is clearly an avid follower of social media, he has confused two quite different stories, but I am pleased to tell him that Jim Murphy requires permission from nobody to bring forward important proposals for the Scottish economy. I want to know whether John Swinney has secured permission from Nicola Sturgeon in the past couple of hours to agree to the proposal for a resilience fund to support sectors of the Scottish economy that are under pressure. If he has, we would be very happy to hear that assurance from him.
Our challenge to the Scottish Government is to begin to take the crisis seriously, to recognise the fundamental importance of oil to the Scottish economy, and to get on board with all those who are calling for urgent action to save businesses and jobs. That means being serious about being prepared to work with other parties and not just talking the talk, but walking the walk. The Scottish Government needs to get on and do that now.
16:50
One of the obligations on a minister is to correct at the first available opportunity incorrect information that they have given to Parliament. Duncan McNeil is not here to witness a moment when I will have to do that following his intervention when I was speaking earlier on. I said that we had not fixed a target for the number of accredited employers paying the living wage that we wished to secure. However, I have been advised that buried in the programme for government is the target of 150 companies by the end of 2015, although we will, of course, endeavour to exceed that.
I am sorry that Mr McNeil was not here to witness that beautiful moment. I am sure that he will watch it on the video player endlessly to appreciate it.
Mr Brown asked about the Government’s economic strategy. I can confirm that it will be published in March. What I say to him about the Government’s economic strategy is that there is absolutely nothing new—[Laughter.] I am sorry; I meant to say that there is nothing wrong with putting in material about what we are already doing, because they are the sound and correct things to be doing in the economy. However, we will update the Government’s economic strategy to reflect some of the challenges that we face and some developments in our own thinking, particularly on issues such as tackling in-work poverty, which is a more significant issue in the economy.
Murdo Fraser chastised me for not being generous in applauding the success of the UK Government’s plan. I simply remind him that the chancellor is borrowing £100 billion more than what was set out in the fiscal plans in 2010. Net debt is continuing to grow and is forecast to peak at 81 per cent of GDP next year. It is funny that none of that was mentioned by either Murdo Fraser or the other fanzine for the United Kingdom Government, Willie Rennie, as it indicates that, far from working, the chancellor’s plan has significantly delayed economic recovery. In 2010, the chancellor predicted that we should experience in 2012 the growth that we are experiencing now. We did not do so then.
Siobhan McMahon raised the issue of the underspend and the discussion about it that has taken place. I made a full parliamentary statement in June on the end-of-year financial position, in which I made it clear that the Government’s fiscal departmental expenditure limit underspend was £145 million, which represents 0.5 per cent of our fiscal DEL budget. The fiscal DEL budget is the budget that we have available to spend; it is the cash that we can spend on public service projects.
The other components of the underspend include annually managed expenditure, which is not budget that I control but which includes, for example, some of the budget cover that is provided for student loans. That is entirely demand led. When the money is not spent on student loans cover, it cannot be spent on other wider public expenditure.
Finally, I reassure Siobhan McMahon that every part of the £145 million of the fiscal DEL underspend was earmarked to be utilised to support our spending plans in 2014-15. I can confirm that that is being taken forward as part of the Government’s budget in the current financial year.
My friend and colleague Bruce Crawford made a substantial speech in which he considered the analysis that was undertaken by the chief economist in his most recent report, weaved together the performance in reducing skills shortages and the real wage crisis that exists in our society, and made it clear that we have an opportunity in the economy to upskill employment and improve the quality of employment in Scotland.
Mr Crawford made the essential connection that not all of that can be delivered by the Government on its own; it can be delivered only as a product of partnership between business and Government, which is what the Scottish business pledge is designed to do. It is designed to say to the business community that there are elements of improvement in the quality and sustainability of employment that the Government wishes to undertake and achieve, but we can do that only if businesses work with us to achieve that objective. I am indebted to Mr Crawford for highlighting the importance of ensuring that the business pledge is successful as an element of the Government’s economic strategy.
I will give further consideration to Mr Crawford’s point about decreasing the size and scale of our capital projects to provide a broader range of capital projects around the country. He will appreciate the challenge that there is to that in the capital programme, because major projects such as the south Glasgow hospital and the Queensferry crossing are fundamental parts of our programme. That makes the achievement of the objective that Mr Crawford set out rather more difficult.
My colleague and friend Linda Fabiani made a similar point to the one that Mr Crawford made, but it was about the partnership that is necessary in our economy between Government, trade unions and business to achieve shared objectives. One important element of the Government’s policy-making framework is the way in which we are regularly in dialogue with the trade union movement through the biannual meetings between it and the First Minister, which have been consistent since the current Government was elected in 2007. Regular dialogue also takes place with business organisations. The aim is to encourage the creation of a shared agenda between the Government, trade unions and the business community to achieve our objectives. That will be essential in achieving some of the points in the Scottish business pledge, to which I referred.
That shared agenda is material to securing business support for delivering the living wage, a point that was discussed by Mr Rowley and in a different way by Mr Fraser, who highlighted the fact that the living wage will be a major challenge for some parts of our economy. I accept that some parts of the economy will struggle to deliver the living wage, but we should not compartmentalise and talk about sectors of the economy that will find that difficult. Mr Fraser said that the hospitality industry will find it difficult but, this morning, I visited Rabbie’s in Edinburgh, which is a successful travel and hospitality business that decided to pay the living wage to all its staff. The productivity and performance improvements that have come as a consequence have justified absolutely every bit of the investment that the company made.
In the time remaining to me, I will talk about the oil and gas sector. The important issue, and the one on which the debate has turned, is the question of what intervention will truly make a difference in challenging the oil price difficulties in the North Sea oil and gas sector today. Mark McDonald and Christian Allard powerfully set out the contribution from Aberdeen and Grampian Chamber of Commerce, which said that
“the fiscal regime needs to be addressed.”
Nearly two thirds of respondents to the chamber of commerce’s oil and gas survey said that that is the issue that has to give. The four key priorities that Mr Collier, the chief executive of the chamber of commerce, highlights are the costs, the fiscal regime, collaboration and the maximisation of economic recovery. Malcolm Webb, the chief executive of Oil & Gas UK, has indicated that the two major challenges are industry inefficiency and UK Government energy policy. Improving the fiscal regime is fundamental to achieving a better future for the oil and gas industry.
Will Mr Swinney acknowledge that, this week, Malcolm Webb said:
“Given the need for the industry to urgently reduce its costs and increase its efficiency, Jim Murphy’s proposal to introduce a resilience fund which can be used by Local Authorities to help persons affected by adverse economic conditions seems sensible”?
Quickly, please, Mr Macdonald.
If Malcolm Webb thinks that that proposal “seems sensible”, can the Scottish Government not at least agree to assess its potential impact in the area?
John Swinney—you must draw to a close, please.
I will draw to a close, simply by saying that Jackie Baillie has indicated to us that setting up an oil fund will take money from public services, so we have had a rather remarkable change in position from the Labour Party. [Interruption.]
Order, please. We are now out of time.
The Government recognises the significance of the oil and gas industry to Scotland. We will take forward all the interventions that we can within our powers, stewarded by Mr Ewing, who puts in a power of effort to take forward dialogue with the oil and gas industry. However, the key change that will make all the difference to the oil and gas industry is an improvement in the fiscal regime of the UK Government and we ask it to take that forward now.
That concludes the debate on boosting the economy. It is now time to move to the next item of business. I remind members that a revised version of section A of today’s Business Bulletin was issued earlier today, which includes Parliamentary Bureau motions on committee membership and substitution on committees.
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