Economic Recovery Plan
I cannot give Lord Foulkes a definitive answer to that question. The upgrade is related to the Cairnryan terminal, and the project has been highlighted in many transport infrastructure assessments for the south-west of Scotland that are material to the process. I will be happy to share further details with Lord Foulkes.
The Presiding Officer knows as well as I do that Maybole is a severe pinch point on the road to Cairnryan; it will not be sensible to upgrade the A77 without providing a bypass at Maybole. I hope that the minister will talk to his officials to make sure that it is included.
Mr Foulkes may recall that the current Prime Minister used to boast about constant economic growth, which—of course—began when a Conservative Government was re-elected in the second quarter of 1992. In a growing economy, the increase in the number of jobs will be blunted by an increase in national insurance. Obviously, that does not mean that the number of jobs will decrease; it means simply that fewer jobs will be created than would have been created if the tax had not been introduced.
Will Andy Kerr concede that we have gone through a process of dialogue in the Parliament in which the Government has, in setting its priorities, been perfectly willing to change its plans to take on board suggestions from the Labour Party and other parties? Does not he have the good grace to accept that the Government has acknowledged the contribution that others have made?
How can Derek Brownlee, for whom I have great respect, say that the increase in national insurance will lead to job losses? Unemployment went down the last time national insurance was increased.
I will.
I confess an interest in this, although it is not a constituency interest. Will the minister confirm that the upgrading of the A77 will include a new bypass for Maybole?
We have been round these houses before, and Mr Harvie knows that we are making a range of interventions in our transport infrastructure—including electrification of the rail infrastructure between Edinburgh and Glasgow through the improvement programme, and the Airdrie to Bathgate line—to create transport initiatives that he might find more acceptable than the essential upgrading of some of our motorway infrastructure.
There are two further points to make on the detail of the capital consequentials that I am announcing today. First, £17 million will be earmarked for investment in further education college capital investments, in supporting work that is planned at Dundee and in enabling an early start to construction at Forth Valley College. Secondly, the Scottish Government will invest an additional £31 million in affordable housing, which will take our total planned investment this year to more than £500 million. That means that, over three years, we will deliver a record £1.71 billion of capital investment in the housing sector in Scotland.
The Business Bulletin contains alternative proposals by the Labour Party for use of resources to activate the Glasgow airport rail link. I say to the Labour Party simply that the consequentials that we have at our disposal today are for one year only and do not give us the kind of lasting support that would allow us to embark on a project with a four-year life. I hope that the Labour Party accepts that the decisions that we have taken today have been designed to support the development of new infrastructure in Scotland and that it will support us in that process.
The current economic recovery is finely balanced, so it is absolutely necessary to ensure that we do nothing to jeopardise it. The chancellor’s March budget was, therefore, disappointing as he confirmed that along with only one other country—Argentina—in the G20, the United Kingdom would withdraw its fiscal stimulus measures in the current financial year. That was a missed opportunity: we can all see that the economic recovery is fragile and needs to be supported to a much greater extent.
The Government’s economic recovery plan focuses on a range of themes. It focuses on the development of a low-carbon economy, which is reflected in the announcements that I have made today, and on the need to ensure that we expand the exports and international activities of Scottish business, which is at the heart of the work of Scottish Development International. The economic recovery plan also focuses on the importance of having a swift and effective planning process that allows us to make decisions that enable development to take its course. We are pursuing further discussions with business, local authorities and our wider agencies to ensure that we are aligned in supporting the development of an efficient planning approach.
Does Andy Kerr agree that the actions of Her Majesty’s Revenue and Customs, which has pushed into administration one Scottish company every day for the past two years, and which on Monday forced a company in my constituency into administration with the loss of 64 jobs, is having an effect on unemployment in Scotland?
The chancellor has made it perfectly clear that the Scottish budget will not be interrupted or changed in any way, shape or form. The assertion that Margo MacDonald makes relates to the Tory party, which has said that it will have an emergency budget within 50 days of the election. I can give the assurance that she seeks to a degree, but I cannot speak for the Conservative party, which seeks to create cuts that will stave off the economic recovery and put us back into a double-dip recession. The impact of that, of course, will be felt not just in Scotland but throughout the UK. The strategy is condemned by most reasonable economic commentators.
Our argument, which is evidenced by the statistics, is that the economy in Scotland is going backwards under Mr Swinney and Mr Salmond, not forwards. Unemployment in the UK went down by 33,000, but in Scotland it went up by 16,000. Scotland is going backwards under the SNP. Across all four key employment measures, Scotland is underperforming compared with the UK as a whole. Scotland is going backwards under the SNP. Economic output is falling faster in Scotland than in the UK as a whole for the first time since the second world war. Scotland is going backwards under the SNP. It is startling to note that two thirds of all jobs that were lost in the UK in the past few months were lost here in Scotland. My argument, which I believe is sustained by the evidence, is that Scotland is going backwards under the SNP. The SNP has cancelled the rail links in Edinburgh and Glasgow, the Scottish Futures Trust has built nothing and has destroyed jobs, thousands of teaching assistants have lost their work, and more teaching posts have gone. Scotland is going backwards under the SNP. I ask members to support the amendment in my name.
I move amendment S3M-6129.3, to leave out from “through” to end and insert:
“; notes with concern that Scotland’s economic recovery is lagging behind that of the United Kingdom as a whole, with unemployment rising in the last quarter by 16,000 while falling across the UK by 33,000; further notes that two thirds of all jobs lost in the UK were in Scotland, and believes that the Scottish Government’s cuts to key budgets in areas of economic growth, including enterprise, housing, regeneration and tourism, the failure of the Scottish Futures Trust and the cancellation of projects such as the Glasgow Airport Rail Link, with the loss of 1,300 potential jobs, risk entrenching Scotland’s relative economic decline compared with the rest of the UK under the SNP.”
15:22
I am happy to reiterate those remarks today, but the point that I want to make to Mr Purvis is about his comparison of Scotland and Wales. I have in front of me the construction employment figures for Scotland and Wales. I concede that there has been a 12 per cent decline in construction employment in Scotland, but it has been 26.8 per cent in Wales. I look at those statistics and recognise that we have a serious situation in Scotland, but it is not as acute as it is in Wales, according to the data in front of me.
I am sure that the cabinet secretary will want to write to us, because I am not sure how what he said squares with the construction figures for all the new work in Wales, including public and private infrastructure, private industrial and private commercial. Between 2008 and 2009—these are official Government figures—the figure fell by 10 per cent from £1.5 billion to £1.37 billion. In Scotland, the figure fell by 30 per cent. I am sure that the Government will be able to explain, but I simply do not know how a fall of 30 per cent in all new construction work in Scotland—a 20 percentage point greater fall than in Wales—can be in any way an indication that our sector is faring better than that in Wales.
The concerns about the reduction in capital investment are even more stark, given that we have to take difficult decisions as we move forward. Because of the choice of funding method for the Forth bridge and the Southern general hospital, we know that the capital budget will be under huge pressure. Officials in the Scottish Government have said that the rest of the capital budget will have to be reprofiled to account for that. That reprofiling will be critical as we move forward. Immediately before the cancellation of GARL, SNP members said that it was an essential scheme and exactly what Glasgow needed, yet immediately after its cancellation they said that it was a waste of money and was not needed, and the transport minister said that Glasgow “luxuriates” in Scottish Government funding. That simply does not square. People want an honest approach. They want to know that, as far as medium and long-term planning is concerned, the Scottish Government will take decisions on areas that are within its responsibility. Unfortunately, we are hearing too much about blame and what other Governments and other countries are doing.
This debate highlights the fact that this is a Parliament with limited powers. The Government’s economic strategy is sound, but its well-considered plans for recovery are severely hampered by the looming cuts from Westminster, which are hanging over Scotland’s public services like the sword of Damocles.
As we have heard from the cabinet secretary, the Scottish Government is doing what it can and the economic recovery plan is beginning to show results. The rate of GDP decline is slowing and growth is starting to return to parts of the Scottish economy.
The jobs supported by the plan, particularly the 5,000 protected by the capital acceleration programme, have ensured that economic inactivity rates in Scotland remain lower than those in the UK as a whole. I am particularly pleased about the investment that we have had in the waterfront in Dundee, which has been particularly important for Dundee’s construction economy.
Despite this Parliament’s limitations, the Scottish Government is continuing to do what it can to foster and protect jobs. In my constituency, support for the life sciences industry, which is highlighted as a key sector in the Scottish Government’s economic strategy, has ensured that the sector has continued to grow, despite the downturn. The introduction of the new two-for-one life sciences modern apprenticeship framework by the Scottish Government is helping to attract the future talent that the industry needs to grow and is ensuring crucial, on-job training. The industry requested that of the Government and the Government responded to it.
The economic recovery plan also focuses on another area where Scotland and Dundee have huge potential—the digital media sector. Some of the world’s bestselling games and applications are developed in Scotland. The percentage contribution to Scotland’s GDP is double that of the UK. The £5 million that has been awarded to the University of Abertay Dundee from the European regional development fund is helping to support new and emerging games companies. Scotland’s £5 million innovation fund is helping artists and creative practitioners in digital media and is ensuring that Scotland continues to be a world leader.
I think that, at the end of the day, we would have done the same as the UK Government did to rescue the banks—there is not a huge difference there. We have to put things in context and remember that there are two sides to the balance sheet. Over the past decade, the UK Exchequer has received the equivalent of what was used to bail out the banks. The member cannot have it one way but not the other. The banks have contributed hugely to Gordon Brown’s back pocket, so it was correct that we did something to rescue them. It is a pity that that money was not invested in a way that would help businesses, rather than just the bankers and their pensions.
I return to digital media. I welcome the fact that the UK Labour Party has finally accepted the need for tax cuts. I wonder whether, in summing up, Conservative members might offer some reassurance that, certainly here in Scotland, they will ensure that if there is a Conservative chancellor, he, too, will ensure that there are proper tax incentives for the industry, which are particularly important to allow the industry to compete world wide.
We understand clearly the importance of the games industry to Dundee and other parts of Scotland, and a Conservative Government would, of course, look very carefully at the matter. I understand that the UK Government has said that those tax breaks will come in only if European state aid rules can be circumvented successfully. That is key: the tax breaks might not come in even under a Labour Government because of technical issues.
I hear the point about not having a London solution, but why would the Bank of England continue to set rates under an SNP Government in an independent Scotland?
Indeed. The member will recall the First Minister’s misquotation of what I said, to which I will come in a moment.
In the eyes of the English, all of the measures to which I have referred are subsidised by the English taxpayer; they are waking up to that. Now Alex Salmond wants even more than we are getting at the moment, no matter how our economic crisis was caused or by whom. It was caused by Scottish banks as much as by anyone, but Scotland must not suffer; everyone else can suffer, but Scotland must not. We have the strange election slogan of “More nats, less cuts”. Ignoring the bad English grammar in that, let us think about the poor English people. Frankly, it is Alex in Wonderland stuff.
The Scottish Government has squandered some of our money. As has been said, there is a bill of £23 million for the so-called Scottish Futures Trust, but not a brick has been laid. Millions have been squandered on preparing for a referendum that almost no one wants and that we will never have. The Scottish Government is providing free school meals for the sons, daughters, grandsons and granddaughters of MSPs, solicitors and bankers, and free prescriptions for MSPs, solicitors and bankers. That might be wonderful, if we had as much money as we need and want. However, given that those who really need free prescriptions and free school meals already get them, it is an unfortunate priority.
I voted with my party.
The Scottish Government has already received warnings about other budget dangers. Let us take the issue of concessionary fares, funding for which is limited to £194 million. It is already clear that the Scottish Government will look to limit concessionary fares for the elderly and disabled. Let us take the issue of free personal care. The Auditor General for Scotland estimates that there is a shortfall of more than £50 million a year—and increasing—for provision of free personal care.
Where the Scottish Government could have additional revenue, with additional benefits to the economy, it has rejected that. Because of outdated dogma, it rejects the development of nuclear power, which would contribute to carbon reduction and is recommended by the First Minister’s Council of Economic Advisers. Where it could cut costs, it does nothing. What will the cabinet secretary do about council chief executives and their huge salaries? What will he do about national health service bosses’ pay and university bosses’ pay, which are going up at unacceptable rates?
When the Scottish Government is asked where it will save money, it repeats again and again that it will save everything by cancelling Trident.
Will the member give way?
No—my time is going.
Finally, I come to the real Tories, as opposed to the tartan Tories. Normally sensible Derek Brownlee has had his arm twisted to put the comment about the proposed national insurance increase into his motion. There is no mention of what alternative might raise the money to fill the gap that would remain should the NI increase not go ahead. It has been forgotten that, last time there was such an increase, the number of jobs did not go down—and incidentally, I am not losing my job; I am giving it up for something that might be rather more satisfying.
As you know, Presiding Officer, it is Labour that has the answers to all this—a future fair for all. Hilary Benn said it in Glasgow yesterday, and Gordon Brown will say it again and again, and I am saying it today. We will be proved right on 7 May.
15:56
Will the member give way?
No, the member is just winding up.
I finish by saying that, if this Parliament had more powers and responsibility over taxation, borrowing, Trident, ID cards and what to spend on defence and wars, we could prioritise economic recovery over such matters. That, of course, comes with independence.
16:09
This week, BASF announced 232 job losses in Paisley in my constituency. That amounts to almost two thirds of the remaining jobs at the former Ciba plant, which will go over the next three years. It is proof positive that the recession is not over.
Last September in his budget statement, the cabinet secretary told the Parliament that he had
“reluctantly decided to cancel the Glasgow airport rail link project”,—[Official Report, 17 September 2009; c 19753.]
which is also in my constituency. Since the Scottish Government took the GARL decision, it has benefited from two unexpected cash windfalls—£23 million in the pre-budget report and £82 million in the March budget, although, in fairness, only £76 million of that was available to spend through the departmental expenditure limit budget. I welcome the fact that the vast majority of that money will go to capital projects, but I must press the Government on why it did not look again at restoring the GARL project. Given that the Government has had a £100 million windfall since it made the cancellation decision in September, why has it chosen not to revive GARL? After all, GARL—unlike some of the projects that we have heard about today—is not a new project, but it is the only Parliament-approved capital project that has ever been cancelled mid-construction. If the decision to cancel the project was taken “reluctantly”, why has it not been reinstated, given that the Government has received an extra £100 million since September?
I would like to raise an important procedural issue. I asked the Scottish Parliament information centre to speak to the Scottish Government at lunch time to ask when the decision about how the £76 million allocation in the budget would be spent would be made public. Scottish Government officials replied to SPICe that that would not happen until the budget revisions in October this year. I would be grateful if the cabinet secretary would look at the accuracy and the courtesy of that response to SPICe and to the Parliament.
I return to the substantive issue—why GARL deserves reinstatement. Uniquely, it is a project that it is estimated would create 1,300 jobs in the future.
That is indeed a matter of no relevance, and I am into my final half-minute. GARL, uniquely in the 10-year history of the Parliament, was cancelled mid-construction. It had unique job creation potential vastly exceeding that of many other projects that have been prioritised. Why was GARL not reinstated and given the £100 million windfall that the Government has received since GARL’s cancellation? Every single major business organisation in Scotland has called for the decision to be reversed. If the Government would engage in a dialogue for progress involving the stakeholders, the business community and the rail network, the desired rail link would be able to deliver those 1,300 jobs that my constituency so desperately needs, having lost a further 250 jobs this week. Getting involved in that dialogue and leading it rather than hiding from it is the responsibility of this Government.
16:23
I will look first at the background of the condition from which we are trying to recover, and then at two or three examples of how we are beginning to support recovery.
On Sunday, a commentator set the context clearly.
“It’s obvious what went wrong. Britain boasts the most profoundly dysfunctional financial system of any G7 country. It’s not just that it went nearer to collapse than any other in the autumn of 2008, it does not know how to finance enterprise.”
That was written by Will Hutton, one of the architects of new Labour, who recognises precisely how that crisis has underpinned the nature of our attempts to recover. In a world in which there has been a crisis, Britain has been one of the worst countries at coping with it or making proposals that would allow Scotland, Wales, Northern Ireland and parts of England to stimulate the economy out of recession.
There has been a lot of discussion about the balance of power and the finance needed to achieve recovery. There was also some discussion earlier in the debate about independence and interdependence. What about countries such as Norway that have similar resources to ourselves? What about the oil fund that has been created in the past 15 years? What about Norway’s ability to bail out the whole of the UK debt and still have more than £89 billion left in its oil account, far less its own money? Norway is a small country with about the same population as Scotland. We are talking about banks failing and saying that a country of this size could not deal with that, but Norway had to deal with that in the early 1990s.
Will the member give way?
No, no. I note that Ireland and Iceland have not been mentioned. Can the member clarify whether he is advocating the same levels of personal and business taxation that exist in Norway?
Some of the projects will do so, but we are accelerating those projects. [Interruption.] Wendy Alexander laughs but, if she were as clued into public expenditure as she tells us she is—
Members: Oh.
I ask Mr Swinney to reply and then close, please.
Of course, Presiding Officer.
If, for completeness, Mr Brown had looked at page 32 of the economic recovery plan, he would have seen that we have set out the recent allocation of an additional £10 million to the Scottish Investment Bank and said that we will give more details. I reiterate that he will not be disappointed by what he hears.
We must consider the data carefully. Yes—the Scottish economy has challenges. Mr Brown derided us for saying that Scottish tourism had outperformed that in the rest of the globe. When tourism in the rest of the globe declined by between 7 and 9 per cent, but our revenues declined by 1.6 per cent, that suggests that we have a performance to celebrate and commend and not to deride. That is what the economic recovery plan does—it builds on the good work that is taking place throughout Scotland to manage the challenges of economic recovery. The Government is determined to continue that effort.
House of Lords abolition!
It simply is not. I recall that, only a year or two ago, Labour members used to stand up in the chamber and berate the Scottish Government for having a 2 per cent efficiency target rather a 3 per cent target. We are saying that by redirecting 1 per cent of Government spending in the way that the Labour Party says it can do from next year, we can fund the national insurance increase avoidance. Labour members used to stand up and advocate that, but they have dropped it. It would be much more sensible if the Labour Party were to admit that removing the national insurance increase would be a positive move for employment and the recovery. The thing that risks recovery is imposing a tax on jobs from next year.
I move amendment S3M-6129.1, to insert at end:
“; regrets the decision of the UK Government to raise further the cost of employment with the proposed increase in national insurance; believes that job creation in Scotland depends on a growing private sector; calls on the Scottish Government to work with the UK Government to rebalance the Scottish economy to make it less dependent on the public sector and to provide opportunities for new business creation, business growth and new jobs, and further calls on the Scottish Government to bring back to the Parliament more details on how it intends to rebalance the Scottish economy and assist growth in the private sector.”
15:32
Mr Foulkes may not be convinced about that, but we are certain that he is one person who will lose his job next year, and that it will not be the result of national insurance increases. Many other people in Scotland would lose their jobs if a national insurance increase took effect.
On the impact on businesses of recent decisions that have been made by Governments, should there be any limit on the tax increase on businesses at this time?
Obviously we have to base our decisions on a range of circumstances. The decision that the Government has made on, for example, the poundage for business will create a competitive advantage for it of more than £220 million, which is quite a helpful additional contribution to the economy.
Other measures that we have taken include the support that we have given to the economic sector through the access to finance survey, which has challenged some of the practices that the Economy, Energy and Tourism Committee reflected on in relation to access to finance from the banking sector; and the Scottish investment bank, which will develop as a significant contributor to the support for the development of new business concepts in Scotland.
One of the great challenges that we face is in employment. The Government is working hard, through the various measures that are being taken forward by my colleagues in the education and lifelong learning portfolio, to ensure that we have in place the necessary investment in skills and training, particularly in relation to the ScotAction programme and similar measures.
On the Government’s record on employment, I remind members that the recession has resulted in a rise in unemployment across the global economy. We have felt those effects in Scotland, where unemployment has increased to the current rate of 7.6 per cent. Despite that, however, Scotland’s unemployment rate still remains below that of a number of other economies, such as the United States and those in the euro area, where unemployment is around 10 per cent. The overall employment rate in Scotland remains the highest of all UK countries.
I give a cautious welcome to the announcements that the cabinet secretary has made today. I have to say that they sound a bit more encouraging than the previous use of carried-forward capital, where much of the money was sunk into land acquisition and properties that were already built, which did not do much to stimulate the economy. I will have a look at the projects that have been mentioned, but I certainly welcome many of them, as they appear to be making good use of the money that has been made available to the SNP Government by the UK Labour Government at Westminster.
However, I will continue to express my disappointment at the fact that not enough space can be found in the programme for the Glasgow airport rail link. Some £42 million has been sunk into that project and we could have been two years into the work by this time. I believe that there is scope for completion of that project, which would have a significant economic impact in that part of Scotland.
I now move to more substantive comments around the subject of today’s debate. We need to move from the fiction and fantasy of the world in which the SNP seems to live with regard to the economy, and to try to look closely at how it has handled the major economic questions that face us. Somewhat belatedly, the SNP has given us this economic recovery plan. What else has it given the nation? It has given us the Salmond slump. No one denies that. The business community, economic observers, academic professors and others agree that the SNP has presided over a slump of its own making with regard to the rise in unemployment in Scotland. Some 16,000 redundancies have been reported in the past few months, at a time when unemployment is decreasing across the rest of the UK. The economic levers that are available in the UK and Scotland are undoubtedly being put to better use in the rest of the UK than they are by the cabinet secretary in Scotland. It is startling to note that two thirds of the jobs that have been lost in the whole of the UK during the recession were lost in Scotland.
We are falling behind the rest of the UK. What the cabinet secretary had to say about how we fare in relation to the UK was not true. Scotland has fared worse than the UK in the global recession. This is the first time since world war two that Scotland has suffered a steeper fall in output than the rest of the UK as a whole.
Members should revisit the SNP manifesto—it is a contender to appear in the “The Guinness Book of Records” for the most promises broken in the shortest time. On the economy, it states:
“we propose three specific targets”,
which include
“being the most competitive among the ... UK nations”.
The Ernst & Young Scottish ITEM—independent Treasury economic model—club’s 2010 economic forecast states:
“Comparisons ... between the Scottish and UK performances over the recession pinpoint ... areas of disturbing weakness across the Scottish economy.”
While the UK Government has received praise for its fiscal stimulus measures, the SNP has alienated the Scottish business community, some of whom have called into question the
“sincerity of their support for the economy and business”.
The SNP put the economy promise in its manifesto alongside other promises for smaller class sizes, £2,000 for first-time home buyers and the rest. We should therefore not be surprised at the result.
When I looked back at the SNP manifesto I saw the term “Arc of Prosperity”, which we have not heard for a while.
Tricia Marwick (Central Fife) (SNP) rose—
Perhaps Tricia Marwick wishes to echo the cabinet secretary’s comment that he would cut off a limb to have the economy of Ireland.
I appreciate the member’s point about her local company, but my reading of the business community’s commentary is that it has widely welcomed the measures that the Treasury has taken, particularly the deferred payments scheme, which has been used by hundreds of thousands of companies in Scotland. Administration is a measure of last resort, and it is a great disappointment when that has to be the case. Underlying features must be considered, but the deferred payments scheme that was launched by Chancellor Alistair Darling has been widely welcomed and used heavily throughout Scotland.
If we contrast the performance and competence of the UK Government against that of this Government, we see that a lot of the levers that are available to the Scottish Government have not been used.
The cancellation of GARL, which I have mentioned already, involved the ditching of 13,000 jobs and of a £300 million investment in the west of Scotland, which was crucial to the economic future of that area and of Scotland.
There is also the tragedy of the Scottish Futures Trust, which was the SNP’s great hope for a not-for-profit futures trust. It was going to build the Forth crossing, schools and hospitals, but it has built nothing and cost thousands of jobs. The responsibility for the loss of those jobs, and for the thousands of families that are left without incomes as a result lies directly at the doorstep of the SNP Government, because of its inability to deliver on the Scottish Futures Trust.
Businesses have been slapped with a massive rates hike with only six weeks’ notice, which has caused great concern in communities throughout Scotland and put jobs at risk. Incredibly in a time of recession, the SNP has chosen to cut budgets for housing, regeneration, enterprise and tourism.
I acknowledge what the cabinet secretary has said today about the money for housing. It is welcome, as it puts to good use money that is provided by the UK Government—[Interruption.] I thought that that was an intervention from Rob Gibson, but unfortunately it was a sedentary one.
I am concerned that the SNP has put itself before Scotland. In a time of recession, when we should be working together, the SNP has simply sought to push its pet project of independence and the national conversation, which we do not hear much about these days. It did not focus and use its budget in the proper manner.
The cabinet secretary let the cat out of the bag in his opening speech when he said that he announced his intentions in summer 2008 but did not publish the economic recovery plan until January 2009.
Let us not frighten Mr Foulkes too much.
Of course, a national insurance increase has a cost to the public sector as well. That is why we think that it is important to avoid such an increase.
I turn specifically to what the Scottish Government can do and to what it has talked about in its economic recovery plan. Some coherent analysis of the current state of the Scottish economy runs through the economic recovery plan, but there is also a flaw in that the Scottish Government overstates its ability to influence the scale and severity of the recession and the recovery. The plan is founded on the premise that there must be a further fiscal stimulus. That is a perfectly arguable case—although it is, of course, an easy case to make for a party that does not have to justify a position on finances at the UK level. An assertion seems to run through the core of the Government’s argument, which even the Labour Party, to be fair to it, does not accept. That assertion is that there is not a problem with the level of UK debt and the size of the deficit. That simply ignores the situation in which we find ourselves. Everybody knows that the markets are watching closely for the result of the UK general election, and no one can be sure that they will take a benign view of a Government that does not want to take action to reduce the deficit.
The member is addressing the issue of unemployment to come. There must be a higher unemployment percentage in Scotland because of its relatively larger public sector. I am particularly concerned about Edinburgh and its travel-to-work area. Edinburgh is the administrative and governmental centre of Scotland. I would like to know that the Government is undertaking modelling to find out what is likely to face us.
We want assurances from whichever party comes into power at Westminster after the election. Those tax breaks are crucial. I guess it comes down to this: if there is a will, there is a way. The French are doing it and the Germans are looking at a system. Indeed, the Irish are looking keenly at whether they can move Dundee’s games industry to Dublin en bloc by means of incentives that are aimed at games development. It is really important that the Conservatives and other parties come clean and give a clear direction on the matter.
The problem that Scotland faces is that the UK Government’s one-size-fits-all approach hampers growth in Scotland. The Scottish economy is very different tfrom that of the UK. I have mentioned advanced technologies such as digital media and life sciences. They are proportionately more important to the Scottish economy than they are to the UK as a whole. Another important sector is renewable energy, where Scotland has huge potential compared with the UK as a whole, yet the UK parties have failed thus far to address the issue of unfair transmission charges that put a brake on the industry. If we are to do what is best for Scotland, we need to make decisions in Scotland. The UK Government is not deliberately making decisions that go against the Scottish economy. What is best for London and the south-east of England is not necessarily best for Scotland. That may be why GDP in Scotland has historically been lower than that in the UK as a whole. We suffered the bust without benefiting from the boom.
If we want to secure recovery, we cannot do that with one hand tied behind our back. We need the same powers that every other nation is using to get back on its feet. It is clear that a Scottish not a London solution is needed if we are to address Scotland’s economic problems. London does not even know what is made on the Clyde, let alone what our economic priorities are.
I was disappointed not to be able to be in the chamber earlier this afternoon for time for reflection to hear the sermon from the Rev Andrew Jolly. I enjoy his sermons greatly. Taking a lead from him, the text for my sermon today is from First Minister’s question time on 18 March. Under pressure from Iain Gray, on the increase in Scottish unemployment, Mr Salmond—to the surprise and delight of the Labour benches—at last accepted that there is “an international recession”. Having tried previously to blame everything on the United Kingdom, Gordon Brown and Alistair Darling, he suddenly remembered the US sub-prime mortgage crisis and the knock-on effect that it had around the world, including the involvement of the banks. He remembered how the UK Government stepped in to save the banks, including—of course, and principally—the Royal Bank of Scotland, Salmond’s former employer. I say with respect to Joe FitzPatrick that an independent Scotland would have been incapable of doing that, because that would have used up the whole of an independent Scotland’s budget for a year. The Government could not have done that.
Let us deal with another Salmond canard: that Scotland is hard done by by the UK Government. That is just not true. In fact, the English are at last waking up to the fact that Scotland has done very well out of the UK taxpayer. The Barnett formula ensures that Scotland gets nearly 20 per cent more expenditure per capita than England. Spending is more than £9,500 per capita in Scotland and less than £8,000 in England. For the past 13 years, the money that has been available to the Scottish Executive has increased in real terms year on year. That is why Joe FitzPatrick is able to praise all of the work that has been done in Dundee.
Unfortunately, we flaunt to the English the fact that we have had more money to spend. We have free personal care, free prescriptions for all and free school meals for all. To some extent, we rub that in the faces and the noses of English people.
Will the member give way?
The member has given two examples. Will he remind the chamber of how he voted on them?
Members will be relieved to know that I will be unable to bring the same theological insight to my commentary on this economic subject as did Lord Foulkes. I gently say to him that, if he is going to comment on the grammatical and syntactical content of slogans, he might think about the grammatical and syntactical content of “a future fair for all”.
The debate is not throwing great light—as these debates occasionally do—on where we might go now. There is not exactly dishonesty here, but I hope that we can somehow smooth over certain things. Joe FitzPatrick was genuine in saying that he did not think that an independent Scottish Government would have done things any other way regarding the crisis that RBS, HBOS and others faced. Joe FitzPatrick is not the only nationalist spokesperson to use the phrase “looming cuts” in a pejorative sense, which invites the listener to conclude that, if we were independent, there would somehow be no debate about whether we needed to cut our cloth. I find that an unhelpful approach as a backdrop to the debate.
We can have an argument—lots of arguments—about what a Labour Government did or did not do with an economy that was hugely predicated on high levels of personal and corporate debt, but it cannot be denied that, given its huge dependence on the financial sector, Scotland has been caught very badly by a world economic crisis, and that it will have to meet the proportionate cost of dealing with the debt that it has incurred, given how RBS and HBOS have been dealt with. The continuing suggestion that we are somehow exempt from all that is not particularly helpful.
Like my colleague Jeremy Purvis, I welcome some elements of what the Government is seeking to do in making investments. There is a genuine debate here. I have no problem with the cabinet secretary, Joe FitzPatrick or any other members of the SNP arguing for independence. That is perfectly legitimate, and I do not regard that as something to scorn. We must reflect, however, on the use of the word “independence” in economic terms. I wonder whether, on proper examination and reflection about what has happened as a consequence of the economic fall-out from the world banking crisis, any country in the world can properly claim to be independent. That is a very interesting question, but one on which we do not have sufficient time to elaborate much further this afternoon. Let us not make silly and false assertions that economic independence is something that many countries have in reality. The interdependence of economies—of those within the United Kingdom, of those in Europe and of those across the globe—must be taken into account, and false assertions about the extent of economic independence are not helpful to a sensible economic debate.
The cabinet secretary has made some sensible decisions. Our construction industry, which faces difficulties, will undoubtedly be helped by the additional sums that will be put into the affordable housing budget. Such decisions are to be welcomed.
We must recognise two elements to the unemployment figures, which are stubborn and difficult. The first is to do with the extent to which unemployment has been fuelled by the collapse in the financial sector; the second is that unemployment is occurring—I regret to say—in the very areas throughout Scotland where it has occurred for years and years. That is a symptom of market failure, which is why I join in and very much support the Liberal Democrats’ criticism of the reduction in the enterprise budget, a great element of which was designed to address market failure in areas that have perennially suffered from high levels of unemployment and deprivation. A reduction in the enterprise budget was not and is still not a sensible policy to pursue in the midst of an economic recession.
We need to give back confidence and stability to the financial sector, which is hugely important to the Scottish economy. The Liberal Democrats have been clear for some time about the need for a different kind of regulation and a different kind of financial organisation that splits off investment banks. Investment banks should no longer be regarded as too important to save. If they make wrong decisions and fail, they should be allowed to fail. The elements of the banking sector that are looking after our savings and fuelling and financing our economy must be saved, but should not be allowed to grow to such a size that their collapse would put the whole economy at risk. We need, collectively, to be clear about where we are going, because we must restore confidence in the sector, whose economic and employment prospects for Scotland remain huge. The sector remains critical and should not be dismissed simply because of the massive failures of RBS and HBOS, among others.
The Scottish Government must address those matters. It has the ability to direct its affairs in the way in which my colleague Jeremy Purvis suggested, it has the ability to begin the process of restoring confidence in key elements of the economy, and it has the ability to consider the fragile enterprise network and the areas in Scotland where there is market failure and additional support is needed because of the current circumstances. Unemployment must be addressed, not just because it exists but because it indicates the state of the economy in key parts of Scotland. The continuing high levels of unemployment in those areas should be of grave concern to the Government, which is why the matter is mentioned in the Liberal Democrat amendment.
16:03
Just a minute. I want to finish this point.
As our economic recovery is based on investment, we must ask questions about the financial system that is supported by each of the British parties, that has not been altered, and which is aimed at supporting property and share prices. That is what the current financial system was set up to do, rather than invest in real jobs in manufacturing and so on. That is the charge that faces the UK parties, but I believe that Mr Kerr is going to tell us that we are all wrong.
This has been an interesting debate, not least because it has contained a few surprises. One of the big surprises was the lack of a focus on the general election, with the notable exception of the speech by Lord Foulkes. Indeed, the parties’ slogans have barely featured in the debate. Less surprising is the fact that the Minister for Enterprise, Energy and Tourism has not been present during the debate, because, whenever we have a debate on the economy, he is missing. It seems a bit strange that the minister who has responsibility for our economy does not participate in debates on the subject, as we might expect him to. However, that perhaps says more about the minister than anything else.
Another surprise was that, even though the debate is about the Scottish recovery plan document, which was published on 3 March, little reference has been made to it. I will try to correct that.
The “Business rate revaluation” section of the document states:
“A package of measures has been put in place through the business rates mechanism to improve the business environment.”
However, I do not think that many of the businesses that are facing huge increases in their business rates this year—having been given just a few weeks’ notice of those rises—consider that what has taken place has been part of a mechanism to improve the business environment. Indeed, many of them are faced with the prospect of having to make significant job cuts in order to fund the business rate increases, which the Government has refused to act on, despite the fact that the matter has been brought to its attention for some time. At the weekend, I spoke to the owner of a domestic appliance business in my constituency and was told that, due to the rates increases on his relatively small business, which is situated on a high street—a sector that we are told is being protected by this Government—it will have to sell somewhere in the region of another 105 washing machines in order to cover the cost. The owner of another business, in the tourism industry, told me that it will have to increase its turnover by around £300,000 in order to cover just the increase in the business rates—if it does not do that, it will have to shed staff or reduce investment, both of which are essential to its business.
The Scottish Government has failed to support businesses that are faced with unacceptably large rates increases, and I note that the cabinet secretary refused to respond when Jeremy Purvis intervened on his speech to ask him what percentage increase in business taxation would be acceptable. He refused to answer that question because he knows that there are unacceptable increases in business taxation happening in Scotland right now because of the failures of the Scottish Government and its lackeys in the Conservative party. I expect that we will deal with that issue a bit more in the course of tomorrow’s debates.
The economic recovery plan document talks a great deal about tourism, which is crucial, and makes a particular point about the movement in exchange rates being beneficial to Scotland’s tourism industry. Unfortunately, however, the latest tourism figures do not necessarily bear that out. There has been a rise in domestic tourism due to the increase in staycations, but the average amount of money that is being spent per trip and the amount of money that is being taken by individual businesses have gone down in the past financial year. Although more people are coming to stay, businesses are having to cut the rates that they charge in order to get them to come and stay, and are therefore losing income.
Further, on international tourism, the latest figures—which, unfortunately, go up only to October—show that there was a 1.6 per cent decrease in the total number of trips that were made and that, although there was an overall increase in spending, it is not as good as we might have hoped that it would be. One particular issue is that the number of visitors from the EU fell by 15 per cent in the first three quarters of last year, which is worrying, as that should have been a particularly good market for us, given the exchange rate.
Given those figures, and at a time when tourism is viewed as a key sector in our economic recovery plan, why is the Government cutting the budget for VisitScotland, the agency that promotes tourism? VisitScotland is not alone. Budgets in other areas, such as those for Scottish Enterprise and Highlands and Islands Enterprise, are also being cut.
The budget for Scottish Development International, which acts to improve our international performance and the exports and inward investments that are crucial to our economic recovery plan, is being frozen—a real-terms cut—in the current financial year. The Government is asking SDI to do considerably more as part of the economic recovery plan, but with no more resources. Those areas of concern are yet to be addressed.
Additional capital expenditure is welcome, and I hope that it will help to promote new jobs. However, we have yet to see the evidence that the advance capital last year was used to best effect; there is evidence to suggest that it was not, and that it did not create as many jobs as it could have done. The money could perhaps have been better invested in household insulation, for example, which would have provided instant jobs in the construction industry and long-term benefits for many of the poorest in our society.
The Government needs to do more to promote economic recovery. It has yet to get its plan right, and I hope that it continues to work on that.
16:36
Will Gavin Brown explain how a Conservative Government—if elected—will raise the money that will not be raised when it reduces national insurance?
George Foulkes needs to listen to the captains of industry, well over 100 of whom have publicly endorsed our policy. If companies are given the chance to grow and to create jobs, the ultimate tax take will be higher and the economy far more likely to prosper than will be the case if a tax on jobs is imposed at the very point when we are attempting to recover.
Will the member give way?
No, not at this time.
The purpose of the debate, as several members have said, is to consider the Scottish economic recovery plan, and I will focus the rest of my remarks on some of the specifics that it contains.
There is little with which to disagree in the Government’s motion, but it is important that the Government takes on board the points that members have made about the recovery plan and about the fact that it has shown genuine inaction in some areas.
I turn first to the Scottish Investment Bank. I believe that the proposal has broad cross-party support and support from industry, which the Economy, Energy and Tourism Committee touched on briefly in a couple of evidence sessions. I have not noticed that many people have disagreed with the concept. That policy was announced almost a year ago by the First Minister at the Scottish Trades Union Congress. It was not a policy that the Government was considering as a good idea to try to accelerate recovery but one that was unveiled as something that the Government was going to do. However, 12 months on, we have seen little progress on the Scottish Investment Bank. The original idea was that it would comprise three funds that are currently distributed by Scottish Enterprise. It would attempt to get European funding and perhaps some extra private funding in order to create the bank. It appears to have been extremely tricky to come by the European funding but, if that is the case, why on earth was the policy announced before the homework was done?
The policy created a lot of excitement at the time, but it has patently failed to deliver. It is so bad that the last time I asked a question about it, the Minister for Enterprise, Energy and Tourism stated that the Scottish Investment Bank does exist and that it is distributing funds week in, week out. However, all that has been done is to encapsulate the three funds that already existed and were already delivering funds and call them the Scottish Investment Bank. I would like to hear from the cabinet secretary when he concludes the debate what is going to happen with the Scottish Investment Bank. Is it a flop or is the Government genuinely going to take it forward?
I turn to other issues in the recovery plan. There are lots of warm words and good suggestions, but there is also hyperbole, some of which we have heard today. On the key sector of tourism, it tells us:
“our tourism industry outperformed the rest of the world in 2009”.
Can the member explain to the Parliament why the Conservatives voted with the Scottish Government against an interim relief scheme for business rates, which are hitting hotels and the tourism industry hard?
Mr Rumbles needs to look at all the items of spending that he has pressed for. He has to realise that the demands that he has made, on top of those from Mr Purvis and Mr Smith today and all the other things that the Liberal Democrats have pressed for, comprise several billion pounds’ worth of additional funding that simply does not exist in the Scottish budget. If the Liberal Democrats can tell us how they intend to fund any scheme that they put forward, it will be taken seriously but, until they are prepared to do so, it is extremely difficult to take them seriously.
To summarise, I want to hear more from the Government about the Scottish Investment Bank. Is it to go ahead? If not, will the Government say so now so that we can move on to something else?
16:42
Nonsense.
It is not nonsense; it is a fact. The minister should speak to the Scottish Federation of Housing Associations, which will reconfirm it for him.
Labour in London has got us back on the road to economic recovery—a fact recognised globally, although not by certain elements in the chamber—and we need to build on the economic progress that we are making. Those efforts will create 100,000 extra skilled jobs in Scotland. The Tories would cut away the recovery and take jobs away from people.
Let us not forget that the Tories and the SNP opposed the national minimum wage. Apparently, some SNP MPs do not even know what level the national minimum wage is at or that it is increasing. When we were campaigning to introduce a national minimum wage, Mr Brownlee and his colleagues were probably marching to free right-wing generals.
Let us discuss the national insurance issue. The decision was tough, but the wider perspective must be considered. The UK Government must balance keeping the recovery going with attacking the national debt at the right time and controlling interest rates. It is vital to support investment in key public services as the UK battles to cut its multibillion-pound deficit after the recession. We can all throw around spending and savings statistics, but the Tories would have to cut back on front-line services to fund their national insurance cut if they came to power. They were wrong when they said that the national minimum wage would cost jobs, and they and their supporters in the business community, which is praised by Mr Brown, are wrong about the national insurance increase. Their policy of seeking to cut the budget deficit at a faster pace is also wrong.
Before the dynamic duo of Mr Brownlee and Mr Brown on the Tory front bench get to their feet to protest, I will quote from a letter to the Financial Times that was signed by 60 leading economists. Members know how much the Tories like letters to the papers. Perhaps Mr Brown should listen to those leading economists. They said:
“A sharp shock now would not remove the need for a sustained medium-term programme of deficit reduction. But it would be positively dangerous.”
Even Ernst and Young—which is a company that is familiar to Mr Brownlee—has commented:
“The Chancellor is right to resist calls to tighten policy more aggressively in the near term given the fragile nature of the recovery.”
Closer to home, the Scottish public are waking up to the fact that Alex Salmond’s team is more about grievance than government. We have all heard about the Salmond bluff and bluster, and we all know how he shouts loudly and stamps his feet. However, what has he done when there has been money and opportunities to act? Despite its carefully worded motion and the fact that it has barely noticed that there is a global recession, the SNP has hardly adjusted its economic plans. Nothing changes in Brigadoon, where the SNP lives.
The Fraser of Allander institute at the University of Strathclyde, where the First Minister was a visiting professor, has calculated that, over the course of the recession, Scottish economic output has fallen by 6.13 per cent. That is a bigger drop than the 5.73 per cent decline UK-wide. Another survey last week in the latest Lloyds TSB Scotland business monitor shows that the tentative recovery from the recession is stalling. In the three months ending February 2010, 25 per cent of the firms that were surveyed increased turnover, 28 per cent experienced static turnover, and 47 per cent experienced a decrease in turnover. After four consecutive quarters of improvement, the latest business monitor shows a deterioration delaying Scotland’s emergence from the recession.
I turn to comments that have been made in the debate. Like Joe FitzPatrick, I welcome the investment in the city of Dundee. I have one other thing in common with him: we both welcome the fact that Dundee United will play in the Scottish cup final on 15 May. We might be on the same side on that day, but not today. He claimed that an independent Scotland would have been able to bail out the collapsed banks and that Scotland would be better off with the euro. Back to Brigadoon, I think.
As usual, Ross Finnie made a thoughtful speech. He will have noticed that I share his views on the decision to cut the enterprise and tourism budgets.
Bob Doris spoke about investment in social housing. It is about time, too. The failure to invest in construction projects in the first two years of the SNP Government has already cost 30,000 construction jobs.
Wendy Alexander made important points about the Glasgow airport rail link. In his opening remarks, the cabinet secretary said that Labour members should remember that that was a four-year project. He knows that next year would have been the peak spending year. As Wendy Alexander pointed out, he has had two cash windfalls plus capital slippage, which would have helped him to reinstate the scheme.
We all know that these are difficult days. We agree with many parts of the economic strategy—with what it says about infrastructure investment and support for education and skills, not least because we have championed those matters. However, it is strange that the report states that the Borders railway scheme, which is much loved by Mr Purvis, is a vital piece of transport infrastructure that is needed to support the economic development of the south-east of Scotland. That is from a cabinet secretary who cancelled the Glasgow airport rail link, which is a vital piece of transport infrastructure that would have been a tremendous boost to the economic prospects of the west of Scotland and would have supported 1,300 construction jobs.
We all know that our economy needs to be rebuilt. However, the SNP Government must concentrate on securing the recovery and investing in future growth and jobs, rather than wasting time and money on national conversations, a Scottish Futures Trust that is not working and a proposed referendum bill that is doomed to failure. Economic recovery will not happen with Mr Salmond sitting in his ministerial car dreaming of independence in the land of milk and honey. He should come into the real world and start taking responsibility for his actions. Economic recovery will be a myth in Scotland unless it is supported by initiatives that contain more than broken promises and worthless words.
16:50
I am grateful for that thoughtful response, but does the cabinet secretary concede that it is perfectly possible to achieve exactly that degree of fiscal responsibility and borrowing powers that he described without necessarily becoming an independent nation state?
The cabinet secretary is well aware that, had he funded GARL this year, a mere £63 million would have been left over the next three years, when he will have £9 billion of capital expenditure at his disposal.
Will any of the eight capital projects to which the cabinet secretary has given the go-ahead today incur expenditure in years after this year?
Briefly, please, Mr Brown.
The plan does indeed contain an update, which is that more information will be released in a few months. It has been a year since the policy was unveiled. Why has progress taken so long?
We do not disagree that the private sector creates the wealth of the nation and that Governments should spend money carefully, but the point is about the fragility of the recovery. Most economic observers, including the ITEM club, The New York Times and 60 writers in the Financial Times, say that to come out of the stimulus package too early and cut back too quickly will give us the double-dip recession that we all dread. However, that is the Conservative party’s strategy.
I am afraid that I do not have time.
The grass-is-always-greener approach from the SNP is wearing thin for most people in Scotland. Even today, on its website, it asks us to look at eight success stories of independent countries and gives us case studies to follow. One of those countries is Iceland. The website states:
“Independence has given Iceland the freedom to become a world leader.”
It suggests that exactly what happened in Iceland should happen in Scotland. Another one of the success stories on the website is Ireland.
There is too much of the Government simply blaming Governments elsewhere and looking at other countries. The SNP’s new example of a country that we should follow—which should give that country great concern—is New Zealand. There is no doubt that the more the SNP talks up New Zealand as an example, the more New Zealand should be fearful for its economy.
I move amendment S3M-6129, to insert at end:
“and regrets that unemployment continues to rise in Scotland while falling in the United Kingdom as a whole.”
15:41
I am sure that George Foulkes understands that it is not possible for us to do every piece of improvement work that we believe to be important. The upgrading of the A77 will support traffic movements to the Cairnryan terminal.
There will be a £5 million contribution to upgrading the A9 at Crubenmore, £3 million for development of part of the renewables infrastructure plan at Arnish in the Western Isles, and an acceleration of £3.8 million for development of the Dundee waterfront project, which is attracting significant support. In addition, £10 million will be allocated to support a range of sustainable transport initiatives that will help Scotland to make progress on our world-leading climate change ambitions. That funding will go to a green bus fund to encourage the construction of low-emission vehicles, to development of electric vehicle infrastructure, and to support for the development of further cycling infrastructure to encourage greater active travel.
I welcome any announcement of an additional £10 million for green travel measures. However, can the cabinet secretary tell us how that figure of £10 million compares with—let me pick a random example—the road-building budget?
Aw!
The next item of business is a debate on motion S3M-6129, in the name of John Swinney, on the economy recovery plan.
14:59
I welcome the opportunity to lead a debate on the Scottish Government’s economy recovery plan. The context for the debate has developed since last October, the most recent occasion on which the Parliament debated the steps that the Government is taking to support economic recovery. The global economy has emerged from the deepest downturn in recent memory. Across the world, the size and the timing of the recovery have varied, but growth is now being led by the emerging economies.
In the developed economies, the picture is more fragile. There are worrying signs that recovery in the euro area might have stalled already, and the latest International Monetary Fund forecast predicts only a modest recovery for advanced economies in 2010.
The Scottish economy entered recession in the middle of 2008; so far, our economy has performed broadly in line with the rest of the United Kingdom. The latest Scottish gross domestic product data will be published on 21 April, but the current data show a further easing in the rate of decline. In quarter 3 of 2009, the Scottish economy contracted by 0.2 per cent in comparison with a 0.3 per cent contraction in the UK economy during the same period.
The Scottish Government has faced up to the challenge of the emerging crisis. We set out a series of measures in summer 2008, and formalised them in the Scottish Government’s economic recovery plan, which was first published in January 2009, and in which we used all the levers that are at our disposal to support the Scottish economy through unprecedented pressures. We have ensured that our recovery plan has evolved throughout the period of recession to meet the emerging priorities for the Scottish economy.
The latest update to our recovery plan was published on 3 March, and it is closely aligned with the principles that are laid out in the Government’s economic strategy. The plan sets out the actions that will accelerate the Scottish recovery, and ensure that we can secure increases to sustainable economic growth in the longer term.
Our focus is on three key areas: investing in innovation and the industries of the future; strengthening education and skills; and supporting jobs and communities. We have already made a significant impact through measures in the economic recovery plan to directly support 15,000 jobs. We have brought forward additional capital spending to the fullest possible extent: capital acceleration of £350 million has supported more than 5,000 jobs, including 3,000 in the hard-pressed construction sector. Unlike other areas of the UK, Scotland has used its allocation fully, but we could do more if Westminster made the resources available.
Skills investment and training opportunities continue to be a priority, so we have invested £145 million to help the unemployed to enter the labour market, to help employers to develop their workforce skills, and to support those who are facing redundancy and to help them move into new work. Almost 20,000 people in Scotland have started modern apprenticeships in the past year.
In addition to that package of activities, I am able to share with Parliament the Government’s decisions on further steps to support economic recovery in Scotland. Today I have allocated the consequentials that have arisen from the Chancellor of the Exchequer’s recent UK budget. The Scottish Government will deploy £76 million of additional investment in the current financial year. That is the resource that we have under our control; £6 million of resources is in annually managed expenditure and is therefore outwith our control.
Funding will be allocated to projects that are ready to be delivered, producing an immediate boost to demand and supporting the Government’s purpose of increasing sustainable economic growth. During the coming months, the new capital investment will deliver vital infrastructure projects across Scotland, with £6.2 million of funding being allocated to upgrading the A77, the essential link to the new Cairnryan terminal in the south-west of Scotland.
Will the minister give way?
Will the member give way?
I am sorry, but I am almost out of time.
I have set out the steps that the Government has taken to support economic recovery and to reinforce the additional steps that we are taking to invest in the economy by deploying the capital consequentials that we have in the budget. We will continue to maintain that focus at the heart of our agenda.
I move,
That the Parliament notes the Scottish Government’s response to the global recession through the Economic Recovery Plan and notes the three core themes of investing in innovation and industries of the future, strengthening education and skills, and supporting jobs and communities.
15:12
I recognise that, and I recognise that we brought to the discussion the 15-point economic plan from which the cabinet secretary quite rightly says he has taken some ideas to put to good use.
However, there are fundamentals around the shape of the Scottish budget, such as the Scottish Futures Trust and the cancellation of projects such as GARL, which are making the situation worse. That is why, if we compare and contrast ourselves with the rest of the UK, we find that Scotland is faring worse under the economic stewardship of the SNP Government. That is where the problem lies. We should perhaps not be too surprised about that, because I do not think that the Government’s focus is on its alleged number 1 priority of growing the economy. In my view, it is about independence, and the Government cannot see past that.
The cabinet secretary mentioned unemployment. We should look to the actual statistics that compare the UK with other Organisation for Economic Co-operation and Development countries, with the European Union average, with the United States, and with other nations. We are faring better in terms of unemployment. The projections that were made at the heart of the recession about unemployment levels did not come true and Labour values in operation ensured that we were able to keep people in work. Fewer people lost their jobs than was projected, fewer businesses have gone bust, the tax take is higher, and more people are in employment than was projected. We should recognise that the values and policies that were put to work at UK level have made a significant difference to our approach.
I do not mean to take issue with the member, but can he assure me that he is confident that whoever wins the election at Westminster will be able to stick to the plans that he outlined a few minutes ago? Every commentator whom I have read says that there will have to be another budget and another spending round because the money is not there to be spent.
I do not know who is more relieved that Andy Kerr does not speak for the Conservatives—me or him. I do not believe that anyone would accept as accurate his description of the plans that the Conservatives would have if we were to win the UK general election.
If we are frank, we face a serious problem in the economy not just in Scotland but throughout the UK. We all know about the severity of the recession, which is the longest and deepest for some time. We know the impact that it has had on families and the fears that it has created for people who are still in employment but who worry that they will lose their jobs in the years to come. If we are candid, we do not yet know whether the unemployment figures, which are less unfavourable than expected, are the result of a lag in the recession’s taking effect or a result of the more flexible labour market that we have managed to create since 1979. We certainly all hope that job losses will be minimised and that the labour market will be able to sustain employment to the greatest possible extent. However, we would be taking a risk if we assumed that the position will automatically be rosy.
Today, the Parliament is not being asked to endorse the Scottish Government’s economic recovery plan. There are certainly parts of the plan that we would support, but we believe that the Government has not got other parts right. I will expand on those in some detail later.
Issues of economic policy are often stated in black-and-white terms—in particular, by the First Minister, I have to say—as if the Scottish Government could somehow wave a magic wand and deal with all the problems that we face. The UK Government is no better in that regard. If we are honest about it, the influence that government at any level has over the economy is significant, but it is not absolute. Government cannot be ignorant of the impact of global economic forces or global markets. It is misleading for any Government to pretend that it can simply avoid problems in the economy by taking certain actions.
We have said that we oppose the UK Government’s plan to increase national insurance next year. That will not be the first national insurance increase under Labour. The plan is a straightforward tax on jobs, which will make it more difficult for employers to recruit and will, we believe, lead to job losses.
Mr Brownlee will be aware that the chancellor expected to borrow £168 billion in this financial year and that he is borrowing less than that. The chancellor had the opportunity in the gap that existed to deploy resources to support fiscal stimulus. Mr Brownlee has derided the point about a fiscal stimulus and additional spending. Why is it that 18 of the G20 countries, many of which are in a more advanced state of economic recovery than the United Kingdom, are continuing with a fiscal stimulus in this financial year?
Nineteen of the G20 countries did not have Gordon Brown wrecking the public finances as chancellor and preventing the UK Government’s ability to invest in a stimulus. The argument that Mr Swinney advances is similar to that which would be made by someone with a credit card who says that they must spend up to the card’s limit. It is simply not credible.
The Scottish Government can and should focus on clear weaknesses in the Scottish economy. We have a problem with new business start-ups, of which there are simply not enough. The rate of new business start-ups here is lower than that in the rest of the UK. Admittedly, there is a target for that on the Government’s Scotland performs website, but sufficient progress has not been made.
There is much to be done to encourage a culture of entrepreneurship in Scotland. That is important, as nobody can be in any doubt about what is coming down the line. Margo MacDonald made a point about that earlier. Everybody realises that there will be significant reductions in devolved spending whoever wins the election. The inevitable consequence will be job losses in the public sector, so the jobs of tomorrow will have to be created in the private sector to ensure that employment levels can be maintained.
Margo MacDonald makes a fair point about Scotland’s overdependence on the public sector. Of course, we could see that as an opportunity, because there is greater opportunity for the private sector to grow. I certainly hope that the private sector would be able to take up some of the slack in relation to employment.
Other aspects of the Government’s programme are sensible. Supporting exports is fine, but every country is looking to exports to get out of recession, so we must be competitive internationally. The recovery plan focuses on the importance of a competitive exchange rate, but the Government has absolutely no influence on the exchange rate and is dependent on the UK Government’s stewardship of the economy to deliver a competitive rate. We cannot ignore the fact that basic skills levels in Scotland are not competitive with those in other nations. Unless we tackle those issues and raise productivity levels in the public and private sectors, we will not perform to our potential in future years. The Government will simply be neglecting its duty if it pretends that all that is not happening. If it pretends that we can simply spend more, and that the public sector can sustain us indefinitely, it is living in cloud-cuckoo-land. We should be considering how to grow the private sector to produce the jobs of tomorrow. The Scottish Government should be prepared to work with the UK Government, whoever wins the election, to deliver that through a joint programme.
We have heard three speeches from the cabinet secretary today. In the first two, he argued for a £420 million tax cut. In the speech that we have just heard, he argued for additional spending in Scotland. People will wonder how the two can be balanced. The cabinet secretary argued strongly that more money should be spent on the economy in Scotland, that more investment is needed in public services and that additional resource must be put into the areas to which the Barnett consequentials that he has received will go. The cabinet secretary made a strong case on that. However, about 15 minutes ago, he argued that a £420 million tax cut, which he knows would benefit those who live in the biggest houses in Scotland, is some form of consistent approach. I am sure that he will address that clearly in his winding-up speech.
On the day of the stage 1 debate on the budget, in a budget process that was rightly dominated by economic considerations and the state of the economy in Scotland, 136 workers were made redundant in my constituency. That was not because of HMRC, as Tricia Marwick suggested, but as a result of a mixture of issues, including difficulty with cash flow for businesses, difficulty accessing affordable finance and the state of the market. Cash flow was the biggest element. That is why I take what Tricia Marwick said with a pinch of salt, particularly given that the Scottish Government moved at a snail’s pace in its consideration of a support fund for debt financing, something that the Welsh Assembly Government established considerably earlier.
Of those people who lost their jobs, about half have thankfully found other employment and most of them are still within the textile industry. We should all wish them luck, as the industry is in a fragile state and needs continual Government support and activity. That is why in that budget process the decision to reduce the enterprise budget was perverse. The Scottish Government should not have decided to reduce the enterprise, tourism and regeneration budgets. There is glib reference in the Government’s economic recovery plan to budgetary choices that have been made.
We were pleased, however, that the Government listened to a certain extent to what other parties said during that budget process. We were pleased that it took on board evidence that we put forward from Scottish colleges that unprecedented numbers of young people were being turned away from colleges—in some cases up 800 per cent. We made a case, the Government listened to it and there are now an additional 7,500 places as a result. We were engaged constructively as part of the budget process. We were also pleased that the Government responded to our case for supporting our rural post offices, which are key local businesses.
After looking at some of the key areas of the Scottish economy, we were not in a position to cast a vote for the budget because we knew that the position was considerably worse in Scotland than in other parts of the United Kingdom. Let us look at what is probably a key indicator of economic activity in Scotland—new construction orders. The official statistics are compiled monthly and are stark. On many occasions, the SNP Government asks us to compare our situation with that of Wales; in fact, the Government has an electoral pact in the forthcoming general election with one of the governing parties there. Private commercial investment in Scotland in 2003 was £1.775 billion. In 2009, that collapsed to £548 million—a colossal reduction in private investment in commercial activity in Scotland. Such a reduction is not just the result of the recession. The fall between 2007 and 2008, before the recession, was from £1.5 billion to £900 million—a reduction of £600 million, which can be clearly attributed to the hiatus in activity as a result of the delay in making any sensible plans for a Scottish Futures Trust.
When the cabinet secretary was asked on “Good Morning Scotland” last year, “Hand on heart, is the Scottish Futures Trust everything you hoped it would be?”, the cabinet secretary replied, “Of course it is.” I do not think that anyone believes that. I am sure that, hand on heart, the cabinet secretary does not believe it either, but I am sure that he will say that he does today.
Will the member give way?
I add my welcome for some of the Scottish Government’s interventions and support for the games industry. I am sure that the member wishes to welcome the UK measures, too. He mentioned the limitations of powers on two or three occasions. What powers—if they were all available to him—would he have used to rescue our banking system in Scotland?
Post independence, the new Government of Scotland would have the opportunity to look at all the options in doing what is best for Scotland. I guess that the initial position would be to stick with UK sterling, but the SNP position is, of course, that Scotland will move to using the euro as soon as that is best for Scotland. That will be sooner rather than later.
It is clear that Scotland requires the full powers that every other nation has. It is important that the people of Scotland have the right to say whether they want to be part of the world’s most indebted economy and remain under a Government that plans to spend £100 billion on nuclear weapons or whether they want to have the economic security that comes from decisions being taken in Scotland with Scottish jobs and businesses as the top priority, not an afterthought.
15:48
Will the member acknowledge that the SNP Government is trying deliberately to make the lives of people in Scotland better?
Will the member give way?
I will give way to the Liberal Democrat.
Will the member take an intervention?
No. In the current budget, Trident costs £400 million a year—about £40 million from Scotland—but it supports 20,000 jobs, many of which are in Scotland. Joe FitzPatrick and all other members should take account of that.
I hoped to strike a note of consensus in my speech, at least initially. Perhaps that was a vain aspiration, given that a UK general election is looming, and given some of the speeches that we have heard—I exempt Ross Finnie from that observation.
I want to consider two key aspects of economic recovery under the Scottish Government. First, I welcome the record level of social rented housing that the Government has delivered, which is an example of how the provision of essential economic stimulus and the securing of important social benefit can be combined in difficult times. In Glasgow, for example, which I represent, there has been a massive 80 per cent increase in new-build social rented housing under the Government, compared with a similar period under the previous Scottish Executive. In terms of bricks and mortar, that represents an additional 1,500 houses for social rent in my city.
The approach has helped Glasgow’s economy, because more brickies, plumbers, joiners, sparkies and so on have retained their jobs or had jobs created for them. More small businesses in Glasgow and beyond are being supported by the Scottish Government. I am proud of that achievement, which is a success for the Parliament as a whole.
There was no great mystery or secret to the achievement of the figures. The Scottish Government took a policy decision to increase the Scottish affordable housing investment programme by 19 per cent over three years and to spend around £1.7 billion in total. As we heard, a further £31 million will be added to that, which I welcome. As a minority Government, we sought consensus to pass our budget in order to make that investment. Although the Parliament has not spoken with one voice in many recent budgets, as a minority Government the Scottish National Party managed to gain a majority to lever in that £1.7 billion record investment. We can have consensus in trying to tackle the serious economic problems that we face.
Another reason for such welcome figures on social rented housing in Glasgow, and indeed figures on affordable housing across Scotland, is that we sought to accelerate much of the capital investment from 2010-11 into earlier years. The Parliament achieved consensus on that, too, and there was general agreement that that would allow the affordable housing sector to support private companies during the recession. The sector was seeing a huge drop in available finance to build private properties and, indeed, a significant drop in demand for such housing due to the income shock that many were suffering.
The Parliament also agreed that, having accelerated capital expenditure from 2010-11 into earlier years, it would be dangerous and wrong to slam the brakes on such capital acceleration. All parties called for a further acceleration from the 2011-12 UK budget—we agreed that capital acceleration should happen for just one more year, until our construction sector became stronger—but when the UK Government’s budget was presented, there was no provision for such capital acceleration. Scotland’s housing sector felt badly let down by both Gordon Brown and Alistair Darling, and it is private businesses, particularly in the construction sector, that will bear the brunt.
I genuinely urge Labour MSPs to approach their UK colleagues, should they be in a position to influence policy after the forthcoming general election, and to stand up once more for capital acceleration; it is important. I urge my Conservative and Liberal Democrat colleagues to do likewise and to build a consensus from within the Parliament. I certainly know that my SNP colleagues in this Parliament and the House of Commons will be carrying that message, but I hope that from within this Parliament we can start to rebuild the consensus.
In the spirit of consensus, will the member take up our challenge to his cabinet secretary to get the money to reinstate the Glasgow airport rail link? It was a project that he supported.
Oh, come on.
“Oh, come on”, says the transport minister, and yet he was left in the dark when the decision was made.
I thank Mr Whitton for his helpful and consensual intervention. We are looking at the stark reality of cuts coming to Scotland—a 1.3 per cent real-terms cut in the year ahead. Should more money become available to Scotland, I would prioritise social housing and construction. That is a difficult decision to make as a Glasgow MSP, but I want to add to the 1,500 extra houses that we have in Glasgow and to provide even more employment. I accept that it is a tough choice to make, but I have made it.
I want to touch briefly on the small business bonus scheme. Although it was not initially intended as part of the economic recovery strategy—it was designed to help small businesses to develop and flourish—in the current difficult economic times it has become by default a key section of our economic recovery platform. Throughout Scotland, 200,000 small businesses will benefit; indeed, in Glasgow, 9,000 businesses will save up to £4,000, with almost 25,000 businesses to benefit across the city.
Economic recovery is about tough choices in tough times. There are constraints on the Parliament, which we should all acknowledge. I do not think that the UK Parliament ever deliberately does Scotland down; it just follows the biggest market in terms of finance and population density—London and the south-east of England. Measures are not anti-Scottish by design, but they may turn out to be in practice. We saw that with stamp duty, as 80 to 95 per cent of first-time buyers in London and the south-east of England benefited from the change in the threshold while only 25 per cent did so in my city of Glasgow. That measure was not trying to do down Glasgow by design, but it did so by default.
I have said before that, in its early days, the SNP Administration was effective and clear in defining what, in its view, the purpose of Government was, although I did not share that view. When asked what Government was for, the answer was that it was for something called “sustainable economic growth”. However, the Government never asked, “What is the purpose of the economy and of economic activity?” In recent years, all political parties have begun to allude to that question by peppering manifestos and other documents with words such as “wellbeing” and “sustainable”, but the question has never been fully resolved or answered. If it had been, we might have faced recession, and we might now be facing recovery, with a far clearer transformational agenda fit for the 21st century. Fundamentally, we would be challenging the idea that all economic activity is a public good and that all growth is good growth.
Let us look at last month’s updated document, “The Scottish Economic Recovery Plan: Accelerating Recovery”. I can well imagine the cabinet secretary sitting around with officials, considering how the document should look. Perhaps the first thing he said was, “Let’s big up the green economy,” for there are many pages at the beginning that talk about the importance of moving to a low-carbon economy. That is all well and good, but even before we get to those pages, some of the flaws can be seen, even creeping in to the cabinet secretary’s foreword:
“Our commitments on ... carbon capture and storage will help lead to the development of major new industries in Scotland”.
Well, that may be, but may be is not enough. The possibility of carbon capture and storage is not a promise or a guarantee. I am happy that the Scottish Government is keen to support the development of that industry, but there is no promise of success. It is far too soon to make commitments on the basis of the assumption that CCS will be a success.
Further on in the first few pages, we read a section on “Developing a low carbon economy”. Notwithstanding my long-held criticism of the Scottish Government’s oil-dependent transport policy, as I mentioned in my earlier intervention, many of those proposals are welcome, even if they remain as yet only on paper. However, on turning the page, the very next thing that we read is a section on “Supporting internationalisation”, which includes a glowing endorsement of efforts to boost long-distance tourism. Domestic tourism is mentioned briefly with the ghastly word “staycation”, but it seems to be understood as only a short-term fad that is based on recent economic circumstances. There is little sign that either the Scottish Government or VisitScotland understands that, in the face of peak oil, Scotland’s tourism sector will have a strong future only if the Scottish Government helps it to adapt to attract visitors by sustainable modes of transport.
And what have we seen just recently? In adverts in national newspapers in England, VisitScotland has teamed up with Ryanair to say, “Fly to Glasgow Prestwick”, “Flying to Edinburgh” and “Flying to Aberdeen”. We should be reading adverts about how rail fares will be subsidised or cut to encourage people to travel in a sustainable way to come and enjoy the tourist attractions, hotels and so on in Scotland. Instead, people are encouraged to fly to Glasgow Prestwick and Aberdeen for as little as £6. In a recent newspaper article, VisitScotland is quoted as saying:
“Let’s not forget that sustainability is about much more than being ‘green’.”
It seems to me that VisitScotland thinks that sustainability is about much less than being green. The idea of teaming up with Ryanair demonstrates that fact. I used to think that only the far right—such as the United Kingdom Independence Party and the British National Party—was in denial of climate change, but Ryanair is a far greater and more serious threat to climate change policy.
Compare that with what the Minister for Transport, Infrastructure and Climate Change, Stewart Stevenson, has told the Parliament on many occasions. For example, he previously stated:
“We want to lead by example. Continuing from the previous Executive, we want to reduce emissions from our own travel.”—[Official Report, 14 June 2007; c 734.]
He went on to say then that he had made a 50 per cent reduction in his use of domestic aviation. If it is right for the transport minister to do that, why is it right that the tourism minister should fund the placing of adverts in English newspapers that encourage people to use domestic aviation even more?
There are fundamental contradictions between what Government is saying on a sustainable, low-carbon economy and what it is doing, and the other political parties’ amendments to the motion give no indication that they have a clearer grasp of the long-term challenge. Too many of these debates boil down to simplistic sloganising—the Salmond slump versus Gordon Brown’s recession. I know that an election campaign is under way, but I genuinely think that very few members of the public take any of that language remotely seriously. They know that it is silly nonsense, so let us please stop using it.
National insurance, which has been the subject of great debate recently, is mentioned in the Conservative amendment, but no other political party seems to agree with us on the fundamental need for a return to progressive taxation, which has gone completely out of fashion in recent years. What is needed is recognition that the free market-dominated, growth-obsessed but increasingly unequal, failed economic model cannot simply be refloated. We need recovery, not the reanimation of a corpse. Economic recovery will be dependent on political recovery and the recovery of values that tell us that millionaire business leaders do not have a monopoly on wisdom, that there is more to life and to our economy than material wealth alone, and that each quarter’s GDP figures are only one narrow and imperfect measure, our obsession with which has obscured what is important in life, including the conditions for our very survival.
16:16
Over what period?
Twenty years.
The Scottish Government has never questioned the accuracy of that job creation figure. SPICe told me that it comes from the “Assessment of Wider Economic Benefits” study by Roger Tym and Partners of June 2005, which is still available on the Transport Scotland website. That suggests that Transport Scotland and the Government consider it to be a robust piece of work. SPICe is not aware of the Government ever having questioned the accuracy of the 1,300 job creation estimate. Those jobs have now been lost.
The long-term job creation potential reflects the fact that GARL, unlike other projects, is closely linked with major private sector investment plans. As many members know, BAA Airports Limited had associated investment of £80 million to £100 million planned at the airports, and there were spin-off jobs in leisure, commerce and other projects that will not now go ahead. The axing of GARL has uniquely destroyed some major job creation benefits.
We have to ask why it has not been reinstated when, in his foreword to the current national planning framework, John Swinney identifies GARL as a project of national importance meriting early implementation. Does he still believe that? We do not know. It is also an inconvenient truth that Mr Stevenson, who has rejoined us, also confirmed that GARL had a better return on investment capital with a higher benefit-to-cost ratio than many other multi-billion pound projects now authorised. The Government has also made clear by its words and action that it is not interested in looking at the independent engineering consultancy work on the way to reduce costs, deliver the project, and produce an even higher benefit-to-cost ratio. We know that the Government did not want to know when Network Rail volunteered assistance to allow a project with a uniquely high job creation potential to go ahead.
Would the member care to comment on the column on the left of the Labour Party’s manifesto for the imminent election, where the commitment to high-speed rail and all its benefits to the whole of Scotland has been downgraded to a mere report into the benefits that might accrue from that? Such a report has already been submitted by this Government.
When people get greater pay and better services, they are happy to pay their taxes for those things. There is less division between the rich and the poor in a country such as Norway, and we should aspire to that. I do not think that smirking is the answer. Perhaps Mr Kerr should contemplate whether other countries have models that are worth following.
If we are going to stimulate the economy, we must use the resources that are at our disposal. That being the case, I welcome the renewables policy that the cabinet secretary has laid out in the economic recovery plan, which can create many thousands of jobs. In a European context—the following quotation is from the European Wind Energy Association—Scottish and Southern Energy tells us that, every year,
“15.1 jobs are created in the EU for every MW installed.”
Given the size of the planned Clyde wind farm, the size of Whitelee wind farm and the size of the others that are proposed for Shetland and so on, as well as the maintenance that creates another six jobs per megawatt installed, we are talking about huge potential. How can we achieve that in Scotland under the present conditions? We must have the capital to establish a green energy bank. We have been promised that, in the outgoing Labour Government’s budget, there will be £2 billion for such matters. I have discussed with the cabinet secretary shares of that money for renewables, and not just for nuclear power, which might be the British choice, as Lord Foulkes said. We need money such as that to set up a green energy bank in Scotland and undertake activity that will secure the investment to speed the creation of all those jobs. Scottish and Southern Energy recently announced its investment in a 15 per cent stake in Burntisland Fabrications, in Fife. I wish that it were similarly involved with the Nigg yard, in the Highlands, which can build offshore platforms. Maybe it will be—who knows? I welcome the certainty of the development of offshore wind energy technology in Fife.
The answer must also lie in retrieving the moneys that the Treasury rules have tied up, preventing us from developing the kinds of energy that I am talking about. The moneys from the fossil fuel levy and the landfill levy are tied up by Treasury rules and our hands are tied behind our back because we cannot borrow or even access the taxes that we have paid as citizens in this country. I pointed out earlier—from a sedentary position; I am sorry that my intervention was not taken—that it is our taxes that are tied up in those things. I ask that we look at the conditions that Scotland is in. We have one hand tied behind our back as we attempt to recover, although we know the kind of enterprise and developments that could take place here to prevent our public sector jobs from being decimated to pay for the bankers’ bonuses and a financial system that does not work.
How do we create a financial system of our own? That is perhaps right at the heart of the issue. We must create a financial system that is aimed at enterprise, and that cannot happen in the British system; it must happen in an independent Scotland.
16:29
The debate on “The Scottish Economic Recovery Plan: Accelerating Recovery” has been interesting. A number of points have come to the fore, not least from the normally sensible Lord George Foulkes, who—if I heard him correctly—suggested that, by increasing national insurance, we can increase employment throughout the United Kingdom. Perhaps Alistair Darling included the NI increase in his plan in the hope that it would increase employment after taking economic advice from George Foulkes. We in the Conservative party have stated clearly in our motion why we think that such an increase would be disastrous. It is a tax on jobs at the very point at which we hope to move into economic recovery. That is why we think that it is so dangerous and why the Conservative party has worked strongly to ensure that it is the first tax rise that we would prevent.
I welcome the opportunity to speak in support of the Labour amendment. We will also support the Liberal Democrat amendment but, not unnaturally, we will oppose the Tory amendment.
Where do I begin? I see the Scottish Government’s response to the global recession through the economic recovery plan and note the three core themes of investing in innovation and industries of the future, strengthening education and skills, and supporting jobs and communities. That is all laudable, but government is about delivery and the question is what progress has been made under the SNP in Scotland? The answer, to paraphrase Paul Daniels, is not a lot. For all its talk about making economic growth its number 1 priority, as we have heard, the Government has slashed key areas that would drive economic growth—regeneration, enterprise and tourism. The wailing and bleating about UK budget cuts continues to consume most of its time, yet if it was honest about the figures, it would admit that it has had more money to spend to help Scotland out of the recession than any Scottish Government before it, with a real increase of £943 million and another £83 million from the recent budget.
How is it the case, as Mr Kerr asked, that the UK economy avoided the dreaded double dip in output in the first quarter but Scotland is lagging behind in several important areas? Last week’s key survey by the British Chambers of Commerce provided reassurance that the UK economic recovery, led by Gordon Brown, will prove sustainable, but it also shows that Scottish companies in the service and manufacturing sectors were less confident about future turnover and profitability than their counterparts in most other parts of the UK. It also found that the service sector appears to be much weaker in Scotland than in the UK as a whole, with a fall in domestic deliveries and new orders and flat export business, in contrast with UK-wide increases on all those indicators.
Labour wants to secure jobs and grow the economy in the face of the Salmond slump, which has cost 30,000 construction jobs through the stagnation caused by the Scottish Futures Trust. I know that that phrase will be painful to Mr Patrick Harvie and that the SNP does not like it, but that is what has happened.
Iain Smith said that there had been an absence of party election slogans and rhetoric. Of course, he spoke before Mr Whitton enlightened us with his speech, which bore a startling and horrible resemblance to the thing that Mr Smith had predicted would characterise the debate. The same could not be said for Mr Finnie, who promised us no theology, although what he said sounded a bit theological. I do not say that to be critical of Mr Finnie because, as Mr Whitton fairly said, he made another thoughtful and substantial contribution to the debate.
I will address several questions that Mr Finnie posed about independence and the public finances. He asked whether any country could sustain an argument that it had economic independence and said that all countries are, in essence, economically interdependent. I accept entirely that there are interdependencies affecting every economy. That is why we have a global economy and why the economic recovery programme is predicated, as we have always said, on the wider global economic conditions with which we have to deal. However, the question that the Government poses is whether we have all the opportunities and levers to allow us to best influence the outcomes to improve the lives of people in Scotland and the performance of the Scottish economy. I do not believe for a moment that we do and I do not think that Mr Finnie believes that, either, because he has long argued—since long before the establishment of the Parliament—for a Scottish Parliament that has a broader range of powers than the current one has.
Mr Finnie makes a substantial argument that relates to many of the questions with which I wrestle about the sustainability of capital investment in the years to come. The ability to borrow, which is a power that is available to our local authorities but not to the Parliament, would undoubtedly have an impact on the approaches that we could take to long-term capital investment when we have projects ahead of us with a substantial cost. There is a debate to be had on that and I signal the Government’s enthusiasm to have that debate.
There are opportunities to do that. In the Government’s white paper on constitutional reform we accept that it is possible, within the framework of the United Kingdom, to acquire a range of further financial powers without changing fundamentally the constitutional structure of the United Kingdom. I suspect that that was the motivation for some of the parties to take part in the Calman commission. We have made clear in our proposals that we would welcome an opportunity to acquire powers that would give us greater financial discretion. We have never resisted that agenda in any way.
I accept that that can be done within the United Kingdom, but I hold to a view that our economic performance will be greatly enhanced if we are players on the international stage and, for example, can influence the agenda of the European Union and wider forums, which are fundamental in that they affect the economic performance and the judgments of member states of that union.
Mr Finnie also talked about the importance of looking ahead to the public expenditure challenges that we face. It is certainly our duty to do that, which is precisely why I have established an independent budget review that will report not to me but to the body politic of Scotland—it will publish its report on such questions. It is incumbent on me to ensure that the budget review group has access to a range of quality information that allows it to form views on the challenges and options for us. That is why I have asked my officials to conduct exploratory analysis of the financial outlook for the Scottish budget in the short and medium terms. That analysis will of course be shared with the budget review group and with Parliament in due course.
Wendy Alexander made several points about capital expenditure decisions, which rehearsed many arguments that we have had in the chamber in the past few months about the Glasgow airport rail link. In my speech—I am not sure whether she was here for it—I made the point that the rail link is not a 12-month project. As Mr Kerr conceded, the money is available only for 12 months, so we have deployed it to fund capital programmes that can be delivered and supported in that period.
Oh yes. Mr Finnie explained the public expenditure levels going forward. I have just said that we will give the independent budget review group information on the question. Capital expenditure levels will reduce in the years to come and we must plan accordingly.
When Wendy Alexander intervened, I thought that she would warmly welcome the extra £31 million of housing expenditure that we have announced today; the support for further education colleges; the work for sustainable transport initiatives, which Patrick Harvie almost accepted grudgingly—mibbes aye, mibbes naw; and various other investments that are designed to support economic recovery.
Mr Brown asked questions about the Scottish Investment Bank, on which the economic recovery plan gives an update. As I am sure he knows, I assure him that—as the economic recovery plan charts—the Government made more resources available to the Investment Bank as part of the spring budget revisions in the 2009-10 financial year. We will have more information on the Investment Bank to set out shortly. He will be in no way disappointed by the flow of information that lies ahead.
Will the cabinet secretary give way?
I will of course give way.