Chamber and committees

There continues to be much discussion of disallowing any rent rises between tenancies. The industry view is that that could limit investment in properties, as any spend would be, in effect, a sunk cost. What assessment has the minister made of that possibility and of its potential impact on meeting the green housing objectives?

I am pleased to support the motion. Scotland is our business, Scotland is open for business and the SNP is focused on supporting and growing that business.

It is a pity that there is a lack of a realistic plan from either the Tory or Labour benches to enhance our prospects for growth. The Tories have lost the plot, but Labour’s row-back on its green prosperity plan, combined with its adoption of the Tories’ fiscal rules, will be hugely damaging. These are not my words but those of the Institute for Fiscal Studies—here is what it said about Labour’s plans for green investment:

“After paring back the plan substantially ... the proposed additional spending would amount to less than half of the additional investment spending the Office of Budget Responsibility thought would be required”

to be

“consistent with the recommendations of the Climate Change Committee in 2021.”

Liz Smith knows that we have had many discussions about that. I highlight to her, from the Scottish Fiscal Commission’s report, on fiscal sustainability, the fact that 18 per cent of Scotland’s capital budget is required for us to get to net zero. Why, in the light of that, is she not clamouring for increased fiscal powers for the Scottish Government?

Accumulating capital stock and increasing the supply of a well-educated workforce are also of vital importance for growth. However, today I want to focus on the most important factor in long-term growth, which is technological innovation.

There are lessons to be learned from history. In the first industrial revolution, which was in the 18th century, we saw steam power taking off with the innovations of James Watt. In the second industrial revolution, the rate of technological change accelerated again, leading to electricity, which enabled new technologies. The arrival of transistors in the mid-20th century laid the foundations of the third industrial revolution, marking the beginning of the digital era, with opportunities enabled by the internet of things, the cloud and big data.

Who on earth, then, when we consider the growth enabled by technology, thought it a good idea to remove the UK from the European Union digital single market? Prior to Brexit, the UK digital economy growth rate averaged 24.1 per cent annually but, by June 2022, it had fallen to 0.7 per cent, according to research from Professor Alison Harcourt. However, the Tories and the Labour Party are now Brexiteers, with the Lib Dems wringing their hands after rowing back on their previous opposition.

The power of technology to drive change is spurred by its growth and use. In 2020, the United Workplace network argued that there are currently more than 19,000 million devices connected to the internet, more than 5,000 million mobile users and about 2 zettabytes of traffic per year at the global level. This is the era of big data. I was therefore delighted that, last year, the Scottish Government launched its 10-year innovation strategy, calling for Scotland to drive towards ranking alongside Denmark, Norway and Finland in being recognised as one of the most innovative medium-sized countries in the world.

The challenge that we all face is neatly summed up in Martec’s law, which states that, unlike information technologies, which grow exponentially, organisations grow logarithmically. It follows that, if organisations do not adapt to the pace of change, extinction will be inevitable. That process is what some people call digital Darwinism. If we do not get on board and if organisations in the public and private sectors fail to keep up and to be much better attuned to continuous innovation, they will become part of digital Darwinism, where organisational extinction is just as much on the agenda as organisational progress. That is the major challenge that we face as we rightly pursue economic growth. Scotland is up for that challenge, and I look forward to seeing the continued focus on economic growth that is outlined in the motion today.

Will the member take an intervention?

I am pleased to support the SNP motion, but I am also pleased to place under scrutiny the wild claims that have been made by the Tories and Labour alike. I have listened to the debate: those parties are singing from the same hymn sheet, but they also appear to be consulting the same economic witch doctor.

The Tories used to claim that conservatism brought political, social and economic stability, but over the past 10 years they have given us five Prime Ministers, seven Chancellors of the Exchequer and 12 plans for growth. At the same time, their policies have caused harm to society and the economy—not least via Brexit. The chaos that was created by the Boris Johnson and Liz Truss premierships displayed a remarkable degree of incompetence, and Scotland continues to pay the price. Frankly, the Tories deserve to be dispatched to the dustbin of history.

Then, along comes Labour, claiming to be the party of change. If Labour was genuinely interested in pursuing change for the better, it would seek to reverse Brexit. Instead, the party is silent on that, which is an act of political cowardice. The fiscal package of tax rises and spending pledges that the Labour Party announced today equates to around 0.2 per cent of gross domestic product, so I will listen to no claims about what the Labour Party is going to do for public services.

In recent times, Keir Starmer, Rachel Reeves and David Lammy have commented about who they claim were the great change leaders of the past. Rather than Clement Attlee, who oversaw the creation of the NHS, or Harold Wilson, who introduced the Open University, they trumpet none other than Margaret Thatcher—that destroyer of communities, who did not even believe in society.

Both the Tory and Labour manifestos claim that they will raise more funds by closing tax loopholes, thereby collecting billions of pounds. However, they cannot spell out how that will be done—I am happy to take an intervention on that point—and neither are they willing to tackle the vastly overcomplicated tax system in the UK, which is full of exploitable loopholes. Similarly, the Tories and Labour claim that they will immediately save lots of money by pursuing productivity gains in, for example, the NHS. That is fantasy land stuff.

Therefore, we should not be surprised that we are in for another dose of austerity if Labour comes to power. We need only listen to Rachel Reeves’s commitment to current Tory policy. As recently as March this year, speaking at the Bayes Business School, she unveiled Labour thinking and emphasised stability of a particular sort. Most critically, she aims to keep the fiscal rule that, as the Institute for Fiscal Studies has pointed out, is the greatest bind on policy—the need to have debt falling as a share of national income. The IFS and others have also pointed out that the rule is a completely arbitrary invention of the current Government. Not only will Labour keep the Tory rule, but it is determined to ensure that it binds the Labour Government, too. In the words of Rachel Reeves,

“debt must be falling as a share of the economy”.

She went on to say:

“I will end the practice of the Chancellor being able to scrap the rules at any time”.

She is supposed to make the rules, not follow the Tory ones.

In case there was any doubt, that is one of the main reasons why many bodies have pointed to the coming of significant cuts—a minimum of £18 billion—under Labour, which Labour has now admitted. I point out to members and to the ladies and gentlemen who are watching the debate that that is just the starting figure. Labour is not only putting on a Tory straitjacket—it is going to tighten the Labour belt.

Let us consider the practical implications. Earlier this year, Labour’s Wes Streeting, writing in The Sun, vowed to fight “middle-class lefties” who oppose expanding the NHS’s use of private healthcare. He wants to expand the invasion of privatised healthcare. Streeting has accepted around £175,000 from two donors with links to private healthcare firms, so it is perhaps not surprising that Labour has dropped its “NHS not for sale” commitment. In the past two years, private equity firms have struck 150 deals for UK healthcare companies, according to figures that have been reported by the Financial Times and cited in The Guardian. Those firms have bought up ambulance fleets, eye care clinics and diagnostics companies. As Hettie O’Brien from The Guardian rightly concluded in an article last August,

“When asked how he would deal with the NHS crisis, shadow health secretary Wes Streeting echoed his Conservative counterparts and pledged to use private companies to reduce waiting lists. For investors, it was a show of support. For patients, it’s a worrying indication that our politicians have little intention of arresting the decline of our public health service.”

The implications go beyond those that have been cited by Hettie O’Brien. If new investment in England and Wales is undertaken using that privatisation model, there will be no Barnett consequentials. That is one more example of how our public services in Scotland are just as much at risk with Labour as they are with the Tories. The only way to protect our public services in Scotland is by securing our independence as soon as possible.

The complexity that is associated with how EU structural funds are allocated—in particular, the match funding that is delivered through third-party agencies and is often overseen by local authorities—is not commonly understood. There has been complexity through Covid impacts and changed audit processes before final outturn figures could be finalised. We all hope that as much money as possible can be spent, but the real loss is surely that of the EU funds themselves. Can the cabinet secretary confirm that any replacement funds from the UK Government will not match the value of EU structural funds, despite claims that they would do so? Indeed, there is an anticipated shortfall to Scotland of £337 million over the next three years.

Is the member aware that the UK economy has made the slowest recovery from the 2008 crash of all advanced economies and that that is highly indicative of macroeconomic issues?

[Made a request to intervene.]

Will Pam Duncan-Glancy give way?

I have a brief top-up comment that follows on from my colleague Ben Macpherson’s fair point about the process of allocation. It might well be worth exploring that issue further, but I would be very surprised if it were otherwise. If the Scottish Government were mandated to flow the consequentials through in exactly the same format, that is exactly what it would have to do; after all, it would be a legal requirement. However, given that this is the education committee, there might well be a misunderstanding about how the financials flow through, the process itself and the point at which money arrives with the Scottish Government. It might be worth exploring that.