Finance, Employment and Sustainable Growth
Good afternoon. The first item of business this afternoon is portfolio questions on finance, employment and sustainable growth.
Daktari Diagnostics (Inverness)
The Scottish Government recognises the strategic importance of Daktari to the Scottish medtech industry and welcomes the company’s decision to open a new manufacturing operation in Inverness—its first overseas operation—which will lead to the creation of 126 new jobs.
Given that the deal was sealed with the First Minister during the Scotland week celebrations in New York and that it arose from a meeting with the First Minister at the Scottish open in Inverness last year, does the minister agree that attendance at, and participation in, such events is a very good use of the First Minister’s time?
Daktari is a company that manufactures diagnostic cartridges that will be used to carry out blood tests to detect the presence of HIV in potentially millions of people in Africa where there is no access to laboratory equipment. We have the drugs for HIV but not the ability to diagnose those who have it. The Daktari company therefore has a world-leading product that can make a huge contribution to solving one of the world’s most serious health problems, which takes many lives. Therefore, I am delighted that the First Minister’s efforts in his trade missions to the United States have helped to secure a marvellous investment for Scotland and, in particular, Inverness.
Does the minister agree that, following Lifescan’s £9.53 million investment last year, including a £2.85 million public investment, adding a further 19 jobs to Lifescan Scotland’s workforce of 1,100, Scotland is building a world-leading life sciences industry?
Yes, I do. I am also pleased that so many of the companies are coming to the city of Inverness, which I represent. That is not just because of something in the water; it is because we are establishing a reputation worldwide as a centre of excellence for the life sciences sector. These things happen not by accident but because of excellent concerted work by many public servants, especially those in the enterprise networks, in this particular case in Highlands and Islands Enterprise. In that regard, I would like to give recognition to Alex Paterson and Lorne Crerar and their team, who are playing a blinder for Scotland. I am delighted that, substantially because of their efforts, we have attracted so many of the top life sciences companies in the world.
Future Oil Revenues (Calculation)
The Scottish Government’s “Oil and Gas Analytical Bulletin” provides forecasts for oil and gas tax revenue from the Scottish portion of the United Kingdom continental shelf under five scenarios. The scenarios use a range of estimates about future operating costs, capital expenditure and profitability to reflect the impact that different assumptions about future prices and production levels are expected to have on costs and sales revenues in the oil and gas industry, and hence profitability and tax revenues.
Three out of the five Scottish Government scenarios for oil revenues are based on a baseline price of $113 per barrel. Will the minister tell me whether any other professional or independent bodies have given similar projections for the price of oil? Will he explain why the Scottish Government has rejected in its calculations the use of the Office for Budget Responsibility forecast based on futures markets?
First, as a simple point of factual correction, we have not rejected the OBR estimates; we have actually shown them as scenario 1 in the bulletin that we published.
I was not asking who has estimated a higher price; I was asking which professional bodies have estimated the price in the same way as the Scottish Government has done.
We have set out a realistic approach on production. Rhoda Grant referred to criticism about production levels. Professor Alex Kemp of the University of Aberdeen, who is probably viewed as the world expert on oil and gas production and prices, has said:
If we have brief questions and answers, I will take a few supplementary questions.
What is the cabinet secretary’s view on the credibility of the OBR, given that its recent forecasts of Government revenues from oil used the futures curve over 10 working days, a methodology that the Bank of England has described as
Clearly, the OBR settles on its view on the basis of a number of factors, and it is for the OBR to defend its methodology. As I said in my initial answer to Rhoda Grant, the Scottish Government has given due regard to the OBR estimates. Of course, in 2010, the OBR predicted that the economic growth in this fiscal year would be 2.9 per cent, but in its most recent estimate growth is now projected to be 0.6 per cent. I accept that forecasting is a difficult job, but the OBR has had difficulties in forecasting accurately a number of factors. The Government’s contribution to the debate on oil and gas revenues is a responsible and considered analysis of the position.
In the interests of transparency, will the Scottish Government publish the workings and the data underpinning its projections in the rather brief analytical bulletin?
A volume of material has been published in relation to the assumptions that are made. The “Oil and Gas Analytical Bulletin” goes through the different scenarios that are relevant to the calculations that the Government has made. I have answered a number of parliamentary questions that have examined some of the detail, and I must say that much of that detail is already contained in the bulletin. Parliament has a significant amount of material that develops the issues.
Here is something else that Professor Kemp probably will not agree with. The cabinet secretary might not have seen the recent report from the carbon tracker initiative and the Grantham research institute entitled “Unburnable Carbon 2013: Wasted capital and stranded assets”, which demonstrates clearly that, if the world is remotely serious about climate change, we cannot afford to burn most of the known reserves of fossil fuels.
Ask a question, please.
Does that not imply that not only are the estimated revenues hugely inflated, but the entire oil and gas industry is hugely overvalued?
I fundamentally disagree with that latter point that Patrick Harvie makes. The oil and gas industry makes a significant contribution to economic health and to employment and the investment regime in Scotland.
Question 3 has not been lodged, and an explanation has been provided.
Employment Opportunities (Dumfries and Galloway)
The Scottish Government is committed to supporting sustainable economic growth and promoting job creation throughout Scotland, including in Dumfries and Galloway, and our economic strategy provides us with the overarching economic framework to do that.
The cabinet secretary will be aware that Reid and Taylor, Langholm’s last tweed firm, has gone into administration with the loss of 35 jobs. That comes after a spate of job losses in Langholm this year that will have a devastating effect on a rural community. What assistance can the Scottish Government offer that community and the people who live there?
Scottish Enterprise has been working closely with Reid and Taylor during the past couple of years on a number of projects to strengthen the foundations of the company. It was with great regret that the decision was taken to call in the administrators on Friday. Since they were appointed, Scottish Enterprise has been in contact with them with a view to encouraging further development of the business. A prospectus to market the business has been prepared, and a closing date of the end of this week has been set for indicative offers to be made.
As well as the jobs that Ms McAlpine mentioned, in the past few weeks we have seen the loss of more than 40 jobs at Interflora in Dumfries, and statistics released by United Kingdom ministers to my colleague Russell Brown MP suggest that more than 2,000 private sector jobs have been lost in Dumfries and Galloway since 2010. Does the cabinet secretary agree that the time has come for the relevant agencies to develop a more proactive approach to job creation and retention in Dumfries and Galloway?
The focus of Scottish Enterprise, as the principal economic development agency, is to work with companies in the locality, to strengthen those companies and to boost employment where that can be secured. That will be reinforced as a consequence of our discussions. The business gateway provides that support in the locality.
Homecoming and Bannockburn Anniversary Events (Support)
The Scottish Government invested £181,500 in events in the Stirling area connected with our first year of homecoming in 2009. The level of confirmed financial support for such events for 2013-14 at present stands at £310,000 and that may increase yet further. My officials, EventScotland and Creative Scotland are in on-going discussion with event organisers, who are all working hard to ensure that Stirling and the rest of Scotland have a fantastic events offering in 2014. In addition to the financial support for events, Historic Scotland is investing £5 million to complete the site upgrade and new visitor facilities at Bannockburn, which will be truly superb.
Clearly, significant investment is being made in the Stirling area to ensure an exciting and vibrant year of homecoming and 700th anniversary of the battle of Bannockburn. However, to ensure that the economic benefits are maximised to the full, will the minister assure me that EventScotland will give every consideration to supporting Stirling Council’s wider and more beefed-up programme for the year of homecoming, including, for example, hogmanay 2014, the Spirit of Stirling whisky festival, Stirling highland games, Stirling food and drink festival and the Bloody Scotland crime-writing festival. This will be Stirling’s year and it is a fantastic opportunity that must be grasped to the full.
The member kept us guessing there as to what was to follow the epithet “bloody”.
Ortak (Administration)
We were saddened to hear of the difficulties faced by Ortak and the impact that its decision to go into voluntary administration has had on its staff. Our thoughts are with them and their families at this difficult time.
I thank the minister for that positive response. He will appreciate the importance and iconic status of Ortak for Orkney’s internationally renowned jewellery sector, which has suffered an understandable knock-on effect to confidence from Ortak’s move into voluntary administration. Can he set out what success the steps that have been taken have had in supporting those, including many in my constituency, who have lost their jobs? Will he agree that, whoever ends up taking on the business—I understand that a number of notes of interest have been received—it is critically important that the manufacturing remains in Orkney over the long term?
I am entirely in agreement with Liam McArthur on that. We will, as always, work closely with him on all these matters in so far as we can, and we will give every assistance to the 29 individuals and their families who are affected. Of course, the primary objective is to secure a successful outcome from the administration.
Business Rates Incentivisation Scheme
The Scottish Government is actively working jointly with the Convention of Scottish Local Authorities and local government to review the BRIS targets for 2012-13, taking into account the latest business rates returns, which show that the loss from revaluation appeals is likely to be lower than previously predicted. If we had not reviewed the targets, local authorities would have stood to benefit from an unjustified windfall and not as a result of any action that they had taken to increase their collection rates or grow the tax base.
The scheme that was originally outlined by ministers would have enabled Aberdeen City Council to invest some £5.8 million in the local economy. The decision to revise the target in light of the appeals means that the council will receive only around £300,000 through the scheme. Is it not the case that Aberdeen is being penalised for delays in business rates collection elsewhere in Scotland? What will the minister do to rectify the situation so that the scheme achieves what it was meant to achieve, namely the ability to invest in economic growth in Aberdeen, which is important to our wider Scottish economy?
The member should understand the full workings of the scheme. Aberdeen City Council has raised matters in relation to the overall take and the change in circumstances. However, if there were a significant event that led to a review of the targets, that would be in keeping with the original intent of the scheme.
South Lanarkshire Council (Meetings)
The Scottish Government regularly meets Scottish councils and discusses a range of issues with them.
Given the further potential job losses in East Kilbride that were announced this week, does the minister agree that it is even more important that South Lanarkshire Council, through the East Kilbride task force, comes up with a vision and strategy for the future of East Kilbride? Will he reconfirm the Government’s commitment to Scotland’s largest town?
We are happy to confirm that everything possible will be done to assist the generation of jobs in East Kilbride. Of course, Linda Fabiani regularly advocates that cause in Parliament.
What assurances can the minister provide that the Scottish Government will find sufficient resources to support the action plan of the East Kilbride task force, thereby helping to secure and promote the pre-eminent position of the town in the west of Scotland economy?
I can provide the member with an assurance that we will do everything that we possibly can to assist the task force in every way that is practical. Of course, we have to work through any proposal to assess how viable, affordable and practical it is, how it can be financed and whether it will sustain jobs, and we do so on the basis of our economic strategy, which is to encourage growth and focus our efforts on growth sectors, growth markets and growth companies. I think that that is the correct strategy, and we will make decisions based on the application of that strategy.
United Kingdom Debt (Scotland’s Share)
The division of the UK’s historical debt would be agreed as part of wider negotiations into the division of the total stock of assets and liabilities. Assigning the debt using either a population or historical share would leave Scotland with a lower ratio of debt to gross domestic product than the UK.
Does the cabinet secretary agree that, as it is now clear that Scotland has contributed significantly in excess of its per capita share of tax revenues to the UK Exchequer over many decades and received no return for that, that should be reflected in the calculations?
Aileen McLeod is correct in the substance of her analysis. The report “Scotland’s Balance Sheet”, which was published earlier this month, shows that tax receipts per person in Scotland have been higher than in the UK as a whole in every year since 1980-81. It also demonstrates that calculating Scotland’s share of UK debt on the basis of its historical net fiscal balances would result in Scotland being assigned a share of UK net debt equivalent to 38 per cent of Scottish GDP in 2011. That is significantly lower than the UK’s debt burden, which stands at 72 per cent of GDP.
Opencast Mining (Restoration)
We share the concerns of local communities around the responsible restoration of opencast coal sites, and we are setting up the Scottish Mines Restoration Trust—SMRT—to help to facilitate the restoration of old opencast coal mines throughout Scotland.
The minister refers to the establishment of the Scottish Mines Restoration Trust. Yesterday in the Parliament, he described it as a facilitating body rather than a funding one. Will he say a bit more about what discussions he is having with local authorities to ensure that bonds are in place for all current sites? What assurances can he give to local communities that, if there is a problem and the bonds are not in place or are at risk, the Scottish Government will take action to ensure restoration, including considering the sale of assets or putting in place a condition on any future buyers?
A short-life working group on restoration bonds was initiated in September 2012. I make that point to emphasise to members that the work did not begin in the past couple of weeks following the announcement of the liquidation of Scottish Resources Group; it has been going on for a long time.
Community Business Initiatives (Kilmarnock and Irvine Valley)
Community businesses may access support from Scottish Government third sector organisational development programmes, such as just enterprise. Individuals who wish to set up social enterprises are also eligible for support from just enterprise and the social entrepreneurs fund.
The support that has been indicated is very welcome in my constituency. Could the minister say how other business start-ups might attract additional support, financial or otherwise, beyond our very helpful business rates relief scheme, particularly during their crucial first year of operation?
There are many ways in which small and start-up businesses can obtain support. The primary source of advice is the business gateway, which is administered through local authorities. From memory—which is always a challenge—I believe that the number of businesses that were contacted and that received advice last year was about 11,000.
Scottish Civil Service Jobs (Dundee)
There are currently 102 Scottish Government staff employed in Dundee—53 in the Office of the Scottish Charity Regulator, 33 by Education Scotland and 16 by the directorate for housing, regeneration and welfare.
My question to the cabinet secretary was to ask how many of those jobs have been created or transferred to Dundee since 2007. I wonder whether he could answer that for me. I know that his fellow minister, Shona Robison, made great play before 2007 of calling for Scottish civil service jobs to go to Dundee. There have now been six years in which to achieve that. I seek clarification from the cabinet secretary on how many of those jobs have been created since the present Government came to power.
I say to Jenny Marra simply that the Government has to operate within a very significant set of financial pressures, which determine the approaches that we take to deployment of public sector resources. In the light of those decisions, the Government has undertaken, with an undeniable and clear consensus in Parliament—
So, the answer is none.
Order.
The Government has undertaken to tackle the cost of administration within the Government. Any relocation of jobs from one part of the country to another costs more money in the short term than it saves. If money is under pressure and if Parliament wants the Government to control the administration budget—which we have done; we have reduced it significantly—the opportunity to undertake all the measures that we would like to undertake to relocate jobs is much more challenging, in that context.
The answer is none.
It is none.
Order.
Energy Sector (Recruitment)
Following the publication of the skills investment plan for the energy sector in March 2011, there has been extensive careers promotion activity to attract a new workforce to the energy sector in Scotland. That includes 10,000 “Working in the energy sector” leaflets, which were produced by Education Scotland, being distributed in Scottish schools, and more than 5,000 hits on the energy section of the “My World of Work” website.
I thank the minister for that detailed and comprehensive answer. He is aware that the historical imbalance in the gender mix in the energy sector remains. What more can the Government do to get more women into the sector in my constituency of Aberdeenshire West, and in the rest of Scotland?
Mr Robertson has identified one of the areas in which most can potentially be done to help the oil and gas sector to achieve delivery of the tremendous oil and gas projects that have been announced of late, of which there are now £100 billion-worth in the pipeline in Scotland. The scale is immense. Over the next couple of years, we will see more investment than has ever been seen in the history of oil extraction in Scotland and the United Kingdom. If we can persuade more females to enter professions in the oil and gas sector, that will perhaps be the most obvious way of rising to the challenge.
Tax Revenue 2011-12 (Estimate)
Including a geographical share of North Sea oil, Scottish tax revenue in 2011-12 was estimated to be £56.9 billion.
The report “Scotland’s Balance Sheet” highlights that per capita tax receipts are higher in Scotland than they are in the rest of the UK. Will the cabinet secretary tell us the extent of the difference and say for how long tax receipts have been higher in Scotland per capita?
On Mr MacDonald’s last point, per capita tax receipts have been higher in Scotland than in the UK in each of the past 32 years, as I said in an earlier response. In 2011-12, the difference between per capita tax receipts in Scotland and the rest of the UK was £1,700 per person. The figure in Scotland was £10,700 compared with £9,000 in the UK as a whole.
Question 15 has not been lodged, and an explanation has been provided. Questions 16 and 17 have been withdrawn and explanations provided.
Employment (West of Scotland)
The Scottish Government is committed to supporting sustainable economic growth and promoting job creation throughout Scotland, including in the west of Scotland. We are investing in infrastructure and working with a range of organisations to maintain a competitive business environment. Since 2007, businesses across the west of Scotland have accepted regional selective assistance offers of £46 million that are expected to create and safeguard more than 5,000 jobs.
Last week’s announcement that Scotland’s unemployment figures have fallen below 200,000 for the first time since 2009 is a welcome sign that the Scottish Government’s policies are playing their part in helping to deal with the tough economic conditions.
We regularly meet local authorities to discuss a range of topics, not least of which is the condition of the economy and the objectives of reducing unemployment rates and improving economic conditions.
Will the cabinet secretary say what initiatives he has put in place to tackle long-term unemployment in Scotland and why they have so far been spectacularly unsuccessful?
That question possibly sums up Mr Macintosh’s rather miserable approach to the issues that we are trying to tackle: of course there are employment challenges.
Next
Canals