Supporting Scottish Business
The next item of business is a debate on motion S3M-4246, in the name of Jeremy Purvis, on supporting Scottish business. I call Jeremy Purvis to speak to and move the motion.
I was heartened to see the reference in the Government's amendment to the benefit to the Scottish economy of the joint European resources for micro to medium enterprises—JEREMIE. Modesty prevented me from spelling out the initiative in detail in my motion, but the reference is to the same scheme—the European Union's JEREMIE scheme—and its applicability and benefit to Scotland's businesses.
Putting aside the nuance of pronunciation of the name as well as the temptation for us to vote for the Scottish National Party's amendment, our proposition is simply that the SNP has acted too slowly and used assertion in place of action. Nine months on from when we first raised the issue with the Government, it can offer only further consideration and study of the scheme in Scotland. That is disappointing not only for us but for the many hundreds, if not thousands, of small businesses in Scotland that could benefit from such a scheme.
Given the fact that Mr Purvis has had nine months to think about the issue, how many millions of pounds do the Liberal Democrats propose to allocate to the scheme? What proportion of those funds would come from the European Investment Bank and what proportion would have to come from the Scottish Government?
I will come to that in a moment when I talk about the Welsh scheme as a possible base on which Scotland can build.
Last week, under a Labour motion, we debated the number of people who have lost their jobs over the past year. The benefits claimant rate in Scotland has increased by 50,000 over the past year—which is chilling enough—and more than 1,000 people in my constituency have lost their jobs. That is devastating for the local economy in a rural area of Scotland. During that time, the Government's economic recovery programme has had, as its highlight, accelerated investment to
"support over 5,000 jobs in the Scottish economy over the next year."
However, we have had no further detail on that figure.
When I got home last night, I re-read the Government's economic recovery plan, because I had received a glossy leaflet from the SNP for the forthcoming European elections. That leaflet boldly states:
"Our Economic Recovery Plan will protect 20,000 jobs".
There is no reference in the recovery plan to the figure of 20,000, so I ask the minister to explain exactly the derivation of that figure. It is clearly misleading in its reference to the SNP's economic recovery plan.
We have argued that a JEREMIE scheme and debt support should be included in the Government's economic recovery plan. We make that plea within the context of the European Investment Bank's new changes, in light of the European recession. For 2009-10, the total investment by the European Investment Bank has gone up to €72 billion, which includes an additional €15 billion for this year. At the December council meeting, the Commission permitted aid grants of up to €500,000 per business, in addition to lending, if businesses can demonstrate that their difficulties are the result of the recession.
Many small and medium-sized manufacturing businesses throughout Scotland would benefit from such aid. Indeed, the Minister for Enterprise, Energy and Tourism met me and representatives from the textiles sector just this week and we debated that point. In drawing up its budget, the Government knew that it had increased flexibility not only to supply grant in aid support but to move ahead with Scottish Enterprise on debt support lending for small businesses. However, the Government wrote to the Convention of Scottish Local Authorities indicating that, although it had that flexibility, it did not have any resource for that within its budget, which had just been passed. That was the Government's own budget that it had put together in the context of having more levers at its disposal.
The JEREMIE initiative, which uses structural fund mechanisms, is being used in Wales. Gavin Brown's point will perhaps be addressed by looking at Wales's EIB draw-down and use of structural funds. In the year ending October 2008, there were 316 deals under Finance Wales for debt support lending worth £33 million. There is concern that the interest rate in Wales is higher than it should be—I acknowledge that. Nevertheless, Wales has an established system that Scottish Enterprise and the Scottish Government have eschewed. It does not take five months—or, indeed, nine months—to study the applicability of such a system to Scotland, so what could be the potential blocks?
We heard from the First Minister yesterday, on Radio 4's "Today" programme, that the dead hand of the Treasury was preventing the Scottish Government from drawing down European Investment Bank funding. EIB funding on a United Kingdom-basis—which includes Scotland—of €600 million has been made available to HBOS and the Royal Bank of Scotland for lending to support small businesses. Indeed, Jim Mather and Peter Mandelson co-launched that funding. Much as I am tempted to picture the image of mind-mapping meeting Machiavelli at that launch, that was all well and good. However, in November, John Swinney said that more needed to be done on debt support lending, as it was the top priority for small businesses. Not only did he say that more needed to be done, he said that it needed to be done over the coming years. That is why we are frustrated that there has been no action on debt support lending.
The dead hand of the Treasury has also not prevented €400 million from being drawn down from the European Investment Fund since the SNP came to power. That money has been used for three public-private partnership projects: one in Dumfries and Galloway, one in the Forth valley and the M80 extension. The SNP seemingly threw off the dead hand of the Treasury to fund PPP schemes that were all signed off under the present Government. That is rather curious, especially as the Scottish Parliament information centre has indicated to the Liberal Democrats that there has been no application to use money from the European Investment Fund to support small business lending.
The money is available. If it is simply a matter of the financial rules governing the way in which the budget is constituted, as John Swinney told the European and External Relations Committee recently, surely the two Governments at Holyrood and Westminster can work together to ensure that small businesses receive the debt support lending that they need. That is what we require. The funding seems to be available for PPP projects under the SNP but not for small businesses.
We hope that, as a result of the pressure that the Scottish Trades Union Congress and small businesses have applied, and the pressure that we hope the Parliament will apply today, we will see changes in the Scottish Government's approach.
Tentative moves have been made. A proposal to use EIB funding has been included in Scottish Enterprise's operating plan for the coming year, and Scottish Enterprise has said that it will consider it. The difficulty is that Scottish Enterprise has been considering it since last summer. That difficulty has been compounded by the fact that the Scottish National Party changed Scottish Enterprise's remit so that it focuses only on high-growth and large companies.
There is no equivalent of Finance Wales in the Scottish economy because of the environment that the Scottish Government has created. In addition to the difficulty that has been caused by the fact that the SNP has been extremely slow to draw down money from the EIB, we face a situation in which the infrastructure that the SNP has created in Scotland will cause difficulties in delivering initiatives on the ground.
If the Scottish economy is to recover from the recession, supporting our manufacturing sector must be the top priority. The driver for that, nine months on from when the issue was first raised with the Scottish Government, is still the provision of debt support lending for small businesses. We need action on that and we need clarity on the way forward from the Government. Yesterday's statement by the First Minister that the dead hand of the Treasury is preventing us from taking such action is not sufficient—we need action and we need it now.
I move,
That the Parliament notes the serious difficulties faced by the Scottish businesses struggling to access the funds that they need during the economic downturn, with the double squeeze of late payment and tighter lending a critical concern for small businesses in particular; notes that the Welsh Assembly Government is using European Investment Bank (EIB) funding to help small businesses bridge funding gaps, supporting the expansion of 800 businesses and creating up to 15,000 jobs across Wales; regrets that the Scottish Government has not introduced a similar initiative in Scotland; further regrets the Scottish Government's inaction and delay in utilising the EIB funding available to it; believes that SNP ministers should use every lever at their disposal to help Scotland's economy, and therefore calls on the Scottish Government to bring forward a statement before the summer recess containing new plans to use EIB funding to support small businesses so that they do not continue to be at a competitive disadvantage to their Welsh counterparts.
Before I respond directly to the motion, it is important to put the debate in context and to look at the root cause of the current economic conditions and the liquidity crisis. The credit crunch stemmed from a huge and unstable sub-prime mortgage market in America, which was a function of the regulatory race to the bottom that took place in the UK and the USA, and the resultant moral hazard that saw business being written off in the interests of short-term profits.
In the UK, there was a failure of stewardship by the Treasury, the Financial Services Authority and the Bank of England, which must have known that institutions were borrowing short term and making long-term loans—in some cases without having any confidence in or proof of the ability to repay—and that that could only end badly and untidily. That is what happened, and there has been a ripple effect on the international financial market, which has contributed to the general slow-down in the economy that has had a direct negative impact on every business and household in Scotland.
In that context, and in the light of the action that we have already taken, I take serious issue with the terms of Jeremy Purvis's motion. It ignores the fact that this Government has shown leadership and commitment from the beginning of the downturn. The Scottish Government has acted quickly and decisively in support of Scottish businesses and households. We accelerated our housing investment and brought forward our spending on structural fund programmes before the rest of the UK. In addition, a cash injection of some £95 million in European funding will be directed towards Scotland's economic recovery through programmes to develop the workforce, safeguard and create jobs, and regenerate communities. A total of 129 projects across Scotland will benefit from £70 million in new allocations from the European regional development fund and £24.7 million in allocations from the European social fund.
Will the minister explain how much of that money was not already in the indicative plans for the funding round up until 2013? How much additional resource has been drawn down from the European Union?
The money that I have mentioned is additional resource—it is a fresh cash injection.
The 50 new ERDF projects, which will focus on business growth, urban regeneration and rural development, will support the creation of almost 8,000 jobs. The 79 new ESF projects are expected to help 75,000 people to gain or sustain employment opportunities through training and skills development. Overall, we have developed a comprehensive recovery programme that is focused on all the levers and resources that are available to this Government. We took immediate action.
In addition, we have worked across the Scottish public sector with the common purpose of marshalling all our resources to ensure that Scotland moves quickly to recovery and on to increasing sustainable growth, and emerges fitter, more focused, more cohesive and more competitive than before. Our latest update on the recovery programme, which is to be published in June, will demonstrate that that continues to be at the heart of all that we do, but it does not and cannot stop there.
Through meetings between the Cabinet and our social partners, we are working collectively on what more we can do to support the recovery. Equally, through our series of sectoral engagement sessions, business breakfasts and meetings with different business groups across the country, we continue to listen to what companies are telling us about the reality of the downturn and what they need. As members of the Parliament are well aware, we are pushing the UK Government to take the right action to support recovery and not to choke off emerging growth through swingeing budget cuts that will result in a huge reduction for the Scottish budget. The UK Government's deflationary cuts could see approximately 9,000 people losing their jobs across key sectors of the Scottish economy.
The First Minister and other ministers bring up those cuts all the time. Should the additional £500 million that is necessary come from increased borrowing by the Treasury or from a tax increase?
The Treasury has the same charge that we have—to optimise the economy. It must optimise the economy at UK level, just as we must do at the Scottish level. However, we will not optimise the Scottish economy if we adopt a deflationary approach in the middle of a recession.
Our active pursuit of the best interests of the people of Scotland continues. From our first day in office, we have been clear that our purpose must be to focus our resources and powers on increasing sustainable economic growth. That goal is supported by our economic strategy, which aims to bring the private, public and voluntary sectors in Scotland together in common cause. We have done that and are continuing to do it, and the people have responded and are continuing to respond. Instead of altering our strategy or our resolve, the current economic downturn has demonstrated the importance of the whole of the public sector acting to support economic growth.
Will the minister give way?
I have already taken an intervention from the member. I need to get some important messages on the record.
People can clearly see that if there are good ideas and opportunities that we can adopt to help us to achieve our goal, we will listen, we will consider and—when it is the right thing to do—we will act. The Scottish people would not expect anything less of us.
Back in April, the First Minister announced that the Scottish Government would work towards the creation of a Scottish investment bank, which would pull together Scottish Enterprise and ERDF funding to support businesses with growth potential and thereby help Scotland to make a strong economic recovery. Work is under way to consider whether the resources that might be available to the Scottish investment bank could be augmented through a loan from the European Investment Bank, with a view to creating a JEREMIE fund for Scotland. Scottish Government officials are already engaging with the Treasury on that issue and will have further such engagement, as those additional funds would enhance our scope to support business growth. Scottish Enterprise and Scottish Government officials are also working together to deliver that objective.
Will the member take an intervention?
I have only 30 seconds left.
We should be clear that Scottish Enterprise is already making such interventions. The Scottish investment bank will initially comprise £150 million of resource, which represents several years' worth of investment at the current spending rate. Although an EIB loan might be positive for Scotland, it is right that we take care and sufficient time to consider whether and how best to pursue that proposal.
The delivery of the SIB is one of a number of activities that we are undertaking. Others include speeding up the payments that we make to businesses, 91.6 per cent of which are now made within 10 days, and the delivery of the small business bonus scheme, which is providing much-needed relief to all Scotland's small businesses and reducing fixed costs for many new start-ups. We will continue with the process to which we are committed because we want Scotland to be fitter, more cohesive and better able to achieve the sustainable economic growth that we seek.
I move amendment S3M-4246.2, to leave out from "regrets" to end and insert:
"further notes that the Scottish Investment Bank, announced by the First Minister on 21 April 2009, will initially bring together approximately £150 million in public sector resource to support company growth in Scotland; also notes that, following this first step, the Scottish Government will look to enhance the scale and impact of such financial support to growing Scottish businesses including the potential to secure significant additional funds from the European Investment Bank through the establishment of a Joint European Resources for Micro to Medium Enterprises (JEREMIE) fund for Scotland, and considers that, among other measures that the Scottish Government has introduced, its small business bonus scheme has helped the tens of thousands of Scottish firms now exempt from paying local business rates."
I welcome the opportunity to open on behalf of Labour. Although the title of the debate is "Supporting Scottish Business", I am keen to put on record our recognition of the important role that businesses play in supporting employment across all our communities. Whether large or small, businesses play a hugely important role in our society by providing services, developing skills for the wider economy and driving economic growth and prosperity.
In the present climate, all businesses face huge challenges in accessing finance, which is affecting their ability to make the longer-term investment decisions that we know they need to make day in, day out if they are to provide the employment and prosperity that we all want them to provide. Throughout my constituency, companies of all shapes and sizes are growing frustrated with the difficulties that they are experiencing in obtaining credit. I know that bodies such as the Confederation of British Industry, the Federation of Small Businesses and the STUC are constantly providing the Scottish Government with ideas and suggestions on measures that might help. I have met most of the major banks over the past few months and they stress that money is available, but I am sure that everyone agrees that circumstances have changed significantly and that the experience of businesses in the front line is not always that money is available.
Will the member give way?
I am sorry, but I want to move on.
That is why Governments, whether here in Scotland or at UK level, must do everything that they can to get the system moving, and why I think there is merit in the motion and the amendments.
Although I said last week that I like Scottish solutions to Scottish problems, we should never be apprehensive about considering initiatives from other countries, especially those that face challenges similar to ours. I recognise that the Scottish Government has been considering the concept of a Scottish investment bank for some time and has apparently been considering a proposal similar to the Welsh model that is outlined in the Liberal Democrat motion. However, it would be useful if the minister, in summing up, outlined whether—I think that he said a little about this in his opening speech—any assessment has been made on adopting such a model. Why has a Scottish investment bank been chosen ahead of any other proposed models? Such detail is important, which is why our amendment would require the Scottish Government to provide further detail on the development of the proposed Scottish investment bank—a proposal which, let me put on record, I have supported for a number of years.
Even before the First Minister made his announcement at the STUC annual congress in April, the concept of a Scottish investment bank conjured up many different ideas and solutions. The first question that might be posed is whether an SIB would indeed be a bank. The Scottish Government has perhaps already given the answer, in that a Government spokesperson acknowledged that the SIB would not be a bank in the accepted sense. As a vehicle of economic development, the proposed Scottish investment bank would not be subject to the control of the Financial Services Authority. No matter what they do next, ministers need to demonstrate how the new body would bring in additional investment—or, better, how it would use existing finances to create jobs—and state clearly what advantage the new body would offer over and above the current separate funds that it would pull together. Businesses will ask, what will this mean for me? What difference will it make? What will that difference look like for my business?
During Labour's debate last week, our call for the Government to examine the ProAct scheme in Wales was well received by the Parliament. Given the importance of Government responsiveness in the current climate, I hope that the minister has done some work since last week and is prepared to say in his summing-up speech something more about whether the Government is seriously considering such a scheme. Today's motion from the Lib Dems also recognises the importance of the Government acting quickly and calls on the Scottish Government to come back to the Parliament with more detail before the summer recess. It is important for all of us that our debates—whether from last week or this morning—are responded to by the Government as quickly as possible. Perhaps in summing up the minister could also outline what steps the Government has taken with the economic recovery programme.
This debate will provide a valuable and important opportunity for members to talk about their experiences within their constituencies. MSPs need to tell the Government what the current situation means for their businesses and remind the Scottish Government of the need to provide detail on the announcements that it has made. The debate provides not only an opportunity for members to discuss the issues but, more important, a platform for the Scottish Government to provide more detail on the announcements that it has made to the STUC outside the Parliament. I hope that the Government will take that opportunity this morning.
I move amendment S3M-4246.1, to insert at end:
"and to provide detailed information about the Scottish Investment Bank proposal announced by the First Minister at the STUC conference on 21 April 2009."
The Scottish Conservatives welcome the opportunity once again to discuss the economy and how best we can support businesses throughout Scotland.
As we heard from Mr Purvis earlier, there have been some terrible figures recently. Over the past year, the claimant count for unemployment has increased by 53,000. BDO Stoy Hayward predicts that 5,000 businesses could fail this year and 5,500 could fail next year. In the past week, various other bits of news have come out. Last Friday, it was revealed that the UK economy suffered a 1.9 per cent contraction compared with the previous quarter, which is the worst contraction since 1979. In addition, the Treasury survey of business forecasts gives gloomier predictions than the Chancellor of the Exchequer provided in his budget. Whereas Mr Darling predicted that we would borrow to the tune of £606 billion over the next four years, the independent forecasts predict that the figure will be £679 billion—a difference of some £70 billion. Just yesterday, news of potential problems for businesses emerged, because the oil price has started to creep up, with oil now at a six-month high of $62 per barrel.
As I said last week in Labour's debate, we will consider seriously any positive proposal from any party that could help businesses in Scotland. This week, our position is no different. The Liberal Democrat motion on using European Investment Bank funding in the way it is used in Wales merits serious consideration. However, I suppose that the difference between us and the Liberal Democrats—this is also probably the difference between the Government amendment and the Liberal Democrat motion—is that we believe that the proposal needs to be given serious consideration rather than requiring the Government to report back before the recess on its plans to make such a proposal happen. There is a debate to be had on whether the proposal is the right thing for Scotland and whether it should happen before we require the Government to come back to us on how it will happen.
I understand why the member makes that point, but does he appreciate that we have put our proposal to the Government not just today but over the past nine months? That is why we now want more urgency in the response from the Government, which has already had too long.
We agree that the Government ought to be pushed on whether the ProAct proposal and the EIB suggestion are viable schemes that should happen. However, as I asked Mr Purvis in my intervention, we need to consider what size of scheme would be appropriate for Scotland. I do not think that he answered that. As I understand it, the Welsh scheme is worth £150 million, but only £75 million of that comes from the EIB—about £60 million comes from the Welsh Assembly Government. If a large sum would be required from the Scottish budget, we would need to think carefully whether the money would be available and where it would come from. Would the scheme involve more than £150 million, given that Scotland is bigger than Wales?
Another important question is whether the proposed scheme—I asked the same question about the ProAct proposal last week—would actually make an impact. The Welsh JEREMIE fund was launched on 24 April, so it has been running for only three or four weeks. Do we know whether the scheme has made a difference thus far? Will helping 800 businesses and 15,000 jobs actually be realised, or is that merely aspirational?
Another legitimate question is how quickly the proposed scheme could be implemented. Whereas ProAct was implemented in about three months, the chairman of Finance Wales has said that the JEREMIE fund was planned for quite some time. Those legitimate questions need to be asked before deciding whether the proposal can or should go ahead.
We will support anything that we believe will genuinely help Scottish businesses. We pushed the Scottish Government to accelerate the small business bonus scheme, which is helping 146,000 businesses across Scotland. We argued strongly for a town centre regeneration fund to the tune of £60 million, which will also be positive in helping many towns in Scotland.
I have one point that I hope the minister will pick up. The Scottish Government has increased the speed with which it pays contractors by introducing a 10-day rule, which the minister said is complied with in, I think, 91 per cent of cases. However, as the minister knows, every contract with the Scottish Government involves a supply chain that involves subcontractors and, very often, sub-subcontractors. What can be done—I suspect that legislating on the matter would be difficult—about the Government's contracts with its main contractors? Can clauses be inserted into any fresh contracts to make it clear that the 10-day rule applies all the way down the supply chain? That simple measure could be implemented quite quickly, at the stroke of a minister's pen, and applied to all future contracts. That would ensure that viable businesses did not go to the wall purely because of cash-flow issues. Those are the kinds of measures that we want to see. I hope that the minister will respond to those points in his speech.
Members may care to note that, provided that they do not get into tedious repetition, time is very much on their side.
It is always a pleasure to consider motions from our Lib Dem colleagues on financial or economic matters. Uniformity is so dull in this drab world, yet the Lib Dems present us with a new set of proposals almost every month. It is unfortunate that the new proposals frequently contradict those that they submitted previously, but that is no matter. To give pleasure to others is a great gift that we should cherish, not criticise.
The 2p in the pound reduction in income tax, with its consequential loss of £800 million a year to Scottish public spending, has been safely kicked into the long grass and we have turned our attention to how we should use that newly restored public expenditure to help our small businesses.
Will the member take an intervention?
I did not think that I had said anything very controversial.
It is a pre-emptive strike.
The member referred to revenue loss. He will be aware that, in the coming financial year, the council tax freeze equates to £420 million of revenue loss. Why is that not part of the public sector cuts that he says other parties are proposing?
Can I presume that the Lib Dems would have trebled the council tax rise to make up for the £800 million loss that they are taking out of it? We had a worthy debate this morning on missing children; in the second debate, we are looking for the missing Lib Dem economic policy.
Far from being idle, the Scottish Government has led the other countries in these islands by taking such measures as are available to it to support our businesses. The small business bonus scheme has been an outstanding success.
Does the member not accept that the debate is about our reaction to the economic crisis, and that the small business bonus scheme was built on the 50 per cent reduction that was introduced by the previous Scottish Executive, entirely before the economic crisis hit Scotland and Great Britain?
That is not entirely true, Mr Rumbles. I give our Government great credit for forecasting the problems. It could see the mismanagement of the British economy. The world economic crisis is one thing, but Britain had an especially bad record in the lead-up to it by spending when we should have been saving. As a result, we do not have the money to tide us through the recession. I give the Scottish Government a great deal of credit.
No one else does.
No, Mr Rumbles. That is why the Lib Dems have 16 MSPs and the SNP has 47.
Many small businesses claim that the small business bonus scheme is a major support in keeping them afloat during the current recession. Businesses with a rateable value of £8,000 or less have had their business rates removed entirely, while other businesses, with rateable values up to £15,000, have had them significantly reduced. That has enabled businesses to offset other bills, while—according to a survey—9.5 per cent of businesses have used the saving to take in extra stock or to train staff.
I accept that the small business bonus scheme is helping to offset bills, but does the member share my concern about research for the Federation of Small Businesses that suggests that only 5 per cent of businesses say that it has led to job-related investment—in other words, that it has increased employment?
I share that concern, but it is early days for the scheme. It is clear from various surveys that the future of Scotland depends largely on small businesses prospering, so I congratulate the Government on putting its efforts into ensuring that, during the financial crisis, small businesses—while perhaps not increasing the number of staff—are not going out of business. That is important. However, I thank John Park for raising the issue.
We have accelerated European Union funding to fund construction work in Scotland; launched business club Scotland to help businesses to capitalise on major sporting events in Scotland; doubled support for the Scottish manufacturing advisory service; and taken the first steps in creating a Scottish investment bank. The latter project has used European regional development fund money. However, as Gavin Brown said, there are technical reasons why a bid for European Investment Bank funding may cause problems, and it is wise to wait until those have been sorted out before going down that route.
No action, then.
Careful action rather than impetuously going into a situation that could cause us trouble later on.
We have also utilised European money to help businesses by obtaining £355 million of investment from the European structural funds since 2007.
I do not wish to be complacent, but the motion, which uses phrases such as
"regrets the Scottish Government's inaction and delay"
while praising the actions of the National Assembly for Wales, does not reflect the reality of the situation. The proof of the pudding is in the eating. Scotland's economy continues to weather the recession better than that of the rest of the UK, with lower unemployment, a greater rate of economic growth and a larger percentage increase in retail sales.
The truth that the motion sadly avoids is that, although the Government is taking heroic steps to protect our economy, we will never be able to do that efficiently until we repatriate economic power from London to Scotland. We could do so much more to protect Scottish jobs and bring about the circumstances in which Scottish businesses can prosper if we could release control of our economy from the dead hand of a Westminster Government that has outlived its sell-by date and limps along in a state of permanent political paralysis.
I know that it is Lib Dem policy to continue to hang on to the coat tails of a United Kingdom that is on the verge of being downgraded by reputable credit rating organisations because it is so close to becoming a banana republic in the hands of Gordon Brown and Alistair Darling. That is the choice of the Lib Dems. However, I cannot understand how they can continue to refer to democracy in their party name, while strenuously trying to prevent the Scottish people from being given the choice, in a referendum, on whether to control their own economic future.
I welcome the opportunity to take part in the debate on supporting business. The debate comes at a crucial time for the Scottish economy—150,000 people throughout Scotland are unemployed, and business has an important contribution to make in taking people out of the dole queue and getting them back to work in Scotland's communities.
There are 279,000 businesses in Scotland, employing 1.9 million people; 99 per cent of those businesses are small and medium-sized enterprises that each employ fewer than 250 people. They make an important contribution to the Scottish economy.
The debate follows on from last week's debate on supporting employment. Many of the themes that we spoke about then—supporting business and building a stronger economy—are relevant to this morning's debate.
Businesses are looking for measures that will improve their cash flow, and economic stimulus. The banks clearly have a crucial role to play in improving cash flow. The £3 billion package that was announced earlier in the year, with £250 million to SMEs, has an important role to play. In order for that money to make a difference, we would like it to flow down from the banks into businesses.
I agree with the member about small businesses and cash flow. Does he agree that the banks have to look to themselves when they are telling small businesses that if they want an overdraft, they will be charged 4 per cent?
There is a crucial role for the banks to play in ensuring that the money that has been committed to SMEs—£250 million—gets down to the SMEs. I congratulate the UK Government on what it has done to shore up the banking system and introduce measures that will free up working capital.
Last month, the minister proposed a Scottish investment bank. Even after this morning's speech, we still need more detail on that. I am unsure whether the £150 million that has been announced is really a bank or whether it is three pots of money brought together from different funds to be pumped into the Scottish economy. We need more detail on those plans.
The Lib Dem motion talks about draw-down from the European Investment Bank. The Scottish Government needs to tell us whether a Scottish investment bank would link into a scheme such as that. The banks have an important role to play in freeing up money to improve working capital and feeding into the important work on improving payment cycles, which will release much-needed cash for businesses.
We need to consider all these issues in the wider context of economic stimulus. If businesses are to make progress, they will need stimulus from Government.
Last week, the minister told us that he had spoken at 96 events throughout Scotland on how to improve the economy. One thing that people throughout Scotland will have been telling him is that the Scottish Futures Trust has been an abject failure in getting projects into the pipeline and in creating capital investment, in order to create jobs and support business. With the Scottish Futures Trust, the Scottish National Party has not only turned the tap off but thrown the plumbing system away.
We need more detail of the economic plan. If we could get the 7,800 apprentices that were committed to in the Scottish budget, and if we could see them helping businesses and boosting the economy, that would be a help. John Park mentioned the ProAct scheme in Wales, which is supported by the Trades Union Congress and the FSB. The scheme offers short-time working, to keep people in employment at this difficult time, and it is worthy of consideration.
There has been an element of "Groundhog Day" about today's debate. A number of speakers have pleaded with the Government for more detail, just as we asked for more detail last week. It is clear that business needs stimulus and communities need jobs. The pace of progress has been slow. It is time for the minister to get a move on.
The motion from the Liberal Democrats seems to be at odds with reality. That is nothing new. The motion
"regrets the Scottish Government's inaction and delay"
and it says that Scotland is at "a competitive disadvantage" to our Welsh counterparts. However, the statistics show the opposite. Scotland's economy continues to weather the recession better than that of the rest of the UK. Economic growth, unemployment and retail sales are all more favourable north of the border. That is not crowing; it is an attempt to show that trying to balance angels on the heads of pins, as the Liberal motion tries to do, is not addressing our potential.
As of March this year, unemployment in Wales was 7.7 per cent. The UK average was 7.1 per cent, but the figure in Scotland was 5.9 per cent. The figures speak for themselves. Figures released this week show that the number of company insolvencies dropped between 2007-08 and 2008-09. Although the figures are incomplete, we are cautiously optimistic that the Scottish Government's stimulus packages—even though we have control of only some of the levers of power—are beginning to have an effect.
James Kelly talked about economic stimulus, and I would like to point out how small and larger businesses are being helped by this Government's programme. No one has mentioned homecoming. [Laughter.] Well, it is a pity that Tory members have not mentioned it. If they came to my part of the world, they would see that, with the stimulus of homecoming, the order books are full. Visitors are coming in large numbers. Many people are coming from other parts of the UK as well, because they see the benefits of coming to Scotland rather than going to the expensive euro zone.
We should consider the stimulus that has been created by the proactive work of this Government to engage with the European Union on the development of renewable energy. Many small and medium-sized businesses that are involved in research and development have been helped by co-operation with the UK's system of renewables obligation certificates—a system that we very much welcomed—and by the Scottish Government's insistence on aiming at high targets. Engagement with the EU has allowed us to ensure that the EU regards Scotland as important in the development of renewables. The European recovery programme can deliver a large amount of money for the Aberdeen offshore wind farm and for the starting of work on the North Sea grid. All those things help Scottish businesses.
Will the member take an intervention?
No, thank you, but I will mention something that Mr Purvis might consider.
In copy from the Press Association this morning, the Liberal Democrats in the National Assembly for Wales say that they have delivered Finance Wales to support businesses. However, I think that it must have been the Assembly that delivered it, because the Liberals are not the Government. The fact is that the Government in Scotland is delivering on that kind of approach. We should therefore pay more attention to Mr Mather's amendment, which describes the approach that we are adopting.
Will the member take an intervention now?
Very briefly.
The member will surely be aware that Finance Wales was established in 2001, when Liberal Democrats were in the Welsh Assembly Government. He will also be aware that JEREMIE was introduced subsequently.
Does the member agree that the Highlands and Islands Enterprise budget for 2009-10 is challenging? The budget is already heavily committed, with little capacity to fund major new investment opportunities. It will therefore be highly important to maximise income from EU funding and revenue receipts. That information comes from the HIE operating plan that has just been signed off by Jim Mather.
I have read HIE's plans for the coming period, and I have great faith that the Government will ensure that they are carried through. HIE's focus will help the renewables industry, for example.
Jeremy Purvis claims that the small business bonus was created before the recession, and that Finance Wales was as well. However, it is how things work during the recession that is important. We should note that around one in eight businesses in Scotland—13.6 per cent—said that savings from the small business bonus were helping the business to stay afloat during the recession. If that means that businesses now have the potential to develop, that is a big bonus for us.
There is another area that the Liberals have ignored, even though we had a debate on it a couple of weeks ago. I am talking about fuel duty. How many businesses are affected in our part of the world by having to pay over the odds in fuel duty? When a Liberal motion appeared, the SNP supported the idea of achieving a derogation, as existed for the centre of France. Did the Liberals help the SNP to make the point in Westminster when we presented our regulatory approach? No, they did not.
People should stand up for Scotland and be consistent. The Liberal Democrats apparently believe in maximum devolution and in fiscal powers coming here, so they should support the idea of getting funds back into Scotland. The Treasury is taking £191 million more in fuel duty and VAT this year than it took before. That money could have been invested in many small businesses here.
Members should acknowledge that the Government is already utilising European money to help businesses. European structural funds have already provided £355 million in investment to nearly 500 companies since 2007. That investment will be vital in helping those companies to survive the recession and to climb out of it. That is why the SNP amendment is well worth supporting.
I thank members for their contributions this morning. We have been talking about an issue of fundamental importance: how we can support the Scottish economy. We have had debates on that topic in the recent past. In particular today, we have been talking about support for Scottish business.
I hope that the minister will be able to respond to the issues that members have raised. The structure of the Scottish investment bank is evolving, and I urge the minister to ensure that progress on it is much quicker than it has been on the Scottish Futures Trust. Letters, acronyms and words are out there in the public debate but, as we wander about constituencies in different regions of Scotland, we see hardly any evidence of progress on the ground. I was brought up in an engineering tradition in the city of Glasgow, and there was an idea that steel in the ground made a statement. Today, we have to demonstrate that we are committed to investing in public infrastructure. The commitment has to come from the Westminster level and from the Scottish Government level.
In some of the contributions this morning, there has been a bit of intellectual sophistry on the question of who takes responsibility. I have heard some nationalists say that the Westminster Government has sole responsibility for the economic crisis, and yet in Scotland we are immune because we have a remarkably robust economy. Now, I do not think that the ground rules were established in 2007—or even in 1997, if I wish to concede some intellectual ground. However, we have to be honest about the measures that we want to be put in place.
There are dividing lines in the chamber. There are those of us who, like me—and, I think, the Government—believe in fiscal stimulus and think that contributions should be made so that we do not repeat the mistakes that had an impact in the early 1980s on areas such as the one that I represent. At that time, no one tried to identify ways in which people could be kept in work or retrained to access other work and no thought was given to ensuring that there was a level of public investment that would encourage the economic activity that is necessary for consumer spend. All the evidence that we in the Parliament have taken in the past six months has been about the need to find ways to inject money into the economy to increase spend.
However, I part company with the Government when it comes to the assumption, driven by focus group assessments, about the figure of £500 million. That figure has been repeated like a mantra, and we might even hear it at First Minister's question time later today. However, those who talk about that figure avoid talking about the £900 million that the present Scottish Government has had made available to it through draw-down from the Treasury, which was not available to any previous Executive and has helped to deliver some of the social commitments that the Government understandably wants to reassure the public about.
A second area in which I part company with the Scottish Government involves the way in which the UK Government has intervened in our major financial institutions. There should be no debate about that. The Government did what it had to do. We have a difference of opinion about how we organise business and our institutional structures, however.
With regard to those banks, for which economies does he think that they were too big to fail? Which economies would be most adversely affected?
That question would have more resonance if the Government had not changed the grounds around the iconic economies that it has identified in speeches over the past four or five years but which it no longer mentions. Back benchers still identify them, though, and a recent back-bench motion said that Scotland should aspire to be like Slovenia. I stand up for Scotland more than that. I think that we can be bigger and better than Slovenia.
Margaret Curran and I have parliamentary seats that cover the east end of Glasgow, and we recently held an economic summit in the Queenslie industrial estate to talk to small businesspeople and individuals who are involved in the public and voluntary sectors there. Some simple and basic themes emerged during our discussions. I agree that the Government is making progress with regard to some of them, but I would like to recommend some immediate action that the minister could take.
Now is not the time to be complacent about the emerging apprenticeships crisis in Scotland or to lack the drive that is needed to address the issue. We must sustain young men and women who are in apprenticeships at present. The mistake that was made in the 1980s was to ignore them.
As other members have mentioned, we must ensure that there is a good cash flow for small businesses. That is a consistent theme, which we must deal with.
We must address the question of how we use public procurement to try to change the economic and social fabric of the communities that I represent. That is a matter that is close to my heart. The Labour-Liberal Democrat Executive developed substantial infrastructure projects that have, thankfully, been continued by the Scottish Government, such as the M74 project and various projects around the Commonwealth games. We need to ensure that those projects deliver employment opportunities for local communities. Often, companies from Scotland and elsewhere bring their existing staff to work on such projects rather than create opportunities in the local communities that need them most, which could be easily done.
Members have raised some fundamental issues. We need reassurance on the Scottish investment bank. If it is an amalgamation of two or three funding streams, that is fine—I do not really care about that; what I am interested in is when it will be established, what it will do and whether it will make a difference with regard to the challenge that we face.
I will happily work with the Government on the issues of public procurement and upcoming local works programmes to ensure that people in the east end of Glasgow can benefit from them.
Many of us have grave concerns about the current economic state of the country, and I welcome the fact that, once again, the Liberal Democrats have brought an important issue before us.
We have debated this issue in many motions and in many terms in recent weeks and months. Today's debate began to identify some of the key proposals that might deal with some of the problems. However, it has also been used to perpetuate some myths, and I would like to talk about a few of them at the outset in an attempt to scotch them once and for all.
The first myth is that Scotland is somehow insulated from the worst rigours of the recession in a way that other parts of the United Kingdom are not. It is true that statistics can be used to show that Scotland has been slower to enter recession, but I strongly believe that it is the nature of the Scottish economy that made that the case—it was always going to be thus. Scotland's economy is disproportionately dependent on the public sector. Without wishing to enter into any arguments about whether that is a good thing or a bad thing, members will understand that an economy that is dependent on the public sector will be slower to enter recession than one that is more dependent on the private sector. However, the sad consequence of that is that, although we are slower and later to enter recession, there is a strong likelihood that we will also be slower and later to emerge from that recession. That is why the issues that we are discussing today are important. We need to think now about that recovery phase and put in place measures that will underpin the rise in our economy at that point.
Does the member accept that, although we have higher levels of employment in the public sector in Scotland, the public sector is an important economic driver? I refer the member to the Ministry of Defence aircraft carrier contracts that are coming to Scotland. The Scottish public sector might be lagging behind because of the Scottish Futures Trust, which has meant that infrastructure projects that should have been started have not been.
I absolutely agree with the member. However, the simple fact is that, as we enter the recession, public expenditure that has already been allocated is more significant to the Scottish economy during this current year and, therefore, underpins the economy at a time when shrinkage is taking place. Sadly, the problem is that, once recovery begins, the green shoots—if I may be allowed to use that phrase—will appear too late in Scotland, and public expenditure will be depressed, which will mean that the Scottish economy will suffer from a lack of resource at a time when growth is beginning to develop in other places. However, I agree that well-placed public expenditure remains extremely important through that phase.
It is fair to welcome the fact that the Liberal Democrats have made a positive proposal. However, I am concerned that the proposal to move forward with the funding proposal in a short timescale might be dangerous. I believe that urgent action is necessary, but reckless action can sometimes be counterproductive. I therefore find it difficult to accept that the proposal should be in place before the summer recess.
We have been stressing our proposal for nine months, and consideration of it is in the operating plan of Scottish Enterprise. We are asking for the Government to accelerate the process so that it can make a statement before the summer recess with a definitive position on whether it will be introducing it. I think that that is reasonable.
It would be reasonable if we knew how much this was going to cost. At the moment, nothing that we hear from the Liberal Democrats tells us what it will cost.
We have before us a proposal for a Scottish investment bank which, as James Kelly and Frank McAveety pointed out, is simply an assembly of existing funds that have been drawn together to produce a figure of £150 million. I do not believe that that is evidence of new money that is being made available.
Jeremy Purvis says that the Liberal Democrats have been stressing their proposal for nine months. It would be churlish of me to say—but I will do so anyway—that, nine months ago, they were also proposing an £800 million tax cut in Scotland, which would have made the proposal slightly difficult to fund.
I welcome the fact that the proposal has been made in the Parliament, but I will support the Scottish Government's position, which allows us to devote more time to considering the issue.
I sometimes worry that the Liberal Democrats are a bit like the goldfish of popular mythology, because, every time that they come to the chamber, they swim around the pond once again and everything is new to them—every proposal is made without any context, because they remember nothing about what they proposed the time before or the time before that. However, I understand that experts believe that goldfish have extremely good memories, and remember a great deal about what goes on about them. Sadly, this debate has clearly shown that Jeremy Purvis does not have the same quality.
I call David Whitton.
Thank you, Presiding Officer. I was so wrapped up in listening to Mr Johnstone that I almost missed my turn.
I speak in support of the Labour amendment and confirm that we will also support the Liberal Democrat motion. As has been said, this is the second week running in which we have debated in Opposition time elements of Scotland's economic performance. Last week, during a Labour-inspired debate, we raised the issue of the wage subsidies that our colleagues in the Welsh Assembly have introduced. Commenting on those, Mr Mather said:
"We are keen to do whatever we can to empower Scottish businesses to take the fullest advantage of the opportunities that lie ahead."—[Official Report, 21 May 2009; c 17698.]
However, what has been exposed today by the Liberal Democrat motion and Mr Purvis's speech is hardly a ringing endorsement of those sentiments.
The First Minister made a grandstanding announcement about the creation of a Scottish investment bank at the conference of the Scottish Trades Union Congress—by coincidence, the very organisation that championed such a move in the first place—but what is the reality? Mr Mather has had at least a week to speak to his counterparts in Wales about wage subsidy policy, but has he done so? I think we should be told. No doubt he will tell us during his winding-up speech.
What are the chances that something will happen soon to access investment from the European Investment Bank? Various figures have been thrown around. Mr Mather's boss, Mr Swinney, the Cabinet Secretary for Finance and Sustainable Growth, told the European and External Relations Committee on 28 April that there was potential for some JEREMIE funds for Scotland—that is, funds from the joint European resources for micro to medium enterprises—and that he hoped to have some news before the end of June. However, he had no answers as to why Scotland is lagging behind Wales in looking for solutions to our economic difficulties.
Sustainable economic growth is supposed to be the SNP's number 1 priority, or its lode star, as I have heard Mr Mather describe it many times. What is the Scottish investment bank, which the First Minister was so keen to brag about? As we heard, the SNP's version is simply a rebranding of three funds—the Scottish co-investment fund, the Scottish venture fund and the Scottish seed fund. It is just like the Scottish Futures Trust—another organisation that flatters to deceive but has so far done nothing to stimulate the Scottish economy. The Scottish Government has admitted that the new organisation is not a bank in the accepted sense but a vehicle for economic development. I thought that we already had one of those called Scottish Enterprise but, just when we needed it the most, it was neutered by the SNP. The Scottish Futures Trust—that other much-advertised vehicle for providing funds for public infrastructure investment—has not even left the garage. Indeed, it should be a candidate for the new scrappage scheme.
Never mind the election leaflets about a recovery plan that will create 20,000 jobs, the dramatic drop of about £1 billion in public investment means that the Salmond-Swinney slump has taken more than 20,000 jobs out of construction and allied industries in Scotland. I predict that there will be no wage subsidy intervention. Mr Mather says that we have to ask questions about the cost, yet only last week he said that the Government did not want a repeat of what happened in the 1980s, when skilled workers were allowed to leave the oil industry. Mr Mather, I fear, is not the minister for the economy but the minister for excuses.
We heard other excuses from SNP members this morning. Dr McKee said that Scotland's economy will not recover until it is free from the dead hand of the Treasury. I say to him, "Look to Ireland and Iceland and be careful what you wish for." Rob Gibson said that Scotland has a lower unemployment rate than Wales, but he did not mention the 1,000 young Scottish apprentices who are out of work but were promised by the SNP that they would be able to finish their apprenticeships.
Does the member have an estimate of the number of citizens of the Republic of Ireland who wish to rejoin the United Kingdom as a consequence of the financial situation?
That is one of the more bizarre interventions that I have come across. I think I can just pass on it.
We all know about the job losses in Scotland's banking sector, which were caused by irresponsible management and the global credit crunch. Our two biggest banks are involved, as is a leading building society. At the weekend, Labour called for an ad hoc committee of the Parliament to be established to consider how the banking and financial services sector is dealing with the situation and preparing for the upturn. Scotland is still a force in finance and one of Europe's leading players in the field, but we need to know what strategy our major banks are employing and what HBOS assets Lloyds is considering selling off, if any, as a result of European regulations.
For how long has Mr Whitton held the view that the Scottish Parliament should conduct a banking inquiry?
My colleague Mr Park is reminding me from a sedentary position that he called for such an inquiry some three months ago. Perhaps Mr Brown and his colleagues are just catching up with us, as usual.
I hope that the other parties will agree to our proposal because getting a clear idea of what is happening in the financial sector is a key ingredient in helping Scotland through our current economic difficulties. The SNP could start by putting some detail into its Scottish investment bank proposal, as my colleague Frank McAveety requested, and showing a little more urgency in its dealings with the European regional development fund programme.
It has been interesting to hear opinions from members throughout the chamber. The majority of speakers have been supportive of cohesion and the support programmes that the Government and the Parliament have delivered, notwithstanding the negative speech that David Whitton just made.
We have programmes in place that meet the current challenges and help families, employees, businesses and other organisations. I am pleased to take this opportunity to reinforce the Scottish Government's commitment to do everything in its power to support Scottish businesses and enterprise in the current economic situation. We are undoubtedly in difficult times, and that is why it is more important than ever to recognise the crucial role that the SME sector plays in increasing sustainable economic growth throughout Scotland. Indeed, it is that recognition and our awareness of the need to reflate our economy that led us to accelerate £293 million of capital spending into 2009-10, on top of the £30 million into 2008-09. It is estimated that that accelerated spending will support 5,800 jobs in the Scottish economy in the next year.
In the meantime, we are ensuring that all Government activity, including planning, regeneration and public procurement, which Mr McAveety mentioned, helps to support economic development. As I mentioned earlier, we have expanded the small business bonus scheme, which has helped the owners of some 64,000 Scottish business properties and saved the average small business about £1,400 a year. We are also allowing businesses that do pay rates to spread the annual increase over three years.
Through Skills Development Scotland and the Scottish Funding Council, we are strengthening our partnership action for continuing employment initiative to help businesses and individuals who face redundancy.
Does the minister share my concern that more than 1,000 apprentices have been made redundant since February and only a third of them have found opportunities to complete their training? We raised that last week because there seems to be little progress on it, despite the First Minister's personal guarantee that that would happen.
The answer is in the First Minister's personal guarantee and the Government's commitment to address the issue.
We have also invested £2 million in our small business loans scheme to help SMEs to cut fuel bills with interest-free loans. In April, as I mentioned, the First Minister announced that the Scottish Government would work towards the creation of a Scottish investment bank. As I state in our amendment, we are keen
"to enhance the scale and impact of such financial support to growing Scottish businesses including the potential to secure significant additional funds from the European Investment Bank through the establishment of a Joint European Resources for Micro to Medium Enterprises (JEREMIE) fund for Scotland".
We are therefore already actively investigating the potential to tap into resources that are available from the European Investment Bank.
As well as collaborating with the UK Government on improving access to finance for Scottish businesses and working together to benefit businesses, we are using all the levers at our disposal to help put Scotland on a course to economic recovery and eventual success.
The SNP's election leaflet says that its recovery plan creates 20,000 more jobs. What is the source of the claim that the Government's recovery plan is creating 20,000 more jobs? It is not in the recovery plan that the Government has published.
That might well be a localised leaflet aimed at Mr Purvis in recognition of his own willingness to take £800 million out of the budget at a time when the Westminster Government was going to take out £500 million and without having any compensating bookkeeping entries in place.
Will the minister give way?
I think that we have heard enough from Mr Purvis. [Interruption.]
One moment, minister. Mr Purvis, behave yourself.
I was in no danger, Presiding Officer. There was no paper clip attached to the leaflet that Mr Purvis threw.
The Government has continued to develop and expand its programme for economic recovery, and we remain keen to hear the views of our social partners to ensure that we are best placed to take advantage of Scotland's strengths. The First Minister recently invited a group of six business representative organisations and the STUC to give combined pre-Cabinet presentations to the Scottish Government on ways of working together to ensure that Scotland is well equipped to deal with the current recession and to emerge from it in a strong position. The Cabinet Secretary for Finance and Sustainable Growth has been and is still engaging directly with businesses around the country, especially SMEs, to listen to their experiences of the downturn and find out what support they need from the public sector.
Did any of the six business organisations that the minister referred to comment in their presentations on the fact that the Scottish Futures Trust is just not working?
I have my notes here. The presentations focused on procurement, business liquidity and connectivity.
We hear what you are saying, Jim. Keep talking.
I will leave it to the Presiding Officer to comment on that.
Please do not make comments from a sedentary position, Mr Rumbles.
I certainly take on board Frank McAveety's suggestions about sustainability, jobs, cash flow, public procurement and positive localism and feel that his thinking is very much converging with our own. Like us, he is keen to ensure that we do not deflate during the recession.
Last week, we had a very important meeting with the Scottish small business consultative group at which we discussed how we might develop some of the approaches that we have been piloting in Argyll and Bute of encouraging communities and local industrial sectors to come together and create the kind of localism that Mr McAveety highlighted.
It is of course important to look at what is happening in other jurisdictions, but it is equally important not to indulge in over-hasty followerism. We must focus on the integrity and complete effectiveness of the Scottish economy. It is crucial to take incremental steps and to ensure that each of those steps is thoroughly and carefully considered.
I am slightly concerned that the minister is coming to the end of his allotted time without taking the opportunity to correct the record. In his opening speech, he said that the ESF money that had been committed—he referred, I believe, to £95 million—was new money, but the SPICe briefing that the European and External Relations Committee received a couple of weeks ago clearly says:
"the Scottish Government also made explicit that the structural fund support had been front loaded in an effort to support economic development and create new jobs in an effort to tackle the current economic downturn. This means the spending had been brought forward from later years of the programme."
In other words, it is not new money, but accelerated money.
I have no difficulty in agreeing with the member. I can clarify that the money has been brought forward.
We welcome the proposed banking inquiry, because we believe that it will expose a failure of stewardship by the Financial Services Authority, the Treasury and the Bank of England in not calling the banking sector to account and in creating the conditions that allowed the sector to indulge in these excesses.
I will leave it at that.
This has been a useful and interesting debate on an important matter. It is sad that more members have not wanted to speak in it; it has meant that some of the closing speeches have been longer than some of us might have expected. Members should feel free to intervene.
I will try to cover some of the points that have been made. I am pleased that in his winding-up speech Mr Mather confirmed that the ESF money, welcome though it is, is accelerated funding and not new money. Many of the actions that the Government has claimed will stimulate the economy have been funded by money that it has been able to bring forward from outside sources. For example, thanks to the UK Government, the Scottish Government has been able to accelerate capital funding, which is welcome. Moreover, it has been able to accelerate ESF funding because the European Union has allowed it to. These economic stimuli have come about not as a result of action by this Government but as a result of action by other agencies that the Government has been able to participate in. We welcome its participation in those actions, but the fact is that we are not talking about new money.
The Government has failed to ensure that its budget—the £32 billion under its control—is being spent in a way that best develops the economy. For example, the Scottish Enterprise budget, which is used to support business in general and to invest in new businesses, is being cut in real terms over the next two years at a time of economic recession. Moreover, as Jeremy Purvis pointed out, HIE's budget is under severe strain and, indeed, is likely to fall as a result of a fall in income from its other activities. As a result, its budget for supporting businesses also faces a real-terms cut. Those are examples not of the Government bringing forward money to stimulate the economy but of a Government cutting money that it should be using as a stimulus.
Does the member welcome the transfer of funds to Skills Development Scotland and the business gateway and the fact that the councils are now completely involved in running our economy?
This is not money that is being transferred to other bodies; it is like-for-like funding that is being cut. That money is in HIE's business programme, which is published today, and Scottish Enterprise's business programme, which was published a few weeks ago. In any case, if the minister wants to talk about skills, I should point out that our colleges and universities will also experience cuts in like-for-like money over the next couple of years.
Does Mr Smith agree that Skills Development Scotland, which the minister has just prayed in aid, is suffering its own cut of 161 staff?
I am happy to do so.
In his opening speech, Mr Mather also said that he was focusing on all the levers available to the Government. However, that is not the case. For example, we have yet to see any progress on JEREMIE funding, to which I will return later.
John Park asked whether the Scottish investment bank was really a bank. The answer is that it appears not to be, in the same way that the Scottish Futures Trust appears not to be a trust. As Mr Park rightly made clear, we need to know the advantages that this move will have over existing arrangements. In fact, it might even have some disadvantages, given that the Scottish venture fund and the Scottish co-investment fund have their own management boards to ensure that the money is well directed and the projects that are supported are well focused. We need clarity soon on whether the proposed investment bank will completely take over those functions or whether it will simply be another quango on top of those two Scottish Enterprise project boards.
The problem is that the Government thinks that by announcing the Scottish investment bank it has actually done something. However, it has done nothing to indicate what the bank will be, whether it will be a bank at all and whether it will bring in any new money or simply amount to rebadging of existing funds and programmes. If it is an exercise in rebadging, will it make any difference to Scotland's economy? I hope that, at a future date, the minister will indicate, if not to the Parliament then to the Economy, Energy and Tourism Committee, what the funds will do.
Gavin Brown asked how much JEREMIE funding the Liberal Democrats would want. The answer is that we need the Government to tell us what it can actually do. JEREMIE funding can lever in additional support—indeed, up to 50 per cent of the total funding—from the European Investment Bank, but we need to know what the Government intends to do with the ERDF funds that are available to it to support the leveraging in of additional funding. That statement should certainly be made before the summer recess. After all, JEREMIE has not just suddenly appeared—it was being discussed as early as 2006, when the proposal for the current European funding programmes was produced.
The programme monitoring committee for the lowlands and uplands Scotland ERDF and ESF programmes discussed the issue at its October meeting and considered a paper on some of JEREMIE's advantages. The paper states that JEREMIE is a holding fund "of a revolving nature", which makes better use of the available money. It also refers to leverage of capital from the European Investment Bank. JEREMIE is described as "flexible" and "efficient" and as providing the ability
"to re-allocate the resources to one or other financial product in a flexible way".
The paper states that the Government's role was to consider, along with Scottish Enterprise, "Potential disadvantages". That was in October 2008. What progress have the Scottish Government and Scottish Enterprise made since then, and why can the Parliament not know about that? If JEREMIE funding has significant disadvantages, the Government should at least let us know about that so that we are clear. However, the programme seems to have significant advantages, which might be why the Welsh Assembly Government has proceeded to use it. In an announcement on the launch of a £150 million scheme in Wales, Rhodri Morgan, the First Minister of Wales, said that the move
"demonstrates how the Welsh Assembly Government is agile and innovative in devising new and practical ways to helping companies to surmount the current global economic and financial challenges, and grow for the future."
Agile and innovative—those are two features that are lacking in the Scottish Government's approach. There is no agility and no innovation.
In my remaining time, I will comment on some of the speeches, although Ian McKee's speech does not merit any comment. Rob Gibson started by using the phrase "at odds with reality" and he continued to be at odds with reality throughout his speech. He seems to think that Scotland is weathering the economic recession better than the rest of the UK. As Alex Johnstone made clear, that might be the appearance, but the reality is that most commentators think that Scotland might end up in a deeper and longer recession than anywhere else in the UK. If the Government does not start to take action soon, that will certainly be the reality.
The member has not discussed any of the issues relating to our support for renewable energy, the year of homecoming or the many other developments that will take us out of recession. Surely those are supporting Scottish business.
Mr Gibson should have been a little more patient. I know that he raised those issues, and I was coming to them. We welcome the support for renewable energy, but we are still waiting for an indication from the Government of how it will continue to fund development. For example, in marine energy, a replacement for the wave and tidal energy support—WATES—scheme is still awaited, and the sooner that that is introduced the better. I am afraid that the saltire prize is not a replacement for the WATES scheme. It is different and does not do the job that needs to be done.
Frank McAveety highlighted a couple of important issues. I talked briefly about the lack of funding for colleges in the coming years. That is important, particularly because of the issue with apprenticeships to which Frank McAveety referred. We do not want to be in the situation that we had in the 1980s, when we had a forgotten generation of people who did not have a chance to get a job or training when they left school or university. Some of them ended up on the scrapheap, in effect, for life. We do not want that to happen again, so the Government must wake up to the reality and ensure that funding is in place to support modern apprenticeships and college and university courses. The Government should try to help those who come out of colleges and universities to get into work.
Our concerns about the Scottish investment bank are about the lack of clarity on what it will do, how it will improve the current situation, and whether it will simply create another quango. Today, we expect the publication of the public services reform bill, which is meant to deal with quangos. I hope that it is not another example of the practice of not reducing the number of quangos in Scotland but merging them so that we have fewer titles but the same number of jobs or more, while less is done.
Let us have something that will benefit Scotland. Let us get the Scottish investment bank going if it will provide benefits, but we must also consider how to draw down as much money from Europe as possible. We need a statement from the Government before the summer about what it will do on JEREMIE funding and on getting money from the European Investment Bank.