Economic Policy
Good morning. The first item of business is a debate on motion S2M-3321, in the name of Mark Ballard, on economic policy.
The motion cuts to the heart of the debate about the purpose of government. What is government for, to whom is it accountable and what should its top priority be? If we asked the average man or woman in the street, they would tell you that the Scottish Executive's priority should be to improve the quality of life of the people of Scotland. However, the Executive has selected as its top priority growing the economy, as measured by gross domestic product. That one-dimensional focus on an abstract economic indicator shows a lamentable lack of vision and ambition. The truth is that GDP tells us little. It is simply the growth measure of market activity in Scotland—the amount of cash that has changed hands. As the headline measure of economic progress, GDP does not stand up to much scrutiny. It fails in four key ways.
First, it simply aggregates the value of monetary transactions and is unable to differentiate between beneficial expenditure and spending that is harmful. If a business kept its balance sheet by entering all the figures in the same column, an auditor would probably not be impressed. However, on a national level, that is exactly what we do, and we place great importance on the total.
If somebody buys a car, therefore, GDP goes up. Every time the car is filled with fuel, GDP goes up. The more inefficient a car is, the more GDP benefits there are. If a car is involved in a nasty road accident following which several vehicles must be repaired, GDP goes up. If the owner of the car is prosecuted for dangerous driving and engages a lawyer, GDP goes up. If he is then sued by one of the other drivers, GDP goes up. A pattern is beginning to emerge.
Crime, divorce and pollution are all treated as economic gains. Perhaps that is why I cannot understand Murdo Fraser's amendment. He spoke passionately about the tragedy and the cost of road accidents in last night's members' business debate on the A9, but today he is supporting a measure of economic growth that counts such accidents as a good thing.
Secondly, GDP is oblivious to the inequalities of wealth distribution. There may be more money sloshing around, but in whose pockets? Too often, GDP has risen while the gap between rich and poor has widened. Regional inequalities are also important. Scotland's economy is becoming more concentrated in the cities. Edinburgh and Glasgow are doing well, as is Inverness, but what about our rural areas? GDP is blind to the skewed distribution of wealth.
Thirdly, GDP champions all monetary transactions, but ignores many valuable services that take place outside the cash economy, in spite of the importance of such services to our communities and our society. Whether it is voluntary work with young people to help tackle the root causes of antisocial behaviour or work done to manage communal land in a crofting township, the Executive's chosen measure of success ignores such work and the enormous contribution of the voluntary sector to our society generally. That is very regrettable.
Fourthly, GDP treats the depletion of natural capital and resources as income. As we use our finite, irreplaceable oil reserves, it is vital that we account for their depletion. What would the auditors say if a business sold off its capital assets and treated the money raised as income? Likewise, if we exploit our fish stocks beyond their safe biological limits, we are depleting that natural capital.
Surely it is time for us all to accept that GDP is simply too crude a measure to meet the needs of a modern, sustainable economy in the 21st century. There have been signs recently that the political landscape is shifting. The First Minister now talks about
"economic growth, but not at any cost."
"The Framework for Economic Development In Scotland" has a vision:
"To raise the quality of life of the Scottish people through increasing economic opportunities for all on a socially and environmentally sustainable basis."
All of which begs the question: why do we hold GDP, an indicator that tells us nothing of social or environmental sustainability, in such high esteem?
It is not just us who have a problem with GDP as a measure of national progress. A Labour Party policy document on the environment spelled out that party's disquiet:
"For too long, economic and political success has been measured solely in terms of the rate of growth of economic activity. This is difficult to justify. Few people actually want a higher level of GDP for its own sake."
However, the Executive's amendment talks about sustainable economic growth, despite the fact that the Executive's prime focus on sustainable economic growth through GDP considers only the economic pillar of sustainable development; it does not consider the social or environmental pillars. If it were a stool, it would fall over.
Simon Kuznets, one of the economists who developed the concept of GDP, said:
"The welfare of a nation can scarcely be inferred from a measurement of national income … goals for ‘more' growth should specify of what and for what."
When it comes to economic development, quality is every bit as important as quantity and quality, as we have seen, is something that GDP simply does not recognise.
It does not have to be this way. If we want a better measure of the direction that our economy and our society are heading in, we should seriously consider other measures, such as the index of sustainable economic welfare, which is being trialled in Wales. The ISEW takes into account social resources and environmental degradation and can differentiate between desirable and harmful economic activity. Obviously, we need to keep on measuring GDP, but let us replace it as the headline indicator and measure it alongside something that tells us about the social and environmental impacts of all the spending.
Ultimately, there does not need to be a conflict between a healthy economy and a healthy environment, in spite of what some people, such as Fergus Ewing, would have us believe. We do not have to make that choice. I would go further and say that a sustainable environment and strong social justice are absolute prerequisites for a stable, healthy economy. That is surely what the people of Scotland want and it is no more than they deserve. That is why we need to measure what matters.
I move,
That the Parliament notes that the top priority of the Scottish Executive, as stated in the current Partnership Agreement, is "growing the economy" but reminds the Executive that GDP, its preferred measure of economic growth, makes no distinction between beneficial and harmful economic activity, ignores many socially beneficial and highly desirable practices and treats the depletion of natural capital as income and is therefore a very poor indicator of economic development; agrees with the Labour Party Policy Commission on the Environment that "For too long, economic and political success has been measured solely in terms of the rate of growth of economic activity"; considers, therefore, that if Scotland is to enjoy economic development that does not compromise social justice and environmental sustainability it needs a more meaningful yardstick than simply measuring the monetary value of goods and services produced in Scotland; remains committed to assisting the positive economic development of a healthy Scottish economy and considers that placing sustainability and national well-being at the heart of Executive policy will ultimately lead to a stronger, healthier and more innovative economic future for the people of Scotland, and urges the Executive to consider alternatives to GDP with a view to adopting a more suitable measure of national progress as its top priority.
The powers of devolution have given us a fantastic opportunity to give Scotland a strong competitive edge in a growing international market. We are determined to make the most of Scotland's potential. That is why we made growing the economy our top priority. The First Minister reiterated that position in his recent statement on the legislative programme.
I agreed with much that Mark Ruskell said, but clearly not all. Our priority of growing the economy is not at the expense of sustainable development more generally.
In those circumstances, can the minister explain why GDP is the Executive's measure of progress, when GDP cannot account for sustainable development because it does not mention social or environmental impact or the distribution of wealth?
GDP is obviously an indicator of economic growth. As I am sure Mr Ballard is well aware, we have a number of other indicators that are used across a broad range to chart our progress towards sustainable development more generally.
Scotland has a small, open economy and the increasing globalisation of trade—global trade has grown twice as fast as world GDP over the past decade—means that the linkages between Scotland and the rest of the world have a critical influence on our economic performance. However, we do not wish to see increasing economic growth and international integration at the expense of sustainable development—the point that I just made.
We have an excellent business environment and a support framework that works for Scottish firms and inward investors. Our workforce is skilled and well educated; higher education participation is at a rate that other countries envy; and major investments have been made in transport and electronic infrastructure. That all translates into a positive economic performance. For example, the most recent GDP data, which are for the first quarter of 2005, showed growth over the year of 2.0 per cent, which is the highest for four years and is above our long-run annual average.
The Scottish labour market continues to perform strongly, with all the main indicators moving in the right direction. The trends have remained strong and consistent. Employment indicators and social indicators are as important as wider economic indicators in measuring the success of economic policy. For development to be sustainable, we have to close the opportunity gap and give economic and employment opportunities to all our fellow citizens, not just to those who currently benefit.
The minister tells us that all the indicators are going in the right direction, but is that in absolute terms or in relative terms? There is still a relative gap between Scotland and the rest of the United Kingdom. When will that gap be closed? When will that indicator be positive?
As Jim Mather in particular will be aware, the trend is certainly moving in our direction. Overall growth in Scotland's economy this quarter last year was twice that of the UK as a whole. However, the longer-term issue is clearly to close the gap in the growth rate between the Scottish economy and the economy of the UK more generally. We can agree about that; it is the reason why—to answer the Greens' point—we make growing the economy our top priority. By closing that gap, we will create greater wealth, which will allow us better to distribute the employment and economic benefits that I spoke of earlier.
Will the minister take an intervention?
I will take the Tories.
I am grateful. As we are bandying around statistics, will the minister tell us whether the Executive is satisfied that Scotland has fallen four places in the UK regional competitive index since 1997? We were fourth out of 12 regions of the UK in 1997; today we are eighth. Is that a record of success?
The member makes a fair point. Obviously, we would wish to be more successful than we are currently. However, to grow the economy over the year at 2 per cent—which is the highest for the four-year period that I referred to, and which is above our long-run annual average—demonstrates progress towards our objectives, as I am sure Murdo Fraser would agree. That is not to say that everything in the garden is rosy. I do not argue—and I have never argued—that it was.
However, Murdo Fraser knows that I emphasise the importance of employment. Unemployment was the scourge of the Scottish economy—dare I say it?—during the period of Conservative control. Over the most recent period—May to July this year—unemployment is down. It is around its lowest level since quarterly records began in 1992. More and more Scots are being encouraged to participate in the labour market, and our economic activity rate is above that of the UK as a whole. Critically, employment is around its highest level since quarterly records began.
Will the minister give way?
The minister is in his last minute.
The rate of employment is above that of the UK and is among the highest in the 25 European Union countries.
Life sciences are very important to the Scottish economy. In sectors such as life sciences, microelectronics, energy and renewable energy—to which we are committed—financial services and the creative industries more generally, Scotland is, I would argue, world class.
Our ambitions for Scotland are to provide all Scots with opportunities for good jobs, fulfilling careers and safe communities—safe communities are a vital part of the social progress that is part of sustainable development more generally—to fulfil all Scots' potential and to help them to achieve their ambitions. All of that must be achieved in an international economic environment, and sustainable development is at the heart of our economic development agenda.
I move amendment S2M-3321.4, to leave out from "notes" to end and insert:
"supports growing the economy as the top priority of the Scottish Executive; believes that economic growth must be sustainable; agrees with the Partnership Agreement commitment to assess economic development policies against their impact on sustainable development indicators; notes that the Framework for Economic Development in Scotland has made sustainable development the principal objective; welcomes the stronger emphasis on sustainability in the refresh of A Smart Successful Scotland; endorses the Executive's determination to drive forward its green jobs strategy, and endorses the Executive's commitment to sustainable development."
In moving my amendment, I will accept the general thrust of the Scottish Green Party's motion. We have our own reservations about GDP. However, economic growth is the key to improving living standards and quality of life, and to neglect economic growth is to create more inequalities between Scotland and elsewhere, and inequalities within Scotland. Such inequalities still occur, and have been occurring for 30 years.
I agree that GDP is not an accurate reflection of performance, especially in a branch economy, which Scotland is becoming. GDP is subject to arbitrary adjustment and poor presentation. We have had the simple and painless recalibration of GDP, which, in essence, wrote off great chunks of our manufacturing and engineering without the bookkeeping that would be required in any company; we have had the indexation of GDP, showing both Scotland and the UK as equalling 100 in 2001 in order to mask the differences and iron out the disparities; and we have had an emphasis on GDP per capita, which further muddies the waters. When we get down to the last pensioner and one offshore oil rig, she might be a poor pensioner but her GDP per capita will be great.
Many of the measures that we actually need to measure performance are available—measures such as population and average life expectancy, and the personal family binary measure of whether our children are living and working in Scotland. However, we also have distortion and deception in the data. For example, labour participation and unemployment are calculated after ignoring 630,000 people in Scotland—20.5 per cent of our working-age population—and average incomes now discount people who work less than 18 hours a week. I hope that the Greens and others will join us in our repeated calls for an independent Scottish office of national statistics.
There is also distortion in the data on our natural resources. The McCrone report that was uncovered last week was optimistic, but it resulted in data—
Will the member take an intervention?
I will make my point first.
The content and thrust of that report was repressed for 30 years and the value of our oil reserves was denied. The report was used as a basis for taking the wind from the SNP's sails—as the report says. It actually missed the target and took the wind from Scotland's sails for 30 years.
Jim Mather calls the employment data a distortion, but of the 630,000 people that he mentions, how many does he believe to be available for employment?
I think that an accurate number is 188,000. That is the number of people who are stepping forward and saying that they would like to work. However, I would suggest that, in a different climate, and in a faster-growing Scotland, the number might be higher.
I want to go back to oil and talk about last week's spectacle in a green context. The McCrone report made it clear that oil has been used in Scotland at a voracious and imprudent rate. Much of it was used to fund failure—policies that did not work in the 1970s, were subject to the false hope that they would work in the years between then and now, but have not worked. Those policies have caused great damage—viz the population, viz growth and viz the migration of people from Scotland.
Happily, we have a second golden chance. The reserves are there—there is at least as much as has already been taken out—and the price is solid and likely to rise. The technology is there to get every last drop of it out.
The key points are these: Scotland does not have nine lives; Scotland has worn a hair shirt for 30 years; Scotland does not need another self-denying ordinance; and Scotland needs a process that will grow our economy on a robust and solid base so that it converges with other economies. I am fed up with tired policies that result in the continuing widening of the gap. I see Jeremy Purvis smiling at the mention of the widening gap; does he think that it might just keep his party in power?
I am not smiling; I am laughing at Mr Mather.
No more. I urge members to support the motion and the SNP amendment in my name.
I move amendment S2M-3321.1, to insert at end:
"as a pre-requisite for a new era in which, no matter how national wealth is measured, the Scottish Parliament should have legislative responsibility for the management of all our natural resources."
I welcome the opportunity to discuss the Scottish economy. The Greens highlight in their motion an issue that they have raised consistently over a long period—that GDP is not the best assessment of economic strength. On one level, the Greens are correct. We on the Conservative side of the chamber have never argued that quality of life is mainly dependent on having wealth.
The fact is that, under the Executive, the factors that are damaging the quality of life for so many Scots, such as the drug-fuelled violence in our communities, are chiefly non-economic. We now know that, on one measure, Scotland is the most violent country in the world. Family breakdown, school indiscipline and the centralisation of local health care services are other examples of such factors. That is why the Conservatives are developing concrete policies to tackle those issues head on and to improve the quality of life for all Scots, especially those who live in vulnerable communities. However, I disagree with the Greens, in that I believe that such quality-of-life issues are inextricably linked to economic growth.
A strong and healthy economy is the necessary foundation for a good quality of life for all our citizens. A strong economy provides jobs, which reduce dependency and give people both the security to provide for themselves and their families and a sense of worth. A strong economy creates the wealth to pay for the quality public services that all of us—even the Greens—are in favour of. The GDP growth measure that the Greens deride is an extremely useful and important tool for assessing the extent to which Executive policies are helping or hindering the economy, on which our quality of life depends. It is unfortunate that, under the Executive's stewardship, Scottish GDP has consistently trailed behind that of the UK as a whole. As a result, it is hardly surprising that Scotland has fared so badly on several quality-of-life measurements.
Our amendment highlights the fact that growth in the Scottish economy in the first quarter of 2005 was 0 per cent, whereas growth in the UK economy in that period was 0.4 per cent. There is no doubt that it would suit the Executive for us to stop drawing attention to those figures; in fact, I am surprised that the Executive has not grasped with both hands the opportunity that the Greens have offered it to move away from the use of GDP, given that it has failed so dismally on that measure over the past six years. However, the Executive probably appreciates that it would lack credibility if it took that route.
The member condemns the Executive for its GDP results, but if he is wedded to the use of GDP and to improving it as the top priority, surely his approach would make no difference.
I do not agree with that at all. As I will outline shortly, and as our amendment states, we believe that a change of Administration and the resulting change in Executive policies would deliver higher GDP growth. It is not a necessary function of the Scottish economy that our GDP growth must lag behind that of the rest of the UK. In spite of what the minister said, the gap between Scotland and elsewhere in the UK continues to grow.
Will the member give way?
If the member will forgive me, I will not give way at the moment, because I want to make some progress.
The latest evidence came from "The UK Competitiveness Index 2005", which was produced by the University of Sheffield and which represents the most up-to-date, thorough and authoritative benchmarking of the competitiveness of the UK's regions and localities. It showed that whereas in 1997, under the Conservatives, Scotland was ranked fourth out of 12 regions in the UK, it is now ranked eighth out of 12—a fall of four places. What a testament to the Executive's track record.
Perhaps we should not be surprised at those outcomes when we consider the Executive's approach to our wealth creators. In spite of his attempts to cosy up to the business community at the recent business in the Parliament conference, Jack McConnell let the mask slip at last week's Labour group meeting, when he is alleged to have referred to business leaders Janette Anderson and Ian Graham as idiots. Perhaps some of the Labour members who are present would like to tell us whether that remark was made, because the First Minister's press officers are reluctant to confirm or deny whether the story is true. When the First Minister displays such contempt for our business community, is it any wonder that Scotland is not regarded as a good place in which to do business?
In Blackpool this week, the new Minister for Enterprise and Lifelong Learning said that he wants business rates in Scotland to be reduced to below the level of those in England, to give us a competitive advantage. I am delighted at our new enterprise minister's conversion to Conservative policies. What a pity that, for the past six years, his predecessor and the Executive as a whole told us that we did not need such a reduction. It is clear that the Conservatives have won all the arguments on what is wrong with the economy and that the other parties are playing catch-up.
I do not think that the Greens have much to offer when it comes to turning around our economic underperformance. Measures such as increasing fuel tax will simply damage businesses, especially in rural areas.
Will the member give way?
The member is in his final 30 seconds.
It is quite wrong to seek to disregard GDP growth as a measure of economic success, even though it might suit the Executive to do so.
The Conservatives are winning the arguments on what needs to be done to turn around our economic underperformance. People from other parties, including the new Minister for Enterprise and Lifelong Learning, are queuing up behind our manifesto proposals.
I move amendment S2M-3321.2, to leave out from first "GDP" to end and insert:
"the Scottish economy actually experienced zero growth in the first quarter of this year; believes that GDP growth is an extremely important measurement of quality of life because a strong economy is crucial to providing individual financial security and the necessary investment for quality public services; further believes that the Executive's stewardship of the economy has been detrimental to the quality of life of many Scots; notes that Scotland fell four places in the UK Regional Competitiveness Index between 1997 and 2005, and therefore calls on the Executive to take concrete action to reverse our economic under-performance by cutting red tape, privatising Scottish Water, increasing investment in roads and public transport and specifying a date for the proposed cut in business rates."
The debate has been useful, interesting and thought provoking. I listened to Mark Ruskell's speech with some interest, but I pose a question about the Greens' treatment of capital. Perhaps their representative can deal with that issue when they sum up. I can see where their argument is coming from when it comes to a financial resource such as oil, but I wonder how they would account for renewable energy and nuclear energy, for example. That is a worthwhile discussion.
Although the subject of today's debate is of interest to me, the minister, the Greens, Murdo Fraser, Jim Mather and all the other members of the Parliament, it would not set the heather alight in a pub in Lairg or at the Lairg sheep sales. I want to return to an argument that I have made in the past and will make again in the future, which is that the situation is not as bad as the Opposition makes out. Of course there is room for improvement but, when I look at my constituency, I see progress. However, there are two fronts on which we could do something impressive.
The first of those is renewable energy. Members will be aware that there are proposals for harnessing tidal energy between Jim Wallace's constituency of Orkney and the mainland of Caithness. Although the proposals are in their infancy, that is an exciting project. It has been said that, with its tidal flow, the Pentland firth could become the Saudi Arabia of renewable energy. That will take investment and scientific research, but if we get there, we will lead the world. That takes me to my second theme—my favourite—which is that at all times Scotland should play to its strengths rather than its weaknesses. We have renewable energy potential—we have the wind and the tide and we can do things with them.
Another of my favourite subjects, which I mentioned during a workshop at the business in the Parliament conference, is that although food production in Scotland is a strength that we play to, there is more that we could do in that regard. I am thinking of home-grown meat, in particular, and home-grown fruit and vegetables and the issue of eating produce that is in season. As I said in a debate two weeks ago, it is a fact that Scottish beef is produced to a higher standard than the South American beef with which it competes. Schemes for care of the animals and quality control are in place at all levels. If we promote and sell such produce, we will do our farmers and producers a great service.
The point that the member makes about local food economies and local distribution is important, but does he not realise that the more we export and import food, the more that adds to GDP? The vision that he is in favour of does not fit with a sustainable economy.
Although I respect the worthiness of what Mr Ruskell says—he makes an interesting point—his argument is somewhat sterile. Crofters, farmers, businesspeople and others in my constituency know full well whether or not they are doing well. They do not need statistics, even though such data have a value. We must adopt a commonsense approach and keep an eye on the situation.
I will give the Parliament an example of useful work that has been done and which could lead to great things. In recent years, the Prince of Wales has taken up residence in the Castle of Mey every year. For a good year and a half, he has single-handedly spearheaded the Mey selections brand. I will not go into detail, but that has enabled quality beef and lamb and other quality Scottish produce bearing the prince's hallmark to get into supermarkets. That is a fantastic achievement and much can be done on that in the future.
To sum up, we should play to our strengths and remember what we are good at. This country has quality products, both in food and in tourism.
This is a very short debate, so I must keep members to a tight four minutes.
The Executive has numerous indicators, so why is such a crude one the top priority for government? If government's purpose is to work on behalf of all the people and to protect the natural resources on which we all depend, and if sustainable development is the big goal, why is GDP growth still at the top of the pile in the partnership agreement?
Beneath GDP growth, there are lower priorities. In the summer, the Executive published its "Indicators of Sustainable Development for Scotland: Progress Report 2005." Out of 24 social, economic and environmental indicators, only six showed some evidence of positive progress. In spite of the minister's optimism, indicator 13, which is on renewable energy, has moved in the wrong direction. The number of children in workless households and the number of families that are assessed as homeless have increased in recent years.
Many indicators—including the numbers of people who suffer from depression, asthma, obesity and so on—are not yet included in the set that the Executive uses. The Executive's health strategy acknowledges the ever-expanding health gap between the rich and the poor. People who live in deprived areas are more than twice as likely to have a long-term illness and their life expectancy is 15 years less than that of people who live in affluent areas. The Institute for Public Policy Research has shown that the top 10 per cent have increased their share of wealth from 47 per cent to 54 per cent since Labour came to power in the UK. It has also shown that women are more likely to live in poverty. The rich and the poor live in different worlds. Poverty and the health gaps remain a blight on our society.
So much for GDP. For those members who believe in market-only solutions and the trickle-down effect, I point out that the evidence is not on their side.
Perhaps the member will remind us whether it is Green party policy to renationalise Scottish Power, Scottish Gas, Scottish and Southern Energy plc, British Telecom in Scotland, First ScotRail and all the bus companies. Would that not give considerably more money to the shareholders of those companies and bankrupt the country at the same time?
Perhaps the member should have stayed a bit longer at the Lib Dem conference when it debated the Royal Mail and what should happen to it.
According to Cardiff University, people's overall sense of well-being has hardly improved at all since the depression of the 1930s, despite decades of GDP growth. The GDP measure does not encompass the depletion of natural capital or the effect of development on our natural resources. It cannot assess poverty or people's quality of life, nor can it measure the extent of Scotland's ecological footprint on the world. If everyone in the world lived as we do in Scotland, we would need two more planets to support everyone. That is our ecological footprint and it is why even the Executive recognises the need for a 60 per cent reduction in carbon dioxide emissions—not the paltry 7.7 per cent since 1990 that was announced with such enthusiasm yesterday.
The Executive's amendment implies that the priority is sustainable development. Why does the Executive not just say clearly that the priority is environmentally and socially sustainable development rather than GDP growth? In measuring Scotland's environmental and social progress, why not consider some of the emerging alternatives, such as the index of sustainable economic welfare? When will the Scottish Executive start measuring and prioritising what really matters? We need a measure of environmental, social and economic development. With that, we can start to build a better Scotland.
Presiding Officer, before you vacate the chair you might be relieved to hear that I have no intention of following the front bench's lead and descending into a sterile exchange of economic statistics. This is the first Green party debate in which I have had the pleasure of participating, not because I am one of the chamber's shrinking violets but because it is rare for the Greens to have a debate on their own terms. It is in that spirit that I would like to respond.
First and foremost, the Green movement calls on us to recognise our very temporary stewardship of the earth's resources, and I for one have no doubt that history will look favourably on the Greens' role in pinpointing issues that demand—or should demand—humanity's attention. In listening to today's headlines at 6 am, which is not my usual hour, I was struck by the signs that the Green movement is asking some of the right questions. In Scotland it is highlighting the issue of asylum seekers and globally it is highlighting the issue of global warming on a day when the United States is preparing for only its fourth category 5 hurricane.
I am not suggesting—nor would the Greens suggest—that they have a monopoly on conscience in politics. After all, we can go back as far as Moses to find people who had compassion for the exile or to the time of Noah to find people who worked to care for the earth's resources. However, the special and distinctive role of those of us who enter public life is not simply to care or even to prophesy, although both of those have their place. It is to devote our time and energy to come up with the right policy prescriptions.
The motion quotes favourably from Labour Party policy. Who can disagree with that? It calls for better measures of well-being. Again, who can disagree? It calls for a more innovative economic future for Scotland. Who can disagree? I return to the special challenge of politics, which is to deliver on the visions of the people. Yes, we can applaud the Greens for their role in putting issues such as climate change and the measurement of well-being on the agenda, but in conscience we cannot follow them to their policy prescriptions.
Last night, I did my Green colleagues the honour of reading their party's manifestos for the previous Scottish and general elections. Their policies include the nationalisation of all Scottish utilities, as we heard from Jeremy Purvis this morning; an end to public-private partnerships, which are helping to build 300 new schools in Scotland; and a range of new Scottish taxes including corporate, personal and land value taxes. Most critically—I invite the Greens to reflect on this—their policies include their misguided protectionism and opposition to international trade agreements. Not only do those agreements give the poor the chance of trade not aid, but two thirds of Scotland's income depends on international trade. We will not enhance our GDP or well-being by attacking the basis of two thirds of our income.
I genuinely congratulate the Greens on calling their first-ever economic debate and I welcome their role in consciousness raising. They add to the Parliament, but I encourage them to think more deeply about the deliverability of sustainability. Perhaps—I say this as someone who worked for the Labour Party in the 1980s—they should think about abandoning once and for all the knee-jerk policy posturing of the old hard left, which continues to pollute some policymaking on their side. Yes, the stakes have never been higher, but our responsibility is to do more than simply to plan for the future. We also have to be willing to build it.
I did Mark Ballard the honour of reading his motion last night, but I am afraid that I never got round to the Green party manifestos. However, I read the motion and listened to Mark Ruskell's speech with interest.
As Jim Mather said, the Scottish National Party, too, has reservations about the reliability of GDP as the sole indicator of a country's growth and well-being. We hear a lot about sustainable development, which surely includes human development, and the fact that it should underpin all Government initiatives both nationally and internationally. Although the United Nations' human development reports update the eight millennium development goals annually, only one of those goals relates directly to the economy and it is about strengthening partnerships between poor countries and rich countries.
I looked at what the European Commission has been saying. The Lisbon European Council developed a set of structural indicators that are designed to measure progress towards the European Union's goal, which is:
"to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion."
That is the key. When we are trying to grow a country and its economy, that growth should be about quality of life.
Even the United Kingdom Government has examined closely different measures of economic growth and well-being. The Sustainable Development Commission has welcomed the UK Government's commitment to deliver new indicators to measure the nation's well-being. The commission is right to say that we need a radically different approach to measuring economic progress, because environmental and social goals should be included and jobs should be safeguarded. Income and GDP should not be the sole components of a nation's happiness. We all know that good health, stable families, meaningful work, secure neighbourhoods and strong communities are all vital components of personal and collective well-being.
The UK Government Cabinet Office has examined a study on life satisfaction as an example of an indicator of sustainable development. That works on the concept that increases in GDP—the traditional indicator—do not necessarily lead to greater quality of life for citizens. The Executive's amendment says that growing the economy is a top priority. I suggest that the population's well-being should be the top priority. Such matters can be considered in tandem. In the report that the UK Cabinet Office has considered, economic growth—if measured as GDP—looks good and shows a steady rise from 1970 to 1997. However, the life satisfaction figures are static. People are not necessarily happier and do not feel a greater sense of well-being just because GDP happens to look good. I would like that to be taken on board and I would like the minister to say whether the Scottish Executive has tapped into what the UK is doing in that research.
Everyone knows that everyone in the SNP believes in independence for Scotland.
Half of SNP members do.
I do—truly and deeply.
My vision is of a radical approach in our country. Independence would allow us to measure our country's growth not only purely in economic terms, but in how our people feel and the well-being of our citizens. I urge all members to consider that for Scotland and its people and to move forward accordingly.
I sincerely hope that the Green party will not take Wendy Alexander's advice—I am sure that it will not—to become just like the Labour Party. The difficulty in politics today in Britain and in Scotland is that too many parties are just like Labour. Elections have such low turnouts and disengagement from the political process is so large because the parties are all the same. They say the same things and they stand for the same policies. It is important that the Greens and the Scottish socialists continue to hold the standard high for those who believe in a different way to organise our lives and in a different social and economic approach that places human beings and not profit at the heart of our society.
It is interesting that, according to all the latest statistics, GDP, gross national product and national output—the measure can be described in different ways—are up. The figures are 0.7 per cent in some research and 1.7 per cent in other research. Industrial output has increased. The problem is that the inequality-of-wealth gap has also increased, so the increase in industrial production and output in no way tackles the gross and obscene levels of inequality that scar our nation.
In April this year, a report in the BMJ said that the difference in life expectancy between Britain's rich and poor has not been as unequal as it is today since Victorian times. It is 2005, but the gap in life expectancy between rich and poor is that of Victorian times. That is the reality of the free-market philosophy that all the political parties apart from the Greens and the socialists adopt and promote.
We have a job on our hands to tackle an economic system that means that the life expectancy of a male in Glasgow is 11 years less than that of a male in east Dorset. The life expectancy of a female in Glasgow is 8.4 years less than that of a female in east Dorset. The poorest 10 per cent in Britain receive just 3 per cent of the total income that is produced throughout the UK, whereas the wealthiest 10 per cent consume 28 per cent of all the wealth. That is the fundamental problem that we must attack. If we are to raise sustainably the quality of life of all our citizens, we must redistribute the wealth that we produce and we must base measurements of our society's outputs on matters such as life expectancy, infant mortality and the ability for citizens to engage fully in life and in what others take for granted.
In the four minutes that I had for my speech, I am heartened that Lord Browne of BP has just made another £40. In a society that is protected by the new Labour Tories, the old Tories and the SNP, individuals such as Lord Browne earn £15,000 a day, when 1.5 million Scots earn less than £15,000 a year. That is the inequality that we must tackle and that is why debates such as this are vital to show the difference between the approach of other parties and those of the Greens and socialists. We want to put people first before profit; the rest just want to continue to worship profit.
The turnout that Tommy Sheridan should worry about is the plummeting support for the Scottish socialists. To be frank, the thrust of his speech shows that the Scottish socialists' intent is to strangle rather than produce economic growth.
Perhaps the Greens are more savable than that. I noticed the careful construction of their motion, which is a little more cautious than some of the statements that Mark Ballard has made in the Edinburgh Evening News and which his colleagues have made elsewhere. It is important to understand whether the Greens oppose economic growth or believe that economic growth should be constructed slightly differently. Do they believe that economic growth is vital to produce jobs and improvements in society or that it is too high a price to pay? That issue is not well addressed by debates about whether GDP is the right measure.
Mark Ballard and his colleagues may wish to know that the Finance Committee has tried to pin down the Executive to say whether GDP is the chosen measure. We have not succeeded in doing that, so the Greens might want to examine that in relation to their motion's veracity.
I disagree a wee bit with some of what Wendy Alexander said. Fairly substantial progress has been made on developing better management of the economy in the direction of sustainability. I highlight the green jobs strategy, to which the Labour amendment refers. That strategy has been broadly welcomed by many who are involved in progressing a green agenda in its broadest, non-political sense—most recently the Sustainable Development Commission—as a good example of what can be done by bending economic policy to deliver more sustainable jobs, better initiatives for matters such as recycling and waste management and a better focus on making the best of the new tasks that we must undertake to improve our performance on climate change, recycling and other measures. I am talking about practical steps that the Executive has taken to deliver meaningful progress that will benefit the whole of Scotland—urban Scotland and rural Scotland. Taking a Scotland-wide pragmatic approach is important.
It seems to me that there are two levels of debate. There is a catcalling debate in which people shout about the general, broad principles of achieving growth. The Greens do not have a sensible case at that level. My constituents require jobs, and they now have more jobs than they had in the past. We must ensure in our economic strategy that employment is maintained and improved. There is also the micro approach. In creating the kind of jobs and the type of strategy that we want, we must be more friendly towards, and aware of, the possibilities of wave power, alternative energy sources, solar energy and the other forms of technology that will be required and will result in increasing economic benefits for the future.
Those are the practical steps that we must take, but they must be linked not to a messianic approach that says that there must be no growth, but to the pragmatic delivery of economic growth. We know that delivery of growth is associated with a series of social benefits, such as health improvement, better education and better services and support for our young people. All those things depend on growth, but balance is needed in our drive to achieve that growth. We need to be aware of green issues and to progress the green agenda, but we should not be driven by the wrong green approach, which can sometimes be seen in the statements of Green politicians.
When I first read the motion, I wondered why it was needed. The Liberal Democrats do not believe in total reliance on GDP. Our manifesto states:
"Gross Domestic Product as a measure on its own does not convey the full impact on the wealth and quality of life of economic activity and, in particular, ignores the environmental degradation caused by some activities. Government measures must address this."
The coalition has proposed policies that take in the wider picture because we recognise that. The minister and Des McNulty mentioned the green jobs strategy, renewable energy targets and recycling improvements. We have spent money on policies that cut into economic deprivation and social disparity. All those policies have been implemented without deflecting from improving GDP. There is not an either/or situation, but a GDP plus position.
Shiona Baird said that we need a measure, but I can see Scotland sinking under measures. I suggest that we have enough measures. Jim Mather may not wear a hair shirt—he referred to Scotland wearing a hair shirt for 30 years—but his general pessimism about the economy must mean that he wears a scratchy semmit at least.
Murdo Fraser, in speaking to his amendment, seemed to be totally obsessed with GDP, which reinforces the view that the Tories may claim to know the cost of everything, but they singularly fail to recognise the value of wider objectives.
I thank Jamie Stone—who is not in the chamber at the moment—for raising the debate from the abstract and discussing the practicalities relating to where the country is. By playing to its strengths, the country can raise its GDP and achieve wider objectives.
Like Wendy Alexander, I read the Greens' manifesto—I did so at 7 o'clock and assure members that it is equally scary at that time of day—which should carry a warning that it might damage the country's wealth. If the policies and statements in the manifesto were to be carried through, that would seriously knock the Scottish economy. I will refer to three of those policies; the manifesto states that there would be a rise in fuel tax
"to reflect the real cost of transporting goods",
that the Greens would phase out nuclear power stations at the earliest opportunity and that they would halt completely all major trunk road building in Scotland. What would such policies do other than knock the economy? Perhaps the Greens want to move away from using GDP because such policies would adversely affect it.
Does the member understand that, as we heard in the debate in the chamber yesterday afternoon, to tackle climate change we must change our transport policy away from a reliance on polluting fossil fuels and that we must reflect on the real cost of using fossil fuels? We must recognise that high fuel taxes and high fuel prices are here to stay and make the transition to sustainable transport.
Mark Ballard has one advantage over me—he was a member of the Parliament before I was. However, I have picked up the fact that the coalition has been investing in wider public transport initiatives, which is how we are progressing our transport policy. Those initiatives are part of our sustainable policies. We are having the debate because the Greens are frightened of GDP as a measure and they want a more woolly, greeny measure in place.
Once again, the debate is too short for the problems of Scotland's economic policies to be explored fully. We heard Mark Ruskell speak eloquently in support of the motion, but the Conservatives think that he rather misses the point about GDP. It is not unreasonable to argue—as Mark Ruskell has done—that economic activity and output are an insufficient yardstick by which to measure our country's success or failure in its broadest sense. However, it is a fundamental yardstick, however crude, which is widely understood and allows comparisons with other countries and economies. Currently, those comparisons are less than flattering for Scotland, as the Deputy Minister for Enterprise and Lifelong Learning, Allan Wilson, has admitted.
We can all talk about add-ons that are desirable in themselves, such as sustainability and social justice—as Shiona Baird and Linda Fabiani did—but they are deliverable only after taxes have been gathered and a certain level of GDP has been attained. To put things simply, we must first create a strong economy that delivers a level of taxation that allows us to provide better public services for the Scottish people, but as Jim Mather said, we are not doing that. Indeed, our quality of life has been damaged by the lack of growth in the Scottish economy. That is a problem not of the Green party's making, but of the Scottish Executive's making.
Murdo Fraser alluded to the intolerable burden of business rates. The Conservatives have constantly drawn that matter to the Parliament's attention over the past five years. Business rates are about to be abolished by Jack McConnell, who opposed doing so, but we all want to know when that will happen. The tax has not only cost our business communities £838 million since it was imposed, but it has almost certainly discouraged many potential investors from locating and investing in Scotland. Businessmen are risk takers, but they like to be made welcome and to feel welcome in the communities in which they seek to invest. It is regrettable that Scotland is not perceived as welcoming at the moment. All other things being equal, businessmen will not knowingly put themselves at a disadvantage by locating in an area in which it is difficult to do business. Sadly, Scotland falls into that category.
It has been alleged that the First Minister regards our leading businessmen and entrepreneurs as idiots. That is unhelpful, to say the least. If he did not call them idiots, he should say so. In addition, water charges on businesses are now so high that I am aware of several businesses that are under severe pressure as a result. It is simply not reasonable for our aged and decrepit water and sewerage infrastructure to be rebuilt off the back of Scottish businesses, and the business community certainly resents that being done. In particular, it resents being overcharged by £44 million per year, which the Executive has recently admitted has happened. The poor quality of the water and sewerage infrastructure to which I refer also acts as a brake on business development.
Transport links in Scotland are poorer than in other areas. The Institute of Directors recently described our transport network as a "national disgrace" and a "major drag on business". However, I must welcome the completion of the M77 upgrade and the dramatic impact that that will have on the Ayrshire economy—I am certain that it will have such an impact.
It is important that the Parliament supports business development in every way that it can. The Parliament must shake off the perception that it is not business friendly and, in that respect, actions speak louder than words. We must appreciate that wealth creation must precede wealth redistribution and foster a climate that welcomes and understands the business community and its needs. As a result, I urge members to support the Conservative amendment.
In recent times we have heard a great deal of the blood-curdling phrase, "Scotland is the best wee country in the world". To a large extent, this debate is about how we judge whether Scotland is the best wee country in the world.
I find it difficult to believe that we are the best wee country in the world when we have the highest rate of violence in the developed world. I find it difficult to believe that we are the best wee country in the world when the Executive brags that 25 per cent of our children live in poverty and that one third of our pensioners live on or near the breadline, when 300,000 people in Scotland are, for one reason or another, economically inactive and when we have one of the lowest gross domestic product growth rates in the UK and in the Organisation for Economic Co-operation and Development. It beats me how anyone can look at those statistics and conclude that we are the best wee country in the world. It seems to me that it is not Janette Anderson and Ian Graham who are the idiots; it is those who see those statistics and describe Scotland as the best wee country in the world.
I accept the Greens' argument that GDP is not the only measure of success. As Linda Fabiani pointed out, the annual UN human development index, which takes many factors into account, is a very good measure of economic performance and social well-being. If the Greens and others consider the countries that are at the top of the UN human development index, they will see that the same countries are at the top of the league for GDP growth and GDP per head. Conversely, the countries at the bottom end of the UN human development index tend to have lowest growth and GDP per head.
That tells me that there is a strong correlation between GDP growth, with all its flaws, and general human well-being. It is no accident that the countries that are at the top of the GDP league and the human development index have several common features. The first common feature is high investment in their economies; on average they invest 20 per cent of their GDP in their economy in education, health, manufacturing and other services. Secondly, most of them strive for full employment. Thirdly, they have far fairer societies. Denmark, Norway, Sweden and Austria have 2 per cent child poverty, not 25 per cent. There is a definite correlation with GDP. I agree with the Greens' criticism of using GDP as the only measure, but it is an indicator or proxy for social as well as economic well-being.
I have no time to develop my argument, but I will say this: had we access to the oil in the same way as Alberta and other places do, we would be top of the league instead of bottom. We could then say that we were one of the best—one of the best—wee countries in the world.
I would like to take the route that was set for the debate by my colleague—
He has forgotten his name.
Des McNulty. Des McNulty. I repeat it for anyone who failed to grasp the significance of what I said. Growing the economy is not just about statistical indicators going in the right direction. As Des McNulty said, it is about real people, jobs, businesses and ensuring that our actions in the chamber enable future generations to enjoy the best possible quality of life. Des McNulty articulated that today.
I do not disagree with what Alex Neil said about GDP as an indicator. It is easy to argue, as Mark Ruskell did, that GDP alone is not a comprehensive measure of a nation's prosperity because it does not measure the environmental and social changes that are associated with production. However, as Alex Neil said, no one has yet developed a better indicator that is universally accepted as the new standard. GDP is an internationally recognised measure and a GDP figure is produced by all OECD member countries. It therefore allows the level of activity of Scotland's economy to be compared with other developed countries.
Does the minister agree that knowing whether the well-being and welfare of our poorest people is increasing is more important than simply comparing ourselves with another country in the world?
I do; that is a point that others have made. In fact, from the Greens' perspective, I would have thought that it would be worrying that the point was made by Tommy Sheridan on their behalf. Economic growth is central to delivery of public services and social justice. That is the real dividing line between us. The Greens believe in environmental protection and environmental justice, but their policies on economic growth would lead us into an economic wilderness that would deny us the social justice and public services that we seek. Tommy Sheridan made that point and Des McNulty answered it. If the Greens want to go in the same direction as Tommy Sheridan's socialist party in popular opinion, they should follow his advice. If they do, that is where they will end up.
I invite the minister to confirm that it is not just the Greens and the SSP that support nationalisation of the railway network: the Labour Party does, too.
I believe in a mixed economy. There is a place for public sector ownership of our utilities in certain circumstances. I supported the revision of clause 4 of the Labour Party constitution because I do not believe that all the means of production, control, distribution and exchange should be in the public sector. I believe that that is one of the reasons why Tommy Sheridan is no longer in the Labour Party.
Wendy Alexander deprecated the fact that we had not got down to discussing sustainable development more generally, and that we had got into a sterile debate on statistics. I blame my Opposition colleagues for that. Every time I get up and try to debate the economy, I am confronted with one statistic or another that has usually been plucked from a small European country that the Opposition likes to compare us with while ignoring all the other statistics that are relevant to that country.
The Greens did that again today, so I remind them of my advice to them. They picked one sustainable development indicator—renewable energy—and pointed out that it was going in the wrong direction. However, it is doing so because the proportion of renewable energy that we sourced from hydropower in the year in question had reduced because there had been a reduction in precipitation during that year. In other words, there had been less rain and snow. Hydroelectricity generation fluctuates in direct proportion to the prevalence of snow or rain in our climate. Although I can do a lot in this chamber and Alex Neil might claim that independence is the solution to all our problems, not even he could claim that the Government can influence the amount of precipitation in our climate.
Our trend for energy generation is on target to allow us to fulfil our objective of providing 18 per cent of energy from renewable sources by 2010 and to meet our ambitious target of providing 40 per cent from renewable sources by 2020. Members must look at the overall picture rather than pick out individual statistics to suit their arguments.
I am pleased to be able to close this interesting debate, which is the first Green party debate on the economic future of Scotland. What more important thing can the Parliament do than hold the Executive to account on its top priority of increasing GDP, and on why it chose that as the top priority?
There has been wide recognition that GDP is a poor measure for assessing how well Scotland is doing. Murdo Fraser acknowledged much of the truth of the opening remarks of my colleague, Mark Ruskell, and Jim Mather highlighted some important things that GDP does not measure. Jamie Stone went so far as to say that crofters in his constituency need no statistics to know how well how they are doing and Tommy Sheridan issued an excellent clarion call on the need for Government priorities that put people before profit.
The debate has been filled with interesting tangents. I agree completely with Jim Mather on the need for an office for national statistics because if discussion of GDP or any other statistic is not to be futile, we need a firm basis for calculation of statistics.
Along with the rest of my Green colleagues, I was struck by Wendy Alexander's biblical analogies, which reminded us of our long history of care for other humans and care for the environment. Like her, I was a member of the Labour Party in the 1980s because I wanted to make a real difference to people's lives, to improve the lives of the many and to improve the environment; unlike her, I have stayed true to that vision.
Will the member take an intervention?
Wendy Alexander's second point—she will probably want to intervene again after I say this—was that trade is always good. However, like GDP, raw trade figures are purely a measure of cash flow, but do not tell us much about whether what is happening is positive or negative. The assumption that trade is always good is based on a purely economic vision of society that does not include the wider social and environmental impacts of trade. Rather than say that trade is good or trade is bad, we need to support positive trade. We need fair trade, not unfair trade.
The policy position of the Green party is that trade is bad. Given that two thirds of this nation's wealth is dependent on trade with other nations, should not the Greens move forward and learn the lesson that trade rather than aid is, as all of history shows, the way in which peoples of all countries prosper?
We want fair trade, not unfair trade. We do not want the World Trade Organisation, which biases world trade in favour of rich countries and multinationals. I support fair trade; I will always oppose unfair trade.
Jamie Stone asked me to clarify in my summing up the difference between renewable energy generation and energy generation that is based on finite resources such as uranium or fossil fuels. The difference is clear: the latter depletes our natural capital, such as our declining stock of oil in the North sea, whereas the former does not. However, that key recognition is not included in measurements of GDP.
Andrew Arbuckle explained that his party's policy is quite similar to that of our motion, as his party has strong criticisms of GDP. However, when such policies are applied to Scotland or come from the Scottish Green Party, it seems that the Liberal Democrats think that they are woolly nonsense. That is a classic example of how the Liberal Democrats tell one story south of the border but, when they are actually in power, all their policies go out of the window.
Unfortunately, we heard some of the same old attacks that are repeated whenever we question whether GDP should be the number 1 priority. A classic example was given by Des McNulty, who said that the Greens are against growth. I remind Parliament that it is not how big it is, but what we do with it that matters. As Mark Ruskell argued, the key is to discuss the quality of economic development, not merely the quantity. It makes no sense to want growth for its own sake, so we should quantify what growth we want. It would be as daft to say—as the Scottish Executive does—that we are always for growth as it would be to argue that we are always against growth. We should measure the things that matter, such as progress and positive development, rather than simply GDP.
A slightly more sophisticated argument was advanced by, among others, Murdo Fraser and Allan Wilson. They said that growth is necessary for providing the job opportunities that will help the poor out of poverty and for producing the revenue to pay for environmental protection. However, that assumes that there is no contradiction between growth and the other objectives. We should remember that GDP does not take account of natural capital depletion, rising levels of poverty, income inequality or regional disparities.
Mark Ruskell pointed out in his opening speech that GDP increases can be obtained from activities that impose much larger environmental costs than any revenue benefits that they might produce. Members need only ask any community that has been blighted by opencast mining whether the limited number of jobs are worth the noise, pollution and disruption. Des McNulty mentioned the Executive's green jobs strategy. That is all very well, but where is its ungreen jobs strategy? Where is the Executive's strategy for dealing with jobs in the polluting industries that have a negative total impact on Scotland?
It is possible for GDP increases to increase regional disparities. For example, we can have overheating in Edinburgh or Inverness to the detriment of the rest of the country. Such overheating is not measured by GDP, but it can lead to wider social problems and affect housing costs and transport infrastructure. GDP tells us nothing about that. It is also possible to achieve GDP increases that serve to widen economic disparities. As Shiona Baird pointed out, GDP increases can mean that the rich get richer while the poor stay poor. As we have seen in Louisiana, the USA's relatively high level of GDP hides a huge array of income disparities.
Let us measure what matters. We should use some of the sophisticated new tools that are available for measuring how society is doing. Like Wales, we should investigate indexes of sustainable welfare. If we want a strong economy, a strong society and a healthy environment, we must measure what matters and end our obsession with GDP.