Economy

Scottish Executive – in the Scottish Parliament at 2:30 pm on 24th June 1999.

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Photo of John Swinney John Swinney Scottish National Party 2:30 pm, 24th June 1999

To ask the Scottish Executive to outline its plans for economic development and employment creation in Scotland. (S1O-91)

Photo of Henry McLeish Henry McLeish Labour

On many of the standard indicators, the Scottish economy is performing well. Unemployment in Scotland is falling, employment is increasing and youth and long-term unemployment are both at historically low levels. Scottish manufacturers and exporters have performed resiliently in the face of difficult trading conditions. This is a tribute to the Government's very successful management of the UK economy over the past two years. Devolution and the creation of this Parliament have given us an opportunity to consolidate our economic success, which we will do on the basis of the principles and initiatives set out in "Partnership for Scotland".

Photo of John Swinney John Swinney Scottish National Party

I thank the minister for that reply. Will he agree that Scottish Widows is particularly important to the Scottish economy?

Photo of Henry McLeish Henry McLeish Labour

Yes. In the dynamic financial services sector it is vital to the Scottish economy. It is important that members of the Scottish Parliament are seen to support enterprise when jobs and headquarters are being secured. Scottish Widows' customer base is being widened from 2 million to 15 million in the United Kingdom and more than 2,200 outlets are being opened to it. The funds under management will increase from more than £30 billion to more than £80 billion, which will mean that the financial services sector in Edinburgh will deal with more than £250 billion-worth of funds under management. That will take it to the level of Frankfurt, and will probably mean that it overtakes Frankfurt as the fifth largest financial centre that deals with new unit trusts and management funding.

Members need to be aware of the issues involved. We clearly need to ensure that we invest in our financial services sector. At the end of the day this must be an issue of paramount importance to Scotland.

Today's editorial in The Scotsman says:

"By their response to this deal . . . MSPs . . . can exercise their responsibility to protect the public interest while simultaneously telegraphing their desire to foster further . . . success stories."

The Royal Bank of Scotland plc, Stagecoach Holdings plc, British Energy plc and Scottish Power plc are all benchmarks of success and we should never talk them down.

Photo of John Swinney John Swinney Scottish National Party

In recognising that the board of Scottish Widows is now a subsidiary board of Lloyds TSB Group and that control over decision making at Scottish Widows has been lost to Scotland, does Mr McLeish propose to take any action in line with the speech that the First Minister delivered at the Scottish Council Development and Industry annual conference last March? He said:

"Government should certainly be prepared to act within its powers if we find ourselves at risk of losing the headquarters of a company that is particularly important to the Scottish economy."

Mr McLeish accepted that Scottish Widows is "particularly important to the Scottish economy."

What has happened to Scottish Widows in the past 24 hours is exactly the same as happened to General Accident, which prompted the First Minister's remarks last March. Was the First Minister right last March or is he right today?

Photo of Henry McLeish Henry McLeish Labour

The deal must go through a de-mutualisation process and there are certainly regulatory authority issues to be considered. I must say, though, that we must not start this Parliament off by talking down the Scottish economy or any element of it. What is important is that the alliance between Scottish Widows and Lloyds TSB means that they will have 7 per cent of the United Kingdom market of funds under management. The headquarters will be in Edinburgh. If the customer base is extended, there will be an increase in jobs.

My right honourable friend and I-sorry, I broke into Westminster speech. The First Minister and I met chief executives and chairmen of the two companies yesterday. We sought and were given assurances. We need always to put Scotland's long-term economic interests first. We must never trivialise them and talk them down. Let us support success and let us hope that that alliance turns into a big success for Scotland.

Photo of Keith Raffan Keith Raffan Liberal Democrat

What plans has the minister for encouraging research and development, and particularly for strengthening the links between our universities and industry?

Photo of Henry McLeish Henry McLeish Labour

I am grateful for Keith Raffan's question because I know that he is interested in those matters.

First, the link that we have secured between lifelong learning and enterprise will mean that there is a basis for co-operation. Secondly, I want the commercialisation of science to be a top issue in the profile of the Scottish economy in the next few years. I hope to enter discussions with not only industry and higher and further education but with the new Enterprise and Lifelong Learning Committee in the Parliament to ensure that we can make products in laboratories become products of successful Scottish companies.