Economic Development
Our first item of business this morning is a statement by Henry McLeish on "The Way Forward: Framework for Economic Development in Scotland".
Sir David, with your permission I would like to make a statement on the framework for economic development, because today we are publishing "The Way Forward: Framework for Economic Development in Scotland". It will be recalled that at the start of the year I issued an invitation to interested parties to take part in a consultation exercise aimed at devising a framework for economic development in Scotland. I know that the report has been eagerly awaited and later this morning the Deputy First Minister and I will host a press conference to launch the framework.
The document is a very substantial read, which is why I want to reassure members immediately that this will not be the only opportunity to discuss it. I am calling for a debate in the Parliament soon after the recess to allow everyone to consider the full report at greater length. That will make for what I hope will be a stimulating and creative discussion on the future of Scotland's economy. I am also planning to organise an autumn conference to take forward action flowing from the framework, the review of the enterprise network, the tourism strategy and other initiatives. That is critical to continue the dialogue with the many parties who have contributed to the framework and our thinking on other aspects of the economy. I have already had a brief discussion with the convener of the Enterprise and Lifelong Learning Committee, Mr John Swinney, on that matter.
In recent months we have been taking forward individual aspects of the commitments in the programme for government, for example in "Social Justice… a Scotland where everyone matters", in which we set out what steps will be taken towards achieving our social justice objectives and towards eradicating child poverty. Today we move another stage forward with the publication of "The Way Forward: Framework for Economic Development in Scotland". This is an important step that will help us to secure the economic opportunities that can deliver the Executive's vision. It will do that by defining the Executive's vision for economic development and by detailing the action-oriented steps that will help us to achieve that vision which, simply, is to raise the quality of life for all Scottish people by increasing economic opportunities for all on a socially and environmentally sustainable basis.
Long-term thinking about the economy is crucial. The UK Government has an overall economic strategy to guide its actions and national development plans have been a common element in the economic thinking of Ireland, Finland and Catalonia for a number of years. Of course, there are many more examples. This framework is the first framework for economic development that we have had in Scotland. It is a measure of our new political circumstances—and I would argue that there has never been a more pressing need for such a framework.
We are now one year into devolution, which has fundamentally altered the nature and visibility of government in Scotland. It demands that we raise the tone and quality of the economic debate. The framework can help us to focus the discussion. We have introduced a number of strategies on specific sectors of the economy—on the manufacturing and tourism sectors in the past year and important work is going ahead in many other areas, including the knowledge economy and digital Scotland. We need to ensure that they are well directed and part of a coherent overall picture. The framework gives us a basis for doing that.
The pace of change in the international economy is extremely rapid and we must understand the nature of the changes if we are to anticipate rather than react and respond optimally at all times. The framework sets out the context in which we can develop such understanding. The information age, or knowledge economy, poses unprecedented changes, challenges and opportunities in telecommunications and technology. The framework will help us to address those issues.
This is a framework for the whole of the Scottish economy. It is not narrowly focused on a part of the Scottish economy, a specific institution within the economy or a geographic area. It is intentionally very broadly focused; on the economy as a whole and on all the different players who influence the direction of Scotland's economy. The framework seeks to engage everyone with an interest in, and influence upon, Scotland's economy. It is, of course, crucial that the Executive prioritises its actions. The framework sets out specifically to guide our actions in that respect.
The framework is not, however, about the public sector alone. With the economy as the centrepiece, it is only natural that the framework highlights the vital and leading contribution of the private sector. I want it to be a framework for the business community which not only spells out to the business sector the Executive's thinking on the economy—helpful as that undoubtedly will be—but engages the business sector and provides us with common aims and objectives in working together on our economic development.
The framework is built on six key principles: it is inclusive; it is longer term—it looks to a five to 10-year horizon; it is dynamic; it is comprehensive; it is a partnership; and it is evidence based.
It is important that at the end of the first year of the Parliament and the Executive, and as we look towards the second year, we look at maintaining policy by ensuring that it is based on evidence and rigorous analysis, not on anecdote and ad hoc assessment. I suggest that all parties can be guilty of that, including my own. That said, I believe that these are sensible, progressive, pragmatic principles that will help us in creating a successful Scottish economy.
Overall, there are six key actions in the framework. I wish briefly to switch from the principles to what the framework will do. As I stated, it sets out a vision that we can all support, but it also identifies four key outcomes that we must secure. First, we need to secure economic growth through increasing international competitiveness—that is common sense, but it is vital. Secondly, we need to achieve regional development in our country, which will mean that we can overcome the social and economic barriers to everyone sharing in the prosperity. Thirdly, we need to foster social integration. Fourthly, we need to secure sustainability.
Crucially, the framework focuses in large measure on a range of factors that take us towards the outcomes and the vision—factors relating to the macro-economy; the economic infrastructure; enterprises; and to securing social, regional and environmental objectives through removing the barriers to development and focusing on environmental quality.
The framework highlights a number of policy statements to be driven forward quickly by the Executive but produced in close collaboration with all other key interested bodies, as we seek to go further in setting out the specific ways in which we can put the framework into practice and to focus firmly on the extremely difficult choices that will need to be made on allocating expenditure.
While the framework articulates our broad thinking on the economy, it identifies a stimulus to action, consistent with the aims and vision of the framework. The policy statements that it proposes are absolutely critical and necessary; indeed, they will be the most crucial aspect of this project. It recognises the need for a sophisticated understanding of what drives economic development and it identifies the key areas where we need to develop our understanding. It sets out our thinking about how we in the Executive, and the Executive's agencies, can improve the effectiveness of our policies and our expenditure in areas affecting economic development.
The framework sets out many of the key issues affecting Scotland's longer-term economic future. The enhancement of productivity is crucial. It is the basis of Scotland's competitiveness in the global economy and a fundamental ingredient for our success. At present, Scotland has a productivity gap compared with many of the major advanced economies. A sustainable improvement in our productivity is, however, dependent on several factors. I shall list them briefly.
Our competitiveness is influenced by the macro-economy. Low and stable inflation, and the balanced expansion in demand that makes it possible, are essential. There will inevitably be debate in Scotland on the fine print of the macro-economy but the central concern of the framework is whether the overall macro-economic conditions are in place to foster private sector development and promote participation in economic activity.
Moving to supply-side areas, it is vital that we concentrate on Scotland's human capital. We will continue to promote the responsibility of employers and individuals in ensuring that appropriate lifelong learning skills development is accorded high priority. Put simply, the ambition of the chamber and the Executive should be to make Scotland a major European knowledge centre.
In addition, we need to ensure that our enterprises are more competitive. Of course, we need to ensure that we have effective transport and electronic communications infrastructure—that is vital. Because of the critical importance of the electronic infrastructure, the framework attaches high priority to the development of mechanisms whereby the Executive can understand the evolving challenge in that area and how it should respond on a continuing basis.
In closing, I wish to emphasise that the framework is another example of devolution making a difference to the lives of the people of Scotland. We have moved forward from the programme for government to some of the detailed thinking that impacts on all departments, ministers, businesses, individuals and the committees of the Parliament. By pursuing the priorities set out in the framework, I believe we will secure the economic opportunities that can deliver a better quality of life for all our people. I commend this statement to the Parliament.
I congratulate the minister on deleting large sections of his prepared text, so keeping us to time.
I thank the minister for his usual courtesy in providing notice of the statement and copies of the document. I was surprised to see a preface by the First Minister. I cannot imagine that it was sent to him for light relief during his recuperation—although I am sure he has read it.
I welcome the minister's statement and the document, which is something we have long called for to structure the debate about economic policy in Scotland. I welcome the proposal for a debate in the autumn on these issues. A knee-jerk reaction to a very detailed 92-page document would not be appropriate; we will bring our comments on the document to the debate in the autumn. We have no difficulty supporting the vision outlined in the document—anyone would be hard pressed to disagree with it. The debate must be on—our contribution in the autumn and my questions this morning will focus on it—how the document will make a meaningful difference to how public and economic policy in Scotland is delivered.
I was glad to hear the minister acknowledge the importance of learning from the Irish economy and how it is planned. That is in contrast to one of his predecessors who had a different view of the Irish economy. I agree with the minister that the macro-economic climate is of great significance, but I do not see in the document much reference to the impact of fuel tax and the climate change levy on the productivity and competitiveness challenges faced by the Scottish economy.
Does the minister accept that arising from this framework a very clear direction will need to be given to a multiplicity of Government agencies to ensure that they are operating within its terms? I have real concerns that what the minister says today is not reflected in some of the work of agencies such as Scottish Enterprise, the Scottish Further Education Funding Council and the Scottish Higher Education Funding Council, which are vital in tackling some of the challenges set out in the document.
Will the minister tell us more about how he proposes to get real, concrete action arising from the document? The document is worthy but I would like to see how it translates into action. Will he tell us what reflection there has been in the Executive on the need to ensure greater value from its public expenditure and how it intends to deliver that?
Finally, one of the things that is missing from the document is that if we are to set out a vision and outcome and enabling objectives, we surely need to have measures in place to show whether we are succeeding or underperforming. Some fairly stiff measures of the Executive's ambition for the future economy should have been part of the document.
I sincerely hope that the First Minister will be watching the game this evening with more enthusiasm and interest than for reading the 92 pages we have submitted to him. However he is very keenly interested in the economy and I am delighted that he wrote the foreword.
John Swinney's first question was on direction given to agencies. I absolutely agree and I hope that in the announcement of the review of the network next week we can link that in. When we have, for the first time in postwar Scotland, a framework for economic development at national level, that should feed through to what we do at a local level. It should feed through our national agencies such as Scottish Enterprise to the local authorities, the local enterprise companies and to all those who are participating in economic delivery. That is vital—there is no point in having a framework if it is not meaningful at local level.
Also critical—in relation to John Swinney's second question—is how we take matters further. I want first of all to see a set of policies that flow from the framework for economic development. There will be a further debate on how best we can focus. I have often talked about Scotland being smart and sophisticated. We must now learn from some of the countries and regional Governments that I have mentioned, because that is how they do it. That is how the Irish and Finns focus; that is what they do in Catalonia with huge success. I want that attitude and change in culture to ensure that we drive that forward in the policy details.
Thirdly, I too sign up to value for money. There is no point in the Executive having a budget of about £18 billion and my department having a budget of £2 billion if we do not examine every pound we spend. The crucial issue is adding value to the Scottish economy. I want devolution to be about adding value. One way that can be done, as John Swinney suggested, is to ensure that in relation to public expenditure we not only have joined-up government, but ensure that it is focused on returns.
John Swinney's final question was about what measures are in place to ensure that we are making progress and how we gauge success. That will flow from this document, which is not about targets or outcomes; it is a framework within which those vital issues can be further developed. Those four questions will be considered next week with the review of the network and will continue to be considered into the autumn. Those are important issues for the country.
I thank Henry McLeish for the courtesy of making available the statement and the document.
The Conservatives, also, welcome the prospect of a debate in the autumn and a conference to discuss this issue further. We welcome the concept of a framework for economic development in Scotland. My principal concern is about what this all adds up to. I must say to the minister that although this document may make the briefcases of businessmen heavier, I am not so sure it will set business hearts beating.
I hold that view because from my brief perusal of the framework it is clear that it is a worthy document for its broad generalisations and sense of vision and because it gives some helpful indications of what the minister considers the key policy matters for enterprise in Scotland to be, but it seems somewhat short on specifics and I think that that is what the business community now seeks from the Executive, in particular from the minister.
The minister will have to start to pin his enterprise colours to the mast, because I detect that there may be a suspicion in the business community that he will be trammelled or cluttered by the political baggage of colleagues, in the sense that he might be impeded in giving a clear and essential message to enterprise in Scotland as to where he seeks to go, how he expects to get there and what measures he intends to put in place to assess how the journey is going.
If this framework is to be a meaningful guide and steer to the business community—that is what is being urgently sought from the minister—I would like the minister to explain how he plans to measure what is happening. Are there targets? Is there focus? What aspects of economic activity in Scotland does the minister feel are critical for the future?
In his statement, the minister said about policy statements that the Executive seeks
"to focus firmly on the extremely difficult choices that will need to be made on allocating expenditure."
If the minister feels that one of the deficiencies in the Scottish economy today is a lack of inventive and innovatory skills and capacities to enable us to beat off challenges from other countries, is not it a matter of concern that 40 per cent of the research and development grants for our higher educational institution are devoted to social sciences?
In no way am I knocking social sciences; what I am trying to get at is that if this framework is to be sensible, it must be a cohesive picture and we must ensure that all the integral players, such as the higher education institutions, are tied into whatever the steer to the business community will be. Clarification on that aspect would be helpful.
Annabel Goldie's comments were uncharacteristically ungracious. As I said to John Swinney, in a sense the document is not about targets or focus. It is about demand by the business and trade union sectors and members for a framework that provides coherence to the multiplicity of initiatives and activities in which we are involved. In one of Scotland's national newspapers this morning it was suggested that I enjoy initiatives. Maybe I do, but the time has come for a coherent framework in which those initiatives can be implemented. I take Annabel's point that providing coherence is essentially the aim of the framework.
Annabel is absolutely right that the agencies and universities are crucial to economic development. She asked what the framework might do for the hard realities in areas in which Scotland is not doing well, such as e-commerce, productivity, the skills gap and the commercialisation of science. If she looks further into the document—I appreciate that she has had only a short time to read it—she will find pages and pages about those areas in which we have to do much better, from the electronic infrastructure right through to learning involving universities and science.
My intention is that the framework should lead to a flow from principles to action points to details. It is then that we will have targets. I do not want a society in Scotland that is aiming for a vision but does not have any benchmarks, so that in 10 years' time we will say that the framework was there but we will have to ask where we have been and what we have achieved. The next step is to get into the issues. The whole of Scotland will be engaged in taking the process forward.
I join my colleagues in thanking the minister for making the statement available in advance. I welcome the publication of "The Way Forward: Framework for Economic Development in Scotland" and I look forward to reading it in full, which I certainly did not manage to do at breakfast this morning.
I wish to raise a specific matter to which the minister referred in his statement. Obviously, as we discussed in the Finance Committee debate yesterday, micro-economic policy should be evidence based and underpinned by robust data and rigorous analysis. Does the minister agree with several leading Scottish academic economists that there are significant gaps in our knowledge of the Scottish economy, which make sound policy making difficult? Those gaps include lack of data about service industries and Scottish education and training performance, and lack of information about the volume and value of exports by commodity, destination and origin.
Will the minister respond to the specific point that, as a matter of urgency, we need to increase the number of staff who are available to the office of the chief economic adviser, who, I understand, has only four members of staff? Will he undertake to discuss with the Scottish Higher Education Funding Council the possibility of adjusting its incentive structure to promote policy-relevant as well as academic research? What is the current status of the panel of economic advisers to the Secretary of State for Scotland which existed in the days of the Scottish Office? Does the Scottish Executive have a similar panel? If not, does the minister intend to set one up?
Keith Raffan makes a good point about the gaps in our knowledge. I, too, have read Jeremy Peat's book on the Scottish economy, in which economists identified many gaps in the statistical information that is needed to have a useful debate. We have taken some steps in the past year to address some of the issues. Following from the framework, we are considering setting up a consultative committee on Scottish economic statistics. Keith Raffan is right: there is no point in having a vision and practical policies if we do not have the data to have an intelligent debate.
Keith Raffan spoke about the importance of the chief economic adviser. I think that a more prominent role should be given to the chief economic adviser in the work of the Executive and the Parliament. His contribution to the framework has been enormous. It is a solid, substantial document, which addresses some of the key issues. The role of Dr Andrew Goudie needs to be considered and I will certainly reflect positively on what Keith Raffan has said.
I also agree with what Keith Raffan said about research. Many countries that are smaller than Scotland are doing better than we are in the commercialisation of science, the application of processes and the development of products. We have to be much more focused about what we are doing in the economy. We need a balance between academic and practical research, but this is an on-going debate.
The panel of advisers the Conservatives had has disappeared—or, to put it more politely, is no longer in existence. The reason for that is that it had served its purpose. I am not sure whether it did or not. We now have a raft of business advisers on specific areas—the review, the knowledge economy and so on. We need to be a bit more cohesive and bring more of that expert advice from outside into the heart of what we do. That is another issue I take seriously.
Like my fellow Labour members, I am at a bit of a disadvantage in not having a copy of the document to which Annabel Goldie and John Swinney referred. Nevertheless, I welcome the publication of the document. An economic framework was lacking during the 18 years of the Conservative Administration, which singularly failed to address that enormous gap. I look forward to the debate after the recess.
I want to ask about regional policy and its relationship to the framework document. If I may be somewhat parochial, it is extremely important to equip areas such as Ayrshire, which have long depended on traditional manufacturing industries, for the new economy through e-commerce and by addressing the skills gap to which the minister referred. How do regional selective assistance and the priority plus programme fit into the development of regional policy for areas such as North Ayrshire, which are excluded from the economic development to which the minister refers?
Allan Wilson raises an important point. Since the war, the debate in the United Kingdom has been about regional policy within the UK, in which Scotland was regarded as a region. The economic framework attempts to talk about regional policy within Scotland. It is clear that despite unemployment being at a 25-year record low and employment at a 34-year high, prosperity is not going to every part of Scotland. North Ayrshire is a key area where we want to make a difference. I see Dr Richard Simpson nodding—Clackmannanshire is another.
We want to ensure that we focus on regional policy, which will mean making the best of what Europe and Westminster decide and ensuring that we pursue the policies in Scotland. In mid-July, I will launch an employment opportunities for all package, which will address those issues head on.
My question also is about regional policy. The document places much emphasis on regional policy or, to use the new term used on page 64, "peripheral sub-national economies"—new Labour, new jargon.
On Tuesday of this week, Dr John Reid indicated in an answer to David Stewart that the map showing the UK's proposals to the European Commission for those parts of Scotland and Britain that should continue to receive assisted area status has been resubmitted. Why has the map not been published? I presume that it will be published, given that the map submitted last July was. Does the minister accept that businesses in the Highlands are more concerned about funding than about framework documents and that they have a right to know what parts of Scotland, in particular in the Highlands and Islands, have received the backing of the Governments at Westminster and Holyrood?
It is important to spell out that the Executive believes that every part of Scotland should benefit from the economy and everything that we are doing. The Highlands and Islands benefit as well. It is not right to say that businesses in the Highlands and Islands do not need a framework for economic development. The Highlands and Islands need hard-edged help and assistance where required. That is why there is a small business service in Highlands and Islands Enterprise and why we are giving the Highlands and Islands help with skills.
We want to ensure that the Highlands and Islands benefit from the new regional map, which is being finalised by the Government at Westminster and in Brussels. It is important not to keep talking down the Highlands and Islands, which is a prosperous part of the United Kingdom. There are areas that need additional investment and development, which is why we work as we do day in, day out. That coincides completely with the emphasis on regional development policy in the document. Why should not every part of Scotland benefit from what is happening? That is the aim and objective. We look forward to working with Fergus Ewing and his colleagues to ensure that that becomes a reality for every part of the Highlands and Islands.
The minister referred to economic opportunity for all and improving competitiveness. Does he agree that Scotland's economic prosperity and opportunity can be enhanced by addressing the challenge posed by European enlargement, which will open up markets to Scottish business? Does he agree that a social and economic impact analysis of sectors expanding and contracting would assist Scottish business in preparing for that opportunity?
Irene Oldfather's first point is well made. The debate on Europe has concentrated on economic integration—on the euro and issues surrounding it—but there is another matter that is important for Scotland, which is enlargement. Scotland should be considering the exports situation and the intense competition that will result from the accession of many other countries. I have already discussed the export issue with Irene and I can assure her that we will consider it carefully.
Irene Oldfather's second point was about the analysis of companies in Scotland. Part of our programme is to ensure that Scotland takes advantage of worldwide competition and opportunity. That requires the key agencies to make assessments of what is happening and to investigate potential opportunities. I have talked about economic opportunities for all in Scotland, but that will largely depend on how good we are at taking advantage of economic opportunities worldwide—there is a strong link between them.
We have run out time but, as the minister said, we will return to the debate after the recess.