What discussions he has had with the First Minister about the level of business rates.

I have regular discussions with the First Minister, covering a range of issues. The Scottish Executive's announcement of an alignment of the business rate poundage with England over a period of two years is good news for Scottish businesses.

I thank my right hon. Friend for his response. I know that he will join with me in congratulating the Scottish Executive on its forward thinking. Let us hope that it will bring the right environment for growth in the economy.

The next time my right hon. Friend talks to the First Minister, will he ask him about the business rates for Glasgow? Since the mechanism was introduced by the then Conservative Government—they took all the business rates for Scotland and put them into a pot—Glasgow has lost, in general terms, about a third of its own money. Will my right hon. Friend ensure that when there is even less money going back into the pot Glasgow gets its fair share for once?

I shall certainly endeavour to talk to the First Minister about that at some stage. I am told that Glasgow has received total Scottish Executive grants of more than £1.1 billion, which is something to be going on with. The whole issue of whether non-domestic rates incomes should be retained was considered by the Scottish Executive city review team in 2002. The Scottish Executive established a cities growth fund, which has allowed £172 million to be made available to councils. I suspect that whatever system is chosen will have some imperfections, but I would not want my hon. Friend to think that Glasgow was completely losing out. The sum of £1.1 billion is a sizeable contribution to the city and is doubtless very much needed. As we all know, Glasgow has made huge efforts in the past few years to transform itself, which is why it is now one of Britain's foremost cities for retail.

The Secretary of State's colleagues in the Scottish Parliament have done a U-turn on business rates, which is a change for which Scottish Conservatives have been calling for five years. During that time, Scottish business has paid some £800 million more in taxation than it should have done. Will the Secretary of State apologise for what was clearly a mistake?

It was drawn to my attention the other day that a By-election was held in Dumfries—which used to be a Tory stronghold—in which the Tories got six votes. The hon. Lady's question perhaps illustrates why.

The hon. Lady must know that Administrations adjust their policies from time to time, in this case to help business. The fact that a Labour-dominated Administration chose to reduce rates shows their commitment to helping Scottish business. I am also bound to say that I do not recall hearing anything from the Conservatives on the subject in the past five or six years, which shows what a hopelessly ineffective Opposition they are, north and south of the border.

Absolute nonsense. We called for that reduction in business rates because we are the party of business and understand that it should have been done long ago. There is no doubt that Scottish business has suffered compared with business in the rest of the UK. The correct decision has at last been taken, but why will it not be introduced until 2007? If it is needed so urgently, should not it happen now? If the elections to the Scottish Parliament were next year instead of in 2007, would it be done next year? After all, it is clearly a political, not an economic, decision.

The hon. Lady just said that it was a necessary economic decision: she cannot have it both ways. The change is being phased in because it has to be paid for. I would have thought that the Conservative party, even in its present state, would accept that to spend money one needs to identify where the savings will be made, and that sometimes takes time.

The Scottish economy is doing well—[Interruption.] Well, it is growing at above the trend rate of growth and we have the highest level of people in work that we have ever had. Contrast that to 20 years ago, under a Tory Government, when 3 million people were unemployed nationally and there were huge levels of unemployment in Scotland. The Scottish economy is completely different from what it was 20 years ago, and that is partly due to what the Scottish Executive are doing, although much of it has to do with the conduct of the economy by my right hon. Friend the Chancellor of the exchequer. We have seen sustained growth when other countries have had recessions—the difference is there for all to see. Scotland is doing well at the moment. We need to do better still, of course, but we are doing a lot better than we would ever have done had the Conservatives remained in office.

When my right hon. Friend discusses the consequences of the business rate setting with the First Minister, will he ensure that they take into account the result of the equal pay and single status agreement, which should have been implemented in 2002? More than 100,000 women are owed back pay to 2002, which could cost local authorities more than £1.5 billion. Will my right hon. Friend ensure that that money is available in the financial settlement for Scotland to enable that back pay to be paid, even if the business rates are equalised with England?

The Scottish Executive had their spending settlement agreed in the spending review last year, and that will not change. As the First Minister has made clear, both the Scottish Executive and local authorities have to live within their budgets, whatever happens in those discussions.

As the Scottish business rate poundage is now heading down to the English level, there is every prospect that the overall rates burden in Scotland will be lower than that in England. What steps will the Secretary of State take to promote Scotland's new competitive edge to potential inward investors from Europe and more widely, to ensure that the Scottish economy gains the maximum benefit from the bold step agreed by the Scottish Executive and announced by Nicol Stephen?

I think that this is a somewhat sterile debate, but it is certainly my recollection that although the hon. Gentleman's Liberal colleague north of the border may have muscled in on the matter, the decision was very much that of the First Minister, as we would expect.

I welcome the hon. Gentleman, who is standing in for his colleague as Liberal spokesman—John Thurso has other business, and I quite understand that—and, as a fellow Edinburgh MP, he will know that there are many examples in Edinburgh, as well as other parts of Scotland, where firms have chosen to set up in business. Perhaps a striking example is the fact that the Royal Bank of Scotland, which is now the fifth or sixth biggest bank in the world, has chosen to locate its global headquarters in Edinburgh. It employs a substantial number of people, and it and other financial service providers in the city have done a great deal to advertise the merit of doing business in Scotland. That is why I told Mrs. Laing a few moments ago that Scotland is doing an awful lot better today than in the past. Of course, we need to improve our productivity and so on, but the economic picture in Scotland is pretty good at present, and we will build on that with a stable economy, as well as with the other measures that will be taken by the Government here and the Scottish Executive at Holyrood.