Economy and Recovery
The next item of business is a debate on motion S4M-02084, in the name of John Swinney, on the economy and recovery. I draw it to members’ attention that the debate is oversubscribed, so members will need to stick to their allotted times, or we will cut them off.
14:55
I will set out the action that the Government is taking to ensure that Scotland’s recovery can take its course, despite the current global uncertainties. As an open economy, Scotland cannot expect to be immune from the developments and challenges in the global economy—most notably in the euro zone crisis, which looms large across the world economy. However, given our enviable reputation as a dynamic country that is rich in economic potential and natural resources, our openness provides a key avenue through which we can deliver faster sustainable economic growth.
We are committed to doing all that we can to protect the Scottish economy at this challenging time and to take advantage of new opportunities as they emerge. Last month, Scottish output figures for the third quarter of 2011 were published, alongside our latest export statistics. Gross domestic product grew by 0.5 per cent over the quarter—the same as in the United Kingdom—with an upturn in services and continued growth in manufacturing.
Overall, the figures confirm that, although Scotland’s recession was deeply damaging, it was shorter and shallower than that in the United Kingdom as a whole. Our recession lasted for five quarters, compared with six in the UK, and our output fell by 5.9 per cent, compared with a fall of 7.2 per cent for the UK as a whole.
The cabinet secretary says that the quarter 3 figure of growth of 0.5 per cent was the same as that for the UK. What about the year-on-year figures in comparison with the UK? Did we grow by more than the UK did?
No, we did not grow at the same rate as the UK over the year. However, I would have thought that the Conservatives would welcome the point that I made. It is almost as if the Conservatives want to inflict even more economic hardship on Scotland. Mr Brown moans every time I say that the recession in Scotland was shorter and shallower than that in the rest of the UK. It seems as if he wants to inflict even more misery on the people of Scotland—[Interruption.] That is right—the way in which Mr Brown prosecutes his arguments is a shame.
Manufactured exports grew for the third consecutive quarter, while the purchasing managers index for January indicated private sector growth for the 13th consecutive month. The retail sales figures that were published at the start of this month showed growth of 0.7 per cent in the final quarter of 2011 and growth over the year as a whole, despite the challenging trading conditions.
Contrary to all the headlines, there are positive developments in the Scottish economy, but the economic conditions—exacerbated by the reductions in public spending—are challenging. The most recent labour market statistics, which were published last week, show a further rise in unemployment and highlight the continued challenges in youth unemployment. Scotland’s unemployment rate of 8.6 per cent is now slightly higher than the UK’s 8.4 per cent rate, but we continue to have better employment and economic activity rates.
Does the cabinet secretary agree that the country enjoys better economic activity and inactivity rates only in a defined age group? In the whole age group above 16, the country does not enjoy better economic activity rates than the rest of the UK has.
Across the measure of economic inactivity, it is a pure statistical fact that Scotland performs better than the rest of the United Kingdom does.
The outlook remains concerning, as recent figures from the Office for National Statistics show that UK output fell by 0.2 per cent in the final quarter of 2011, and growth forecasts for the UK have been revised downwards.
In summer 2010, the Office for Budget Responsibility forecast growth of 2.8 per cent in the UK in 2012. In the autumn statement in November 2011, that was revised down to only 0.7 per cent. Those recent trends and poor forecasts for the years ahead highlight the inherent weakness in the economic strategy that is being pursued by the UK Government.
We have aimed as a Government to bring forward a range of measures that are concentrated on boosting public sector capital investment; improving access to finance and encouraging new private investment; enhancing economic security to support confidence; and taking direct action to tackle unemployment.
Where private sector demand is fragile, public investment can provide a vital boost to economic activity and creates an asset that supports the long-term growth potential of the economy. Now is a perfect time for such investment. Not only is there little risk of crowding out private demand, but interest rates are close to record low levels.
A recently published Confederation of British Industry report called for capital investment rather than tax cuts, due to the economic impact on employment. John Cridland, the director general of the CBI, said on “Good Morning Scotland” yesterday:
“the best way to get growth going is to invest in infrastructure ... investment in infrastructure is three times more likely to get a growth result than cuts in taxes.”
Will the cabinet secretary therefore now abandon his plans to cut corporation tax?
The short-term priority for the Government, within the powers that are at our disposal, is to ensure that we obtain the necessary capital investment to boost infrastructure in Scotland, which I would have thought Mr Findlay would welcome.
Clearly the Government does not have the power and the responsibility to reduce corporation tax now, but we are committed to ensuring that, within a responsible fiscal framework, we reduce corporation tax to boost the competitiveness of the Scottish economy and to ensure that we put Scotland at a competitive advantage.
The Government has delivered major new infrastructure such as the M74 and M80 completion projects and we are pressing ahead with the Forth crossing. In the budget bill, I announced additional capital investment of around £380 million over three years, which will support infrastructure developments and jobs the length and breadth of Scotland. When that is added to the other interventions that I set out in the budget, by 2014-15 our overall capital investment in Scotland’s economy will be 25 per cent higher than it is this year, despite the falling capital departmental expenditure limit settlement.
Through the infrastructure investment plan, which Mr Neil launched in December, we have set out our long-term investment priorities, which provide a clear direction in order to give confidence and certainty to the private sector in Scotland.
The Government’s procurement reform programme is making it easier for businesses, particularly small and medium-sized enterprises, to access the new capital investment and other public sector expenditure. SMEs currently receive 75 per cent of all contracts that are awarded through Public Contracts Scotland. SMEs account for 45 per cent, or more than £4 billion, of public sector procurement expenditure. The Government will intensify its efforts to strengthen the use of procurement in the forthcoming sustainable procurement bill.
The second element of our focus as a Government has been on boosting private sector investment. On-going uncertainty means that many large companies are putting off investment, while smaller companies continue to struggle to secure finance even if they are keen to invest. That was demonstrated by the project Merlin figures that were released last week, which show that the big five banks failed to meet their SME lending targets. Yesterday, I received a regional breakdown of project Merlin figures from the Chief Secretary to the Treasury. The figures confirmed what I expected: Scottish SMEs’ share of that below-target lending was only 4.8 per cent, despite Scottish SMEs accounting for 6.4 per cent of the UK total.
Even more worrying is that that is gross lending. It includes facilities that have not been drawn down and the rollover of existing facilities; it does not report new lending. What we know from Bank of England data is that the more important net lending figure was negative in each quarter of 2011, which gives me even less confidence that finance is getting to the companies that need it, which reinforces the contents of the Government’s access to finance survey.
For those reasons, we have set up the Scottish Investment Bank, which is open and is investing in Scottish companies; we continue to attract major international investment to Scotland through companies such as Amazon, Mitsubishi, Michelin and Avaloq; and we have in place the small business bonus scheme to support small companies in the Scottish economy.
Will the cabinet secretary give way?
Given the time, I had better press on.
In order to boost economic confidence in Scotland, we are taking action to combat weakening consumer confidence, support household incomes, and promote economic security. Our budget contains a range of measures, including the extension of our no compulsory redundancy policy commitment and ensuring that, through delivering on our commitments on the social wage through freezing the council tax for a fourth year, freezing water rates and fulfilling our commitments on personal care, concessionary travel and tuition fees, we contribute to boosting consumer confidence in Scotland.
In tackling unemployment, the Government’s opportunities for all programme guarantees an education or training place for every young person who is not in work, education or a modern apprenticeship. In the Budget (Scotland) Bill, we announced an additional £8 million for the Scottish Further and Higher Education Funding Council to help colleges to deliver that commitment. That is supported by our commitment to create around 25,000 modern apprenticeships in each year this session, which is 60 per cent more than when we first entered office. Each of the modern apprenticeships that we provide reduces the welfare cost to the UK Government. With independence, of course, the Scottish Government would benefit from the savings in that respect, which would give us the ability to further invest in training opportunities for our population.
Will the cabinet secretary take an intervention?
I will press on.
On building on our recovery, I will set out some actions that the Government intends to take to capture opportunities that will ensure sustainable growth for the long term.
New markets and the growing emergence of new players in the global economy are driving global growth. We have seen evidence of that in the way in which the Government’s efforts to support business developments in the Chinese market, for example, have delivered significant increases in the business prospects of our salmon industry and our whisky exporting sector, in which there has been substantial growth. In the creative industries sector, our video games industry is an example of an industry in which Scotland is capable of punching well above our weight, but we must be alert to the threats that are posed to that industry by the tax incentives that are offered in Canada, the United States, Australia and other countries, which can be a threat to the competitive position of the Scottish economy, unless that is properly and fully reflected in the tax position of the Government and this country.
Scottish Development International is actively involved with a range of Scottish companies in ensuring that we boost their opportunities for growth. It is engaging with 8,000 to 10,000 more businesses in Scotland, which will be able to ensure that they continue to grow in the international economy. The Government will support it in its efforts.
A major part of the Government’s economic strategy is ensuring that Scotland is a competitive location to which we can attract business. We appreciated the verdict of the Ernst & Young UK attractiveness survey report, which concluded that Scotland was the leading location for foreign direct investment in the UK in terms of employment generation. That is an indication of the way in which we have marshalled our efforts and activities to attract major companies to be based in Scotland and to support the development of the Scottish economy.
The Government will use every lever at its disposal to ensure that we support the process of economic development in Scotland, encourage employment growth for all our citizens, and seize every opportunity to ensure that Scotland is able to work out of the economic difficulties that we have faced and deliver sustained economic growth in the period to come.
I move,
That the Parliament calls on the UK Government to acknowledge that its pursuit of austerity in the absence of a credible plan for economic growth is threatening the UK recovery; supports the Scottish Government’s distinctive approach, as set out in the Government Economic Strategy and its budget, to accelerating recovery, supporting long-term sustainable economic growth and boosting employment; further calls on the UK Government to do more to support growth, particularly through expanding capital investment, and welcomes the actions taken by the Scottish Government to ensure that Scotland grasps the opportunities in international growth markets by growing its international presence, boosting exports and attracting international investment.
15:09
Yesterday, we enjoyed that rarity in economic debates: unanimity among the parties across the chamber. That was on our approach to the green investment bank—we all hope that the Scottish bid is successful. I suspect that there will be little such agreement today, but I will begin by mentioning the one line in the Scottish Government’s motion with which the Labour Party agrees. Austerity is not working. The tax rises and spending cuts that the Tories in Westminster have introduced have proven to be too deep and too fast, which is precisely as Labour claimed. They have choked off recovery, pushed up the cost of living for many families, and created a rise in unemployment that many of us fear will lead to a whole new lost generation.
I will go further. As I have said in every contribution that I have made to the debate on the budget in recent weeks, despite the fact that the Scottish National Party has been in power in Scotland for the past five years, I do not blame every economic ill on it. We are in the midst of an international as well as a national economic difficulty, and the Scottish Labour Party stands ready to work with any and all parties to tackle the serious problems that we face and to get Scotland working again. I hope that I will have time to return to that point later.
If it were simply a case of taking the Scottish Government at its word, or taking the minister at his word today, we might have much more in common on the economic agenda. However, the motion before us follows the unfortunately all-too predictable SNP line of false assertion rather than evidence-based argument, while simultaneously avoiding facing up to any of its own responsibilities.
I do not doubt that the Scottish Government claims to have a distinctive approach to economic policy, but I believe that there is a huge gap between what the SNP says that it is doing and the decisions and policies that are implemented by ministers.
Economic commentators are certainly clear about where the evidence points. In an article earlier this month, following the publication of Scotland's horrendous unemployment figures, Professor David Bell, who is a professor of economics at the University of Stirling and an adviser to the Finance Committee, pointed out that the average difference in unemployment rates between Scotland and the UK as a whole during the recession has been less than 0.5 per cent. He therefore concluded that SNP policy
“has not driven any massive differences in labour market outcomes north of the Border since the beginning of the recession.”
Does that not make the point that we need more powers if we are to do something much better than the UK?
The point is that the motion that is before us calls on us to support the Scottish Government’s “distinctive approach”. What distinctive approach? The SNP is always claiming—as Mr Swinney did again today—that plan MacB, that fantastic success, has given us a shorter, shallower recession. I point out, by the way, that it has taken us longer to get out of recession. I am just suggesting that there is no evidence for the SNP’s argument. It is simply assertion.
Professor Bell went on to make an interesting point. He said:
“The contrast in rates of unemployment between Scotland and the rest of UK is insignificant compared with the differences within Scotland itself ... the claimant count unemployment rate in Aberdeenshire was 1.5 per cent, while that in West Dunbarton was 6.7 per cent.”
In other words, we have a Scottish Government that is more interested in making unsubstantiated claims about the difference between its approach and that of the Tories in the rest of the UK, and is either unable or unwilling to tackle the gross inequality in joblessness that is within its own jurisdiction in Scotland.
Professor Bell is certainly not the only economist illuminating that gap. Last month, in evidence to the Finance Committee, the point was made by Professors Peat and Armstrong, and the Centre for Public Policy for Regions has said:
“Overall, the different approaches taken by the Scottish and UK governments thus far appear to have made little difference to the economic outcomes. The deterioration in both GDP and the labour market have been on a similar scale in both Scotland and the UK.”
In my intervention earlier, I was trying to make a point that we had just heard another example of the politics of assertion over argument. The minister was trying to claim that economic activity, employment and economic inactivity rates are better in Scotland than in the rest of the UK. However, that is not true. It is true only if we consider the 16-to-64 age group—the working age group. If we consider the rate for everyone over the age of 16—that is the age group to which the minister is referring in relation to unemployment, so it is not my selection; it is his—we see that we are not doing better than the UK but are doing worse.
The Scottish Government is asserting that it is making a difference, but the evidence does not support that at all. I suggest that the minister starts to make a case for his assertion that the Scottish Government is making a difference and starts to deliver on his words.
Let me give Mr Macintosh a fact. Since 2007, unemployment has been lower in Scotland than in the rest of the UK in 38 out of the 56 months. In the 96 months of the previous Administration, unemployment was lower in Scotland in only 10 months—only 10 per cent of the time. That demonstrates that this Government has a better record on unemployment than the previous Labour Administration.
Can I suggest that it demonstrates nothing of the sort and that it answers a different question? The minister’s claim is that his Government is making a distinctive difference compared with the policies that the Westminster Government is pursuing, but the evidence does not back that up. The minister is comparing previous Administrations with his Administration and is not comparing his Administration with the UK Government. However, the SNP’s motion claims that it is doing the latter.
I do not know why any of us might be surprised by the Government’s position, given the decisions that we saw in the budget this month. We apparently had a budget for jobs and growth, but it had a cut in the college sector of 20 per cent over the next three years and a housing budget cut of more than 30 per cent, which is more than £100 million.
However, if the SNP policy is so distinctive, perhaps we can see it if we look at the SNP’s specific economic policies. What specific policies does it have? There is the public health levy—the so-called Tesco tax—which was introduced without even an apology for not carrying out an assessment of the impact on business and employment. We had the announcement of enterprise zones, but guess what? When asked by one of his own back benchers how many jobs that would create, the minister replied that he did not know.
Of course, the Scottish Trades Union Congress’s analysis of the small business bonus scheme has revealed that there is no evidence whatsoever that demonstrates that it has had an impact in improving employment levels or growth—quite the reverse. Scottish Government ministers are quick to point to the scheme’s popularity among small businesses, but is that not the point? The SNP is keen on appealing to electoral advantage. The scheme is populist, but it is certainly not distinctive, measurable or progressive.
I have read in detail not just the STUC’s report but the Federation of Small Businesses in Scotland’s report. Why does the member not represent a fair view of what the small business bonus scheme means to the FSB and how it interprets it, rather than just seeking to present, as he has done on most issues, an isolated point?
That is a good question that goes exactly to the point that I am addressing. Of course the scheme is popular: that is why the SNP introduced it. It is popular, but that is not what the SNP, or the Scottish Government, is claiming. The SNP claims that it is a distinctive policy that is part of a budget for jobs and growth, but it does not create any jobs and has not proven to have produced any growth. It is simply a populist policy. If we are going to have a genuine budget for jobs and growth—
What are you going to do about it?
The minister asks what we are going to do about it. Can I suggest that the minister should listen to Labour? Perhaps he is already doing so. For example, I am pleased that the SNP has already adopted the idea of guaranteeing work, education or training for every 16 to 19-year-old and that the minister has already adopted the idea of appointing a minister specifically for youth unemployment. In addition, the minister has already heeded our call to increase the number of apprenticeships that are on offer, so thank you very much. I am glad that the SNP can recognise the excellent ideas that are on offer from the Labour Party. However, the SNP needs to do more. [Interruption.]
Can we hear the member’s last 30 seconds, please?
Following three interventions, Presiding Officer? Well, okay.
We should see further interest in wage subsidies and a drive to maintain rather than reduce the number of jobs in the public sector. We also need to see an increase in productivity, a graduate-led economy and far more use of procurement and less of giving our contracts to foreign countries, which means that we unsustainably import steel and cement and rely on wages in countries in which workers do not enjoy the same protection as workers do here.
We can agree with the SNP that the Conservative austerity measures are failing, but the SNP is not in opposition, much as it pains me to be reminded of that. The SNP has both the powers and the responsibilities of government. It is time for it to stop simply pointing the finger of blame elsewhere and to live up to those responsibilities.
I move amendment S4M-02084.4, to leave out from “supports” to end and insert:
“calls on the Scottish Government to acknowledge that its approach has resulted in very little difference to economic outcomes in Scotland compared with that of the UK; notes that despite claims that the Scottish Government’s budgets are designed to boost economic growth, the evidence suggests otherwise, with Scottish GDP growth stagnating at the same rate as the UK’s and with joblessness in Scotland now at an even higher rate than in the rest of the UK; believes that the Scottish Government must, as a matter of urgency, ensure that its public spending boosts the Scottish economy and put reducing unemployment and increasing employment at the heart of public policy, and calls on the Scottish Government to bring forward a sustainable procurement bill as soon as possible.”
I reiterate what my colleague John Scott said: the debate is very tight for time, so no time will be given back for interventions.
15:18
What did we have today from the Scottish Government? We had the usual cartoonish exaggeration: everything that it has done has helped the economy and spurred a mini-revival, but everything that the UK Government does dampens the economy and harms business.
Members: Hear! Hear!
Right on cue. I knew that that was coming. I think that it was even in the script.
I take issue with something that the cabinet secretary said when he criticised my response to him on the shorter and shallower recession in Scotland. I accept that the recession was a quarter shorter and mildly shallower. However, if one takes the time to look at the graphs of the recession in the UK and Scotland, one sees that they are pretty much identical. It is splitting hairs to re-emphasise continually that the recession in Scotland was shorter and shallower. That is compounded by the fact that, since the end of the recession, both in the UK and in Scotland, Scottish growth has failed to match growth in the UK. What matters is where we are going now, not what the graph was like two years ago—even though, in my view, it was broadly identical.
I will point out another instance of the SNP exaggerating wildly. Let us look at the employment statistics. Scotland has an employment rate of 70.7 per cent while England has an employment rate of 70.5 per cent—a difference of 0.2 percentage points. Today, at First Minister’s question time, the rate in Scotland was described by Alex Salmond as “significantly higher”. Now, let us look at the unemployment statistics. Scotland has an unemployment rate of 8.6 per cent while the UK has a rate of 8.4 per cent—a difference of 0.2 percentage points—and the cabinet secretary has, this afternoon, described the rate in Scotland as “slightly higher”. If the statistics are in the SNP’s favour, there is a significant difference, but if the statistics are not in the SNP’s favour, there is an insignificant difference. On the same afternoon, two of the highest people within the Scottish Government have expressed completely contradictory viewpoints.
Who is splitting hairs now?
If the cabinet secretary wishes to make an intervention, I would welcome it at any point in my speech.
I will wait until the member makes a point of substance.
Mr Swinney had 14 minutes in which to make a point of substance—and he made lots of them, apparently. I will pick him up on some of the other points that he made.
The cabinet secretary quoted the CBI as saying that the best way to get growth in our economy is “to invest in infrastructure”. Yet, a mere two weeks ago in the chamber, the Government slashed the housing budget at a time when there had been a cash-terms increase in the budget as a whole. He also criticised the UK Government’s response on banking. Yes, the project Merlin figures are disappointing, but he stated what a great job the Scottish Government is doing with the Scottish Investment Bank, which it took two years to set up. The question that I was going to ask the cabinet secretary when I tried to intervene was this: although everyone in the chamber welcomed the creation of the Scottish Investment Bank, how many companies has it actually helped and what percentage of those are the microbusinesses that he talked about in his speech?
The cabinet secretary talked about the computer games industry and again criticised the UK Government for its response on that industry. However, at the same time, he has failed—in every budget that he has produced—to do anything on business rates that would help the computer games industry specifically. He criticises the UK Government for not doing anything; yet, even though he has the powers to do something on business rates, he has failed to take that opportunity.
Is that not an elaborate cover to paper over the fact that Mr Brown voted against the small business bonus scheme when he had a chance to vote in favour of it just a couple of weeks ago?
What an absurd proposition. In legal circles, they say that one should not even bother to counter bad evidence. In this case, I will ignore the cabinet secretary’s point completely. He knows well that, a couple of years ago, that scheme was accelerated and brought into being entirely because of the Scottish Conservative Party.
The cabinet secretary said that the Scottish Government is using every lever at its disposal to help the economy; yet, it has slashed college funding when youth unemployment is at an all-time high.
I am afraid that you must conclude, Mr Brown.
The Scottish Government has slashed the housing budget at a time when the construction industry is in deep trouble and it has introduced a Scotland-only tax rise called the retail levy to make Scotland less competitive than the rest of the UK. That is why we lodged our amendment and it is why we are very disappointed with the Scottish Government.
I move amendment S4M-02084.1, to leave out from the first “calls on” to end and insert:
“regrets that the Scottish Government did not prioritise the Scottish economy in its recent budget; notes the Scottish Government’s severe cuts to college funding and housing, its failure to take action to boost Scotland’s town centres or provide more help for small businesses and its intention to make Scotland less competitive than the rest of the UK through the introduction of a £95 million retail tax; further notes that the Scottish Government has more money to spend next year than this year in cash terms; notes that, due to Barnett consequentials from the UK Government, Scotland has £500 million more to spend on capital and £70 million more to spend on revenue in the current spending review period; acknowledges that the UK Government has lifted 90,000 people in Scotland out of income tax, cut corporation tax, frozen petrol duty, restored the earnings link to pensions, raised the minimum wage and increased child tax credits, and believes that the UK Government’s commitment to tackling the nation’s debt means that the UK remains a safe haven while much of Europe is engulfed in a debt crisis.”
I ask members who wish to speak in the open debate to press their request-to-speak buttons. Speeches will be a tight six minutes. It is entirely up to members whether they wish to take interventions but I am afraid that, if they do, they cannot be given the time back.
15:25
I support the motion, of course. I will not rehearse some of the half-truths and untruths that we have recently heard. Mr Brown falls into the category of people who, as Joe Chamberlain said of Disraeli, stumble upon the truth and facts purely by accident.
The motion is set against the backdrop of the UK Government—the London coalition Government—failing abysmally to set any economic direction. Regrettably, we are associated with that Government in the short term. It has no consistent direction; it falters and stumbles. It has no plans and no analysis. We would be better off getting reports from Obi-Wan Kenobi than from the OBR.
The UK Government has no long-term plan to balance investment and jobs—as opposed to consumption—and, consequently, there is a balance deficit. That Government seems to have no capital investment plan to work with the various agencies to tap into the commercial capital funds that are sloshing around the markets. However, it has a plan to print money to buy back its own debt.
The coalition Government has a plan to lecture Scotland—the energy cash cow with oil and gas revenues. Last week, Mr Cameron came to tell us:
“there are countries in Europe, small countries that make it on their own, but … we are better off, we are stronger together, we’re fairer together, we’re richer together.”
Well, let us test that. I regret that only one member of the Tory party attended the STUC discussion on the economy on Tuesday morning and that we only briefly had two members of the Labour Party there.
Are we richer together? Income in the UK is $40,000 per head. That puts it in 22nd place behind Luxembourg, which is first with $122,000 per head; Norway, which is third with $97,000 per head; Switzerland, Denmark and Sweden. I say to Mr Brown that those data are all supported by the World Bank.
Are we fairer together? As confirmed by Wilkinson and Pickett in their book, “The Spirit Level: Why More Equal Societies Almost Always Do Better”, the Gini coefficient is 60 per cent worse in the UK than in Denmark, Sweden, Luxembourg and Norway. The gap between the rich and the poor in the UK is a modern obscenity, as is the gender equality gap.
Are we stronger together? No. The UK lags far behind smaller, independent countries on innovation, research and development and entrepreneurial activity rate. The Organisation for Economic Co-operation and Development reports that the UK trails way behind the smaller Scandinavian and other European countries on happiness and quality of life.
Will Chic Brodie give way?
I do not have enough time.
The Scottish Government’s economic strategy is to secure resilience and robustness in our economy to buttress ourselves as best we can against the current global economic storm and to get us ready and fit to take our rightful place among the highly successful smaller countries across the globe. It is to promote a high-income, high-wealth, sustainable, fair, globally competitive, joined-up economy and society. It is to develop a country with a culture of savings and investment—such as we used to have—to sustain the basis for future consumption.
That strategy will deliver via the Government’s infrastructure investment plan, which the cabinet secretary announced—a long-term plan for £60 billion of capital investment through 2030. Even within the existing limited powers that we have, we are spending £10 billion through the capital budget, providing a not-for-profit pipeline of £2.5 billion and making an £800 million switch from revenue to capital.
We will be investment ready, capital ready and productivity ready. To support that, we are providing youth training and apprenticeships. We have an ambitious reform of post-16 education that will allow us to start to close what the Joseph Rowntree Foundation described and delineated as a widening gap between those on the fast and slow lanes to adulthood. That reform puts our young people at the heart of that productivity-ready programme.
However, it goes beyond being ready in those areas. The inward investment that has already been achieved through the excellent performance and results of our enterprise agencies is to be applauded. The creation of export and targeted international initiatives will lead to revenue and employment generation in industries such as life sciences, food and drink, tourism and renewables. As someone who ran a sheet metal company, I say to Labour members when they carp and moan about the steel in the new Forth bridge: we anticipate being a global player. If we went to a country and said “We’re not going to buy your steel,” and it turned around and said, “Well, we’re not going to buy your whisky,” what would Labour members say to the people who work in the whisky industry?
We will be internationally ready and jobs ready, and we can and will join the happy, successful group of small, fairer, richer and stronger countries. That is why this Government’s economic strategy and plans for recovery set us on that road. We are ready.
15:31
I wonder whether the first part of Mr Brodie’s speech could be summed up as “talking down Britain”, to coin a phrase.
This is probably the most important debate that this Parliament will have in this session. Forget the referendum—if only—this Parliament’s priority has to be jobs and getting our people back to work. The rising rates of unemployment represent the clearest evidence that austerity is not working, and l accept fully that the actions of Mr Brown’s much-loved Tory-led Westminster Government are a major factor in that. On the back of the global economic crisis, it is that Government’s policies, with their massive cuts in expenditure, their attacks on the public sector and the poor, and their failure to intervene and stimulate the economy that have contributed to the disastrous situation we are in.
What we need to do now is create demand in the economy through sustainable jobs that give people confidence and stability in their lives, which in turn allows them to plan and to build a future. That is the foundation we need to create a stable and growing economy and community, and we will never create that with a low tax, low public expenditure, deregulated approach.
Increasing unemployment is affecting all our people. Young people are seeing their ambitions and life chances thwarted, and for many older workers this feels like a return to the “Boys from the Blackstuff” era of the 1980s. The reality is that unemployment is causing misery for tens of thousands of Scots. In my local authority area of West Lothian, 440 more people have joined the dole queue in the past month. Youth unemployment stands at an incredible 30 per cent, and the long-term rate has quadrupled over the past three years. In January, we had a claimant count of 148,000 across Scotland, but only 19,000 vacancies existed, and at the same time Skills Development Scotland—the careers service—has been cutting front-line careers services and jobs. That simply does not make sense.
Nevertheless, there is much that we can do here and now with the powers that this Parliament already has. In Scotland, Labour for some time called for a youth employment minister, and we welcomed the appointment of Angela Constance, but some worrying messages are coming out of her office. Two things in particular cause me great concern. First, the minister has stated several times that it is not the Government’s job to create jobs. That is an astonishing statement from a party that claims to be social democrat in outlook. The Government can, and indeed must, create jobs, and it can do so by having an industrial policy that supports manufacturing and prepares businesses for future work, giving them an early indication of contracts, having local contract events to promote work for local employers, and assisting with investment in research and development. Such a policy does not overconcentrate on prestige projects but delivers small to medium-sized local projects that sustain employment; it also has community benefit clauses that build jobs and skills development into contracts.
The second issue that causes me concern is the work experience programme, in which the Department for Work and Pensions and major employers collaborate to get young people to work for benefit only. I was very disappointed, to put it mildly, to read that the Minister for Youth Employment was said to be “relaxed” about the DWP’s plans and programmes.
If the member is so appalled by the welfare reforms from Westminster, why is he happier to be in a union that is run by Conservatives than to have an independent Scotland that would never be run by Conservatives but would be run by a left-of-centre democratic party?
That is almost laughable. It was an SNP minister—no one else—who said that she is relaxed about the DWP programme and people working for nothing. That programme is exploitation of the worst kind—using the economic crisis to allow highly profitable companies such as Tesco to exploit young people. It is morally objectionable and I am glad that many companies are withdrawing from the programme after people took direct action against them.
I have a particular interest in construction, having worked in the industry for a number of years. The 30 per cent cut to the housing budget has been accompanied by construction firms such as WJ Harte of Bothwell, which employed 500 local people, going out of business. Companies in Northern Ireland, taking advantage of a lower training levy, have won Scottish contracts while Scottish firms tendering in Northern Ireland are forced to pay not just the Scottish levy but the Irish levy.
I am advocating not a cut or an end to the Scottish training levy, but rather that the Government works to ensure a level playing field. I am pleased that some initial progress has been made in the building engineering services national agreement dispute in the electrical sector—I have been campaigning on that for the past year—but we are a long way from finalising an end to that dispute and we cannot afford for it to go on much longer.
Construction is very much a family-orientated business. Like me, many young people follow their father or another relative into a particular trade. As the industry goes into decline, a skills gap emerges. That has a knock-on effect on colleges, which withdraw courses, many of which are not reinstated after the recession is over.
I would be grateful if the member could conclude.
Will do.
The colleges situation overall is very difficult to fathom. Jobs and the economy have to be a priority for the Government. When the Government takes positive actions, we will support it. However, on too many fronts, Government spin does not reflect the reality of what is happening out there in the real world.
15:37
I welcome the debate. The economic situation in Scotland is of on-going concern, and it is right that we debate it regularly. Its importance can be reflected in the fact that just before the recess we had a debate on the youth unemployment strategy and, as Ken Macintosh said, just yesterday we had a debate on the green investment bank. It is right to have a debate about the economic picture more generally today.
Much is said about the situation in Scotland, so let us put it in a little context. Compared to its pre-recession level, Scottish output was down 3.3 per cent in the past quarter. That is not good, but the UK was down 3.6 per cent in the same period. In January 2012, the claimant count in Scotland decreased for the fifth consecutive month, whereas the UK claimant count has been increasing for 11 months in a row. The employment rate for 16 to 24-year-olds in Scotland is 2.7 per cent higher than the UK figure. The retail sales index indicates that the volume of retail sales in Scotland increased by 0.7 per cent in 2011, while growth in Great Britain was 0.3 per cent.
That is not to suggest that there are no issues with the Scottish economy, but it should place in context the doom and gloom that we hear about. When we make such comparisons we are often asked why we are making them only against the UK. I do not accept that that is all that the Government does—I will come to the international position later, if time allows.
We are part of the UK now, though. Some members—a minority, I am glad to say—want us to remain part of the UK. If that is the situation that they want us to remain in, it is only fair that we compare with UK performance. In many respects, we compare very favourably.
I agree with the Scottish Government motion. There is broad concern, which I think is shared by some other members, about the UK Government’s deficit reduction strategy. The issue has been raised many times in the Parliament. Many leading economists, particularly Krugman and Stiglitz, have raised concerns about the deficit reduction approach. In Scotland, we have seen that the UK Government is cutting public spending too far and too fast. It is good that the Cabinet Secretary for Infrastructure and Capital Investment is here, because I am sure that he will remind us later that that is particularly true of the capital budget. Capital investment is one of the best ways in which to support economic recovery. We saw how beneficial it was when the Scottish Government was able to accelerate capital investment but, now that that has ended, we see some of the difficulties, although there is still an on-going programme of capital investment that is the best that the Scottish Government can take forward.
The UK Government approach is not working. We should have a programme of investment for recovery, but we do not. Instead, the current approach threatens the recovery. For example, in recent weeks, we have had a threat to downgrade the UK’s credit rating, which testifies to the threat to recovery. The UK Government approach is hindering recovery in Scotland.
Will the member give way?
I will in a second, if Mr Brown lets me carry on for a moment.
In recent weeks, the National Australia Bank Group has talked about wanting to disinvest in the Clydesdale Bank, citing the UK Government’s economic strategy as one reason for that. That hardly testifies to the UK as the “safe haven” to which Mr Brown’s amendment refers. On that point, I should give way to Mr Brown.
There was a threatened downgrade last week by one of the ratings agencies, Moody’s. However, what does the member think would happen to that threat if the UK Government borrowed even more money or put up taxes to spend more, as he would like to do?
The point is that we are already borrowing more money—or rather we are not, but the UK Government is borrowing more, because it recognises that its approach is not working. In the autumn statement, we heard that borrowing was higher than previously forecast. If that borrowing had been undertaken a little earlier to support recovery, rather than as a last desperate move, we might not have had that threat.
Recently, we have heard a lot of nonsense spoken about what an independent Scottish state’s ratings might be and about companies wanting to disinvest in Scotland. Let us hear no more of that nonsense, when it is being part of the union and the UK Government’s actions that are threatening the Scottish credit rating and investment in Scotland, as is shown by the case of the Clydesdale Bank.
I would have liked to have spoken for a little longer about why independence is important, but I see from the Presiding Officer’s expression that there is absolutely no chance of that, so I will make the point quickly. It is interesting that the Labour Party has a five-point programme, but only one of those points relates to a devolved area, with the other four relating to reserved issues. That is why independence matters. I hope that, in future, Mr Macintosh will be able to take forward that five-point programme in the Scottish Parliament.
15:43
John Swinney’s motion once again predictably criticises the Westminster Government’s economic approach to deficit reduction and recovery and goes on to talk about the Scottish Government’s “distinctive approach”. However, before George Osborne rushes to call Mr Swinney for advice, I am sure that he might just compare the figures for both economies.
My party welcomes any initiatives to boost economic growth and jobs in Scotland, from whichever party. To respond to a point that Jamie Hepburn made, it was announced this week that the UK Government’s borrowing in the tax year to date is down by £15 billion and is well on course to meet the target.
Will the member take an intervention?
No.
The SNP might not support the UK Government’s economic approach and deficit reductions, but those are supported by the International Monetary Fund, the Organisation for Economic Co-operation and Development, the European Commission, the Confederation of British Industry, the Institute of Directors, British Chambers of Commerce and many other bodies. Given that 40 per cent of our exports are to euro zone countries, as those countries experience a fall in demand, that will inevitably affect our economy and exports. The rise in personal tax allowance has taken more than 90,000 people in Scotland out of taxation.
Will the member give way?
No. We have very few speakers—the SNP has plenty of opportunities to get its points over.
That figure will increase again, given the 8 per cent rise that is due in April.
The official facts and figures for the Scottish and UK economies certainly do not justify John Swinney’s motion. Let us have a few comparisons. Over the year, Scottish GDP has grown by 0.9 per cent, whereas UK GDP has grown by 1.3 per cent. In the past two years, growth in Scotland totalled 1.4 per cent, compared with a figure of 2.8 per cent for the UK as a whole. Growth in the UK was higher by a distinctive 100 per cent.
Manufacturing in Scotland has grown by 4.8 per cent in two years, compared with a figure of 6.6 per cent for the rest of the UK. SNP policy is distinctive in that regard. When the SNP came to power in 2007, the unemployment rate in Scotland was 4.6 per cent, whereas in the UK it was 5.4 per cent. At 8.6 per cent, the unemployment rate is now higher in Scotland than it is in the UK. Of the 20 areas that have experienced the greatest rise in the number of unemployment claimants, seven are in Scotland. As Neil Findlay said, youth unemployment in Scotland is now 3 per cent higher than the rate in the UK—that is certainly distinctive.
According to the STUC, 30 small businesses in Scotland go to the wall every day. That 11 per cent slump is four times the fall in England, where the number of small businesses fell by only 2.8 per cent. That is another area in which SNP policy is distinctive. Instead of pretending that Scotland is doing so much better than the UK, the SNP should look at the figures on the situation after five years of SNP Government and start to take some responsibility for governing Scotland.
In the time that I have left, I will focus on the retail sector, which, in employing 240,000 people, is one of Scotland’s biggest employers. It is a sector in which 90 per cent of retailers have fewer than 10 employees, and 97 per cent have fewer than 50 employees. The finance secretary’s taking a closer look at the retail sector would be welcome—[Interruption.] I ask Mr Swinney, if he does not mind, to give me the opportunity to speak. He had 13 minutes; I have six.
In the same period in which footfall in Scotland fell by 8.5 per cent, footfall in Wales increased by 11.4 per cent. We go down by 8.5 per cent and Wales goes up by 11.4 per cent. In the same period, footfall in Northern Ireland increased by 7.2 per cent. Given that Glasgow is the second-top shopping destination in the UK and Edinburgh is the fifth, and that both attract UK and international visitors and continue to generate further substantial investment and improvements, could the Scottish Government examine how that success could be built on across the country, how retail rankings could be used to drive inward investment and how our retail sector could be developed to further Scotland’s reputation as one of the world’s best retail destinations, with retail outlets complementing other attractions, including tourism and food and drink?
The SNP wants to impose a tax—a tax that was not mentioned in its manifesto. I ask the nationalist Government why the public health levy has not been underpinned by any objective evidence to support it. Is the revenue from the new, allegedly hypothecated tax to be ring fenced for public health initiatives? Any true health measure would be properly evidence based and would not discriminate in an arbitrary way, and the revenue would be ring fenced specifically for health purposes.
I am afraid that you will have to conclude, please.
I hope that the finance secretary will be much more constructive in his summing-up than he was in his opening speech.
15:49
This seems a particularly appropriate week in which to be debating the need for greater growth and, in particular, the need for us to boost our international presence and exports, given that the Scottish Council for Development and Industry held a hugely successful event on the future of oil and gas across the road at Our Dynamic Earth on Tuesday.
The north sea oil and gas industry is perhaps the most successful example of Scotland exporting its knowledge and skills around the world and attracting international investment to the waters off our shores. The industry still has a bright future. It is a major employer, particularly in the north-east of Scotland, and it will remain important for many years to come. The industry is important to the Scottish economy and the growth that it has achieved stands in stark contrast to the meagre levels of growth in the UK economy as a whole.
That lack of growth should be of huge concern to George Osborne, particularly given the indications that it could soon lead to the UK’s credit rating being downgraded. Making cuts that are too far-reaching and too quick at the expense of economic growth is a dangerous path to take and it could cost us all dear. Austerity without economic growth leads in one direction, which is down the path that Greece has been forced to take. Making an ideological pursuit of austerity while ignoring the need for economic growth is simply no way to run a country.
We are just a few weeks away from the Chancellor’s next budget speech. It should be clearer now than ever before that investment is needed to boost economic growth and create jobs. George Osborne should expand capital investment now to support the vital growth that we need in our economy. Boosting capital spending leads to higher employment in the short to medium term and more robust economic growth in the long term. With economic growth in the UK being as anaemic as it is, taking such action has become more urgent than ever. By cutting Scotland’s capital budget by 32 per cent over four years, the UK Government has done precisely the opposite of what the Scottish economy requires.
Gavin Brown talked about what the Scottish Investment Bank has done. Perhaps he should do what the north-east MSPs have done and get a presentation from his local Scottish Enterprise company, along with the Scottish Investment Bank, and see the help that it is giving to growth.
Will the member give way?
No, I will not. Perhaps Joseph Robertson (Aberdeen) Ltd will show him what has been done to help it.
Mr Brown is very good at trying to intervene on everyone else’s speeches, but he had six minutes and said virtually nothing.
Next month, George Osborne has the opportunity to right those wrongs, boost economic growth through capital expenditure projects and create thousands of jobs for people as a result. People up and down the country will be hoping that he does so, but they have little expectation that their hopes will be realised.
Having spoken of the positive things that the Chancellor could and should do in the coming budget, we should be all too aware of the potential for him to make things substantially worse. Next month’s budget will mark the anniversary of the surprise tax raid on the north sea oil industry that was dreamed up by Danny Alexander and implemented without warning or consultation by George Osborne. Of course, that contributed to the rout suffered by the Liberal Democrats. There should be no doubt of the severe and lasting damage that that action did to the confidence of the offshore industry. The risk of future tax raids has been factored into the investment decisions of oil and gas companies, thus jeopardising future jobs in what is perhaps the most successful part of our economy. It can mean the difference between a marginal field being viable for development or not, and consequently between job-creating investment, or not.
One of the fundamental things that is necessary to the oil and gas industry—and, indeed, any other business sector—is a consistent and stable investment environment upon which it can base decisions. Pulling the rug from underneath the feet of some of our biggest employers without so much as a word of warning was utterly irresponsible. That is no way to encourage growth.
Will Maureen Watt assure me that the finance minister gave the supermarkets a warning that he was about to impose the Tesco tax?
Maureen Watt, you are in your final minute.
Mary Scanlon was completely wrong. Given that the tax was discussed during the previous session, the industry knew full well that it could happen.
The UK Government’s approach is no way to encourage growth in the sector or the wider economy. One year on, the anger in the north-east at its behaviour remains substantial. The decisions that will be made ahead of the United Kingdom budget next month are critical. Scotland simply cannot afford to be shackled to a Treasury that gets it wrong again.
15:55
We have heard again the nationalists’ broken record. Many of us have listened to it for four years and we will no doubt have to listen to it for a further two and a half years before the referendum. They tell us that everything down south is bad and that everything will be all right when Scotland votes for independence.
The nationalists are playing the game, day in, day out, of intimidating, blaming and threatening any organisation or individual who questions the purpose. It is a purpose with a capital P, judging by all the lectures we get. The purpose, of course, is not economic growth—no one who wants to think about the future of Scotland should be in any doubt about that—but independence. We know that, because of the permanent secretary’s contributions in public to our understanding of what is going on in the Government. Everything and anything that this nationalist Government does is about that purpose, and spin, spin and more spin will be deployed on the economic and financial future of Scotland to paint a separatist picture on a nationalist canvas.
Will the member give way?
No, I will not. Let the Parliament consider the nationalist spin and look for an alternative way of conducting good government in an objective and reasoned fashion, although I fully expect such a solution to be entirely rejected today.
The nationalists claim that an independent Scotland would, under the OECD yardstick, be the sixth wealthiest nation in the world. We heard more of that guff during First Minister’s question time earlier. That position, however, is based on oil prices, which change, and, therefore, on the oil and gas tax revenues.
There are two big dollops of nationalist spin in that approach. First, as the OECD itself has shown, such a scenario is only accurate if the assets of the North Sea are held by the Government. The second and more important point is the complete absence of any statement from any minister in the nationalist Government, or from any other proponent of independence, on oil and gas tax revenues.
Tuesday’s Scottish Council for Development and Industry conference—Maureen Watt was right about this—was the First Minister’s big opportunity. He was, after all, making a speech in Scotland, which does not happen every week, but instead of setting out his tax proposals to the entire UK oil and gas industry, he treated us to a polemic on what the UK Chancellor should do on 21 March. I hope that the UK budget delivers fiscal certainty until 2015, with a commitment to consultation, which is what the finance secretary did not do when he introduced new business taxes this year.
Fiscal certainty from the UK Government would mean that the nationalists would have to commit to a higher, lower or the same regime before the referendum, and on tax, that would be a first. Neil Findlay received no answer to his question about corporation tax earlier, although every time I hear nationalist ministers reported from boardrooms, they say that corporation tax is going down. It is a pity that they are not so keen to say that in the Parliament. The uncertainty that pervades every corporate boardroom in Scotland is the responsibility of the nationalists and the nationalists alone.
Renewables project offices are being set up throughout Scotland. There is much collaboration with universities, and the scoping and detailed design work of renewables projects is under way. That is welcome and I applaud the Government’s work in assisting those commercial developments. However, as representatives of a major renewables business told me this week, there is a quantum leap from a project office to a massive capital expenditure decision. The representatives told me—these are not my words—that the sanctioning of tens or hundreds of millions of euros will only happen when the fiscal and regulatory regime is clear. The industry has no idea what MacOfgem would look like in an independent Scotland. Neither does it know what the nationalists’ fiscal regime would look like, because they have not outlined any of that either, or how UK electricity market reform would work when there is no such thing as the UK.
Businesses throughout Scotland—the men and women responsible for jobs and economic growth—want answers and an end to that uncertainty, not the spin that the nationalists emit in a ray of taxpayer-funded mushroom clouds.
In expressing his opinion about the fiscal regime for the renewable energy sector, will Mr Scott reflect on the guddle that the United Kingdom Government has created in its handling of so many aspects of the funding regime for the renewables sector?
I find that intervention puzzling, because I sat in at a meeting, to which Mr Swinney’s ministerial colleague Mr Fergus Ewing invited me and Liam McArthur—it was good of him to do so—at which Mr Ewing rightly described the proposals from the Office of the Gas and Electricity Markets and the UK Government in relation to project transmit on the Scottish mainland as a positive step forward. Mr Swinney should spend a bit of time talking to his ministerial colleague, because on that issue the situation has been sorted. The renewables industry told us that day that clear progress had been made and that it had got the certainty that it had been asking for. I am not sure that Mr Swinney is quite up to speed with his ministerial colleague.
Bill Howat conducted a review of Government expenditure five years ago and concluded that the Government needs an independent financial check—a tartan Office for Budget Responsibility, in effect—which would independently check the spin and say objectively what is growing in the economy. The OBR does that in London and makes assessments that are uncomfortable for the UK Government. I think that that is a very good thing; we should have that good thing in Scotland, too.
The finance secretary has so far resisted having such an independent check, but I hope that he will consider it for the future. I hope that we could have such a body now, because it would provide exactly what is needed in Scotland in this crucial period for the future of our country: a series of independent assessments of what is happening in the Scottish economy. That matters particularly because this year’s budget and the lamentable partisanship of the Finance Committee mean that few people will believe nationalist spin on finance without there being an independent check. Scotland needs the MacOBR.
16:01
I support the Government motion.
According to the amendment in Gavin Brown’s name,
“the UK remains a safe haven”.
As many SNP members have said, however, that view is not shared by the ratings agencies. Moody’s put the UK on a negative outlook, suggesting that there is roughly a 30 per cent chance of its AAA rating being lost during the next 12 months. In making its assessment, Moody’s said that the UK’s slow economic growth undermines its ability to address debt and cited the euro zone crisis as a key factor—that was picked up in a BBC report.
Do the Conservatives agree—
Will the member give way?
If Mr Brown allows me to finish my point, I will come back to him. He might respond to the question that I am about to ask. Do the Conservatives think that David Cameron’s veto, which stalled prospects of a euro recovery, was helpful in relation to the maintenance of the UK’s credit rating?
Moody’s said that a downgrade could follow
“reduced political commitment to fiscal consolidation, including discretionary fiscal loosening”.
Does the member acknowledge that?
As Mr Brown knows, the Scottish Government has no discretion over the size of its budget and has demonstrated over many years an ability to live within its budgets. We have had practice of good fiscal discipline in Scotland and I have every confidence that an independent Scotland would be able to maintain our track record of good fiscal discipline.
Ken Macintosh seemed to imply that the small business bonus scheme should be abolished, which would greatly upset the 68 per cent of small businesses in the Borders and the 58 per cent in East Lothian—his former leader’s seat—who benefit from all forms of rate relief, including the small business bonus scheme.
I said nothing of the sort. Will Mr Wheelhouse say how many jobs the small business bonus scheme has generated?
I cannot answer Ken Macintosh’s question, but the FSB said in its briefing for this debate:
“More than half—54 per cent—of Scots small businesses are looking to grow their company this year ... 68 per cent ... said they had introduced new products or services during the past two years.”
The FSB went on to say:
“During 2012, 69 per cent of businesses said they are looking to increase their client base; 54 per cent expect to up their online presence and 20 per cent are expecting to increase their staff numbers.”
That is the backdrop for the policy that has been implemented.
Scotland’s economy is export oriented and I am sure that we all agree that there has been tremendous success in the tourism, food and drink and oil and gas sectors. Indeed, oil and gas is responsible for £38 billion of exports, which benefits the UK balance of payments and of course would benefit an independent Scotland’s balance of payments. There has been growth in particular in whisky exports to China and the other BRIC nations—Brazil, Russia and India. I point out to Mary Scanlon that the GDP figures that she quoted exclude the extra-regio territory, which includes all the oil and gas activity that takes place in Scotland’s territorial waters.
We had an excellent briefing from Scottish Renewables on the prospects for investment in renewables. PricewaterhouseCoopers reported that global renewable energy deals climbed to a record high of $53.5 billion in 2011 and, in October 2011, Scottish Renewables’ completed figures showed that there was a potential future pipeline of renewable electricity projects in Scotland with a capital value of approximately £46 billion.
It is clear that there are considerable investments in the pipeline for Scotland. To pick up on my colleague Maureen Watt’s point, the skills that are employed in the oil and gas industry can easily be transferred to facilitate that investment in the offshore sector.
Chic Brodie correctly identified that capital spending is vital. However, we have been faced with absurd assertions, primarily from Conservative politicians. They include John Lamont, who in last week’s Berwickshire News described what is in effect a 32 per cent cut in Scotland’s capital budget as an increase. He was criticising the Scottish Government for not funding roads investment in the Borders after having had an increase in its budget, despite the fact that there is actually a 32 per cent cut in funding to the capital DEL. Indeed, the non-profit distributing funding stream will increase the overall level of capital spend in Scotland by topping up that DEL.
Just for clarity, I think that John Lamont was saying that there was an increase between 2011-12 and 2012-13.
Paul Wheelhouse, you are in your last minute.
Thank you, Presiding Officer. I am glad to see that Mr Brown is reading the Berwickshire News on a regular basis. I assure him that that is not what John Lamont said in his column.
Neil Findlay talked about status projects being the wrong approach. I ask him to identify—perhaps through his colleague Rhoda Grant, as she is summing up—which status projects the Labour Party aims to cancel. Perhaps it is the Forth crossing, the Southern general hospital, the A9 upgrade or broadband investment. I had understood that all those things were important to the Labour Party, but they are clearly not important to Neil Findlay.
Perhaps the Cabinet Secretary for Infrastructure and Capital Investment can indicate whether the Conservatives have made any offers of largesse from Westminster to fund a Selkirk bypass and upgrades to the A1, A68 and A7, and whether they are planning to provide extra funding for town centre regeneration or for small business tax incentives.
16:07
I preface my comments by making it clear that I understand that the Scottish Government’s economic policy must be developed within the constraints of the block grant. The Chancellor of the Exchequer inevitably must respond to the budget deficit, but he still has a choice with regard to the pace and scale of deficit reduction.
The chancellor was warned that cutting too far and too fast would put the recovery at risk, and I fear that that is exactly what is happening in the economy today, with profound ramifications for all the nations and regions in the United Kingdom.
In that respect, I agree with the thrust of the motion. However, I would add that, just as the UK Government has a choice, so too does the Scottish Government.
Will the member give way?
I am taking no interventions, thank you—time is too tight. It is this Parliament’s job to hold the Government to account and to ensure that the choices that it makes are right for the Scottish economy and for the Scottish people.
I have already raised with the Scottish Government my concerns about the retail sector. Figures that were released just this week show that footfall is falling further in Scotland than across the UK as a whole. In all sectors, we can see that businesses are reluctant to invest in new staff or in expansion while consumers hold on to their cash and anxieties about the domestic economy and the euro zone persist.
Of course, those are just symptoms of the real problems in the economy: a lack of aggregate demand and a serious crisis of confidence. If we track confidence in both the Scottish and UK economies since 2007, we can see that it recovered from the lows that were experienced during the previous recession, only to decline again after the austerity measures that the chancellor introduced.
The UK Government’s spending review has done nothing to reassure investors or consumers about the underlying state of the economy. We need a change of course at a UK level, and we need to know that the Government in Scotland is doing all that it can to increase employment and to boost our economic prospects.
As the Government motion indicates, there will have to be a strong international dimension to the recovery and I believe that we should set the bar high. We should look to increase exports to emerging markets and aim to double the value of Scottish exports in the next 10 years. We should task SDI with seeking out new opportunities for Scottish businesses in the BRIC nations and beyond.
Earlier this week, I heard that HSBC has launched an international SME fund to make £4 billion of credit available to firms that intend to trade internationally. It will help firms in economies where confidence is low to trade with firms in economies where confidence is rising and growth is strong.
We must unlock opportunities at home, as well. Big capital projects attract media attention. However, I have met bodies such as the FSB and the Scottish Building Federation to discuss some of the more persistent practical problems that SMEs encounter in the procurement process. Those who administer that process must ensure value for money for the taxpayer, but the Government should expect them also to consider their decisions’ economic impact on employment, growth and innovation in Scotland.
The sustainable procurement bill will give the Parliament the opportunity to scrutinise procurement. Given the urgency of the economic situation, I ask the Government to introduce that bill now. I also ask it to look at measures to make the process simpler and more accessible that do not require legislative change.
Small firms and microbusinesses do not have dedicated staff or functions to deal with tenders, and the resources that they have are often limited. They would benefit not only from simplified procurement processes but from the disaggregation of big contracts into more achievable tenders and from more advice from services such as business gateway on how to bid for contracts in consortia with other small firms. When contract aggregation is unavoidable, steps should be taken to ensure that enough subcontracting opportunities are available for local firms, which too often miss out.
Many of us in the Parliament have spoken at length about the worrying unemployment levels in Scotland—especially the youth unemployment level. When the labour market is tough, many people take the wise decision to return to education or training to maintain and improve their skills until the economy picks up. However, as I have explained, so many firms are under so much pressure that employers are very often struggling with the costs of taking on a trainee or an apprentice. That was far less of a problem under the skillseekers model, which ensured that costs were borne by Skills Development Scotland instead of employers. I suggest that the Scottish Government should look at innovative ways of helping young people to nurture their skills now, so that they can take full advantage of the upturn in the jobs market when it comes.
I am happy to agree with the Scottish Government on some of the substantive points in the motion, but I believe that it can and should do much more to get the Scottish economy moving again.
16:13
We are where we are and we cannot rewind the clock to be somewhere else, but we must remember why we and the economy are in the current position. Successive Labour Governments failed to save in the good times. Unlike the situation in Norway, which has an oil fund for a rainy day of £338 billion, our money has been squandered, so our room for manoeuvre is limited.
When you were an MP at Westminster, the Labour Government took decisions to secure the Royal Bank of Scotland and financial services across Scotland. Did you support those measures?
I remind members to speak through the chair.
One reason why I was elected to Westminster was that the public realised what a mess Gordon Brown had made of the economy. I am afraid that the good times had passed by the time I got to Westminster. In my first week, Westminster was trying to save the banks.
I mention in passing that, at lunch time, I was at a good event about the unions into schools initiative and about unions and young workers, which Neil Findlay chaired. We had a tremendous debate, in which young people shared a variety of views—particularly about youth unemployment, training and suchlike. It would certainly have stood comparison with many of our debates in the chamber. It was really good to hear the young people’s views, and I commend the event.
We do not have as much control over capital expenditure as we should have. It is determined largely by Westminster and it has been cut by far too much. We all know that investing in housing and infrastructure creates jobs, as well as better homes, hospitals, transport links and so on. My constituents and I very much appreciate the investment from the Scottish Government—sometimes in conjunction with Glasgow City Council—in and around Glasgow Shettleston in recent years. It is good not to forget some of the good things: the M74 extension, which has been a tremendous boost to business and jobs; the rail link from Bathgate to Edinburgh; the Commonwealth games and the forthcoming village; Clyde gateway, which targets people in our area, including young people; the Dalmarnock station upgrade; and the east end regeneration route, which is a much better route into the east end for businesses. All those things have created jobs already; they are creating jobs; and I believe that they will create jobs.
Today, and during previous debates on the budget, we have heard a lot from people in other parties about their desire to see more jobs created. However, once again today, we have not heard about what should be cut so that investment in other areas could create more jobs. We are still waiting to hear that.
Obviously, there has been irresponsible borrowing, and we do not want to repeat that, but it makes absolutely no sense for the Scottish Parliament to have no borrowing powers at all. Councils are allowed to borrow and, in general, under the prudential code, have borrowed responsibly. The Scotland Bill Committee has considered this issue at length. If David Cameron is serious about letting us have more powers, let him start with borrowing. We should have some prudential borrowing, without some arbitrary limit.
I turn now to the business atmosphere. As an accountant, I like things that can be measured, especially numbers. Confidence and atmosphere, for example, are not easily measured, so they are just a little bit subjective for me. However, I am happy to accept that confidence and the mood of the country are extremely important in these times. If we are all gloom and doom, as some seem to be, we discourage people from investing and from trying new things. Sadly, we repeatedly hear negative comments from Labour and no new, positive, practical suggestions. I do not agree with artificial optimism, but I do agree with being positive and seeing opportunities, even in difficult times. My colleague Paul Wheelhouse has mentioned some encouraging quotes from the Federation of Small Businesses. If we can get small businesses growing, we will be well on the road to recovery.
Corporation tax has been mentioned already. We should spell out why we would want to play around with any corporation tax powers that we could get. For example, a reduction of even 1 or 2 per cent can actually increase the total tax take, allowing more money to go into public services. It can also create more jobs, and industries can be targeted—not with the rate itself, but with capital allowances.
So far, the member’s speech has been very interesting. However, his own Government’s proposal is not to tinker, making a change of 1 per cent or 2 per cent either way; it is to cut the rate to below the rate in Ireland.
The UK Government proposes that a reduction in corporation tax of 1 or 2 per cent—or, I think, 3 per cent—will boost jobs and the economy. Broadly, we would follow the same logic. No one on the Scotland Bill Committee was suggesting that we should have half of Ireland’s rate, but it was often suggested that we should play around with the rate by 1, 2 or 3 per cent. As I have already said, I believe that by using capital allowances, we can target areas much more effectively—for example, the games industry or enterprise zones. In the past, enterprise zones benefited greatly from tax measures and other things.
In my final few seconds, I will mention comparisons with Europe. The Tories are in slightly risky territory on this issue. One way of comparing economies is to consider exchange rates. For many years after the euro was brought in, it was worth 70p. It is now worth 80p. Will someone please explain to me why the euro has done better than the pound?
16:19
I will start by saying a little about the type of economy that we live in, and about some short-term decisions that we can take now that would, I hope, have an impact over the longer term, improving the current situation. One area that I would like to focus on was mentioned by Mr Swinney in his opening remarks and has also been mentioned by a number of other speakers. It is the type of inward investment that Scotland attracts. Inward investment is central to our economic recovery. Important, too, are the types of jobs that flow from inward investment.
We had a good discussion yesterday in the Economy, Energy and Tourism Committee with the Council of Economic Advisers. It is recognised that we must ensure that there are top-quality and high-quality employment opportunities on the back of the money that we spend in Scotland.
There are things that we can learn from the past. In the 1990s, a significant amount of money was spent on encouraging companies to come to Scotland that perhaps did not have a longer-term vision for Scotland—perhaps they did not have a vision of staying in Scotland for the longer term. We need to learn from the likes of Motorola and Chunghwa Picture Tubes, where employment practices were not exactly the best. Obviously, the people who worked in those companies at the time took the benefit of having that employment, but perhaps when the opportunities were gone and the companies decided to move to other low-wage economies, they did not get the full benefit of having worked there for those years.
We have the economic levers in Scotland to encourage longer-term investment from employers. I have spoken to people in my constituency about that issue very recently. In a youth employment debate that we had a couple of weeks ago, I briefly raised the issue of Amazon’s investment in Scotland and the support that it received from the Scottish Government to make that investment happen. We welcome any jobs that come to Scotland, but I have been disappointed to learn from constituents about some of the working practices at the new Amazon plant in Dunfermline. If we are going to use public funds to attract companies to Scotland, although we must accept that nothing in the global economy is certain, we must as much as we can build into the funding support when companies come here a long-term approach.
I suggest three simple commitments that we should seek from employers who want to come to Scotland and invest in it and who receive public support for that investment. First, we want those employers to employ people on permanent contracts in the main. We recognise that workloads fluctuate and that agency workers are needed, but temporary workers, in Amazon for example, do not enjoy the conditions that permanent employees enjoy.
Mr Park raises the issue of workers—particularly temporary and agency workers—facing unfair employment conditions. Does he agree that it is up to the UK Government to change employment legislation? It is in its gift to do that. When the Labour Party was in government, it never changed it.
I am very disappointed by that intervention. I have asked the Scottish Government a number of times what representations it has made to the UK Government about the changes that the UK Government wishes to make to UK employment practice, and the answer has been zero. Every time, the answer that comes back is, “We need the powers here and we do things a little bit differently.” Frankly, I do not trust a party that forgot to go to vote for the national minimum wage in 1998. We should remember that.
My second suggestion is that the employers in question should train and develop their staff using nationally recognised qualifications where applicable. There is no point in people getting in-house training if the company moves away, the funding goes and, all of a sudden, we are left with people who do not have transferable skills.
My third suggestion is that we should commit to ensuring that there is proactive redundancy support should such companies decide to close or move production elsewhere. We have seen other circumstances in which such companies have moved away and left people, and the Scottish Government and the UK Government have had to pick up the slack.
We have had a little bit of a discussion about the small business bonus scheme. A full assessment of its effectiveness is needed to ensure that it leads to job-related investment. In the absence of such an assessment, it would be useful to look at some of the current figures that are available—not a survey from the FSB or a document from the STUC, but perhaps the figures that are available from the Department for Business, Innovation and Skills. We should consider what Jim Mather said when the policy was coming forward in 2007, for example. He said that it would give us a comparative advantage, so let us consider how Scotland compares with other parts of the UK. Between 2008 and 2011, the number of enterprises in Scotland decreased by 11.3 per cent. In England, the decrease was 2.8 per cent; in Wales, it was 4.5 per cent; and in Ireland, it was 3 per cent. Employment in Scotland has gone down by 7.9 per cent. In England, it has gone down by 5 per cent—
The member must start to wind up.
Turnover in Scotland has decreased by 10.3 per cent. I am talking about a key issue. We need to reassess the policy and target it to ensure that it at least leads to job-related investment.
16:25
I welcome and support the motion in the name of John Swinney, and the debate around the economy and economic recovery. I am confident that the Scottish Government has previously highlighted its prioritisation of the growth objectives of Scotland, and how that will be a key driver in assisting economic recovery.
I agree with Kenneth Macintosh’s earlier comment that we had a good debate yesterday afternoon on the green investment bank. During that debate, the Government, as well as many members, highlighted the investment opportunities and economic opportunities that having that bank in Scotland would provide.
In its fresh thinking and its programme for government, the Scottish Government has quite rightly spelled out the need to modernise and energise the industrial landscape of Scotland. The recent unemployment figures clearly show that much more needs to be done on aiding the economic recovery and growing the economy. The figures for unemployment were up in December 2011, and there is a time lag on those figures. It is worth observing that the Office for National Statistics shows that, at 4.1 per cent in January 2012, the jobseekers allowance claimant count, seasonally adjusted in Scotland, is the same as it was in January 2011.
With regard to future indicators, it is worth highlighting the Bank of Scotland’s latest purchasing managers index, which is for January. It highlighted further increases in output, with the PMI up from 51.2 per cent in December 2011 to 51.4 per cent in January this year. Growth was underpinned by activity in Scotland’s private sector, increasing for the thirteenth month running in January, with the overall pace of expansion picking up at its fastest rate for four months.
The purchasing managers index report highlights that new business in Scotland is increasing at a solid rate, with service providers witnessing strong month-on-month increases in new business and new work growing at a robust pace.
Looking to the future, I believe that there is more that the Scottish Government can do, although Scotland needs the tools for the job of investing in the built environment.
With regard to getting Scotland to move forward, the need to attract significant investment is fundamental, and the Scottish Government has signposted its commitments, in particular the need to advance a Scottish growth strategy that focuses on growth sectors and marketplaces.
This debate on Scotland’s economy and recovery must be put in the context of the harsh political agenda that the UK coalition Government is developing, with its focus on cuts being essential. The £2 billion cut that households in Scotland are predicted to undergo as a result of the proposed Welfare Reform Bill clearly indicates the UK Government’s commitment to those living in the poorest households in Scotland. The autumn statement of 2011 was focused on growth, but the reality is that the facts did not bear that out. Growth is flat, and the Office for Budget Responsibility forecast is for a UK growth rate of 0.7 per cent this year.
Only additional tax and spending powers for the Scottish Government and Parliament will do the necessary job of stimulating economic growth in Scotland. A key undertaking of the Scottish Government is to deal with the realities of renewing Scotland’s growth prospects.
As I have stated previously in the chamber, maintaining the principle of the public pound is vital to achieving best practice, with procurement an important component. It is even more relevant today, given the current economic setting, especially with the on-going eurozone troubles continuing to influence the economic growth prospects of the UK and the rest of the world. The Scottish economy’s growth prospects and the Government’s strategic policy objectives do not operate in a policy vacuum.
Scotland is severely constrained under the current devolved settlement. That is even more apparent given the changes to the Scottish block grant that the UK Government has announced.
The growth of Scotland’s companies has been severely tested by the recent economic environment and individual sectors have been increasingly exposed to current economic trends. The Scottish Government is doing everything within its current powers and budget.
Will the member give way?
I do not have time.
On the remarks that Neil Findlay and John Park made, attacking the Scottish Government on employment legislation, I do not want any lessons from a party that supported the continued abuse of the working time directive and had a leader arguing in Europe that the working time directive should not be introduced in the UK, never mind Europe.
So the member agrees with the comments that his own minister, Fergus Ewing, made at the time, when he said that he believed that the working time directive was a waste of time and was having a negative impact on the Scottish economy.
That may have been the view of the minister at the time, but it is certainly not my view and has not been my view for a number of years. As Mr Park is well aware, I have campaigned on employment rights for a long time and I understand the full impact of the working time directive and that what the UK Government was doing in Europe was against workers who were fighting for the working time directive.
I welcome today’s debate and I am hopeful about many of the issues that have been raised being taken forward in the coming years so that we can develop a programme and a strategy that truly benefit the wider economy in Scotland and lead to every household benefiting from the economic growth that we should all be working for in the Parliament.
16:31
It is right that in the debate today we concentrate mainly on the Scottish Government’s policies, but it would be ridiculous to hold the debate without looking at the wider UK framework. The reality is that the SNP and Labour have substantial agreement on our analysis of what is happening in that regard. The deficit reduction programme is clearly too severe and is leading to an increasing deficit, and demand in the economy has collapsed because of the real-terms fall in the wages of the majority of the population. At the same time—I hope that the SNP agrees with Labour on this, although sometimes its attitude to business suggests otherwise—we have a massive build-up of surpluses by business and the super-rich. That is why Labour at Westminster has a policy of a super-tax on bonuses, plus a policy of reducing VAT to inject demand into the economy. I hope that the SNP will support those policies, and I am glad that in the debate today we have not heard the kind of nonsense that we heard in the debate on the Budget (Scotland) Bill, when the SNP claimed that Labour and the Tories had an identical economic policy at Westminster.
Turning our focus on Scotland, I think that we can agree—well, I certainly hope that those on this side of the chamber agree—that Ken Macintosh struck the right tone in the debate when he said that it is not that the Scottish Government is doing nothing but that it is overegging what it is doing and making exaggerated claims about the consequences of its policies. I am certainly happy to go along with a lot of what the Scottish Government is doing, but the reality is that it is not making as much difference as it claims. I think that the article by Professor David Bell, to which Ken Macintosh referred, gives good evidence of that.
Does Mr Chisholm agree that a lot of the levers of power still rest with Westminster and that they should be here? After all, four of the five points in Labour’s action plan for jobs refer to powers that Westminster has retained. It would be much easier for us to deal with the situation if we had those powers here.
In the first two minutes of my speech, I indicated that I think that, given its actions, the UK Government bears a lot of responsibility for what is happening in the Scottish economy. However, that cannot become the single, repeated excuse for what the Scottish Government fails to do.
Although I have acknowledged what the Government is doing, we see from the example of the construction sector that a third of construction firms expect employment to fall this year and that 30,000 jobs in the sector were lost in the past year, which is 15.2 per cent of the number of people employed in construction. That is way beyond the figure for any other part of the United Kingdom—I will not embarrass the SNP by quoting the percentages for the other countries in the UK.
Although there was a fall in the housing budget—the cabinet secretary will think that I am a housing bore—we were of course pleased that a bit more was put into housing at the final stage of the budget bill, but why was housing way behind other areas? More investment in housing would have not just served a social imperative but boosted employment far more quickly. The Scottish Government has to look at its attitude to construction in general and housing in particular.
I also want to talk about procurement, which is mentioned at the end of our amendment. I am not going to join the battle of the Forth bridge, which we have waged quite a lot over the past couple of weeks. However, a constituent of mine from an SME approached me about not getting any work for the Forth bridge and I wrote to the cabinet secretary about the situation. I cannot read all of his reply, but one sentence said:
“Supply chain sourcing and management is a commercial matter for the main contractor which is to all intents and purposes outwith the scope of the Regulations.”
The problem is that, once a contract is awarded, it is up to the contractor, who can do what they want with the work. The person who approached me on behalf of an SME in Leith made the point that none of that work was coming his way.
We should listen to what Margaret McCulloch said about SMEs and procurement as well as what she said about apprenticeships, because she knows a lot about training, apprenticeships and procurement. She made some suggestions that I fully back, particularly her call for the proposed sustainable procurement bill to be produced as quickly as possible. Some of the points that she made were also made in the recent report from the Jimmy Reid Foundation by Jim and Margaret Cuthbert. The Cabinet Secretary for Infrastructure and Capital Investment is not listening at the moment, but I am not making points about the Forth bridge, which our parties have had battles about; I am making a plea to him to read that report and address its recommendations.
The Cuthberts make the point that one way in which Scottish contractors could benefit from large projects would involve splitting contracts into small blocks to make it easier for small firms to win them. The report highlights the fact that public sector contracts have been designed in the interests of big business that is located mainly outside Scotland, with the country’s large, small and medium-sized business sector largely squeezed out of the bidding process. It also points out—crucially—that Scotland has a “much more restricted view” of European Union law on the awarding of the contracts than other nations. It states that
“those drafting the Directive were ... aware of the importance of being able to protect various disadvantaged groups, of taking social, economic, and environmental issues into account, of encouraging research and development, and of the economic importance of SMEs. A number of exemptions and provisions were written into the Directive to allow for these needs.”
That approach to the directive is not being taken by the Scottish Government. I am not making a party-political point, as some of the blame lies with the way in which directives were transposed into regulations a few years ago at Westminster and here. Nevertheless, the Scottish Government can act now to ensure that directives are implemented and interpreted far more flexibly.
16:37
The Scottish Conservatives support the UK Government in its efforts to reduce the size of the budget deficit, for the simple reason that we believe that it is absolutely critical that the United Kingdom maintains its AAA rating. The rating has, thus far, been preserved, while the ratings of countries all around the world—particularly, recently, in Europe—have been downgraded to AA status and many more countries have been given warning of a severe risk that their ratings will be downgraded in the near future. At the moment, only a handful of countries across the world can borrow more cheaply than the UK over a 10-year period.
We regret very much the negative outlook that one credit rating agency, Moody’s, put on the UK on 14 February. As Paul Wheelhouse rightly said, Moody’s view was that, statistically, there is a 30 per cent chance of the UK’s AAA rating being lost within an 18-month period. However, it is important to note what else Moody’s said around that negative outlook, which is why I intervened on Mr Wheelhouse. Moody’s stated that a downgrade could follow
“reduced political commitment to fiscal consolidation, including discretionary fiscal loosening”.
That is the biggest risk factor in the UK losing its AAA rating. Were that to happen, of course, the yields on gilts would probably shoot up, and it is worth noting that even a 1 per cent rise in those yields would add about £7.5 billion to debt interest payments by 2016. Contrast that with the position prior to the coalition Government taking office, when many commentators and economists said that UK gilts were sitting
“on a bed of nitroglycerine.”
In relation to the economic situation in Scotland, we have tried to be realistic without being negative. We have also tried to avoid the sunny and unrealistic optimism to which John Mason referred.
When we talk about the unemployment figures in Scotland being higher than those in the rest of the UK, we do not do so to talk Scotland down in any way, but we look to see whether Scotland can learn from anything that is happening elsewhere in the United Kingdom. There is now a higher rate of unemployment in Scotland than there is in England. Let us examine why that is the case and what we can do about it with the levers that we currently have. Let us consider what is happening in the other devolved nations.
At First Minister’s question time today, the First Minister referred again to Wales and stated that we should not take lessons from there.
In his analysis, might Gavin Brown also cast his mind over the employment statistics, which show that Scotland has the highest employment rate of any part of the United Kingdom?
I acknowledged that they show that in my opening speech. I said that Scotland’s employment level was 70.7 per cent, whereas England’s was 70.5 per cent. I am perfectly happy to acknowledge that. We are trying to be realistic. We talk about areas in which Scotland is doing better and those in which it is doing worse. My critique of the Government is that it talks selectively only about areas in which Scotland is doing better and almost refuses to acknowledge that, in some areas, Scotland is doing worse.
As I was saying before I took the intervention, the First Minister gave the impression that we could not really learn a great deal from Wales because it had a higher unemployment rate than we did. Traditionally, it has had a higher unemployment rate than Scotland but, over the past quarter or so, it has seen reductions in unemployment. Last month, the figure was down by 1,000; this month, according to the figures that were published only last week, it was down by 3,000.
What is Wales doing that we are not doing? Is there something that we can learn? Even though it has a higher unemployment rate than we do overall, it appears to be moving in the right direction—over a short period, I stress—when we are not.
I will pick up on another couple of points that were made during the debate.
In relation to oil and gas, Maureen Watt made the point that she believes in consistency, not in the rug being pulled away. However, as was pointed out in an intervention, what about the retail levy? There was no mention of it in the SNP manifesto and I do not believe that the supermarkets or any other retail businesses expected it. I believe that because, in June, I asked whether there were any plans for new taxes, and the answer was that there were no current plans for new taxes. I should probably have read a little bit more into the word “current”. The same written answer was also given in response to a question from Tavish Scott in June.
The reality is that the supermarkets and other retail businesses did not expect the levy and that the rug was pulled out from underneath them.
Will the member give way?
I am usually happy to give way, but I have only 30 seconds left, so, on this occasion, I am not able to.
The Scottish Government must be realistic. We must examine the considerable powers that we have and use them to our best advantage. That means not introducing taxes that make us less competitive. It also means genuinely prioritising the economy—whether colleges or housing—instead of simply talking about doing so. Talking about doing it and actually doing it are, clearly, not the same thing.
16:43
The debate has been interesting, but I fear that much of the discussion had already been rehearsed in the Parliament during the budget debates. I see little change in direction.
What the SNP Government is doing is not working. Although I share its criticism of the UK Government’s approach, its own approach appears even more woeful. It is cutting capital spending faster than the rest of the UK and it uses smoke and mirrors to pretend that it is transferring revenue spending into capital spending.
In his opening speech, the cabinet secretary painted quite a positive picture, despite the fact that a third of all jobs lost in the UK were in Scotland. The UK Government has the wrong approach, but so does the Scottish Government.
In his closing speech, Gavin Brown talked about how the unemployment figures in Wales appear to be improving. The National Assembly for Wales has fewer powers than this Parliament but appears to be using them more effectively.
Young people are the hardest hit by unemployment. Neil Findlay said that 30 per cent of young people in his constituency are unemployed—an horrific figure. When the Government cuts funding to colleges, that impacts on young people’s ability to gain skills. We need to act now to ensure that young people are equipped for an upturn in the economy. If they have no skills and no experience, they will become increasingly unattractive in the job market and in future will find themselves excluded from it. A cut in funding for colleges of 20 per cent over the spending review period plays into the hands of what is already becoming a national crisis. We need to use procurement to get young people back into work. Margaret McCulloch emphasised the need to upskill young people during this period.
We can talk about the figures, but unemployment takes a huge emotional toll on everyone, especially young people. Some time ago, the quote was that being unemployed had the same impact on a person’s health as smoking 400 cigarettes a day. We cannot underestimate the personal impact that unemployment has on those whom it affects.
John Park talked about training and development for those who are in work, and ensuring that employers make certain that those people receive recognised qualifications. That is especially important in modern apprenticeships. If employers are getting help with that, they need to make sure that nationally recognised qualifications are being delivered, to ensure that people are being skilled in ways that prepare them for the future.
Women are second in line to young people when it comes to those who are affected by unemployment. That is because front-line services are being hit and women tend to deliver those services. In many areas of local government, free personal care is the only care available to elderly people. Although the Government talks about preventative spend, its policies are doing away with any prevention.
Unemployment also has an impact on child poverty, not just because many unemployed women are in single-parent households but because women tend to be the breadwinners now. A high proportion of women out of work will not help the Government to meet its child poverty targets.
Malcolm Chisholm said that he was a housing bore, and so am I. Housing is one of the most important issues in the debate. In its manifesto, the SNP promised 6,000 social rented houses a year. What a difference those houses would make if they were delivered. They would make a difference to housing standards, they would help in the fight against fuel poverty and they would create jobs. Last year, 30,000 jobs were lost in construction alone. The Government seems to fail to acknowledge the impact that those jobs could make to our economy, including through the provision of apprenticeships for young people. Housing money could be used to retrofit older houses, as part of the fight against fuel poverty. Such things not only deal with social ills but provide jobs in our economy. A 30 per cent cut in the housing budget is incomprehensible in the present conditions.
Margaret McCulloch talked about the introduction of the procurement bill, and I very much agree with what she said. She also talked about small and medium-sized enterprises being able to take part in procurement. To allow them to take part, we need to look at not only the tender size but the simplicity of the process. The procurement bill is long awaited and could make a huge impact on some of the Government’s targets, for example by ensuring that those who receive funding from the public sector help to meet our carbon reduction targets.
A bill could also help us to meet social and financial sustainability targets. Enshrining policies such as those on the living wage and the employment of disabled people in a procurement bill would ensure that the best value is obtained for not only the procuring organisation but the public purse.
We could consider employment practice, which John Park talked about, and apprenticeships in a procurement bill, which could also deal with inward investment. Public money goes towards contracts and is used to encourage businesses to set up here, so we should ask those businesses to sign up to a procurement bill that sets a basic minimum standard for how people are to be employed. Malcolm Chisholm talked about contracts going abroad. All those issues could be dealt with through a procurement bill, so it is high time that we had one.
We need to concentrate on the most vulnerable in our society and ensure that our young people get that valuable first job that provides the experience that they need and leads them to their career. We need to ensure that women are working so that we do not have an increase in child poverty. A failure to deal with the economy is a failure to deal with the people whom we serve. I call on the Government to scrap plan MacB and to use the powers that it has to make a real difference to the people of Scotland.
16:50
In listening to the unionist parties’ front benchers, I am reminded of a Victorian undertaker praying for a hard winter and a full churchyard. They seem to be searching for bad news about Scotland and boasting about any chink of doom and gloom that they can find. I will begin by putting the facts on the record. They are based on the latest economic indicators available, not from the Government, but from the independent Office for National Statistics and from independent statisticians working in Scotland.
The retail sales index in Scotland is higher than that in the UK. Growth in the production sector and in the distribution, hotels and catering sectors in Scotland is higher than that in the UK. The employment level in Scotland is higher than that in the UK and, as Mr Swinney said, Scotland has the highest rate of employment and the lowest rate of inactivity of all the UK countries. The unemployment claimant count in Scotland fell at the last count, while in the UK it rose. Scotland’s employment rate has been higher than that in the UK for 15 consecutive months.
Will the cabinet secretary give way?
I will in a minute.
Growth in the construction sector in Scotland is higher than that in the UK. Only today, Ken Gillespie, the head of Morrison Construction, claimed that Holyrood was better than the UK Government at green lighting public sector building projects
“to help get the economy moving again”.
He went on to say that the Scottish Government
“has managed to keep its capital projects moving while we have seen many shelved elsewhere in the UK”,
and that
“Holyrood has made the connection quicker than central government that investing in major infrastructure projects in the public sector is the quickest way to get the economy moving again.”
I will now take an intervention from the undertaker, Mr Brown.
Undertaker? That comes from the pantomime dame.
Mr Neil is again being highly selective in choosing his statistics. We in the unionist parties have tried to be realistic. Does he not think that he should look at overall growth and unemployment figures for Scotland?
Of course we are looking at the overall figures. Some of the figures that I gave are overall figures—I did not restrict myself to particular sectors. On the overall position on inward investment, an Ernst & Young 2011 survey reported that Scotland was the leading location for foreign direct investment in the UK in terms of employment generation, which gives the lie to all the scaremongering that the prospect of a referendum on independence is chasing away investment from Scotland.
On procurement, I will deal specifically with the Forth replacement crossing, on which the main Opposition party takes the ludicrous position that we should suspend a contract, which would result in laying off and making redundant thousands of Scottish workers and making large numbers of Scottish companies bankrupt. If ever an idea was irresponsible and stupid, it is the idea that we should suspend that contract.
Labour members forget that, before we implemented our reform programme, Labour’s procurement record was a very poor one indeed. For example, in 2005, the then Scottish Executive awarded a contract for fishery protection vessels to a Polish shipyard instead of Ferguson’s shipyard. That contrasts with my announcement, two months ago, that we would give Ferguson’s the contract for the first two hybrid ferries in Europe. When Jack McConnell, the then First Minister, was challenged about giving that contract to a Polish shipyard, he said that he was
“a bit restricted by the rules of procurement and tendering ... we have to be honest”—
that was a first. He went on to say:
“We cannot give preferential treatment to one company”.—[Official Report, 16 June 2005; c 18051, 18054.]
As the Labour Party knows, we are engaged in a procurement reform programme. One of the reforms that we are demanding from the European Union is that we should be allowed to take into consideration the local economic impact of awarding a particular contract to a particular company. Regrettably, the UK Government has utterly refused to support us in that demand, which is absolutely shameful, to say the least.
When we look at Professor Bell’s argument, the question that we need to ask is: what would the unemployment rate in Scotland have been if John Swinney had not implemented his programme of capital investment? Over the next three years, despite a cut of £3 billion in capital investment funding from Westminster, across the Scottish Government, we will invest nearly £12 billion directly and through leveraging in private sector investment. Seven billion pounds will follow the £3 billion reduction. We would not have had the £2.5 billion NPD programme if we had followed the Labour Party’s private finance initiative policy. On top of that, the Scottish Futures Trust is involved in mobilising total investment of £9 billion, including that £2.5 billion. The tax increment financing programme will result in hundreds of millions of pounds of investment in Scotland, and investment in the railways is worth £1 billion. The enterprise zones that Mr Swinney announced recently will generate hundreds of millions of pounds for Scotland.
Members on both Opposition front benches have displayed their ignorance of housing finance in Scotland. What matters is not how much money we put in, but what we get out, in terms of both the leveraging in of finance and the number of houses—
Gavin Brown rose—
Derek Brownlee would have telt ye that.
When we announced our programme—
Will the cabinet secretary give way?
I am running out of time.
Ken Macintosh rose—
They are queuing up, Presiding Officer.
Before Christmas, we announced our programme of £460 million-worth of investment to build more than 4,300 new houses in Scotland. Our share of that money was £110 million, which we used to leverage in another £350 million. If we had followed the policies of the unionist parties, the total leveraged in would have been £35 million. That is why we will exceed our 6,000-a-year manifesto commitment on social housing, and why we are building 5,000 council houses, whereas Labour built six a year—in Shetland.
Labour talks about Scotland, so let us think about what Scotland would be like under Labour policy. There would be no NPD and no £2.5 billion investment. Ed Miliband and Ed Balls—an appropriate name—said that—[Laughter.]
The minister needs to wind up.
Presiding Officer, I thought that I was doing a good job of winding up the Opposition.
I will make one more point about Labour’s policy to reduce public sector wages and take demand out of the economy. That is the difference. The Labour Party wants to be the Victorian undertaker of the Scottish economy. We are the champions of Scotland and we are delivering for the Scottish people.