The Economy

– in the Scottish Parliament at 3:15 pm on 24th June 1999.

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Photo of George Reid George Reid Scottish National Party 3:15 pm, 24th June 1999

The next item of business is an Executive debate on motion S1M-68 in the name of Henry McLeish, on the economy of Scotland, and on amendments to that motion. I intend to take amendments S1M-68.1 and S1M-68.2. I draw members' attention to a typographical error in Mr David Davidson's amendment as printed in the revised daily business list. The second line should read:

"not to increase the tax and regulatory burden".

Photo of Henry McLeish Henry McLeish Labour 3:45 pm, 24th June 1999

I will set out the key principles of our approach to the economy and to economic development. We will create a modern, knowledge-based economy in which enterprise can flourish. An enterprise economy is the key to generating wealth, sustaining high employment and ensuring good-quality public services. To grow new jobs and new skills, the new Scotland requires stability, investment in education, the development of new technologies, greater innovation and a business tax environment that is supportive of business development and growth. As the motion notes, we will build on Scotland's economic success by investing in jobs and skills, promoting a stable and competitive environment for enterprise, and encouraging the growth of new businesses. We intend to do that by working in partnership with business, trade unions and the rest of Britain. The new Scotland will be built within a strengthened United Kingdom.

It is important to say at this point, in an overture to Mr Swinney, that we want to work with the Enterprise and Lifelong Learning Committee. Business will look to the committee, and I want to work closely with it in the spirit of the new politics. There will be an important role for the committee in work on the Scottish economy and on higher and further education.

Photo of John Swinney John Swinney Scottish National Party

I am grateful to the minister for his comments about the Enterprise and Lifelong Learning Committee, which got off to a good start at its first meeting yesterday. In my capacity as convener of that committee, I want to ensure that the work of all the parties represented on it is effective, and that the minister has the opportunity to engage in dialogue. In particular, I want to ensure that we have the opportunity to involve people from the business community, and people with expertise in lifelong learning and enterprise. I welcome the opportunity that the minister has given me to put that on the record.

Photo of Henry McLeish Henry McLeish Labour

I welcome those comments and embrace their implications. I am sure that members of all parties will welcome what Mr Swinney said. It is vital that the positive message of partnership goes out to the business community.

It is important to build on the strong, stable macro-economic policy that has been delivered for Scotland at the UK level-Scotland and Britain will be all the stronger for that. Since 1997, Labour's overriding economic purpose has been to secure long-term economic stability, with low inflation and sound public finances, so that families and businesses can plan for the future. Our ambitions have become achievements. Inflation is now low and stable-in May it was at its lowest for nearly five years. Interest rates are at their lowest since 1997, and mortgage rates are at their lowest since 1966.

Public finances are under control, and massive extra funding for key areas has been delivered. In Scotland, we will be spending an additional £1.8 billion-that is £1,800 million-on health and £1.3 billion on education. The capital modernisation fund, announced in Gordon Brown's budget this year, provides an extra £165 million for Scotland. That is about investment, jobs and national prosperity. In Scotland we have many strengths on which to build a prominent position in key sectors.

Photo of Phil Gallie Phil Gallie Conservative

Earlier today, the minister commented on a number of Scottish companies that are adding greatly to Scotland's prosperity. To some extent, he boasted of them. Does he agree that most of those companies were previously trapped as nationalised companies, and that he opposed their privatisation? Those companies are now offering much to the Scottish economy and to the figures that he is using in his boasts about Scotland's current economy.

Photo of Henry McLeish Henry McLeish Labour

With the greatest respect, I shall not give a ringing endorsement to 20 years of near-economic failure under the Conservative party. Suffice it to say, the politics of the past are less important than the prospects for the future.

In my comments on Scottish Widows, Lloyds TSB and other companies, I was illustrating that when the nation is successful, we should pride ourselves on that success, and that-as Mr Swinney suggested-we should work with all concerned to ensure further success. Scotland has many strengths on which to build a prominent position.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

As someone who represents the Lothians, I listened with great interest to what Mr McLeish said about Lloyds TSB and Scottish Widows. It would be helpful for the staff employed by those companies-many of whom live in my constituency-if he could tell us whether there has been any guarantee of long-term employment, particularly from Lloyds TSB, which has said that it is still hungry for further takeovers.

Photo of Henry McLeish Henry McLeish Labour

I am grateful to Fiona Hyslop for making that point. The headquarters and brand name are crucial, but jobs are critical as an integral feature of the Scottish economy. In the discussions that the First Minister and I had with the chief executives and chairmen of the two companies, that point was put to them and we were reassured that the matter that she mentioned was being confirmed. The Parliament, the Executive and political parties will be ever watchful of what is happening in the Scottish economy, whether internally or in link-ups such as that.

We want to build on the strength represented by our prominent position in key sectors such as oil and gas, electronics, whisky, tourism and financial services. There are opportunities for further growth and success in new industries and the emerging technologies. Scotland has been successful in attracting inward investment. Since 1 April, J P Morgan, Morgan Stanley Dean Witter, BPS Teleperformance, One 2 One, Quintiles Scotland Ltd, Absolute Quality, NFU Mutual Direct and Level 1 Communications have announced plans to create new jobs in Scotland totalling more than 2,500.

Unemployment in Scotland is falling and is low by historical and international standards. Employment has risen by 7,000 over the past quarter. Unemployment is 5.5 per cent-its lowest since 1977.

Photo of Tricia Marwick Tricia Marwick Scottish National Party

Mr McLeish will know that yesterday Scottish Power announced the closure of Methil power station in his constituency, which will cost 70 jobs. He will also know that the Methil and Levenmouth area is one of the country's unemployment black spots. Unemployment is not falling in the Levenmouth area-in fact, it has been increasing over the past two years. Can Mr McLeish assure the people of Methil and Levenmouth that in the short and the long term he will work to secure jobs for them?

Photo of Henry McLeish Henry McLeish Labour

I was tempted to decline the intervention and perhaps I should have done so.

I take Tricia Marwick's point-in certain parts of Scotland there is still high unemployment that needs to be tackled, and that will be done. On the local issue that she mentioned, Methil power station has served Scottish Power well over many years. Economic circumstances have changed and raw material for the plant is in short supply, but the 72 employees are being offered the possibility of enhanced voluntary redundancy or transferral to other Scottish Power plants. I understand that there is a close working relationship between Scottish Power and the work force. I hope that the resulting discussions will satisfy all concerned. In the longer term, all of us-including the local list and constituency members-will need to work hard to ensure that, while unemployment is low throughout the country, it is lower still. The dignity of work should not elude our constituents.

The new deal continues to provide support for the long-term unemployed and for young Scots to improve their skills and experience and help them find work. Unemployment in the new deal groups has fallen over the past two years. Youth unemployment has been cut by 54 per cent since May 1997 and long-term unemployment has fallen by 49 per cent. Scottish manufacturers and exporters have performed resiliently in the face of tough global trading conditions. Output in the manufacturing sector in Scotland increased by 2.1 per cent in 1998, compared with an increase of 0.3 per cent in the UK as a whole. The level of Scottish manufactured exports increased by 6.7 per cent in real terms in 1998, despite difficult global and European conditions.

We know that much remains to be done in putting Scotland to work and keeping Scots in work. There have been job losses and closures. The global downturn has slowed industrial activity in all the major European countries and we cannot expect to be immune from that. However, there have also been more hopeful signs, most recently in the April Confederation of British Industry survey for Scotland, which said that manufacturing output and orders are expected to be back on a growth path over the next quarter.

I am also encouraged by the Fraser of Allander Institute's quarterly economic commentary, released this morning, which suggests that there will be an earlier upturn-driven by the electronics sector-in manufacturing output in Scotland than in the UK.

Growth across the economy as a whole will be lower this year than last, but global turbulence has eased and interest rates have fallen. The latest independent forecasts suggest that growth will accelerate from 2000, in line with the UK.

However, we now need to look forward. In terms of manufacturing strategy, there is no point in simply standing back and hoping for better times. We know that manufacturing industry will continue to face aggressive global competition, and I am determined that we should look with renewed vigour at how we support our manufacturers and at the opportunities for us to extend that support. Therefore, in consultation with manufacturing industry and the Scottish Trades Union Congress, I want to develop a strategy for the manufacturing sector in Scotland. Currently, about 300,000 people are employed in manufacturing and about 1.7 or 1.8 million in services; both sectors are crucial to the future of the Scottish economy.

The group that is considering the manufacturing strategy will build on the work of the pathfinder group, take into account the Department of Trade and Industry's activity and complement our support for the service sector. I plan to make real progress on that over the summer. We will progress the pioneering work of the pathfinder group to ensure that its voice and the ideas of businesses are heard. Through the Enterprise and Lifelong Learning Committee, every party in the Parliament will also be heard.

Photo of Murray Tosh Murray Tosh Conservative

If the minister is committed to listening to industry, will he listen to what many manufacturing industries are saying about the potential impact of high energy taxes? A number of critical industries in Scotland are fearful about how those taxes will affect their prospects. Will he offer them any comfort?

Photo of Henry McLeish Henry McLeish Labour

That was a constructive intervention about a matter that is of considerable importance to industry. I know that representations are being made to the Chancellor of the Exchequer by a wide variety of bodies, and I reassure the honourable gentleman-I have fallen back into Westminster habits for the second time today-that those concerns will be voiced to the people who need to listen.

Education and lifelong learning are crucial and, since 1997, we have put them at the heart of enterprise policy. Skills policies bridge education and employment. We are improving jobs skills and training skills, both of which are central to growing jobs, boosting competitiveness and building social inclusion. Our plans for lifelong learning will allow working people to balance the responsibilities of family life and employment with the need constantly to upgrade skills. The mere fact that we have linked enterprise and lifelong learning is a powerful message to all concerned that we take the matter very seriously. The link has not happened at Westminster and very few countries in Europe have linked the two subjects. Again, I like to think that Scotland is leading on the issue.

There is much to be said about job skills and training skills, but suffice it to say today that we must focus on ensuring that people receive a basic grounding before they enter the labour market and that the necessary frameworks for education and qualifications are in place. We must also play a role in addressing market failures, by providing support or a co-ordinating role in seeking solutions.

We have a plethora of publicly financed training programmes, which are often very successful. One area in which we have not made as much progress is employer-based training; that is highlighted by what is happening in Japan, Germany and the States. We need to have a boost for such training in the workplace and we hope that the infrastructure that we have established will help. The Enterprise and Lifelong Learning Committee will want to consider how we can encourage the work force to demand skills training and employers to respond positively.

Most of these measures are set out in "Skills for Scotland". The Scottish university for industry and individual learning accounts will help, because they will have a major impact on learning and skills development. The Scottish university for industry will help individuals and businesses to identify the learning that they want and enable them to access it, where and when they need it. The individual learning account is about self-ownership of skills in education. From the earliest possible age after leaving school, why should not people want to acquire, develop, own and renew skills and knowledge? As people's careers develop and their adaptability becomes paramount, that will become a crucial issue. Individual learning accounts are the first step in making that process a reality.

The knowledge economy is also crucial. A knowledge-driven economy is one in which the generation and exploitation of knowledge rather than physical assets plays the predominant part in the creation of wealth. The concept is not simply about pushing back the frontiers of knowledge; it is about the more effective use of all types of knowledge in all types of economic activity-not just in those that are sometimes classified as high-tech or knowledge-intensive.

A wide programme of work is under way in Scotland and the rest of the UK following the publication of the white paper, "Our Competitive Future: Building the Knowledge-Driven Economy". I want to acknowledge and take forward the tremendous work of Gus Macdonald and his task force. We should establish a group involving all sectors of business, to ensure that we advance the knowledge economy as quickly as possible. There are various initiatives in that area, but I do not have enough time to outline them today.

The knowledge economy is about knowledge, understanding, competencies and skills. We have to acknowledge that, in a fiercely competitive world, people can provide factories, finance and a one-door approach, but it is the development of human capital-the knowledge economy-that will make the difference. I hope that the Parliament will sign up for that idea. I am sure that the Enterprise and Lifelong Learning Committee will want to take it further.

I am conscious of the time, as are you, Mr Reid-I see you nodding constructively in my direction.

There is a raft of policies that we will discuss further with the committee on encouraging the growth of new businesses, which want a stable environment.

Tourism is crucial to our objectives. I can announce today that I have asked the Scottish Tourist Board to prepare a new strategy to replace the original strategy that was published in 1994. Tourism will be an important issue to which everyone can contribute. It is worth around £2.5 billion, even though it has had two difficult years, and we have not been able to extend the season. We are losing visitors from within the UK and there has been a diminution of the number from abroad, but tourism has a great future. We need a strategy that combines the customer-is-right approach to customer care with aggressive and positive marketing abroad.

Rural areas will also play a key part in our economic strategy. This Parliament is a reflection of the new politics in Scotland. We have already had a constructive debate on Mr Mundell's motion on Dumfries and Galloway. We are working in the Borders and in the Highlands. I say to all MSPs-both list and constituency-that we want to ensure that this Parliament and its economic approach are for the whole of Scotland, not just for the central belt.

In conclusion-thank you for your tolerance, Mr Reid-the question is also about social inclusion. We still live in an era in which social inclusion is fundamentally about the self-worth of having a job; it is about being able to structure one's life, and have an independent life, an income and a quality of social life. If we accept that social inclusion underpins everything that we do, we will be well on the way to grasping a collective ideal on which we have prided ourselves in Scotland for more than a century. We now have a great opportunity to achieve that as well as to implement policies for a prosperous economic future.

I move,

That the Parliament notes that unemployment in Scotland is falling and is low by historical and international standards, and that employment is increasing, and looks forward to the Executive building on Scotland's economic success by investing in jobs and skills, promoting a stable and competitive environment for enterprise and encouraging the growth of new businesses.

Photo of John Swinney John Swinney Scottish National Party 4:03 pm, 24th June 1999

I am grateful to Mr McLeish for allowing me to make an intervention during his speech, as it let me place on record the involvement of the Enterprise and Lifelong Learning Committee. For the remainder of my speech, I will speak in my capacity as Mr McLeish's shadow.

There is a whiff of complacency in the text of Mr McLeish's motion. In his 1996 budget speech, Kenneth Clarke boasted about falling unemployment figures and said that they were an indication of the Conservative Government's success. He was challenged by the then Leader of the Opposition-the current Prime Minister-who made various criticisms of what the Government had said which were based on other economic indicators. I find myself in much the same position.

There has undoubtedly been a fall in unemployment. However, if Mr McLeish were to get out of his ministerial car in the Shettleston area of Glasgow, he would find male unemployment at 16.7 per cent. That situation is disguised by the motion that we are debating today. Unemployment in Scotland has fallen, but only to the levels that we had at the tail end of 1997. In 1998, unemployment rose, relatively speaking, because of a number of factors. We must acknowledge the difficulties that that has created for people. We are not yet back to the level of employment that we had a year ago. The Government must present Parliament with more comprehensive measures to deal with unemployment.

I should like to highlight other economic indicators. The number of new businesses created and operated in Scotland declined in 1998 from the figure in 1997. We await the performance of that indicator with interest because the number of business failures in 1998-99-more than 16 per cent-was worrying. The stability of the business sector has to be addressed by Government policy.

Many reports, such as the Fraser of Allander Institute report that was published today and to which the minister referred, comment on the Scottish economy. The Royal Bank of Scotland, in its June monthly assessment of the Scottish economy, said that it expected the Scottish economy to grow more slowly that that of the rest of the United Kingdom. Although I accept that it is important for this Parliament to conduct this debate on its own measures, we must look at the performance of the Scottish economy in relation to other economic units and determine how we can differentiate the economic performance of Scotland from that of other units to intensify the rate of growth of the Scottish economy. None of us can be proud of the rate of growth that we have experienced until now.

In recent years, particularly since the general election, one of the most compelling factors in the economic performance of Scotland has been high interest rates. They have come down recently, which has made a major difference, but they were an enormous burden throughout 1997 and 1998 and undermined the competitiveness of many companies.

The Scottish Council Development and Industry said that "the high level of the Sterling exchange rate is damaging the Scottish economy's manufacturing base."

We ignore the strength of sterling at our peril.

Photo of Phil Gallie Phil Gallie Conservative

Having heard Mr McLeish's words about the wonderful performance of the Chancellor of the Exchequer, does Mr Swinney agree that one of the greatest problems that the economy faces-and the fundamental cross that Scotland has to bear-is the strength of the pound, which was brought about by the fact that, in 1997, the chancellor increased interest rates totally unnecessarily?

Photo of John Swinney John Swinney Scottish National Party

The chancellor has not increased interest rates; he has passed the responsibility to the Bank of England monetary policy committee. As a result of that decision, economic measures were applied in Scotland although there was no discernible reason why they should have been. The Scottish Council Development and Industry paper said that there was no reason to believe that there was an inflationary threat to the Scottish economy, which would have suggested that any action to increase interest rates was inappropriate.

A factor that will affect many of the rural areas to which Mr McLeish referred is petrol duty. It will have an impact on the competitiveness of individuals and companies in the rural economy.

There is a great deal on the agenda about economic development and enterprise in Scotland. The minister referred to the "Pathfinders to the Parliament" report, which was presided over by Lord Macdonald. The report contains a vast number of suggestions that I hope will be taken seriously by the Executive. There are a few thorny suggestions that I am sure the Executive will find rather uncomfortable and which I doubt it will take forward. They are good suggestions, and I am sure that my colleagues will refer to them in the debate.

It would be difficult to disagree with Scottish Enterprise's strategy, but it is important that we press the enterprise networks much harder than before, to guarantee that they deliver the performance that the public expect but about which the public are not confident.

The amendment in my name refers to four areas that we must consider more closely. I want to touch on those issues briefly, although I see that you are giving me a look, Mr Reid, which says that it is time that I was sitting down.

We heard very little from the minister about the small business sector. Anyone who examines the performance and composition of the Scottish economy cannot fail to realise the implicit importance of delivering for the small business sector. I want the Government to produce a positive strategy to relieve the business rates burden on smaller companies, a measure that will give a competitive advantage to companies in Scotland. As part of that, we must recognise that a large proportion of the tourism industry is driven by the small business sector. I welcome the minister's announcement of a refocused strategy for the tourist board, but it is important that we examine the structures for the delivery of tourism support in Scotland, because they have not served us as effectively as they could.

Photo of David McLetchie David McLetchie Conservative

I am impressed by the scope of Mr Swinney's remarks, his fine words and the language of the amendment. How does he think that that squares with the tone of this morning's debate, which was a long diatribe by SNP members against privatisation and revealed their deep-seated hostility to business in the private sector? Is it not the case that the Scottish National party speaks with forked tongue on such matters?

Photo of John Swinney John Swinney Scottish National Party

I am happy to endorse everything that my colleagues said this morning. They were talking about the sell-off of public services and I have never advocated-and never will advocate-the selling-off of public services carried out by the previous Government and by this Administration.

It is important that we deliver competitive conditions for Scottish companies. We have a long track record; my colleague, Mr Ewing-who I hope will speak later on-has fought many valuable battles for the small business sector in Scotland and has delivered real progress.

We are tripping over economic development agencies in Scotland. I hope that the minister will tell us the attitude that the Government is taking towards refocusing and refining the number of agencies that are cluttering the delivery of economic development services in Scotland. We want to advance the arguments that we made in the election campaign for the drawing together of tourism, inward investment, export development and support for indigenous companies into a sharply focused economic development agency that addresses the needs of companies in Scotland.

We recognise the Government's commitment to tackling the problem of youth unemployment, but it is time that it started to come up with evidence of the long-term structural change that is being delivered by the new deal. It is difficult to find any evidence of that in the Scottish economy or to find companies that can say what pattern has been delivered.

Finally, on the issue of competitive advantage, we must examine all our measures carefully. That is why I encourage the Government to look at tackling the issue of higher business rates for smaller companies. That would give our small companies a competitive advantage.

Like everyone else in the chamber, we have high aspirations and ambitions for the Scottish economy and we want to promote ideas and initiatives to achieve them. However, members must recognise that there are some problems in the Scottish economy-problems that are not stressed in the Government motion-which must be addressed by the Parliament.

I move, as an amendment to motion S1M-68, leave out from "is falling" to end and insert-

"remains a grave and ongoing economic and social problem which is not addressed by a partial representation of statistics; and calls on the Executive to develop an economic strategy that has long term sustainable growth in the economy and jobs as its focus and addresses the need to-

(a) recognise small businesses as the engine of growth in the economy and the labour market and tackles the need to improve entrepreneurship and business start-up, survival and expansion with particular emphasis on reducing business rates;

(b) develop cohesive economic development structures through greater synergy between agencies involved in economic development, inward investment, exporting and tourism and to gain maximum benefit from Scotland's external representation;

(c) produce compelling evidence that the New Deal is delivering long-term structural change in the labour market that will be sustained when the New Deal programme has concluded, and

(d) generate competitive advantage for companies in Scotland."

Photo of David Davidson David Davidson Conservative 4:14 pm, 24th June 1999

The reason for the amendment is that we are unconvinced that the nationalists have gained the confidence of our business community. We have a long way to go. After the performance this morning, I am sure that many members of the business community will be worried about the sincerity of this afternoon's words-nice as they might have been. However, that is not to say that we do not agree with many of Mr Swinney's points.

The motion in the name of Mr McLeish is nothing more than a selective use of statistics. As we heard today, there is growing evidence of economic downturn and job losses. The other day, Mr McLeish very kindly offered to visit the region of my colleague, Mr Mundell, to see how it is suffering. The minister had better start clearing his diary because he will be getting an awful lot of invitations in the next few weeks. Has he noticed the thousands of job losses in the north-east in the oil-related industries? Confidence in those industries is wobbly. If there is no further investment, what measures will the minister take to give support or confidence?

Photo of Duncan McNeil Duncan McNeil Labour

As someone who was born and brought up in a shipbuilding community and saw the shipbuilding industry destroyed by representatives of the Conservative party-just as it destroyed the steel industry-I find that hard to take. Enough is enough. I do not want any lectures from David Davidson on jobs.

Photo of David Davidson David Davidson Conservative

Interestingly, since problems have arisen because of the lack of control from the Westminster Labour Government, the oil industry has really started to suffer locally. A year ago, I formally asked the industry minister Lord Macdonald to come and look at the north-east for himself. I asked him to set up a task force to look at the knock-on effects across the economy in addition to the oil task force that was already in place. The response that I got left me cold. We have to move on.

Business confidence is low, and we must give business the confidence that it needs to invest, as the economy of Scotland cannot grow without that investment. The minister talked of promoting a competitive environment for enterprise and for the growth of new business, but there was no mention of support measures for indigenous business. He talked very briefly about small business-90 per cent of our businesses are very small-but what does he have to offer them in practical terms? Does he really understand their needs?

Our rural economy is on its knees. Despite that, at the Royal Highland Show at Ingliston, a proud industry with the highest production standards in Europe is today flying the flag for Scotland. The motion gives no support to that industry, which shares the bureaucratic burden imposed on business. Farmers should be ploughing the soil, not ploughing through paperwork, but what is the minister offering our rural areas for the future?

There is talk today of a tourism strategy, which I welcome. I hope that part of that strategy will be to look closely and in detail at the structure of tourism support systems, including the involvement of local authorities.

This evening I will be attending a Scottish Young Farmers Club function. What message do I take to the young farmers from the minister's statement to give them hope for their future?

On the subject of the future and our young people, what is being proposed to ensure that our children leave school with the basic skills of reading and writing? Day after day, we hear that the low skills level with which pupils leave our schools amazes people in industry and business. I hope that the minister, and his colleague the Minister for Children and Education, will give us an assurance that that problem will soon be tackled seriously. If children do not have the basic skills, they cannot be employed and they cannot enter training courses. We have not heard many statistics about that from the ministerial team. We must quantify our skills needs and resource them accordingly and I welcome a review of workplace training. Before the election, all the parties had fine words, but we now need an action plan. Today, we have had the minister's vision, but we need a practical strategy for developing and supporting the skills base of our industry.

We must also examine locally available training that is appropriate to the needs of our young people, which is not necessarily what we have at present. Does the minister agree that the new deal is almost past its sell-by date? I share Mr Swinney's views on that point. The new deal needs a drastic review, as it has failed the young people of Scotland. We have a common interest in holding an investigation into that in the near future; I hope that such an investigation will come through the Parliament's committees shortly. Our high streets are full of empty shop premises, yet we hear rumours that local authorities-

Photo of David Davidson David Davidson Conservative

I will give way in a moment, Mr Raffan-my throat is giving out anyway.

We hear rumours that our local authorities are to be given power to adjust business rates. That will guarantee that our high streets will become deserts of charity shops, doing nothing for anyone.

Photo of David Davidson David Davidson Conservative

Mr Raffan asked first, and so I will be decent.

Photo of Keith Raffan Keith Raffan Liberal Democrat

I am interested by the interventionist tone of Mr Davidson's speech. Is he aware that Mr Lilley was sacked last week for precisely such a speech?

Photo of David Davidson David Davidson Conservative

I am sorry, but I am not responsible for Mr Lilley's actions and I am not at Westminster.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

On the topic of business rates, does Mr Davidson accept the evidence of the Scottish Council Development and Industry that, while the Conservative party was in power, the total surcharge that Scottish businesses paid, according to Craig Campbell, was £1.2 billion? That was when the uniform business rate was in force and so it had nothing to do with local authorities of other hues. The uniform business rate amounted to a 20 per cent tax on every business in Scotland. That was not a tartan tax for each of those five years, but a London levy of 20 per cent on every Scottish business and small shop that Mr Davidson is now purporting to defend.

Photo of David Davidson David Davidson Conservative

If Mr Ewing had been listening to us during the election campaign, he would have heard us talk about what Mr Swinney has just been discussing. In our manifesto, we said that we were investigating schemes to relieve the rates burden on small businesses and to encourage them-and small industrial units-to move back in to and reinvigorate our town centres. We have moved on a bit from Mr Ewing's history lesson.

Photo of Phil Gallie Phil Gallie Conservative

Does Mr Davidson recall that it took a fair number of years for the Conservative Government to achieve a uniform business rate in Scotland? Is he aware that other members in the chamber would undoubtedly give councils the right to impose additional taxes, which would destroy that Government's achievement of the removal of the burden to which he referred?

Photo of George Reid George Reid Scottish National Party

In replying to that point, Mr Davidson should remember that many other members are still waiting to speak in what is a relatively short debate.

Photo of David Davidson David Davidson Conservative

Thank you, Deputy Presiding Officer, but I have allowed other people to intervene.

We have to make sure that this Parliament understands that business is not a cash cow that can be milked by the Treasury or by local authorities. I am pleased to note that, in the partnership agreement, the Liberal Democrats' wonderful tax-raising plans for small business-from turnover tax to payroll tax-have at last died.

If we are to build an economy for the future, we must start with the building blocks of education and training-an aim that we share with the minister. I am sure that we can work together through the committees to resolve that situation. I agree with him that we must urgently sort out the muddle and overlap in the support systems for business in Scotland. We cannot allow the current waste to continue. I hope that Mr McConnell's statement about overlap and waste is a recognition by the Executive that the issue should be dealt with in one of the first pieces of legislation to go before Parliament this year.

I shall not go back over our infrastructure requirements. It is a pity that the Labour Government at Westminster did not carry out the roads infrastructure programme that the previous Conservative Government had put in place and allowed resources for. I ask the Executive to consider that proposal again. It is important to examine the infrastructure-particularly for industry-in areas other than the central belt. I was refreshed by Mr McLeish's comments, but he and his colleagues need to come to this chamber and to the committees with clear, practical and pragmatic proposals, not just visionary statements.

I move, as an amendment to motion S1M-68, in the name of Henry McLeish, leave out from first "in" to end and insert-

"is increasing in parts of Scotland, and calls upon the Scottish Executive not to increase the tax regulatory burden on business in the interest of expanding employment".

Photo of George Reid George Reid Scottish National Party

I would say to members that the opening statements were perhaps full of detail, but a little longer than desirable. I intend to restrict remaining speeches to three minutes each.

Photo of Duncan Hamilton Duncan Hamilton Scottish National Party 4:23 pm, 24th June 1999

Surely one of the interesting aspects of this morning's debate was the repeated insistence that the SNP was short on specifics. However, this debate demonstrates the interesting comparison between the woolly and wan comments in Mr McLeish's motion and the specific, dynamic proposals in the SNP's amendment. We have detailed four key areas where we believe the Scottish economy can grow faster and further.

In the three minutes that I have kindly been given, I will consider two of those key areas. Although I recognise the global context rightly set out by Mr McLeish, I think that it is right for this Parliament to pay tribute to the role of small business as the driver of growth in the Scottish economy. Perhaps small business is also the way in which we can insulate ourselves against the kind of global economic downturn that we have seen.

It is a continuing fact of economics that most goods and services are produced and consumed locally, so it would seem reasonable to promote indigenous industry. We should bear in mind the fact that, because about 99 per cent of Scottish businesses employ fewer than 50 people, most of Scottish business is small business. If we promote that sector, we insulate our economy against global downturns.

There has been much talk about how to promote the small business sector and I think that we are all clear on the need to reduce the rates burden on it. That is certainly the SNP's standpoint.

Another important aspect, over which this Parliament perhaps does not have immediate control, is how we can make a cultural change in banking in Scotland, which has thus far been risk averse. Banks have been determined not to take any risk with small companies. That is in stark contrast to some of our-shall we say-international cousins. We should consider the example of America, where a business that starts up and fails does not get the same damning indictment as it would in this country. The belief in America is that people who have tried and failed know more about business, and their credit rating is not affected as it would be here. Perhaps we need to have a more imaginative banking structure and a more imaginative attitude. I hope that the banking sector in Scotland will become partners in the creation of the growth that we all want.

Mr Swinney referred to the downturn in new businesses in Scotland over the past year. According to the most recent statistics, that downturn has been about 8.4 per cent. That suggests that we have our work cut out. I want to put my weight behind encouraging growth in indigenous small business sector.

The other area that I will consider-very briefly Mr Reid, as I see your knowing nod-is that of inward investment, to which lip service if often paid. During the global downturn, inward investment was one of the few areas of the market that continued to grow year on year. The foreign direct investment market and inward investment in Scotland have been important for many years. I think that the entire chamber will join me in praising the work of Locate in Scotland. However, we can do a great deal more. The issue now is the quality of jobs that inward investment provides. We do not want to see the high-tech, low-skill jobs that we have seen so often. We want to embed high-quality jobs and learning in the economy through marketing and management and through keeping Scottish graduates in Scotland-or at least giving them the option to stay. Although we have done well on inward investment, we must do better still.

Photo of Duncan Hamilton Duncan Hamilton Scottish National Party

Nicely put. This Parliament has a role in removing the barriers to growth, which will happen. Let me finish-

Photo of Duncan Hamilton Duncan Hamilton Scottish National Party

Let me just finish on this point. If this Parliament has a-

Photo of George Lyon George Lyon Liberal Democrat 4:27 pm, 24th June 1999

That is amazing: I get a round of applause without saying anything.

I will be brief, especially as I have only two and a half minutes. I suggest to Mr Davidson, who was concerned about what he should say to the young farmers when he goes to their function tonight, that an apology should be the first item on his agenda. We all know that the Conservative Government's handling of the BSE crisis created the tremendous downturn in the fortunes of much of rural Scotland. Conservative members seem to have complete amnesia about everything that occurred before May 1997. It is a pity that Dr Simpson is not here to help them out with that.

Photo of George Lyon George Lyon Liberal Democrat

Yes, but remember that I have only three minutes.

Photo of Annabel Goldie Annabel Goldie Conservative

Will Mr Lyon exercise his influence in the coalition pact to emphasise the urgent need for the immediate lifting of the beef-on-the-bone ban?

Photo of George Lyon George Lyon Liberal Democrat

Our position on the beef-on-the-bone ban is clear. We are committed to having it lifted. There was no time scale on that in our manifesto.

I welcome the fact that the minister reinforced the importance we attach to the extra spending on public services. We must also realise that we have to generate the wealth, as that is what allows us to deliver good public services. As he rightly said, there are tremendous opportunities for the Scottish Parliament to exploit Scotland's industrial and entrepreneurial strengths, but I suggest that we are rather narrowly focused at the moment. We need to widen the range of industries in Scotland.

The appointment of a Minister for Enterprise and Lifelong Learning is a symbol of joined-up government. It is essential that this new ministry brings business and higher education closer together. It is vital that we equip our work force, which will be our strength in the future, with the appropriate skills for business to exploit the knowledge economy. We must ensure that Scotland is a leading player in that economy.

I welcome the partnership agreement's proposals for the new business growth fund to help small businesses. Creating 100,000 jobs is an ambitious target, but given the track record of 9,000 jobs last year, it is not out of reach. However, it is important to sustain those businesses; it is all very well having business start-ups, but the businesses must last. If they fail within the first year, it will have been a fruitless exercise. I hope that measures will be taken to sustain jobs.

Not all sectors of the Scottish economy are booming. We have a downturn in the manufacturing sector, which, because of the strength of sterling, is suffering from the blow of cheap imports. I hope that the new Government will make strong and clear representations to the Westminster Government that, when the Bank of England monetary policy committee takes decisions on interest rates, we need those rates to come down.

Photo of Annabel Goldie Annabel Goldie Conservative 4:31 pm, 24th June 1999

I applaud the spirit of the motion, but I have to express some cynicism about its substance. To propose, as the Government does, motorway toll taxes, city entry charges and employee parking taxes is a curious way of promoting skills, of promoting a stable and competitive environment for enterprise and of encouraging the growth of new business. That all comes on top of the already crushing weight of tax increases that the Labour Chancellor of the Exchequer, Gordon Brown, has imposed by way of fuel taxes. As Scottish products have to be distributed over large distances, the increases in fuel taxes and the recently announced penalties for using Scotland's roads will further threaten the health of the Scottish economy. That seems to strike at the heart of the motion. The health warning is clear: Labour taxes will seriously damage job prospects.

It is extraordinary that the minister did not allude to the Manpower Employment Services report that was published this week. Its quarterly survey of employment prospects indicated that Scotland was unlikely to prosper as much as England. It seems that business is scared by the arsenal of stealth taxes that Scottish Labour intends to unleash on the Scottish business community. That relentless pounding will presumably intensify when Labour creates the minefield of permitting local councils to reintroduce a variable business rate. I applaud Mr Hamilton's contribution but, perhaps unlike him, I know the pain of such measures because I have been in small business. I am deeply concerned about the implications of the Government's proposals for that sector.

Labour is incapable of understanding the basic law of economics that taxes destroy business and kill jobs. Whenever the electorate are told about new or increased taxes, someone, somewhere, as sure as night follows day, is losing a job as a consequence.

I have not yet mentioned the crippling cost to Scottish business that has been created by Labour's high-value pound. I submit that our business sector is much more fragile than the tone of the motion would suggest. Any further taxes would badly affect the demand for products and services and could well push business over the edge, taking jobs with it.

In its motion, the Government has the temerity to mention skills. I share Mr Swinney's concerns about the new deal. Quite simply, I do not think that it is working; it might be better classed as no deal at all. A system that fails more than 60 per cent of its participants does not seem to me to be a good model for the reintegration of people who have been without jobs. The Labour party hypocritically trumpets loudly its stolen slogan, "Scottish solutions for Scottish problems". Why then did it mess up a good and improving series of skills development programmes that was made in Scotland, by Scots and for Scots, by forcing on Scotland an English programme-the new deal? As we now know, Scottish skills experts urged the Labour party not to do so.

Looking at this motion, I feel that this Government is no friend of Scottish business and enterprise; it may masquerade as such, but it is posturing. Deeds mean a lot more. Judged on its legislative programme, this Government is a "spend" Government. It is neglecting the enterprise base-the very base on which we rely to produce the generated taxation and Exchequer funding that we need before we can consider what we can spend within that allocation.

I oppose the motion and I welcome the amendment of my colleague Mr Davidson.

Photo of Elaine Murray Elaine Murray Labour 4:34 pm, 24th June 1999

As a mere female I am humbled by being able to take part in the same debate as the redoubtable Mr Hamilton. After hearing Nicola Sturgeon's comments about her abilities this morning, I can say only that at least the younger members of the SNP do not seem to be reluctant to blow their own trumpets.

I am pleased to be able to speak in this debate on unemployment, and to note that in May this year the seasonally adjusted rate of claimant count unemployment has fallen to 5.5 per cent-although that is admittedly a small decrease over the year. I was also pleased to observe in a Scottish Parliament information centre publication on unemployment in Scotland in May 1999 that the figures for my constituency-which was referred to as Mr Mundell's region-bear out the statement I made last week on the economy of Dumfries and Galloway. I said that Dumfries is not an unemployment black spot. It has an unemployment rate of 5.4 per cent and is ranked 36th out of 73 constituencies in terms of unemployment.

I was a wee bit confused about how Galloway and Upper Nithsdale-Mr Morgan's constituency-has an unemployment rate of 5.7 per cent, but is ranked 40 th out of 73. As a former scientist, I thought that I understood numbers, but perhaps I do not. The unemployment rate in Dumfries has fallen by more than a quarter since 1996.

I am much more concerned-and this is a matter for concern-to observe that the unemployment rate in my constituency suffered the fourth worst change over the past couple of months due to a couple of high-profile manufacturing jobs losses. Unemployment in the constituency has increased in the past year. That is why I particularly welcome the wording of the motion: it does not congratulate the Government and it is not self-satisfied.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Does Elaine agree that although the employment figures in the south-west of Scotland are bad, they actually mask a worse situation? Many people have emigrated from the area because they cannot get jobs.

Photo of Elaine Murray Elaine Murray Labour

The training count and unemployment rates are ways of monitoring unemployment, but they do not always represent the entire situation. Female unemployment always appears to be less than the male rate because to many women who are seeking work there is no financial benefit in making a claim for benefits. Interpretation of unemployment figures must be done carefully, but the figures can represent a trend as long as the parameters remain the same. The trend at the moment is downwards.

The motion says that things must get better and that we must build on successes to make things better. There must be determination to build on economic success, to invest in jobs and skills and especially to provide a stable environment for enterprise and encourage the growth of new businesses. My colleagues and I can take that back to our constituents as a message of hope. We need to give that message of hope and we need to articulate the intention to not only bring jobs to our constituencies, but to ensure that employment is here to stay. Would you like me to wrap up, Mr Deputy Presiding Officer?

Photo of Elaine Murray Elaine Murray Labour

We must equip our people with the skills that they will need to compete in the job markets of the next century. We must, in other words, invest in education and training and ensure that the local and national economy is stable and that jobs will continue to be available for the existing work force and their children.

Photo of Elaine Murray Elaine Murray Labour

I agree with Mr Swinney: we need to require organisations that are funded for the purpose of, and charged with the creation of, training and employment to demonstrate that they are doing their job. Glossy brochures and strategy documents produced in attractive offices are all very well, but what matters to those of our constituents who are out of work or who fear that they may become unemployed is that real jobs that pay decent wages come to their areas. Employment must be here to stay. I am glad to welcome the fall in unemployment in Scotland and I hope to see it reflected in my constituency in the near future.

Photo of Robin Harper Robin Harper Green 4:39 pm, 24th June 1999

I applaud what I have heard from Mr McLeish and the emphasis on supporting small businesses that we have heard from the SNP. One thing has been of great concern to me for a considerable time. Would either party-or both parties-give consideration to insuring vulnerable areas of historically low employment against the cruel blows that are dealt to them when inward investment turns without warning to disinvestment? This happens with little loss to the multinationals concerned, but it has catastrophic effects on local economies.

Photo of Irene Oldfather Irene Oldfather Labour 4:40 pm, 24th June 1999

I appreciate your letting me in, Deputy Presiding Officer, as I have waited for a few days to get into a debate. I am pleased to be able to speak about the Scottish economy and, in particular, to welcome the good news set out in the minister's speech.

People in my constituency also will welcome the statement, as Cunnighame South is an area that suffered a haemorrhaging of jobs during the 18 years of the previous Government. Consequently, it has the fourth highest unemployment rate in Scotland. We now have a Government which, for the first time in a long while, is listening and is prepared to tackle the scourge, the wastefulness and the human tragedy of unemployment in areas such as Cunnighame South.

I welcome the fact that, through low inflation and sound public finances, the Government is setting the climate to deliver for business and for investment. The new deal for jobs has provided almost 29,000 jobs for young people and has given them skills and experience. The apprenticeship scheme recognises once again the importance of skilled workers. We also have a new ministry for enterprise. I was pleased to welcome the minister to my constituency on one of his first engagements to open a new project by USI. The investment will create 700 jobs over the next three years.

While we must hold on to our manufacturing industry, which is important and makes up so much of our exports, we must edge into the highly skilled and innovation markets. Our education system will play an integral part in regenerating the Scottish economy. The investment that we make in our schools today will pay dividends in our work force tomorrow. I believe, like the great social reformers, that employment opportunity for all is not only a worthy goal in itself, but the route out of the poverty that divides our communities.

Photo of George Reid George Reid Scottish National Party

I am sorry to interrupt, but if you end there we will be able to get the two concluding speeches in.

Photo of Irene Oldfather Irene Oldfather Labour

A sound economy will allow us to achieve that route out of poverty for our people.

Photo of Murray Tosh Murray Tosh Conservative 4:42 pm, 24th June 1999

I am sorry that Henry McLeish is not here to hear me say that I welcome much of what he said this afternoon, including the tone in which he addressed the debate. I will make some points about some of the content, but I thought that his vision statement was fair and positive.

The picture that the minister painted of an improving economy, however, rattles back a little further than the past two years. This Government came in against a background of falling unemployment and inflation, as all members will be aware.

The new ingredients that this Government introduced, which hardly anyone in this chamber welcomed, are the way in which interest rates are treated and the way in which the pound has been allowed to escalate, putting many of our industries and communities in a highly uncompetitive position. The Westminster Government has been unable to put that right and, although it may be outwith the powers of the people in this chamber, it remains one of the most important priorities for our pressured economy.

The Conservatives were accused earlier of selective-indeed total-amnesia. I recollect three things in which the Conservative Government was involved. One was the agreement at Rio to cut emissions to combat global warming. We are now reaching the stage at which those agreements are starting to hit hard. Earlier, I mentioned the impact of the energy tax. It is causing real concern for many of our important industries.

The minister undertook to listen to industry-I hope that that means that he will do more than listen. There is also the question of high fuel taxes in general and the burdens being put on road haulage. We have come to the point at which that is crippling for many companies and many regions.

The second thing that the previous Government was involved in was roads, into which the Conservatives put a lot of money. We thought that roads were important and that many of our problems stemmed from our relative isolation and the fragility of much of our manufacturing industry. We still earn an awful lot from moving goods. We developed a roads programme which, on the M74, was heavy. A rolling programme was to follow.

Photo of Murray Tosh Murray Tosh Conservative

Yesterday, Sarah Boyack acknowledged that that programme had virtually been axed and that it is unlikely that the new Scottish Government will restore much of it. This Parliament must take the issue of roads seriously if it wants to do something about the more isolated economies.

The third important thing that the Conservative Government did was to address the entire structure of enterprise. For examples, members can look at Scottish Enterprise and Locate in Scotland. We tried to streamline the process of attracting inward investment. Scottish Enterprise faces a decline in its budget and spending allocations. It believes that it could spend more and that, if it were given the resources, it could generate employment. Surely we must use the enterprise agencies to breathe life into some of the areas of our country where the enterprise structure is weak. We must examine that again and consider the boundaries between local government and the enterprise agencies, what more we can do to promote the economies of peripheral areas and the issues of energy and roads. Subject to those criticisms, I accept much of the message in the minister's speech, but we have a lot of practical work to do to flesh it out.

Photo of Fergus Ewing Fergus Ewing Scottish National Party 4:46 pm, 24th June 1999

There are 1,629 unemployed people in my constituency. That is about eight or nine times the number of people here today. People come in units of one; the task that we face is what can we do to make a difference for the better. So far, we have heard only one proposal in the Government's programme that will make a difference-a difference for the worse-and that is the toll tax.

I was encouraged by the minister's positive tone earlier on, but I wonder whether he will take the advice of the pathfinder document to which he referred, particularly the section that the retail sector submitted. It states:

"Road pricing: the sector does not relish the idea of a road toll tax imposition that has the net effect of forcing lorries off motorways onto rural roads and through towns in order to save transport costs."

That is an excellent proposal. I recommend that the minister takes it up, as I believe he suggested, and that he now follows the advice to ditch the toll tax.

SNP members want to make-and have made-some constructive suggestions. It is much easier for a Government to do harm than good, easier for it to create unemployment and make things worse than magic new employment out of the air. I will mention, briefly, five barriers to increasing economic success in Scotland.

On the burden of business rates, will the minister involve the Federation of Small Businesses and all other small businesses organisations in the revaluation process rather than leave contact with them until after the result has been completed? If he does not involve them, I believe that we will get the wrong results, as we did last time. I hope that he will consider banding, net asset value, transitional relief or a combination of those measures.

Will the Executive lift the weight of bureaucracy? In the Highlands, it is virtually impossible to have development off any trunk routes because of the design restrictions that are imposed by the Scottish Office. Will the minister make a specific commitment to review that? I could mention many constituency cases had I the time to do so.

On late payment, will we explore the possibility of reducing the subby-bashing problem by mandating payment directly from the client to the sub-contractor so that the sub-contractor does not face sequestration or liquidation? It is an option that is perfectly possible, so let us consider it. I hope that the ministerial team will.

On access to capital, will the minister restore the small business development loan scheme that mysteriously disappeared without any proper explanation or announcement from Westminster about why it should end?

Finally, will the minister give the electronic sector the value of fifth freedoms, which Alex Salmond mentioned earlier in the Parliament's deliberations?

Many of the more serious problems that affect the Scottish economy are within Westminster's power. Does any member think that the highest fuel tax in Europe is anything but an unbearable burden? I believe that that burden is forcing many hauliers out of business.

Mr Tosh mentioned the energy tax. Arjo Wiggins has written to me stating that the paper sector in Britain will have used up two thirds of its profits to pay for the energy tax. That is bound to lead to job losses. Nothing has happened for more than 18 months, although Mr McLeish mentioned that consultation was going on. This is a vital matter for my constituency, for the Highlands and for Scotland.

While the SNP welcomes-and will always welcome-the taste of home rule and national self-determination that we have today, we do not have home rule in Scotland; we have home rule and away rule, and it is the away team that is the problem, so what will be done about it?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat 4:50 pm, 24th June 1999

In the main, we have had a good and constructive forward-looking debate this afternoon. The role of Government and politicians in our economy and in supporting enterprise and business will always be controversial, and one that is rightly debated, but all of us in the chamber will agree that there is a role to play and that we want it to be positive.

I welcome John Swinney's constructive comments. I wish him well as the Convener of the Enterprise and Lifelong Learning Committee and look forward to working closely with him and other members of the committee. I welcome his support for the "Pathfinders to the Parliament" report, which makes many detailed and constructive suggestions, and for the Scottish Enterprise strategy. He asked about the need for refining and refocusing the work of the economic development agencies in Scotland. We do not see the need for major upheaval, but his suggestion of refining and refocusing should happen. The roles of tourism, inward investment, business support and other aspects of the agencies should always be looked at constructively.

Mr Swinney spoke about competitive advantage and particularly about small businesses and rating, which was commented on by other members. As was stated earlier this afternoon, that issue will be addressed in the autumn. I say to Annabel Goldie that I understand the situation of small businesses, having been a small businessperson. We are conscious of the pressures on small businesses and we are meeting representatives of the small business sector later this week. However, I do not necessarily agree with Duncan Hamilton that we can isolate the small business sector and look only at internal demand. We are part of a global economy and our global position is critical.

David Davidson made many constructive comments about the importance of education and the need for an action plan to develop a strategy for Scotland's skill base. We agree with him.

With regard to the oil industry, there are problems, but they are not nearly as severe as the problems that existed in the mid-1980s. At that time, I led an all-party delegation to Westminster to lobby the Conservative Government on the great problems facing the industry. We got short shrift and the plight was greater than it is now.

Photo of John Swinney John Swinney Scottish National Party

Nicol Stephen talks about competitiveness. As a member of the Administration, does he believe that the current value of sterling is too high or too low, and what does he think that the level does to the competitiveness of Scottish companies?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

The value of sterling is affected greatly by interest rates, which are now a matter for the Bank of England. Mr Swinney will know that on many reserved and economic matters the Liberal Democrats will continue to have debates, and sometimes disagreements, with the Labour party, but in relation to the issues that are being discussed by his committee and by all of us in this Parliament, we want to continue to be forward-looking and constructive.

The value of the pound creates some severe problems for the manufacturing sector throughout the United Kingdom. That causes me some concern, but having a strong currency is a good thing for a country. We do not want our currency to be falling. The decline of a currency also attracts considerable attention.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I want to move on.

I mentioned Duncan Hamilton's speech and George Lyon answered the rest of David Davidson's points very adequately. Some of Annabel Goldie's remarks had a disappointing tone to them and exhibited considerable cynicism about the motion.

The state of transport is of great concern to industry. A crushing cost arises from chaos and congestion on our roads, and many business groups support the initiatives that the Government is suggesting. Elaine Murray introduced a note of realism when she referred to the particular problems in her constituency.

Before I move on to my main remarks, I want to reply to Robin Harper's point about inward investment leading to disinvestment. That is a danger, but does it mean that we should oppose inward investment? Of course not-we want to encourage more inward investment.

In response to Murray Tosh's remarks, I understand that at no stage has Locate in Scotland turned away a project for budgetary reasons.

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

I will give way briefly, but after that I must move on.

Photo of Sandra White Sandra White Scottish National Party

Nicol Stephen mentioned inward investment and global companies. Does he agree with me-and, I presume, all other members in this chamber-that we do not need companies such as Via Systems, which take our money and run away? Would it not be better to invest our money in indigenous industries?

Photo of Nicol Stephen Nicol Stephen Liberal Democrat

We need both inward investment and the growth of indigenous companies. Indeed, inward investment encourages and leads to the growth of indigenous small companies. However, I agree that we need the right sort of inward investment.

In the area of enterprise perhaps more than in any other, working together in partnership-not only across the political parties, but in close association with business and industry-is crucial. We can achieve a great deal for Scotland and Scotland's economy if we take that approach. If we get it right, we will develop a strong relationship with business in Scotland, similar to that which is found in places such as Catalonia and Bavaria, where industry values and fiercely defends its local democratic institutions.

There will always be areas that are outside our control. As has been mentioned, many economic measures are reserved to Westminster, but many more matters are now decided on a European and a global level that individual Governments often find difficult to understand, far less control. However, the Scottish Parliament and our new Government in Scotland can still do a huge amount. The challenge to us is to get it right-to use the considerable powers that will now be available to us to help business and to give Scotland a real competitive advantage.

If we are to thrive as a nation in the next century, it will be through our knowledge, our skills and our creativity. Scotland has no ambition to compete with low-skill, low-margin, low-value, high-volume ventures. One of my great hopes is that through the development of the Scottish Parliament we will become more international in our outlook. If we want to be world class, we must benchmark with the best, wherever they may be.

That is why a foundation of excellence in education is so crucial to our economic future. Traditionally, our schools and universities have had a world-class reputation, but reputation on its own is not enough: we must constantly compete if we are to be at the leading edge. We cannot be complacent. The new technologies-the digital revolution, the internet and biotechnology-are transforming our lives. Scotland already leads the field in some of those crucial areas. Dolly the sheep, for example, is a global, not a national, icon.

However, we must do more. It is vital that we commercialise our research skills. That is why initiatives such as project Alba are so important and why, as Sam Galbraith said, the work of the knowledge economy task force must be given real momentum over the coming years.

We must not simply encourage our young people, our universities and people in business and industry to be more innovative, more creative and more entrepreneurial. If we want to help our new businesses to become world class, all of us in this Parliament must be more innovative, creative and entrepreneurial. Together, we can play our part in creating a world-class business environment fit for the 21st century.

Mr Presiding Officer, this has been a short debate, but it is only our first debate on the Scottish economy. Our handling of this issue-the development of our economy and our progress in improving competitiveness and internationalism-will be central to the success of many of this Parliament's other core policies. It will also help define the success of the Parliament itself.