Official Report 390KB pdf
The next item of business is a debate on motion S7M-01070, in the name of Stephen Flynn, on programme for government: an economy fit for the future. Members who wish to speak should press their request-to-speak buttons now.
15:11
From the outset, let me be clear with the Parliament—in fact, let me be unambiguous and emphatic: the Government believes in sustainable economic growth, and we intend to deliver it. The Parliament and the members of the public who sent us here to represent them will welcome that focus. It is a focus that runs right through the heart of our programme for government, because without growth, we cannot fund the services that the public rely on. With it, we can innovate, develop and, most important of all, we can create jobs and opportunity right here in Scotland.
That alone is a prize that is too great to ignore. To achieve it, we start with solid foundations. Members will be all too familiar with the fact that since 2007, gross domestic product per person has grown faster in Scotland than in the rest of the United Kingdom as a whole. They will know that, in Scotland, our productivity has been more than double the UK average. They will also have read the research published by the Royal Bank of Scotland that shows that Scotland is leading the UK with the fastest growth in new start-ups.
Let me repeat: that is just a starting point because, working with our newly established national council for economic growth, we intend to make Scotland the best place on these islands to do business. That is a bold vision that is built on protecting what we have and building for the future. It seeks to capitalise not just on our history or our natural environment but, most important of all, on the energy, skills and talent of our people.
Yesterday, we were at a fiscal literacy event. I noticed that the cabinet secretary was not there—maybe he knows everything. We learned that there is an £800 million tax base gap. If everything is so rosy and Scotland is doing so well, as he set out in the introduction to his speech, where does that gap come from?
It is long overdue that the Tories took a fiscal literacy test, given that they are the party of Liz Truss. I will leave the member to reflect on that very small matter of collapsing the entire UK economy.
While they are getting on with reflecting on those things, we will create an economy in which long-established sectors such as tourism, food and drink and financial services can adapt, innovate and stay ahead of the global competition. We will create an economy in which new sources of growth across energy, net zero technologies and infrastructure generate long-term sustainable employment and help to shelter our economy from global shocks.
The cabinet secretary makes an important point about those sectors driving growth, but one of the big challenges for Scotland relates to the firms that are based in Scotland. He mentioned that there was a high rate of start-up growth, but one of Scotland’s big challenges is the number of firms that do not grow and then are bought over by overseas conglomerates. There is a real challenge of retaining a mass of firms in Scotland.
If Mr Sweeney bears with me for a moment, I will come to that very point, because we have some good news in that regard.
Beyond the energy, net zero and infrastructure space, we also want an economy in which our creative sector continues to break new ground, to challenge convention and to shape our national brand. We want an economy in which emerging sectors such as space, artificial intelligence, life sciences and critical technologies have the talent, investment and opportunities that they need to get stronger and create businesses that start up and scale successfully. To repeat—because it does bear repeating—we want an economy that generates well-paid jobs for people in every corner of Scotland.
I am clear-eyed enough to know that, to deliver those aims, we must work at pace. To investors I say: we know that the processes involved in moving from idea to implementation can too often be too sticky and too slow. That is why the Government will create a major projects office to accelerate progress on nationally and strategically significant investment projects. It will unblock barriers and unlock private investment.
Although the aim of facilitating high growth is welcome, is there not a danger of duplication with the creation of that unit? Is that not what Scottish Enterprise is for? Is there any intent to reform the enterprise agencies?
I do not believe that there will be any duplication—I will make sure that that is not the case. However, when we are talking about the future of the enterprise agencies, it is important to recognise that we have a direction of travel in relation to regional economic growth. I look forward to saying a bit more on that in my speech. I am sure that Mr Johnson will agree with me on many of those points, as he has appeared very keen to do so on far too many occasions up until now.
I re-emphasise our determination to unblock barriers and unlock private investment. However, we recognise that that is not enough on its own. We can reduce barriers and, as Parliament, we have a responsibility to make sure that when we regulate, we do so simply, flexibly and as a last resort.
To the innovators, I say: we know that, too often, it can be easier to find the capital to support and develop your ideas and products not here in Scotland, but abroad. We want you to stay in Scotland and to scale in Scotland, because your success is our collective success. That is why the Government will create a new high-growth unit to provide the wraparound support that you need. It will build on the support offered by our enterprise agencies and our investment bank. However, that is not enough on its own. That is why we will use the power of public sector procurement to stimulate innovation and provide new business opportunities for Scottish companies, and we will empower our regional economies to thrive. That point will require an element of bravery from the Government—on the point of bravery, I see that Rachael Hamilton wants to come in once again.
Mr Flynn, I am not scared of you. Ninety-eight per cent of businesses in Scotland are small businesses. Your speech is talking about scaling up and being supported by South of Scotland Enterprise and other enterprise agencies. They tend to support bigger businesses. Is it not time that we gave small businesses support, too, given that they are the drivers of our economy?
As well as going on a fiscal literacy course, Rachael Hamilton should perhaps also look at some of the other schemes that are in place from this Government to support small businesses. They include the very generous small business support that we offer to ensure that they do not have to pay business rates in Scotland, which is incredibly important to the bottom line for many of those small businesses that she and I want to see thrive.
With revaluations, that is gone.
However, she appears to be suggesting that she is not in favour of the small business bonus, which I think will come as a surprise to many of the businesses in her constituency.
Through the chair please, cabinet secretary.
Is the cabinet secretary able to provide the chamber with an update on his relationships with Alvance and Liberty Steel Dalzell? Businesses and entrepreneurs will find it frustrating that the Government was prepared to put in hundreds of millions of pounds of financial backing for those companies on the promise that they would make significant investments, which has not been fulfilled. What action will the Government take, if for nothing else than to at least restore some confidence among those entrepreneurs that this Government is on their side?
I know that Mr Rennie has been very diligent on that issue over very many years. It is important to place on record that, sometimes in life and in politics, you do not engage with people who you do not believe to be acting in good faith. I suggest that that is the case in this regard: not with regard to Mr Rennie, but with regard to the company that is associated with Dalzell. I expect it to respond in a much more positive fashion than it has up until now.
On the specifics that Mr Rennie seeks an answer to, I give him the commitment that I will write to him in detail on the topic and that I will meet him in person, if he feels that that will be of benefit.
What lessons has the Government learnt from its engagement with Mr Gupta and the GFG Alliance? The Serious Fraud Office is investigating them and, in numerous years, they have not published financial accounts. Surely the Government must reflect on the decisions that it took at the end of the past decade so that we do not repeat those mistakes.
I do not think that it is a mistake for the Government to want to protect jobs in Scotland. In fact, it is incumbent upon us to do that. I could point to a number of examples over recent years where we have done exactly that: where we have been well intentioned and approached it in good faith. Unfortunately, however, that good faith is not reflected in everyone who we have dealt with. As I said, I am more than happy to write to Mr Rennie in relation to the specific points that he has made.
I am conscious of time. The point that I was seeking to make is that allowing our regional economies to thrive and providing that empowerment will require an element of bravery from Government—not only because it represents public sector reform but because it involves moving power from the centre outwards. However, I believe that there is shared ambition among most in this Parliament to do just that.
That shared ambition extends to the support that we have in this chamber for a variety of issues, whether that is expanding childcare, the important role of developing and nurturing the skills of tomorrow, or bringing the long-term unemployed back into the workforce, because of the positive impact that those things can have on our economy.
I do not say “shared ambition” lightly, but because it is essential that we acknowledge that economic growth cannot be about only this Government: it must be about this Parliament. Yes, we will have our differences. However, as members of this Parliament, we must be willing to come together to deliver for our economy and for the people who sent us here.
This Parliament must recognise that the world around us is turning, and that Scotland cannot afford to stand still or to yearn for the past. To do so would repeat the mistakes of Prime Minister after Prime Minister after Prime Minister after Prime Minister—and that is just in the past few years at Westminster. We must instead recognise that domestic supply chains matter, that energy security is not a choice but a necessity, and that our partnership with European allies is essential.
To be clear, it is why the Parliament must fight to protect the energy jobs that we have but also be big enough to back the energy opportunities of tomorrow: the wind, solar and pump storage projects that will not only provide us with ever more abundant clean energy but allow us to create new jobs and build the expertise that we need to export our skills across the world. We will not run and cower from the opportunity in front of us, as those who deny science on the benches to my left seek to do, but will highlight the economic opportunity that energy abundance has and continues to offer our nation—not only can it offer jobs; it offers us a unique opportunity to anchor the digital world right here in Scotland. It is our competitive advantage, and we get only one opportunity to capture it.
There is no doubt about the importance of energy and so on to creating jobs, so why has the Government completely failed over the past 20 years to take communities in rural Scotland with it and bring them on board? Communities are fighting daily to prevent the industrialisation of rural Scotland with massive turbines, solar parks and, now, AI centres. Why has the Government failed to take the communities with them?
I thought that the Tories believed in investment, believed in energy abundance and understood the constitutional make-up of these isles. As Finlay Carson will know, responsibility for the grid in Scotland does not rest with the Scottish Government. National Energy System Operator plans rest with the UK Government. Planning is of course within our remit, but Finlay Carson will recognise and understand that, on these isles, energy needs to get from A to B. I will come to that point in due course.
[Inaudible.]
I have been very generous with my time, Deputy Presiding Officer, and I am conscious that that generosity has eaten into my time. I will jump to a concluding point.
All of us in the chamber have watched the doom-mongering that has stemmed from Westminster over recent years. We saw it again yesterday when Rachel Reeves—sorry, John Healey—spoke about the future of the UK. What a contrast that doom-mongering is to our opportunity in Scotland to grasp the renewables opportunity, look at the digital world in a new way, make sure that our financial services are growing and ensure that innovative technologies such as semiconductors are harnessed and secured in Scotland for our domestic security. That is a hopeful and optimistic future for Scotland, and we should be very proud of it.
I move,
That the Parliament notes the publication of the Scottish Government’s Programme for Government, Ambitious for Scotland, and its aims for a strong and sustainable economy; welcomes the commitment to deliver economic growth and make Scotland the best place to invest and do business; recognises that raising living standards through supporting the creation of more good, secure and well-paid jobs, can help generate the resources needed to invest in high-quality public services; believes that the transition to low carbon industries, including renewable energy, can create economic opportunity and strengthen Scotland’s future competitiveness in order to benefit people and communities across Scotland; welcomes continued investment in infrastructure, connectivity and innovation so that more opportunities can be realised in Scotland, and supports action to increase climate resilience and tackle the climate and nature emergencies.
I call Daniel Johnson, who has five minutes, please.
15:28
I assume that my five minutes will be a little bit more curtailed than the cabinet secretary’s ten. I move the amendment in my name.
I spent the summer being asked constantly what I thought was going to be in the programme for government. I said that I did not know. I should have been much more confident, because there are two big ideas in it: one was about regionalisation and the other was about health service reform, and both came from the Labour Party manifesto.
However, we have to consider those issues seriously. It is important that we move from the agenda that has come from this Parliament—across different Administrations, I think—which is focused on building central bureaucracy, to an agenda that is about delivery.
I am concerned that we have had a lack of clarity and articulation from the Government so far. However, I want to be constructive in my comments because the agenda is an important one. I would like a reform agenda that is genuinely cross party, because long-lasting reform requires cross-party input and consensus.
General Petraeus, who is a leading general and strategic thinker, has a theory of change that relies on four key things: having a big idea; communicating that big idea; having a mechanism for delivery; and then refining it. My concern is that, although the Government has said that it wants to have person-centred delivery, it has not said what assets it believes it has and how it will reorganise those for delivery—it has certainly not communicate that.
More specifically, we have to look at regionalisation. The cabinet secretary referenced Scotland’s growth figures. Those are interesting, but we should look at growth figures around the country. Manchester’s GDP per head was £1,700 lower than Scotland’s in 2016; however, it overtook Scotland in 2022. Since 2009, Scotland’s productivity has grown by 13 per cent; however, it has had only 1 per cent growth since 2020.
In the north-west, it is the reverse: it has had 11 per cent productivity growth since 2009, but 10 per cent of that was since 2020. Something is happening in England’s regions that is not happening in Scotland’s regions. We need to analyse that and bottle it.
I worry that, although the regionalisation agenda is important, it has been blown off course in recent days, with the focus being overly much on council mergers. We need to articulate why regionalisation matters, and that is not just about the numbers elsewhere. I believe that it matters because regions are the fundamental building blocks of economic growth. Through regionalisation, we can create co-ordinated plans for delivery and partnerships between Government, industry and trade unions, and we can plan infrastructure to grow local economies.
My view is that, since 1999, we have been using devolved powers to recreate a unitary state, and that has been a mistake. We need to use the reform agenda to reverse that and to push powers out from the centre. At the moment, there is a fear in local government that we are talking about sucking powers up from local authorities. Local leaders in England, where we have successful combined authorities, are clear about one thing—ignore mayors and those structures, because that is not what it is about; it is about having a plan to co-ordinate across local authority areas and pushing power down from the centre. That is what we need to see in Scotland.
Likewise, in other areas of public sector reform, we need to hear more about the how—how it will make things better—and, critically, we need to know the organising principle for what will be changed and how we will ensure local accountability.
In my final minute, I want to draw attention to the skills agenda. Labour market projections show that, in the coming years, we will have a labour shortfall of 1.3 million people. In the programme for government, all we had was 150,000 apprenticeships. If we divide that by five, we get a figure of 30,000. That number sounds familiar, because it was the pledge on the number of apprenticeships from the previous session of Parliament. Over the past five years, the number of apprenticeship starts has never exceeded 26,000, so it is a recycled pledge, and one that does not acknowledge the shortfall of the past few years.
We need a skills agenda that is about not just catching up but upskilling and reskilling—an agenda that focuses on those who are not in education, employment or training and on how we ensure, with an ageing population, that people stay in the workplace.
Scotland has enormous assets and huge potential. We are a small nation, but one that can be flexible. Above all else, we have people with enormous potential and talent, and we need to make the most of them.
I ask Mr Johnson to move amendment S7M-01070.1.
Oh, I did that at the beginning of my speech. In case I did not, I will move it now.
My apologies.
I move amendment S7M-01070.1, to insert at end:
“recognises that reforms to the skills system, including interventions to help those who are economically inactive, are required to drive growth and allow individuals to realise their potential; understands that real partnership between public and private sectors will be key to producing better outcomes across the economy, and calls on the Scottish Government to outline how its plan for regional devolution will operate to give regions the tools they need to grow local economies and increase prosperity in their communities.”
I call Malcolm Offord to speak to and move amendment S7M-01070.4. You have 10 minutes, Mr Offord.
15:33
Thank you, Deputy Presiding Officer. Another day, another debate on the economy, and on economic growth. What is that? Since 2010, no politician in this Parliament has experienced it, so how can they debate it? In the past 10 years, GDP per head, which is the only true measure of prosperity, has been anaemic in the UK, Scotland and Europe. In France, for example, in 10 years, that measure has gone up by 8 per cent—
Will Mr Offord take an intervention?
No, I am going to make some progress. GDP per head has gone up by 8 per cent in France; 5 per cent in the UK; 3.5 per cent in Germany; and 3 per cent in Scotland. To be clear, that is inflation adjusted over 10 years, meaning that all four countries have grown at less than 1 per cent per annum. Misery likes company—it is not just us—but compare that with the USA, which has had 18 per cent real-terms growth in the same decade, and where GDP per head is now one and a half times that of the UK. Mr Flynn and the tartan army saw that first-hand in Boston this summer.
What is to be done? It is actually pretty simple. How about we adopt some policies that drive economic growth? I will give some examples of those, but before I do, I ask: why bother with economic growth? Yesterday, we had a very worthwhile workshop in Holyrood with the Scottish Parliament information centre, the Fraser of Allander Institute and the Scottish Fiscal Commission. I think that all members would agree that it was a sobering day. The Scottish Government faces a £5 billion black hole over the next five years, and there are no easy answers.
SNP policy decisions—which are no doubt well meaning—have pushed welfare spending up to record levels, public sector employment and pay up to record levels, Government borrowing and debt service up to record levels and taxation up to record levels. The only way out of that squeeze is to create economic growth, but the only record there is that it is close to zero.
The population of Scotland is 5.5 million, comprising 900,000 children under 16, 3.6 million adults of working age and 1 million pensioners. The 3.6 million adults fall into three categories: 2.1 million work in the private sector, 600,000 work in the public sector and 900,000 are not working.
The welfare economy, created by Nicola Sturgeon and promulgated by the SNP for the past 10 years, has been very good for people who work in the public sector and for those who do not work, but it has been disastrous for the private sector.
For the public sector, there have been 20 years of upwards-only pay deals, no-redundancy policies, and final salary pensions that have long since been abolished in the private sector. For people on welfare, there is the most generous regime in the UK, with Scottish social security already costing £1 billion more than the UK equivalent. The private sector just has to pay for it. With six income tax bands, Scots are the highest taxed in the UK, driving productivity down. Energy costs are at a record high level. Employment taxes are at a record high level. Minimum wage is at a record high level, and business rates are at a record high level.
Is it any surprise that when I meet small and medium-sized enterprise owners, they just shake their heads in despair? Those with the broadest shoulders are now shrugging their shoulders. Why bother growing their revenue when it is all taken away? Why bother hiring new staff or expanding their premises when the additional costs are so punishing?
More than half of private sector workers are employed by small and medium-sized enterprises. Surely the alarm bells must have sounded when the Government learned that, of the top 500 SMEs in Scotland, one third reported that their revenues went down in the past 12 months.
Will the member take an intervention?
No, I will continue for now.
Just today, VG Mathers Ltd, hauliers in Kintore, has gone into liquidation after six years of trading, citing skyrocketing fuel prices, soaring insurance premiums, mounting compliance burdens and rising maintenance costs.
It is time now for a reset. We need to build a wealth economy rather than a welfare economy. It is only the private sector that can create the wealth that pays for public services and welfare, so let us implement policies that will make work pay, reward workers who work, incentivise business owners to invest in their companies and focus on jobs.
Why focus on our base of 380,000 SMEs in Scotland? Because the days of mass employment in Scotland are over. We discussed that in the chamber last week. We highlighted Inverclyde, where 16,000 jobs in shipbuilding gave way to 8,000 jobs in electronics, which gave way to 2,000 jobs in call centres, in ever-decreasing circles.
The member for Inverclyde, Stuart McMillan, last week put on the record that the blame for that lies with the Tories. It is not down to me to defend the Tories, but that is just a lazy trope designed to fit a political narrative. The reality is that, by the 1980s—I was there in that area—South Korea was building ships at one third of the price and in one third of the time of the Clydeside yards. International competition closed the shipyards.
Similarly, on electronics, it was well known 10 years before IBM closed in Greenock that it could manufacture more cheaply in Hungary and Bangladesh, so it left. We should focus all our attention on our base of 380,000 SMEs because they are loyal—
[Made a request to intervene.]
I am going to continue.
Those SMEs are local, they are loyal to their communities and they will not disappear overseas as long as they remain competitive. This is our opportunity to incentivise them to grow their revenues, invest in their premises and people and employ local adults who can be retrained and reskilled.
However, in order to do that, we need to reduce their costs of doing business, and to deliver that, we need a co-ordinated approach between Westminster, Holyrood and local authorities to enact policies that drive economic growth.
Let me give five short examples. Policy number 1 is cheaper energy. My colleague Duncan Massey will expand on that, but it is clear that we cannot reindustrialise Scotland with our energy costs at four times those in the US and seven times those in China. It is time that we used our own North Sea gas as our transition fuel.
Policy number 2 is lower taxes. If the Government increases taxes on people who work while paying more to people who do not work, we should not be surprised if more people do not work. Instead, we should lower the tax rates and give everyone an incentive to work.
Policy number 3 is skills and training. One quarter of secondary 1 pupils do not have the literacy to access education—let us fix that. Let us stream them through the Swiss “head, hands or heart” system at 12, and get them into meaningful technical jobs through schools and colleges. For adults, let us create a lifelong learning programme for continuous reskilling and retraining.
Policy number 4 is deregulation. Let us get rid of the business prevention officers, simplify and fast-track planning decisions for SMEs and remove useless European Union bureaucracy such as the general data protection regulation.
Policy number 5—no more gimmicks and no more woke. To the cabinet secretary, I say: please just drop the food price cap—they tried it in Hungary and the poor went hungry. Let us have no more performative debates on Gaza, transgender and neverendum—just get it out of the way and allow our own creative and innovative Scots to build businesses and create jobs.
What is the objective here? It is simple: to build a new, modern Scotland that builds prosperity to all through well-paid and meaningful jobs rather than through welfare. It is to create a joined-up industrial strategy for Scotland based around our 10—not three—world-class centres of excellence: financial services, advanced manufacturing, energy, food and drink, tourism and hospitality, creative industries, life sciences, agriculture, fisheries and marine. It is to get our young people streamed into those sectors, primarily through our schools, colleges and apprenticeships and, where it adds value, our universities. It is to get our adults reskilled and retrained, with an objective to grow our working population from 2.7 million to 3 million by helping 300,000 Scots off welfare into work. It is to equip our local authorities with 10-year plans to regenerate their town centres with business premises for SMEs and with health, housing and transport solutions for local workers, which will rebuild civic pride, with one single objective: to create wealth, which will in turn create health and happiness.
The Laffer curve is never wrong: increase taxes, and we will collect less tax; reduce tax rates and we will collect more revenue. We can look at Sweden 20 years ago. Between 2000 and 2017, Sweden reduced its tax ratio from 51 per cent to 44 per cent of GDP, and it now collects an extra £20 billion per annum.
It is time to drop the mindless ideology: tax the rich? Well, the richest 1 per cent of the population is already contributing 30 per cent of income tax, and the top 10 per cent contributes 50 per cent. What happens when they stop striving or retire early, or leave? It is pretty simple. Newton’s third law says that every action has an equal and opposite reaction. Increasing tax rates reduces revenue collection; reducing tax rates increases revenue collection. Go figure.
I move amendment S7M-01070.4, to leave out from “recognises” to end and insert:
“believes, however, that successive policies of the Scottish Government have done the opposite, with high energy costs, high taxes and high welfare preventing economic growth; recognises that creating good, secure and well-paid jobs is vital for Scots to be able to build their own healthy and prosperous lives and that these can only be created with economic growth; believes that if Scotland wants real economic growth, it needs cheap, abundant, reliable energy, which is best delivered by maximising oil and gas over the medium-term, and transitioning to nuclear power over the long-term, with renewables playing a complementary role rather than a dominant one.”
15:43
There might be a little bit of a key change at this point in the debate. I begin by acknowledging some aims of the Scottish Government and of the UK Government that I share, and which I hope they share with each other.
The Scottish Government’s motion talks about raising living standards; having a strong and sustainable economy; investing in high-quality public services; increasing climate resilience; and tackling the climate and nature emergencies. Any progressive party or Government should share those objectives.
With regard to the UK Government, I am slightly surprised that Labour’s opening speech did not champion a little bit some of the Prime Minister’s remarks in his first speech. Andy Burnham, as Prime Minister, promised the biggest changes in the past 40 years. He talked about a new economic model. He said that the four decades of the neoliberalism that began in the 1980s have not been kind. He said that, in the 1980s, Britain took some
“wrong turns”.
He went on to say:
“Political power was centralised, economic power privatised and”
large parts of
“the country deindustrialised”,—[Official Report, House of Commons, 1 September 2026; Vol 790, c 27.]
and they have still not recovered.
That is ambitious rhetoric. It remains to be seen whether any of that turns into action on the scale that is necessary to meet that challenge. Critically, if there is action to follow on the scale of that challenge, it must include bringing much economic power back under democratic control.
As well as centralisation, privatisation and deindustrialisation, the harms of the neoliberalism that began in the 1980s also included the growth of extractive industries, exploiting people and planet, and hugely growing inequality. We cannot simply reverse time, but we can begin to repair the damage.
On privatisation, Scotland never copied the doomed experiment of privatising the water industry, and it has already taken ScotRail back into public ownership. However, there is far more that we can do to grow public and community ownership in our economy. The current moves towards bus franchising should be a first step towards fully publicly owned bus services. Public stakes in renewable energy and investment in publicly owned and operated heat networks can also play a significant role. We can begin to reverse decades of harmful drift on housing policy, when social housing was sold off and new build was directed by investors’ interests instead of social need. Changing that would take time, but routes to bringing private rented housing stock into social rental and ensuring that, in future, land use is determined by local housing needs would be a strong start.
I was interested by a detail in the Green amendment. Does “stock transfer” infer that there would be market-level compensation? What does Mr Harvie envisage that transfer entailing?
I certainly do not imagine that it would be on the scale of the wholesale stock transfer away from the social rented sector. However, if any landlord believes that, in the face of rent controls, they are no longer making enough extractive profit from private rents, they should be given a route that would ensure that that home could move into the social rented sector with the tenant in situ. The Government has already started exploring other options, and we should build on that work.
On poverty and insecure work, again, good intentions in the Scottish Government have been the beginnings of important changes in the application of fair work principles, but we are held back by the devolution settlement. With more power to act, we could achieve fair working conditions and an end to poverty wages throughout the economy. I remind those who are angry about social security costs that poverty wages are the overriding reason why many workers depend on in-work social security benefits.
On union rights, the UK Government has taken some good first steps by repealing some of the worst of recent anti-union laws, and that agenda can go further. Devolution does not let us legislate for that, but the Scottish Government could work with the trade union movement to drive up membership, especially in underunionised sectors such as hospitality and the gig economy. Union organisation helps to drive up standards. It rebalances power in the economy and has been shown to cut inequality as well.
On deregulation, another feature of 1980s neoliberalism, the Scottish Government’s better regulation framework is not as simplistic as a straightforward deregulation agenda, but it too often places the interest of business ahead of the purpose of serving the public interest. In addition, many regulators in Scotland have had legal duties imposed on them to put economic growth ahead of the public good, of public health and of protection for the environment. Members do not need to share the Green scepticism about GDP to recognise that regulators should be putting their regulatory purpose ahead of boosting GDP. A truly successful economy is one that respects those priorities while meeting people’s material needs.
On wage and wealth inequality, we must confront the gulf between the highest and lowest paid and the extraordinary growth in the social and political power of the super-rich to control how we live our lives, what ideas we are exposed to and how we see the world. This week, yet again, Scotland and the UK have seen how profound a threat we now face from far-right ideas and racist and anti-immigrant conspiracy theories, which some of the wealthiest people on this planet are propagating. Redistributing power in our economy must mean redistributing wealth. Again, Scotland has taken initial steps with a fairer tax system, but that must be only the beginning, and every level of Government must do more to ensure that asset wealth is part of the tax base.
If we do all that, we will achieve not only a more equal society but an economy that has the resources to invest collectively in the things that improve our lives collectively: healthcare, education, community facilities, the public realm and so much more.
The economic model that has been dominant for decades has caused inequality, allowed exploitation and accelerated environmental destruction. It has allowed our public services and our public realm to be degraded when they should have been renewed for the 21st century.
All that can, and must, change if people are to be given a reason to believe that politics is capable of improving their lives and their communities, and of building a world that we can pass on to the next generation with pride.
I move amendment S7M-01070.2, to leave out from first “; welcomes” to end and insert:
“and to raise living standards, invest in high-quality public services, increase climate resilience and tackle the climate and nature emergencies; further notes the Prime Minister’s stated intention to develop a new economic model and his criticism of four decades of neoliberalism; believes that significant changes to both UK and Scottish policy will be needed to turn this ambition into reality; calls on both governments to develop long-term strategies to expand public and community ownership in the economy with an immediate focus on municipal bus services, public stakes in renewable energy and mechanisms for stock transfer from the private rented sector to social landlords; urges the UK Government to devolve to Scotland the power to improve working conditions and union rights; calls on both governments to review their regulatory frameworks to ensure that public interest tests have primacy and that growth duties on regulators never impinge on their regulatory purpose, and believes that tax systems at local, Scottish and UK levels must all be used to dramatically cut inequality as well as to raise sufficient revenue to invest in rebuilding public services.”
I call Rachael Hamilton to speak to and move amendment S7M-01070.3. You have six minutes.
15:50
Where to start? I will attempt to do so by speaking to some of the amendments to Stephen Flynn’s motion. The Scottish Conservatives agree on some aspects of the programme for government around public sector reform and procurement modernisation. We heard a lot about those this morning in the Economy, Tourism and Energy Committee: businesses need support to be able to scale up, and they need access to public sector procurement. That is particularly so in the AI sector, in which there seems to be a lack of Government guidance.
Here we are, with Stephen Flynn and John Swinney trying to rebrand two decades of economic failure as a fresh start. It is not a fresh start. They promised an economy fit for the future, but Scots are still being punished with high taxes. While businesses face rising costs, there is sluggish growth, yet the Government wants more reviews and consultations to be put on to businesses that are just trying to survive. Scotland needs action from the SNP; it does not need any more dithering. We have seen enough of the dithering. We have a high-tax and high-spend agenda, and the only way that to ensure that we have public services that are fit for purpose is to cut taxes.
I turn to some of the information that we received yesterday at the fiscal literacy day. I reiterate that I believe that the cabinet secretary should have been there, because he would have heard what the rest of us—and his SNP back-bench colleagues—heard. Scotland has lagged behind the rest of the United Kingdom for a decade, at a cost of £12 billion. The benefits bill, which Patrick Harvie talked about, is nearly £10 billion, and it will reach £10 billion by 2030.
Rachael Hamilton has placed on record twice the matter of where I was yesterday. Some of us have childcare commitments on a Monday. I would not want her to get into the space of trying to make a political point—which I am sure that she would try to use elsewhere—in relation to me without recognising that I was not able to be in Edinburgh yesterday because, like a lot of people in this Parliament, I have children. I am sure that she will reflect on that.
Yes, I totally accept that—I had three children of a young age when I started here in 2016. I had childcare responsibilities as well.
The SNP’s own fiscal watchdog says that weak earnings and employment growth are eroding Scotland’s tax base. The Scottish Fiscal Commission identified a £888 million tax base performance gap in 2024-25. That was driven primarily by slow aggregate earnings, and employment growth that was slower in Scotland than in the rest of the United Kingdom.
The programme for government talks about making Scotland
“the best place to do business”,
but it also says that businesses should be doing more consultation and should have more regulation.
I, too, was at the event yesterday. We heard that, the previous year, Scotland had a surplus of more than £600 million, and that one issue with the fiscal framework is the volatility from one year to the next. That is another reason why we need to reform the fiscal framework. Does Rachael Hamilton agree?
Any budget will have a forecast, as Bob Doris will know, and there will have to be a reconciliation process, whatever happens. However, the fundamental argument remains that the tax base has not improved and the Government is relying on choices being made in the Scottish Parliament that support things that it increasingly cannot afford. The public can see that.
Turning to the Greens, I was surprised that Patrick Harvie burst out laughing at Malcolm Offord’s reference to the Laffer curve, because we all know that addressing in-work poverty, which he talked about, involves people not turning down pay increases in order to keep their child payment, making work pay, increasing productivity and allowing people to be skilled up and have earning power. Allowing people to get on in life is the best way to support them.
On the Green amendment, the figure for the percentage of Scots paying the higher rate of tax has more than doubled, from 12 per cent in 2016-17 to a forecasted 26 per cent this year. A million taxpayers are expected to be caught by that by 2030. As we have heard, the tax rises have not raised the money that was hoped, with analysis suggesting that the 48p top rate of income tax might have reduced public revenues by £22 million—that is £22 million that could have gone to essential public services. Scots already pay £1.8 billion more in tax than they would if they lived elsewhere in the United Kingdom.
I will move on to some of the other amendments. I agree with much of the Reform amendment, particularly on the impact of high energy costs. I agree with the argument that we must increase our nuclear capacity, including by building small reactors, which would be a simpler solution, and I agree that we should support the oil and gas industry in the North Sea and all the jobs that that creates.
I see that my time is running out. Did you say that I have six minutes or seven minutes, Deputy Presiding Officer?
Six minutes.
Could I take another minute, given that I took interventions?
You can have some time for taking interventions.
I will quickly wind up by speaking about the Liberal Democrat amendment. I am afraid that we cannot support it, because I feel that the Liberal Democrats are patting themselves on the back for supporting an SNP budget that has failed the economy, weakened economic growth and failed on the delivery of public services. The Liberal Democrats got a very small return from their negotiations—I think that the Government played them.
On the Scottish Conservatives’ amendment, we need to remove the barriers to growth and remove the challenges that small businesses and the rural economy face. Stephen Flynn’s comment about the small business bonus scheme was really uninformed, because he knows perfectly well that the assessors’ revaluation, for which the Government set the criteria, has increased valuations and the bills that small businesses face and has resulted in a decrease in the number of small businesses that are eligible for the scheme, because they have gone over the threshold for rates relief. I do not need to declare an interest in that regard because, as a shareholder in a small business, I do not receive rates relief.
I move amendment S7M-01070.3, to leave out from the first “welcomes” to end and insert:
“notes that, after almost two decades of Scottish National Party administration, Scotland continues to suffer from weak growth and an increasingly uncompetitive tax environment; further notes that the SNP promised to build an economy fit for the future eight years ago, yet now acknowledges that economic growth has been too low for too long; recognises the Scottish Fiscal Commission’s and the Auditor General’s concerns about the significant fiscal pressures facing Scotland and the weakness of its business base; considers that further reviews, consultations and interventions such as statutory food price controls risk adding costs and uncertainty rather than removing barriers to growth; regrets that the Programme for Government does too little to unlock the potential of Scotland’s rural industries or address the infrastructure constraints facing rural and island communities, and calls on the Scottish Government to cut the burden on workers and businesses and to pursue a genuinely pro-growth agenda that delivers for Scotland’s urban and rural economies.”
15:58
I welcome, rather belatedly, the cabinet secretary to his post and thank him for his engagement on what is a pretty vast brief.
I agreed with much of the cabinet secretary’s opening speech and, indeed, I agree with much of his motion. My criticism is that his perspective was perhaps a little rose tinted, as he elided some of the challenges. There are challenges that are external and over which we have less control, but businesses in Scotland also face challenges as a result of things that are very much within our control. There is a persistent impression that decision making takes longer in Scotland than it needs to and longer than it takes elsewhere. Collectively, we need to address that.
I welcome the recognition in last week’s programme for government that our islands are
“productive engines of economic growth”.
That is reflected in my amendment, which I will have the pleasure to move. That statement has the benefit of being true. We see that in the energy sector, with our transition to net zero; in our fishing, agriculture and aquaculture sectors; and in our wider world-leading food and drink sector, with Scotland’s aspirations resting fairly heavily on our islands continuing to punch above our weight.
Government rhetoric must be matched by reality. We can see, 10 years on, that the Islands (Scotland) Act 2018 has failed to live up to the promises that were made by ministers at the time. I have come across no islander who has anything good to say about the legislation or who can point to so-called island proofing or island impact assessments having delivered anything tangible in practice. It feels as if that act paid lip service against the backdrop of a Government tendency to centralise.
Over the summer, we saw the loss of air services on key lifeline routes serving the islands and have seen ongoing and widespread disruption to ferry services on the west coast. The islands resilience fund was slow to be set up and to pay out and still ignores many legitimate claims from coastal communities. Similarly, the roll-out of the digital infrastructure that is essential to levelling the playing field for rural and island areas has been slow and subject to lengthy delays and currently lacks resilience. There is time for legislative scrutiny and some much-needed dental work to put some more teeth into the islands act.
Despite those criticisms, Scottish Liberal Democrats will continue looking for the areas where we can make progress with the Government and with other parties, because that is what the public would expect. The cabinet secretary was right to say that there is frustration and even anger out there about politicians overpromising and underdelivering. The Government has been in power for two decades and must shoulder much of the responsibility for that, but the onus is on all of us who are elected to this Parliament to find ways of getting things done to address the real and pressing needs of those who sent us here.
Our track record as a party, whether on legislation or in budget negotiations, has lived up to that expectation. Last year, among other things, we secured £178 million in a relief package to help businesses struggling with eye-watering rates bills and I suggest to Ms Hamilton that that was no small matter. It provided breathing space, but fundamental reform is required. I welcome the fact that the Government has embarked on that process, but it must keep business at its heart, which will not be easy.
The part of the Liberal Democrat amendment that dealt with non-domestic rates was the only part that I was struggling to understand in order to reach to reach a decision on how to vote. Is Liam McArthur saying that, in future, there should be fundamental reform that achieves fairness and predictability while also ensuring that those businesses that can pay, do pay, or is he actually, as some do, asking for a tax cut for business, much of which will be capitalised into business rents and would have to be paid for either by taxing workers or by making cuts to services?
That is a fair question that goes to the heart of the dilemma that is faced by the Government in particular as it tries to come up with something that will command confidence across the business community and from the public as a whole. Those funds must be raised somehow and we have to find a way that feels fair and equitable. What we see in the current system are sharp rises that seem to come out of nowhere and cause viable businesses short-term cash-flow issues that can, in some cases, leave that viability in question through no fault of their own.
Patrick Harvie highlights some of the complexity, which is why the Government must avoid short-term fixes and the sorts of gimmicks that have given rise to the proposed food price cap that has been roundly condemned as counter-productive.
On housing, Parliament declared a housing emergency two years ago, since when the Government’s action in response has not reflected the same urgency. I was at a summit yesterday looking at Orkney’s future workforce, at which housing was identified pretty consistently, across the board, as one of the biggest obstacles, if not the biggest obstacle, for businesses and third sector organisations and to the delivery of key public services. I am sure that Orkney is not alone in that and that there will be similar stories across the country. Long-term investment is needed, as are urgent steps in the short term.
The Scottish Government must also accept that the cumulative impact of some of its recent policy decisions has created uncertainty and a loss of confidence in the sector, which has not helped. If the Government truly considers our islands to be engines of growth, it cannot afford to maintain a one-size-fits-all approach to policy that ignores the specific needs of those communities. Better-tailored support for island resilience, connectivity and infrastructure in the short term will have long-term benefits for Scotland’s economy as a whole.
I welcome the ambition that is set out in the Government motion, but I also recognise the substantial work and reform that are needed to ensure that that ambition can be realised for every part of Scotland.
I urge colleagues to support the amendment in my name. I move amendment S7M-1070.5, to insert at end:
“; recognises that work to ensure Scotland has a strong and sustainable economy must address high levels of economic inactivity, an inefficient planning system and the impact of rising business rates; recalls the £178 million of additional rates relief, secured by the Scottish Liberal Democrats in the 2026-27 Budget, while acknowledging that businesses are still feeling the effects of the 2026 rates revaluation with changes required to ensure revaluations don’t produce unfair bills that threaten otherwise viable businesses; believes that island and rural businesses play a key role in helping Scotland’s economy to grow and that those businesses rely on good transport connections to help move supplies, products and staff; acknowledges that where cuts are made to lifeline flights or where there is consistent disruption to ferry services, the viability of these businesses can be adversely affected, and calls for the Island Resilience Fund to offer more funding, and sooner, to both island businesses and the coastal communities that have been consistently excluded from the scheme.”
We move to the open debate.
16:05
I was keen to speak in this afternoon’s debate to talk about how the Scottish Government, along with key partners, can do all that it can to support hugely talented individuals and businesses that are innovative and often at the cutting edge of their sectors to flourish and remain based in Scotland, while having a vibrant international reach and achieving success.
Supporting such businesses is one way in which Scotland can continue to maintain and strengthen our position as the most attractive place in the UK for inward investment outside London and the south-east. However, we can both celebrate success such as that inward investment track record and be clear that we must always strive to do much more. We can do that in a cross-party, collegiate way.
I take Mr Doris’s point made about inward investment, particularly foreign direct investment. However, does he recognise that there is no critique of the nature of that investment? For example, the takeover by a foreign company of a Scottish company is classed as foreign direct investment.
It is reasonable to analyse individual investment opportunities to determine whether they meet the test of benefiting the Scottish economy and Scotland-based businesses. Mr Sweeney makes reasonable points.
I am sure that we would all welcome the fact that Scottish Enterprise supported projects over the past five years, up to March 2025, to create or safeguard around 90,000 jobs and bring £4.6 billion of capital investment to Scotland. However, by the same token, I suggest that Scottish Enterprise can, despite its impressive performance, still do better. I am open to suggestions in the debate about what more it can do.
I want to use my speech to highlight one of Scotland’s success stories. The motion speaks of making
“Scotland the best place to invest and to do business”.
I will give a Glasgow example. I recently met my constituent David Campbell, who, along with his business partners, is a co-founder of LumiAIres. The meeting was hugely beneficial. I learned that LumiAIres is building the world’s most efficient and advanced neuromorphic photonic processor chips, so that artificial intelligence can run anywhere, in every environment, on earth and in orbit, with minimal power, no cooling and entirely on-device. That world-leading technology is in my city of Glasgow.
LumiAIres is a Scottish company working on global problems, and Scotland got it started. Scottish EDGE, which is a great example of partnership funding, Scottish Enterprise, Space Scotland and Innovate UK have all backed it. It is strong partnership funding.
David Campbell believes that our innovation ecosystem is doing its job very well. However, we must also ensure that we are equally equipped to support scale-ups. That is vital.
All the key ingredients exist in Scotland to support scale-ups. We have the universities, the scientists, the engineers and the innovative founders of many companies. Expansion and scale-up require significant capital. I am confident that our successful innovators and businesses will secure capital. However, we need to support an investment environment that enables that capital to be invested right here in Scotland. We also need capital investment that expands job numbers here in Scotland, rather than seeing investment move overseas, with intellectual property and the associated tax base going with it.
The Scottish Government’s programme for government indicates that there is to be a new major projects office
“to accelerate progress on … strategically significant investment and private capital projects … unlocking private investment across strategic sectors including housing and energy.”
On that front, LumiAIres’s neuromorphic photonic chips are 90 per cent more efficient than the silicon alternatives. With data centres and the energy that they use at play, that is strategically important not just for Scotland but for the world economy. I welcome that, and I hope that companies such as LumiAIres and other similar companies can benefit from the major projects office initiative.
It is positive that the Scottish Government will also establish a high-growth unit, as we have heard, working with senior industry leaders from the outset to accelerate support for high-potential businesses to scale, anchor themselves and grow in Scotland. That is hugely important.
It would be incredibly beneficial for the cabinet secretary to visit LumiAIres and discuss with its founders how the Government can continue to scale up such groundbreaking and innovative businesses. That would be an example of how the new high-growth unit could work with businesses to create a successful pathway not only for the company but for other businesses to continue to develop and flourish here in Scotland. I extend that invite to the cabinet secretary.
I was also pleased to hear, in the programme for government, about the development of the invest in Scotland portal and plans to work with partners to deliver a programme of investor events and summits, including a scale-up summit in 2027. We want to see positive outcomes from that. I also note that the Scottish National Investment Bank is to launch a Scottish innovation fund to promote university spin-outs and to leverage private capital.
I want to ensure that our fantastic start-ups and spin-outs are invested in so that they put down deep roots here in Scotland and have an international reach. That requires private investment, but I am also keen to know what more we can do with public sector investment and equity stakes so that, when businesses go global, we get a significant recoup of finances back in the Scottish public purse and we can invest in the next generation of business innovation. I support the Government’s motion, and I look forward to an exciting opportunity for Scottish businesses to go global.
Before I call Ms Gibson, I remind everyone who wants to speak in the debate to press their request-to-speak button.
16:11
As the Government seeks to build a more just, fairer and more prosperous Scotland, it is vital that it grows Scotland’s economy and ensures that Scotland is the best place to do business. We are rich in resources and innovation, and in that regard we have a history of leading the world. Indeed, Scotland has a proud history, having played a pioneering and central role in the industrial revolution, transforming from a rural society into a powerhouse of heavy industry, textiles and engineering. Today, it stands at the cutting edge of new technologies that are already transforming, and will continue to transform, our society.
I will not detain the chamber by listing the world-changing innovations that emanated from Scotland and that have benefited mankind—
I do not mean to put a downer on Patricia Gibson’s input, but today we have seen Scotland’s programme for international student assessment ranking absolutely tanking. In Scotland, we used to be world leading in education. What happened, and how will that impact what she has talked about?
We have enjoyed seeing the greatest number of working-class children go to university without tuition; we have a record number of passes in exams; and reading, maths and science levels are increasing, so it depends on which measure we use. I am not surprised that Rachael Hamilton chose to use a measure that shows Scotland in its poorest light.
In Scotland, we come from a tradition that, because of our long history of free education, has led the world in innovation. We must look to the future with ambition, as is set out in the motion in the name of the Cabinet Secretary for Economy, Tourism and Transport. We must be mindful of the potential that is offered by our resources, our people and our innovations, and we must use the confidence that that provides to build a better Scotland for all our people.
At this juncture, I should say that I do not want to put a dampener on the contributions that were made by Malcolm Offord and Rachael Hamilton, but the uncomfortable truth that flies in the face of much of what they said is that, overall, more taxpayers continue to move to Scotland from the rest of the UK than are leaving. That statistic comes from His Majesty’s Revenue and Customs data this year. No official economic data shows that any businesses are leaving Scotland due to the burden of tax, which is a wee uncomfortable truth that I shall leave them to grapple with at their leisure.
We need to build a better Scotland, and whether we do so depends on how we continue to nurture economic growth and fund the public services that we all rely on. Economic growth is the canvas on which our broader social aims, such as tackling poverty, are painted. It is important to remember that the Scottish Government’s investment in childcare is a driver of economic growth by allowing women to make a greater economic contribution than might otherwise be the case.
An important part of having a successful economy is attracting inward investment to ensure we have high-quality, high-skill jobs so that the people of Scotland can utilise their skills and live well and upskill. I will not repeat the information and statistics that the cabinet secretary set out so competently, because I would not do it so well. However, driving economic growth is central to our commitments to ease the cost of living, reduce child poverty and deliver and improve public services for all. I am pleased to hear from the cabinet secretary that every opportunity will be taken to ensure that Scotland continues to have a strong and vibrant economy in the years to come, with well-paid jobs in every part of Scotland, from our cities to our island and rural communities. We must continue to make Scotland the most attractive place in the UK to invest, create jobs and build a more sustainable future.
That is not in any way to underplay the challenging context in which business operates. We know that there are challenging global circumstances and we know of the structural weaknesses of the Westminster economic system; the damage caused by Brexit, harming business; and the impact of soaring inflation, soaring energy costs and the cost of living, which is making the landscape much more challenging for business than it otherwise would be. However, in Scotland we have a Federation of Small Businesses, which I am sure sent the same briefing to all of us, telling us that its confidence—the confidence of small businesses in Scotland—is growing, and it is growing well. Again, that may put a wee dampener on the doom mongers on the Conservative and Reform side of the chamber. We must continue to attract investment, and we must continue to protect and nurture home-grown businesses and markets with the greatest growth potential, removing barriers to progress, increasing business and investor confidence, and securing growth in priority areas.
I apologise, but I need to correct Patricia Gibson’s assertion that small businesses are confident. We all received a briefing from the Federation of Small Businesses that says:
“You cannot build an economy fit for the future if the businesses that make up 98% of the business base lack confidence in the present.”
Read the brief. It says it there.
I am actually quoting from the brief, and I am in no way downplaying the challenges that the Federation of Small Businesses has put forward. I am in no way attempting to undermine that. However, the key line from the briefing is that the confidence of small businesses is growing. I know that that is uncomfortable for Rachael Hamilton to hear and is not nearly as big a black cloud as she would like, but there we go. Maybe the member should take that up with the Federation of Small Businesses and tell it that it has no right to be optimistic or to have confidence in the future, because that does not suit her party’s agenda.
The programme for government includes important measures to make a more positive business environment possible, with the advancement of the £1.5 billion Scottish Government bond programme, which will help to attract new investment into Scotland, and the new major projects office, which will unlock private investment across strategic sectors such as housing and energy.
I look forward to the driving of innovation in health and care through a partnership between industry, NHS Scotland and other care providers, through innovative procurement and through support for an industry-led life sciences cluster, which is very important to Ayrshire. There is also the £35 million life sciences accommodation programme. I welcome the development of AI Scotland as a flagship international programme. This is what Scotland is good at. It is good at being at the cutting edge of new technologies, just as it was at the cutting edge of the industrial revolution. In that regard, Scotland has not lost her edge.
We operate in extremely challenging circumstances in that we are shackled by a failing Westminster system. However, the outlook for Scotland is very positive. We are punching above our weight right now. Imagine for a moment what more we could do with the normal powers of an independent country at our disposal. It is possible to build prosperity and deliver a fairer Scotland. With the limited powers that we have, we are doing just that.
16:19
I am pleased to contribute to this debate on the programme for government—an economy fit for the future. As the member for East Lothian Coast and Lammermuirs, I speak for a constituency that combines coastline, productive farmland and growing towns and villages and that, of course, has a strategic position on the edge of the capital.
East Lothian is one of Scotland’s fastest-growing areas. Tourism and renewables are key sectors and both employ a considerable number of people in the area. Tourism employs around 3,000 to 4,000 people and generates around £200 million for the local economy. A recent report by the Energy and Climate Intelligence Unit and the Confederation of British Industry showed that East Lothian employs around 1,500 people in the green energy sector. With Torness being decommissioned in a few years, a transition will be key. I have seen the growth in the green energy sector in my region. About six months ago, Gillian Martin and I visited Had-Fab, which has doubled or trebled its workforce and has taken on many apprentices. There is huge potential for growth in green energy jobs in the area.
Community benefits and community ownership of renewables, as well as the development of heat networks, will be a key focus of my work in the next five years. The pace of growth in East Lothian brings opportunities, but it also brings pressure on infrastructure, housing, skills and local services. I will touch on that later in my speech. An economy that is fit for the future must deliver for places such as East Lothian, and it is vital to have flexibility, as a one-size-fits-all approach does not work.
I welcome the clear focus in the five-year programme for government on growing the economy, eradicating child poverty, tackling the climate emergency and sustaining high-quality public services. We all agree that those things go hand in hand. We need to grow our economy in order to tackle child poverty and the climate emergency, and we must look to have high-quality public services. In particular, I support the commitment to deliver economic growth that reflects the unique strengths, opportunities and ambitions of each part of Scotland. That principle is essential because, as I said before, a one-size-fits-all approach will not work.
I agree with Daniel Johnson that local economic strategies must be at the heart of delivery. In East Lothian, we have precisely such a strategy. East Lothian Council works closely with its neighbours in Edinburgh, Midlothian, West Lothian, Fife and the Borders.
The East Lothian local economic strategy sets out a clear vision for a thriving, sustainable and inclusive East Lothian. It is built on five key principles, with the headings: “Fairness”, “Enterprising”, “Thriving & Resilient”, “Community Wealth Building”, and “Green & Sustainable”. Those are priorities that we can all agree on. They align closely with the national priorities in the programme for government and with the Edinburgh and south-east Scotland city region deal and the regional prosperity framework.
Our strengths are real. Tourism and hospitality generate hundreds of millions of pounds for the local economy and support thousands of jobs. Our food and drink sector has a strong reputation not only in East Lothian but across Scotland. As I mentioned, we have significant renewable energy potential, particularly around the former Cockenzie power station site, and there are offshore opportunities, as well as strategic development sites at Blindwells. Just last week, the Cabinet Secretary for Economy, Tourism and Transport, Stephen Flynn, visited the Edinburgh Innovation Hub near Queen Margaret University. It presents opportunities for growth in East Lothian and brings prospects for new jobs, housing and commercial activity. The reopening of East Linton station has improved connectivity, and there is the possibility of a station at Blindwells. Further investment in sustainable transport is essential not only in East Lothian but across Scotland. Transport supports both residents and businesses.
However, growth alone is not enough. We need growth that is fair, that retains more wealth in local communities and that creates good jobs for local people. Community wealth building must be more than a phrase; it must mean procurement, land, assets and the creation of enterprise support so that more of the benefits of investment stay in East Lothian. It must mean ensuring that young people from our towns and villages can access the skills and apprenticeships that are needed for the green jobs of the future, whether those are in renewables, construction, digital or care—all areas of growth in East Lothian.
Therefore, I welcome the programme for government’s emphasis on attracting investment and backing home-grown businesses. My background is that I worked for 20 years with the Bank of Scotland in commercial banking, so I know how businesses grow and what they need to do that. I urge the Government to ensure that regional economic strategies and local plans are properly supported with the funding, flexibility and powers that are needed to turn ambition into delivery. As I mentioned last week, that would include powers coming back to the Scottish Government from the UK Government.
The role of Scottish Enterprise, the Scottish Futures Trust and the Scottish National Investment Bank need to be flexible to secure support where it is needed. I would like to see part of that discussion being taken forward by the cabinet secretary, if he could mention that in his closing response.
The city region deal has also brought substantial investment. That is an example of what the UK and Scottish Governments can do by working closely together, as we saw at the opening of the innovation hub at QMU last week. We need continued support for strategic sites, for skilled programmes to meet local needs and, of course, for infrastructure in areas such as public transport, digital and energy.
Climate action and economic opportunity also go hand in hand. East Lothian’s landscape and coastline are among our greatest assets. Protecting them while developing renewable energy, sustainable tourism and nature-based solutions is not a contradiction—it is the only sensible path. Green jobs must be local jobs. That requires the existence of skills pipelines that are linked to our colleges, schools and employers. It requires planning and consenting systems that move at a pace that ensures opportunity without sacrificing environmental standards. The Scottish and UK Governments also need to look at that.
Last week, I hosted an event with EDF at which we talked about consenting support right across Scotland. There are issues in that regard that we need to take forward as MSPs. Housing is also an economic issue. Without sufficient affordable and mid-market homes, we cannot retain or attract the workforce that our businesses need. Blindwells and other sites have the potential to deliver thousands of new homes, alongside other employment opportunities. I hope that the Government will continue to work closely with East Lothian Council and regional partners to unlock those possibilities.
An economy fit for the future is one that works for every community in Scotland. It is one that recognises the distinctive contribution of places such as East Lothian—our enterprise, our national assets and our growing population—and equips them with the tools to succeed. The programme for government sets that national direction; regional economic strategies provide the local road map.
I support the motion and look forward to collaborating with ministers, local partners and colleagues across the chamber to ensure that East Lothian and every part of Scotland can thrive in the years ahead.
16:26
I welcome the Scottish Government’s aspirations for Scotland’s economy, which the cabinet secretary has set out today. The ambitions to promote inward investment, create sustainable jobs and make the most of our renewable energy potential are all laudable aims. I welcome, too, the commitment to supporting the rural economy. In particular, I look forward to hearing more detail around the last provider fund and how it will operate.
Small businesses are the backbone of our rural economy. The services that they provide keep communities functioning. However, despite the warm words in the programme for government, the failures of the Government are already holding back the economy in my constituency. From public services being pushed to breaking point, to the lack of affordable housing that Liam McArthur mentioned in relation to his constituency, and the unavailability of childcare, such failures are damaging opportunities for businesses to grow.
The failure in the transport sector is perhaps the biggest threat. Problems across the west coast ferry network were well documented in the spring, but those on the Sound of Harris have persisted. From April to July, 214 sailings on the Sound of Harris crossing were cancelled due to technical reasons. The ageing MV Loch Portain—the vessel that links the Western Isles across the Sound of Harris—was out of action for months this spring as she was being re-engined. She returned to service in mid-May, but by July a vibration issue with her gearboxes had been identified and she was removed from service again. Now island communities are being told that she will not be back before the end of the summer timetable in October.
Only one other vessel in the Caledonian MacBrayne fleet can operate that route: the MV Loch Bhrusda. When she has been required to cover other services, no vessel at all has been able to service the Sound of Harris. Thankfully, the MV Glen Sannox, a welcome addition to the fleet, has been able to operate sailings from Lochmaddy in North Uist to Tarbert, with a passenger charter vessel operating across the sound. However, that arrangement has meant that businesses in the South Harris port of Leverburgh and the island of Berneray have been completely bypassed by vehicle traffic travelling through the islands. The start and end of their visitor season has been marked by intense periods of ferry disruption.
To add insult to injury, the £10 million islands business resilience fund that the First Minister came to the Western Isles to announce during the election campaign, which he said would be delivered within 20 days of forming a Government, turned into a £3 million fund to be delivered within 100 days, with the rest to be available over the next five years. That is not what island businesses were promised, and it is not what they need. They were promised compensation for the disruption that has already happened to their businesses—not a promise that they should expect more chaos in the future, but that it will be okay because there is £7 million left to cover it.
The reputational damage to our islands cannot be underestimated. Unreliable ferry services have put people off travelling and our visitor economy is suffering. As new ferries enter the fleet over the coming months, investment needs to be made in rebuilding the reputation of our islands as a place where visitors can be confident of a holiday free from disruption. The Scottish Government needs to support the visitor industry in our islands to achieve that. It also needs to be supported by further investment in new vessels, including replacements for the Sound of Barra and the Sound of Harris ferries, along with a replacement for the MV Lord of the Isles. The recent disruption on the Sound of Harris not only affects tourists but impacts businesses operating across the island chain, impacts public services and makes our islands a harder place in which to live and make a living.
If the Scottish Government is serious about economic growth across rural Scotland and our islands, that means investing in good, reliable transport links that communities and visitors can rely on.
16:30
Last week, I spoke in the chamber about my genuine gratitude that people were at the heart of our programme for government: that citizens were being placed over structures. When it comes to our economy, I take the same stance. Our economy must be shaped by the needs of our communities, and it is vital that we acknowledge the role of secure, well-paid jobs in providing high-quality public services, which will, in turn, support our economy.
Although other parts of the UK have chosen to outsource and commission large parts of their public service provisions, I am proud that, here in Scotland, we are committed to fair work principles and fair pay deals for our workforce. I fully acknowledge that we should look at future opportunities, which may include working with the private sector. However, we need to be clear that, when it comes to our public services and building our economy, that cannot come at the cost of people. Community and fair work principles must be protected and promoted as a core tenet.
I also want to acknowledge the large number of incredible businesses in my constituency that are powering Scotland’s economy. Although there are too many to name, I will draw attention to a few. Tucked away in rural spots across Carrick, Cumnock and Doon Valley are some key businesses that are driving our economy and significantly contributing to Scotland’s economic successes. The first that I will mention is Grant’s distillery in Girvan, which is a vital and essential part of our world-class whisky industry that in total generates £5.3 billion-worth of economic benefit in Scotland. We then go over to Auchinleck, where we find the Egger wood panelling manufacturing plant that supplies the trade and supports our all-important housing demands. I must also mention that the largest aerospace hub and centre of excellence are in my constituency. When we add in destinations such as the Robert Burns and Robert the Bruce trails, and sites such as Culzean castle, the economic benefits of tourism cannot be ignored either.
I truly believe that rural Scotland is the key to our economic ambitions and must be fundamental to promoting Scotland as a place to invest. Having world-class businesses is one thing, but how does that translate to our economy and our people?
I will now mention another brilliant business, Land Energy, which is also based in Girvan. It is the UK’s largest manufacturer of sustainable wood pellets, briquettes, and natural fungi-filled fertilisers. It prioritises local suppliers and creates local employment. I recently met the team there and I was struck by how proud the staff were of their business. They supply a range of products to individuals, organisations and our national health service. They are a living wage employer and members of the Ayrshire Chamber of Commerce. However, they also ensure that their communities share in their success by supporting local clubs and events—including the Girvan tattie fest, which I was very disappointed not to attend this year.
Supporting businesses is only one aspect of building a strong and sustainable economy. Alongside that, we must ensure that development and regeneration projects across our communities can be delivered, which is also crucial. Although I welcome the Scottish Government’s intention to reform and modernise the compulsory purchase system, it is vital that progress on compulsory sale orders is accelerated as part of that work.
Across Scotland, vacant and derelict buildings that are owned by absentee landlords continue to have a detrimental impact on our communities. Where there is a willingness from investors, community groups or the third sector to redevelop and repurpose such properties, local authorities must be provided with the appropriate levers to facilitate investment, tackle blight and support community-led regeneration.
If we are serious about building a stronger economy, we must remember that economic success is measured not solely by figures on a balance sheet but by the opportunities, security and quality of life that are delivered for our people. From world-class manufacturers and distilleries to community-led regeneration projects, the future of Scotland’s economy depends on empowering those who invest in our communities and creating the conditions for them to thrive. By supporting fair work, investing in local enterprise and giving councils the tools that they need to tackle dereliction and unlock development, we can build an economy that not only is prosperous but works for everyone in every part of Scotland.
16:36
I have listened to most of the debate, and some of what I was going to say has changed as we have gone along. I listened to Liam McArthur make, as always, an eloquent speech in which he told us about how there are areas on which we can agree. We should have more of that when we talk about this issue in the future—areas that we can discuss and find common ground over. It is too easy for everybody to have an absolute rammy all the time in the Parliament. I am partly to blame for that, a lot of the time, because who does not like a nice wee rammy now and again? However, the whole point is that we should be focusing on what we can agree and work together on.
On the other hand, there have been some total belters of speeches. Malcolm Offord’s opening speech mentioned that he remembers the 1980s. As Lord Offord’s speech continued, I started to think that he might still be in the 1980s, as he started going on about his support for extreme Thatcherism—along with a wee bit of hatred for minority groups, for a bit of extra colour.
He talked about how the market will deliver. The market did not deliver for Scotland in the 1980s. All that it created was mass unemployment in many industries, and lives were totally destroyed. That is not what I want for my community’s future. What I want to talk about when it comes to the Scottish Government’s motion is the setting out of a programme for government that is bold, progressive and, above all, ambitious for Scotland. It also talks about the most important thing: putting people at the heart of it. Members should make no mistake: although the doom-and-gloom merchants on the Opposition benches want to drag Scotland down into a mire of Westminster’s failed economic dogma, our Scottish Government is rolling up its sleeves and getting on with the job. The Scottish Government is building on the economy that works for real people—hard-working families and communities right across Scotland.
I will talk about something that gets lost, I think, when we talk in the chamber about economic growth. For most people, economic growth is not a line on a graph. People whom I know—people I have grown up with—do not see it in that way. It is not a figure on a Treasury spreadsheet. It is about whether they have a decent job, whether their wages are keeping up with the cost of living and whether their son or daughter can get an apprenticeship. It is about whether their town centre has shops, cafes and businesses and whether people are using it. Those are the important facts in any debate about our economy. It is about people—our people: our friends and our communities.
To look at the facts, GDP per person has grown faster under this Scottish Government than in the UK as a whole, and Scotland’s productivity growth has been double the UK average. For 11 years running, Scotland has been, outside London, the top UK destination for foreign direct investment. Scotland is a global powerhouse in life sciences and a leader in digital innovation.
What does the Scottish programme for government do? It doubles down on those strengths. It sets out a clear and unwavering vision, attaching top-tier investment through a Scottish Government £1.5 billion bond programme, streamlining planning with a new major projects office, and backing Scotland’s businesses and laying the foundations for industries in the future.
The programme for government sets out six priorities for growth: making Scotland a better place to invest and do business; helping businesses to start, scale and innovate; connecting people to better work; building the right infrastructure; enhancing Scotland’s global offer; and backing growth in every region.
That last point matters to me because I represent Paisley. I do not want economic growth just to be concentrated in Edinburgh, Glasgow or elsewhere. I want the benefits of growth to reach Paisley, Renfrewshire and communities across Scotland.
However, there is already a very strong economic story developing in Paisley. In Paisley, we are not just Scotland’s largest town; we are embracing the Scottish Government’s plan for growth, and the choices in the programme for government are going to help to write the next chapter of our town’s history.
Take manufacturing and economic transition, for example. The programme for government prioritises advance manufacturing and energy transition. Look just down the road at the advanced manufacturing innovation district, right beside Glasgow airport, in Paisley. Paisley is already home to the National Manufacturing Institute Scotland and the medicines manufacturing innovation centre. The programme for government commits to cluster development, high-growth units and university spin-out funding, which means more high-value, highly skilled jobs coming to communities such as mine in Paisley. It secures our place on the world stage in those key industries.
Look at the University of the West of Scotland, right in the very heart of our historic town. UWS is not only educating the workforce for the future; its research excellence has been turned into real businesses, real products and real jobs. Through its research and enterprise work, the university brings academics, graduates and entrepreneurs together, giving ambitious companies access to specialist knowledge, facilities and support, so that ideas developed in Paisley can compete across the world. I saw that myself when I visited the Paisley campus in July and met two outstanding UWS spin-out companies. Novosound has taken university research and developed flexible high-resolution ultrasound sensors, for use in industries ranging from energy and aerospace to digital healthcare. Wellfish Tech is using pioneering non-lethal blood sampling to transform how aquaculture industry monitors fish health. That is technology that was developed in my home town that is now serving customers at home and internationally. That is what economic growth looks like in practice—using university research excellence to nurture innovation, and businesses turning knowledge into future businesses and ensuring that we move forward.
Most important, look at how the programme for government supports Paisley’s families. We are living through the squeeze of Westminster’s cost of living crisis, but the Scottish Government is standing by families. The Scottish Government is capping bus fares at £2 across the Strathclyde Partnership for Transport area. It is delivering a transformational expansion of childcare and moving towards universal coverage, from nine months of age right up to the end of primary school, starting with national primary school breakfasts. It is boosting Paisley’s local workforce and lifting children out of poverty. Those are not just words but ways in which Governments can make a difference in people’s lives and to families’ futures. The Scottish Government is building a green, resilient and prosperous future. It is using every lever, every penny and every power available to it to deliver for Scotland and our communities.
Imagine what it would be like if Scotland could do that via this Parliament, not fighting with one hand tied behind its back by Westminster’s economic mismanagement. Imagine what Paisley and Scotland could achieve with the full powers of Scottish independence and by rejoining the EU, taking control of energy policy and building a tailored economy that puts Scotland’s people first.
This is a programme for government that is rooted in ambition and focused on delivery, creating good jobs, supporting families and giving communities such as mine the confidence to thrive. That is the future that I want for my home town, and that is what I want for Scotland.
We move to closing speeches, and I call Willie Rennie.
16:43
There is nothing like a good speech from George Adam to conclude the afternoon’s debate. We have never heard about Paisley so often—and it is a great thing to hear. The fungi-filled fertiliser was certainly the highlight of the whole debate. What these examples show is that many members are very proud of the businesses that they represent in their constituencies and that they have good relationships with those businesses. Bob Doris, Donald MacKinnon, Paul McLennan, George Adam and Katie Hagmann all talked about the businesses that are thriving in their parts of the world.
That fits in with my first point, which is that Scotland is a good place to do business. We should not talk it down or trash it, because there are many people who do great things in this country, and we should cherish that. We should dismiss those who wish to say that the country is broken and that business is broken.
That is not to say that there are no issues—I will come on to those in a second. We should cherish the fact that we have really good people who do great things in business. They have great skills and talents, and they are able to create good opportunities and economic growth.
We have resources in this country, including energy—renewable energy, oil and gas—and great defence industries that do fantastic work and defend our country. We have secure laws, and we should not underestimate how important secure laws and enforcement are, because not many parts of the world have that security. People who want to invest in this country want to know that their money will be safe and that they will be secure in their investments.
We also have a Government that can make decisions to back individual businesses, areas and clusters. We should cherish all those things, whether they are in the tourism sector, energy, defence, universities, finance, sciences or food and drink. There are many great things in this country, but there are challenges. Brexit has posed a significant imposition on this country and has created trade barriers with the rest of the countries in Europe, which were important traders with this country.
We have great problems with our transport system. We are not managing to get the ferries operational, which Donald MacKinnon talked about, or build the A9, the A96 or the Rest and Be Thankful on time. There is a list of transport issues.
The planning system is clogged up, and it needs to be much smoother. We need a system in which businesses know that if they invest in developing a site, they will get planning permission in good time and good order.
We need to tackle the rates of high economic inactivity. We need to make sure that the next generation of young people who have additional support needs are given the right support, because they are the workers of the future.
We have heard today about the PISA performance, but we should not overstate it. John Swinney was wrong to highlight all the positive but slim pickings from that analysis. We need to recognise that we have a challenge in relation to the performance of our schools internationally.
The perception is that this country is also a high-tax nation, and that tax is out of control, and of course, we have seen the figures on people who are moving to this country or moving away. We should reflect on the often-hidden behavioural change, as well as on the impact that it is having on economic activity and the £5 billion financial deficit that the country will face in just a few years’ time. All of those issues mean that we have sluggish economic growth, which is epitomised by the fact that we have a slow rate of house construction.
What do we do next? I recognise that Stephen Flynn struck a different tone in his speech on college investment and social security and the fact that he emphasised that work is good. On his criticism, I think for the first time, of GFG Alliance, I welcome his contribution on that and on careful regulation.
However, we need to do an awful lot more to support young people at school who have additional support needs. We need to drive down the rates of economic inactivity, and we need to keep doing business simply—sometimes boringly and predictably—so that businesses know exactly what to expect. That means a smoother planning process.
We also need to invest in skills. That comes back to my central point from the beginning. We need to invest in the skills and talents of people in this country, because if we do not, we will not get out of the sluggish growth that we have experienced for many years.
16:48
Rural areas make up around 98 per cent of Scotland’s land mass and contribute roughly a third of our total gross value added. Agriculture alone added £2.5 billion to the economy last year, while shooting and conservation, agritourism and farm retail each contributed around £300 million annually.
Despite that importance, communities such as those in my constituency of Galloway and West Dumfries are too often overlooked. Their unique challenges are often ignored, and the support that they need is often an afterthought.
In its programme for government, the Scottish Government pledges to continue its strong investment in agriculture and crofting communities. However, the reality, as always, is rather different. The agriculture budget was cut by £16 million in real terms, and ministers continue to fail to provide multi-annual funding that is fit for purpose, leaving farmers without the certainty that they need to plan, invest in and grow their businesses.
Will the member take an intervention?
Absolutely—that is right on cue.
Right on cue; I thank Mr Carson for taking my intervention.
A total of £660 million has been pledged and will be delivered over this session of Parliament, with some more reforms to come that will see agricultural businesses rewarded for more of their activity. Does he not welcome that?
No, I do not, because £660 million is the figure that has been quoted year on year, while, realistically, we are seeing a flatlining, and a real-terms reduction, in that budget. However, if the cabinet secretary wants to repeat that figure repeatedly, that is fine, because it just highlights exactly how the Government has failed farmers.
The programme for government highlights the rural support plan that was published in March and claims that it provides “clarity and certainty”. However, industry responses suggest otherwise. Giving evidence at the Rural Affairs Committee last week, Professor Davy McCracken of Scotland’s Rural College said:
“what is lacking is an actual pathway and some sense of direction with regard to how the schemes will change over the next five years.”
That criticism matters, because the Scottish Government intends to reduce support for active farming in real terms and redirect funding elsewhere, yet active farming remains essential to food production and food security in the wider rural economy.
As former NFU Scotland president Martin Kennedy told the committee,
“right now, we are not focusing on active agriculture, and that is where the frustration is.”—[Official Report, Rural Affairs Committee, 2 September; c 8, 7.]
The programme for government also promises—
Will the member take an intervention?
I will—that is right on cue.
It is not right on cue. We rehearse this argument over and over again. Scotland is the only part of the UK where we continue to provide direct support. We have an ongoing rural support programme that aims to deliver far more funding to the people who are actively farming. What has the member got against that?
What I am saying falls on deaf ears. Maybe if the minister had listened to the committee meeting last week, and to its meeting in March 2025, he would understand that he is talking in an echo chamber and not listening to what is really happening out there. I have already quoted the president of NFU Scotland and I have a number of other quotes that set out exactly why this Government is failing.
The programme for government does not set out how we can promote economic growth in rural areas. We have no real indication of what the proposed rural renewal bill will actually deliver. Too often, it feels as though ministers are reaching for another consultation, strategy or piece of legislation instead of taking the difficult decisions and delivering practical outcomes. Rural Scotland needs action, not endless process.
Indeed, during the previous session of Parliament, the Government introduced a range of measures that could have proven to be damaging to the rural economy. One example was the proposal to require larger landholdings to be lotted before sale. That completely ignores the reality that many farming businesses need to scale up in order to remain viable and continue to support jobs and investment in rural areas.
Likewise, rewilding policies, the ongoing debate about reducing livestock numbers and meat consumption and the Scottish Government’s refusal to embrace gene-editing technology all create further uncertainty for farmers.
Will the member take an intervention?
There is another one right on cue.
I am not quite sure how many times I have had to correct Finlay Carson in the previous session of Parliament on the fact that the Scottish Government has no policies in place to reduce livestock numbers.
Once again, the cabinet secretary repeats that the Government has no policies to reduce numbers, but it has no policies to ensure that livestock numbers are maintained—no policies whatsoever.
Will the member take an intervention on that point?
No, I will not—I need to make progress.
He knows that he is talking nonsense.
I think that there is a requirement for members to treat one other with respect, and the minister saying that I am talking nonsense is certainly not a good example of that. Maybe the minister needs to listen a bit more to the industry, rather than blindly defending his Government’s position.
The picture is made worse by the cut to capital funding in the rural affairs budget—that cannot be denied. Farmers need support to invest in modern equipment and technology that can improve productivity while reducing costs and environmental impacts. Food security must be a greater priority. Scotland needs more local abattoirs, stronger local supply chains and a greater focus on promoting Scottish produce rather than relying on imports. We should be encouraging more people into agriculture, not making the industry less attractive through uncertainty and a lack of long-term vision.
We should also make better use of Scotland’s natural resources. Venison is a high-quality, nutritious, sustainable product that is available in abundance, and we need to pay more attention to the great role that public procurement can play in that regard, including in our schools.
Twenty-three organisations across retail, rural and farming have criticised the SNP’s plan for a cap on food prices. Does Finlay Carson agree that that could have an entirely detrimental and severe impact on the rural economy?
Absolutely. We have a policy here that, once again, was all about making announcements. I could say that it was ill thought through, but it has not been thought through at all. There is very little chance that this policy will be delivered, because it was just another giveaway at election time.
Concerns remain about the impact of recent legislation on countryside sports and land management. Insufficient attention and funding have been given to the fishing sector, despite its contribution of almost £400 million to the economy and the thousands of jobs that it supports. Many of those policies may be well intended, but I fear that their cumulative impact on the economic viability of rural Scotland is not being properly considered.
Those concerns are shared by others across the sector. Donna Smith of the Scottish Crofting Federation told the Rural Affairs Committee last week that crofters
“share the frustrations … about the real lack of any kind of indication of where we are heading.”—[Official Report, Rural Affairs Committee, 2 September 2026; c 6.]
Too often, the needs of rural Scotland have been secondary to the priorities of this Government, food production is placed behind environmental targets, economic prosperity is sacrificed in pursuit of ideological objectives, and the realities of living and working in remote and rural communities are forgotten. Perhaps that explains why rural Scotland continues to face depopulation, declining opportunities and growing difficulties in accessing essential services.
If we want thriving rural communities, a strong rural economy and greater food security, we need a renewed focus on active, sustainable agriculture, productive land use and the people who live and work in rural Scotland every day.
16:56
At the start of the debate, Stephen Flynn set out the objective to have well-paid jobs in every corner of Scotland. I do not think that anybody could disagree with that, but clearly we do not have an agreement on how we get there and what needs to change to deliver that objective.
The Prime Minister’s ambitious rhetoric over the summer was important, because, for a very long time, we have been waiting for a Labour leader to talk about neoliberalism and the failures of the past 40 years. It will be interesting to see whether a new Scottish Labour leader is prepared to adopt the same analysis and apply some of those fixes as well.
George Adam is right—communities across central Scotland were absolutely battered in the 1980s. Neoliberalism has been a failure in most areas of our economy. Communities across Scotland feel that, increasingly, they do not have a meaningful stake in the economy. They are not able to direct the economy or their own futures.
Liam McArthur talked about island proofing and the expectation that the Islands (Scotland) Act 2018 would bring more of that conversation into island communities, but it has not really delivered.
Daniel Johnson talked about the importance of pushing powers down. He did not mention mayors in that context, but I would be interested to hear more from Labour members about what they meaningfully believe pushing powers down will deliver.
Katie Hagmann talked about citizens over structures. It is important that people are able to be part of the conversations, and I will give members an example: this week, I will be meeting community councils that have a stake in the future of the Mossmorran site in Fife. We will discuss the economic future and talk about legacy and skills, and the operators that they would like to come and invest in the Mossmorran area. I am concerned because, at the moment, much of the conversation about the future of the economy in Fife and of Mossmorran has taken place between Scottish Enterprise, the plant operators and potential investors, including data centre developers. At this point, I do not feel reassured that communities and unions have been meaningfully involved in the planning for what the future of that part of Fife looks like.
It is clear that we need to see more public control, because public control of our services works. We have seen that with municipalisation of bus services in the Highlands, in Stirling, and, we hope, also in Strathclyde in the future. As a result of that municipalisation and community control of services, there have been improvements in services, new services have been started and there has been better timetabling and more patronage. It is clear that, when it is done right, public control and public involvement in the delivery of services can work, and there are great models across the UK of how that is done.
Does that not speak to the wider fiscal challenge? Taking into public control equity stakes in corporations that generate money for the public good grows the revenue base of the Scottish Government.
Absolutely—and that virtuous cycle of reinvestment in public services benefits us all. If that results in more profitable and successful public services that meet the public’s needs, the virtuous circle continues.
Notwithstanding that, I recognise the pressures. Many of us were at the public finances seminar yesterday; bits of that were sobering, although I was particularly proud of the fact that the changes in tax that the Greens brought in through a budget deal have resulted in £1.5 billion of extra investment in services every year. However, I recognise that there is still a gap there and that public service reform is inevitable.
There are other challenges in our economy. AI has been talked about positively in the chamber this afternoon. It is changing the labour market and the opportunities that are available, particularly for young people to take their first jobs in industry. Then, of course, who can ignore climate change and the climate crisis? Unfortunately, most speakers have done so, apart from Paul McLennan, who gave a very good speech. I point to the impact on the economy of climate change. The impact in the Cairngorms national park as a result of the wildfires this summer is just a hint of the economic impact to come because of climate change. It is clear that climate impacts harm productivity. They contribute to higher inflation and put pressure on public finances—climate risks slow growth. It is therefore disappointing that the PFG is weak on climate. There is not a transformative mission at the heart of the PFG—for example, on home heating—that will create jobs, tackle the crisis and lower emissions.
I was surprised not to hear any speaker talk about the wellbeing economy. I thought that that was a legacy from Nicola Sturgeon that members of the SNP were particularly proud of. Right now, we should be doubling down on that vision of a wellbeing economy: fair and inclusive work, gender equality in our economy, fair taxation, investment in communities and an economy that operates within the ecological limits of our climate and environment.
We only have to look at the issue of hyperscale AI data centres to see that issue. Of course, hyperscale AI data centres will deliver GDP economic growth—they will deliver growth and wealth for speculative developers who are seeking planning permissions for the operating companies. Bizarrely, even the environmental impacts of those data centres will increase GDP. However, where are the Government’s wellbeing economy tests? Where is the test around the lack of jobs that such data centres will deliver? Where is the assessment of their failure to reinvest back into the communities that host them? The Scottish Government needs to get a grip on the growth of those data centres, define what is a responsible investment in Scotland and, while it is waiting to do that, hit the pause button on approving any more of them.
Stephen Flynn said that regulation needs to be simple but that it needs to be a last resort. I disagree. Regulation can drive innovation while it protects people and the planet. AI data centres need that appropriate level of regulation and it needs to come sooner rather than later.
Presiding Officer, I am nearing the end of my allowed time.
We have got time, so you may finish your speech.
Thank you very much.
Does the cabinet secretary want to come in on that point? He does not.
I notice that the cabinet secretary who covers the environment and rural affairs is also with us. It has been noticeable that we have had few reflections on the environment.
Will Mark Ruskell take an intervention?
I know that the cabinet secretary is about to give her speech—maybe she will get around to that point.
I circle back to the importance of putting communities at the heart of the Government’s action on the nature emergency. Over the summer, I visited several projects in communities that were funded by the nature restoration fund. In Strathfillan, the community is involved in large-scale asset transfer of forestry and woodland. The Rural Affairs Committee visited Lochaline, where we saw ambitious coastal restoration projects. That work is leading the way in Scotland and it is creating jobs and opportunities for communities. However, the message that we have continually been getting is: where is the long-term commitment to funding?
Communities are starting projects involving ambitious work that is benefiting the economy, their community and the environment, but they do not have long-term commitments through the nature restoration fund. I ask the cabinet secretary to reflect on that and ensure that communities are at the heart of our nature recovery work.
We have the potential for a vibrant and fair future economy in Scotland—a real wellbeing economy. It will be interesting to see whether the cabinet secretary is prepared to use that language in her summing-up speech. Perhaps, as a Sturgeonite, she will. However, it is clear that there are big challenges that we need to address. We need to get right our approach to potential threats such as AI, we need to empower communities, and we need to put people at the heart of the delivery of public services. The Scottish Greens still have questions about whether the Government is ambitious enough in putting people and planet first.
17:05
It has been an interesting debate. There have been points of agreement. I welcome the fact that we are at least talking about growth, which seems to have been missing from debates in the Parliament and certainly from the agenda of SNP Administrations for a very long time.
However, I fear that this continuity Scottish Government just cannot deliver. It does not understand the issues, and it will keep imposing high taxes, myriad regulations and Soviet-style diktats—food price caps, minimum alcohol pricing and centralised control of nearly everything. My fear is that, instead of the growth set out in a document, what we will actually get will look more like 1960s Albania, now complete with bread queues.
Today, Scotland faces stagnant growth, which is causing stagnant wages and is resulting in far too few opportunities for people, especially young people. That is the national failure, and it must be addressed by growth, coupled with jobs and benefits reform.
Of course, it is hard to drive growth in jobs when we are crushing one of our key industries—our North Sea oil and gas industry—through deliberate policy choices. I am pleased that the Jackdaw gas field looks set to go ahead, but let us be clear: that is the bare minimum that is needed to revive our industry. The dither and delay from Labour and Tory Governments on the consents, along with the SNP’s presumption against new oil and gas developments, have been hugely damaging to the industry.
Given that everything is so awful according to Mr Massey, how does he explain why more taxpayers continue to move to Scotland from the rest of the UK than leave Scotland? Surely that is at odds with the idea that everything is just terrible here.
I think that Patricia Gibson will find that our tax base is declining, even if the number of people is increasing.
I will continue with the important argument that I was making about oil and gas. I want to use this opportunity to call on the UK Government to urgently approve other projects, including Rosebank, and back new exploration, so that we can maximise our own resources while reducing imports and overall emissions. That will ensure that we protect jobs, tax revenues and energy security. I call on the SNP Government to back that, too. The Scottish Parliament needs to be a champion of our oil and gas industry if we want a strong industry in the future, and I hope that the cabinet secretary agrees.
In my speech, I mentioned that the Energy and Climate Intelligence Unit has said that there are 1,500 green jobs in East Lothian, and that number continues to grow. Does Duncan Massey not understand that the rhetoric of his party and his colleagues is harming prospects in my community?
We have time in hand, so members can respond to interventions.
I disagree with what Paul McLennan has said. I am coming to energy. [Interruption.] I will answer that.
Another core reason for the lack of growth is the cost of our energy. Despite the Saudi Arabia-style rhetoric that we are hearing, we have a failing system that is driving an ever more fragile grid that is dependent on huge UK Government subsidies and features some of the highest energy costs in the world, especially for industrial energy. That is causing huge cost of living challenges and doing huge damage to all our industries and many businesses.
Let us talk about jobs. It seems to me that the Government is becoming increasingly desperate about the lack of jobs in renewables. That applies to job numbers, the location of jobs—which are not happening in the north-east—and the pay for those jobs, which is much lower than in the equivalent industries that are being replaced. Figures from the Office for National Statistics say that there are around 16,200 direct renewables jobs in Scotland. That is great and we support having renewables as part of the energy mix, but that is compared to around 90,000 jobs in the upstream oil and gas industry. We need perspective, because renewables are a welcome part of the mix but they are not a replacement for the current energy industries.
If we look at wider infrastructure, such as our fantastic petrochemical infrastructure at plants such as Grangemouth, we see risks to future operations because feedstocks will become more and more dependent on ethane imported from the US. Britain and Scotland need cheap, abundant and reliable energy, which will best be delivered by maximising our oil and gas in the medium term while transitioning to nuclear power in the longer term, with renewables playing a complementary role rather than a dominant one.
As we outlined earlier, it is now time for a reset. We need to build a wealth economy instead of a welfare economy and must build a new, modern Scotland that produces prosperity for all through well-paid and meaningful jobs rather than through welfare. We must create a joined-up industrial strategy for Scotland, based on our 10 natural, world-class industries. The five key policy areas should be cheaper energy, lower taxes, skills and retraining, real deregulation and fewer performative gimmicks.
Ultimately, our goal should be clear. We must build a Scotland where young people—whether they are pursuing a trade, profession, apprenticeship or degree—can secure a good job, earn a decent wage, afford a home, take a holiday and raise a family. That is the promise of a growing economy and that is what Reform seeks to deliver, so I ask members to support our amendment.
17:12
I second the amendment in the name of my friend the member for Edinburgh Southern.
We have heard an interesting debate today about headline growth and, more interestingly, about some of the holistic things that we need to do to achieve fair economic growth of the kind that builds up local economies, joins education with industry and embeds fair work to weather climate change. Too often, we pass legislation on issues such as land reform or community wealth building, or we hear high-minded rhetoric in this legislature, only to watch radical ideas being watered down into administrative burdens for cash-strapped councils.
Bus franchising, which was mentioned by Patrick Harvie, is an obvious example. Glasgow has taken far too long over it and is lagging way behind other British cities. The introduction of the fare cap, although welcome, simply doubles down on corporate subsidy instead of taking public control in the truest sense. We need to speed up.
The member will know that I support bus regulation in Strathclyde. Does he have a perspective on the fact that the more public money that goes into the system, the more we can extract on behalf of Strathclyde when we bring in that regulation?
That is a good point, which speaks to Mark Ruskell’s point about a virtuous cycle. If we can extend public control of the fare box in Strathclyde, that will supercharge our ability to run subsidised services where routes are not profitable or to increase the frequency of bus services. The Centre for Cities has said that, if Glasgow could catch up with other European cities of equivalent size, the entire Scottish economy would be around 4 per cent bigger, so there is a huge prize to be won if we can get it right.
That is particularly crucial because, as the Government knows, we are facing a £2.6 billion resource deficit and a £2.1 billion capital deficit by 2030. Attempting to manage that fiscal gap through consolidation alone risks repeating the destructive mistakes made during the austerity that we saw from 2012 onwards.
To grow revenue, we must acknowledge the fundamental role that large domestically anchored firms play in our economy. Major corporate headquarters drive regional supply chains and research and development, and they build our tax base. Our macroeconomic output is undermined and eroded without them. The Scottish Government’s figures from just last month expose the vulnerability of our economy. Only a fifth of Scottish businesses export at all. Because we rely so heavily on a shrinking pool of large firms to carry that burden, the loss of domestic corporate leadership is catastrophic. It is exactly why our manufacturing exports have collapsed by 15 per cent in real terms since 2018. That is the cost of losing half of the headquarters of the major independent publicly listed companies in Scotland over the past 30 years. Titans such as Scottish Power, Scottish & Newcastle and Christian Salvesen have been hollowed out by foreign takeovers, yet that barely features in the public debate.
Without those domestic anchors, Scotland operates increasingly like an extractive enterprise for foreign multinationals. In 2021, the gap between our gross domestic product and our gross national income revealed that £36.5 billion was extracted from our economy to overseas shareholders. International capital is too often favoured over domestic public value, as we regularly see through the uncritical citation of foreign direct investment statistics such as those referred to by the member for Paisley and the member for Glasgow Kelvin and Maryhill.
We need only look at our shipbuilding heritage, which was mentioned earlier, to see the historical cost of a lack of joined-up industrial planning in Scotland. In the 1980s, a senior civil servant warned the chairman of the state-owned British Shipbuilders Corporation that Margaret Thatcher wanted to get rid of shipbuilding. In 1988, that crusade culminated in Kenneth Clarke, the Minister for Trade and Industry at the time, deciding over dinner to turn off state support for the shipbuilding industry, prompting the chairman to turn up at a colleague’s door, asking for a bottle of whisky to toast the fact that it was all over. As one yard director noted at the time, just as British Shipbuilders was becoming effective, it was terminated.
Today, other European countries—principally France, Germany and Italy—dominate an industry in Europe that is worth €92 billion and employs more than 350,000 people. Today, Reform’s leader peddled that same hands-off dogma, and there was not much detail from the cabinet secretary about what the Scottish Government would do to improve industrial planning.
When the Wood Group, our Scottish engineering champion, was recently faced with a foreign takeover, the Scottish minister sat on her hands and did nothing about it. This paralysis is most absurdly demonstrated by CMAL handing half a billion pounds in taxpayer-funded shipbuilding contracts to shipyards in Turkey and Poland. As my colleague the member for Na h-Eileanan an Iar mentioned, the recent procurement for MV Lord of the Isles excluded British shipyards from bidding at all.
We must look at what other countries are doing and benchmark our approach against, and contrast it with, Spain’s tax-leasing regime, which leverages accelerated depreciation to provide a 20 per cent subsidy for domestic shipyards. While our Government treats procurement as an isolated transaction, nations such as Spain are using state-backed finance to guarantee domestic work. We should be using the Scottish National Investment Bank to derisk projects for our own shipyards, not exporting capital and importing finished ships.
Where the Scottish Government intervenes, it is often half baked and disastrously misjudged. As we heard from the member for Fife North East, in 2015, ministers brokered the sale of the Dalzell steelworks in Motherwell to Sanjeev Gupta, with an unpaid £7 million loan for an aluminium wheel factory in the Highlands that never materialised. Dalzell is paralysed by cash shortages and is unable to roll 34,000 tonnes of steel plate for the new Royal Fleet Auxiliary ships that are being built in Belfast. Instead of propping up these dodgy magnates and letting them hold these key assets hostage, we could be aggressively backing a green steel plant there with an electric arc furnace to feed our shipyards and our offshore wind sector. Perhaps the reform of compulsory purchase orders and compulsory sale orders that the member for Carrick, Cumnock and Doon Valley mentioned could be deployed in favour of our industries as well as our high streets.
We must reclaim our industrial and municipal ambition. In Glasgow, which is a city that is built on world-class engineering and bold municipal enterprise, we know that true economic strength is generated locally and retained publicly. We need an industrial strategy that backs our domestic engineering base, leverages public procurement for local supply chains and ensures that our infrastructure serves the public good.
We cannot settle for a branch plant economy. We must build Scotland’s economy in a way that retains its wealth for the communities who generate it.
I call the cabinet secretary to wind up the debate. We would be grateful if you could take us up to just before decision time.
17:19
For the benefit of members who have been waiting for the climate and rural aspects of the debate—a number of members have alluded to the economic growth potential in climate action in particular—I will focus my remarks largely on those issues. However, I will also respond to some of the points that have been made during the debate.
I am really grateful for all the contributions. There has been a bit of a philosophical debate about what economic growth is. To address Mark Ruskell’s point, I am actually not an anything-ite; I am just somebody who wants to see a successful Scotland for everyone who lives in it. If that is the wellbeing economy, that is the wellbeing economy.
We all know about countries that have high GDP, large companies and billionaires who have nine yachts or whatever; that is considered a mark of economic success, but it is not a mark of success if there are still kids going hungry, town centres being depleted and people who cannot get work or do not have opportunities. If having a wellbeing economy tackles that situation, that is what I want. That does not make me a character from “Doctor Zhivago”. Duncan Massey painted our wanting everyone in the country to get the fruits and benefits of economic growth as some kind of communism, which is absolutely ridiculous. At the end of his speech, he described what a wellbeing economy actually is by talking about what economic growth would mean for ordinary families, which I was really pleased to hear.
Our programme for government sets out the clear plan of action that we will take over the next five years to achieve sustainable economic growth. Such growth will benefit people and will provide jobs and opportunities for our young people, but it will also progress our climate commitments, because, as Paul McLennan said, economic growth that benefits communities across Scotland and provides well-paid jobs goes hand in hand with a lot of the activities that are associated with the just transition.
Duncan Massey referred to 90,000 jobs being associated with oil and gas. My family has very much benefited from that industry—many of them have worked in it. On the 90,000 jobs figure, the peak was in 2014; we know that the trajectory is slowing down, so we need to ensure that the jobs are in place now, for the transition and into the future. We need to ensure that we are less reliant on burning fossil fuels for all our civic activities, because we have seen in the past year what that has meant for my constituents and many people in rural areas who have oil-fired and gas heating at the back of their houses. Relying on such heating means that we are subject to global geopolitical situations.
To address my earlier point about firms, does the cabinet secretary not regret that the Scottish Government did not do more to preserve the independence of Wood Group as an independently headquartered large Scottish company?
That gives me the opportunity to share Mr Flynn’s bewilderment about that point. Was Mr Sweeney asking that we nationalise Wood Group? I am not quite sure what he wanted us to do.
I will go back to some of the contributions to the debate. What I really liked about some of the speeches that I heard today was that members mentioned other interventions in the programme for government that will have an economic impact. Patricia Gibson and George Adam made a case about the economic potential of childcare. One of my favourite stories is about Jens Stoltenberg, the former Norwegian Prime Minister, who was asked by The Washington Post about the secret to Norway’s economic success. The journalist expected him to say “oil and gas”, but he did not say that. He said that his Government had made childcare free, which had increased women’s participation in the economy, and that that was the secret of the country’s economic success. That has always stuck with me, because social and educational interventions have an economic impact. I was really pleased to hear Patricia Gibson and George Adam make that point.
Katie Hagmann and Patrick Harvie pointed out the Scottish Government’s lack of powers in employment law and the impact that having those powers here would have on fair work. That is really important, particularly in relation to the wellbeing economy. Insecure work has grown since 2011—it is not me who is saying that but the Trades Union Congress. The jobs associated with such insecurity are in care, leisure and hospitality, so it disproportionately affects female workers.
My point was twofold. Yes, there are constraints in the devolution settlement that do not allow us to take hard measures, but there are also things that the Scottish Government could do within those limits. Does the cabinet secretary agree that the Scottish Government ought to work constructively with the trade union movement to help drive up union membership in underunionised sectors such as hospitality? That would be a way to ensure that we bring about a change in the power balance in parts of the economy where that insecurity hurts people.
I agree with that sentiment. The Scottish Government has done an awful lot of work with the Scottish Trades Union Congress on that.
To go back to some of the comments that others have made, Bob Doris rightly challenged Rachael Hamilton on the need to reform the fiscal framework to give the Scottish Government and Parliament more scope on fiscal levers. That has an impact on the economy in the round.
Malcolm Offord made some assertions about economic growth between the parameters of particular dates. Scotland’s economy grew by 68.5 per cent in real terms between 1990 and 2024, at the time when we were setting our net zero targets. I think that that tells a story. Scotland’s economy grew by 68.5 per cent in real terms at the same time as we cut our greenhouse gas emissions by more than half. That is a fact.
That also speaks to the fact that economic growth is not just about GDP.
Will the cabinet secretary take an intervention on that point?
I will not, Mr Massey.
We have competitive advantages in key sectors in offshore energy and its supply chains and the financial and professional services associated with them, and huge infrastructure investment in our electricity grid and networks that will sustain thousands of jobs across Scotland; significant investment will be unlocked that will see businesses form and grow. If anyone is turning their back on any of the actions associated with climate action and the drive to net zero, they are turning their back on that growth potential. The direct financial benefits of delivering all the policies in the climate change plan are estimated to be more than £42 billion to the Scottish economy over the period to 2040.
Adaptation measures such as infrastructure investment in utilities, wildfire prevention and flood defences are critical.
Will the cabinet secretary take an intervention?
I will not just now.
Those measures will provide jobs and, in themselves, will contribute between £6 billion and £7 billion to the economy over the next year. Mark Ruskell made the point that they will save money. The wildfire devastation that we have seen not just in Scotland but across the UK has had a real economic impact on communities.
Net zero-related industries already support £10.2 billion in gross value added in Scotland, which is 4.9 per cent of the total economic output, and more than 100,000 full-time equivalent jobs across Scotland. I was pleased to hear some examples from members’ constituencies. Katie Hagmann mentioned the organic fertiliser from Land Energy in her constituency. That is a resilience issue. Manufacturers in Scotland are looking at organic fertilisers, which will mean that the cost of fertiliser is not impacted by the oil price or, indeed, by adventures in the Strait of Hormuz. We need to see more of that happening in Scotland and we need to make sure that we are more resilient in that respect.
Our £200 billion energy infrastructure pipeline represents a long-term flow of capital investment across multiple regions, not just in the north-east, where I am from, where the energy industry has been vibrant for many decades. The investment in renewables and in new low-carbon technologies will take place across the whole of Scotland; the whole of Scotland will benefit from the revolution that we will see in low-carbon energies.
Of course, Scotland’s vast energy wealth must benefit the people of Scotland. We have seen £400 billion in revenues from the North Sea going directly to the UK Treasury coffers. That is why we formally requested the devolution of energy powers from the UK Government to the Scottish Parliament. George Adam went a tad further, of course, and rightly said that all powers should be brought to the Scottish Government and Parliament and that we should have our independence.
Our economy must deliver for every part of Scotland. We are investing £1.9 billion over the next 10 years in regional growth deals to unlock economic potential across the whole of Scotland. I want to say a little bit about potential planning reforms and how we must treat our rural and island businesses and economic growth there differently, which Liam McArthur referred to.
There are different stresses and pressures, as well as different opportunities in that space. Those are the kinds of conversations that I want to have about the rural renewal bill, and I want those to feed into planning reforms to see how we can make economic growth in our island and rural communities surge.
[Made a request to intervene.]
[Made a request to intervene.]
I will take an intervention from Liam McArthur, if I have time, Presiding Officer.
I thank the cabinet secretary for her comments. This is not a matter for her as a Government minister, but I was making the point about the need for post-legislative scrutiny of the Islands (Scotland) Act 2018 10 years on. Would she support the general principle of that? It is clear that promises about future legislation will be easier to stack up if there is confidence that legislation that has already been passed is doing what it says on the tin.
Post-legislative scrutiny looks at legislation, but there are other things that I am keen to do without having to change legislation. Those include the rural renewal bill and interventions from the rest of Government, such as planning reforms that might make things less difficult and could bring down some of the barriers to economic growth.
I am determined to deliver climate action in a way that supports thriving local communities, businesses and households. I am pleased that I was asked to wind up the debate that my colleague Stephen Flynn opened, because I am convinced that climate action is a blueprint for economic growth. Some of the contributions have shown that and, indeed, the way that we have worked together to talk about our economic growth opportunities also speaks to our climate ambitions. We have a once-in-a-generation opportunity for transformation that will not just reduce emissions but ensure that our economy prospers. If we do not grasp the opportunities, other countries will. We will grasp those opportunities with both hands and, in 10, 15 or 20 years’ time, we will have a more energy-secure and prosperous country that will be playing its part in addressing climate change.
That concludes the debate on the programme for government—an economy fit for the future.
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