Kintyre Economy

– in the Scottish Parliament at 5:09 pm on 25th November 1999.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 5:09 pm, 25th November 1999

We now move to members' business. I make my usual appeal for members who are not staying to leave quietly. Members' business today is motion S1M-261, in the name of George Lyon, on the Kintyre economy.

Motion debated,

That the Parliament notes the severe problems facing the Kintyre economy as it faces the combination of a downturn in all its primary industries, a drop in tourist numbers in the last two years and the threat of Sea Containers pulling out of the Campbeltown-Ballycastle ferry service, and calls for co-ordinated and effective action to ensure that the ferry crossing remains and that the necessary investments are made to safeguard the long term viability of Kintyre's communities.

Photo of George Lyon George Lyon Liberal Democrat 5:16 pm, 25th November 1999

As all the members exit, I must say how nice it is to play to a packed house. I welcome the opportunity to bring the problems facing the Kintyre peninsula to the attention of this Parliament, if not all the parliamentarians.

Many problems face a peninsula such as Kintyre. It is far from markets—Campbeltown is 150 miles from the central belt. It suffers from the problems of high transport costs that have been exacerbated in recent years by the fuel price escalator. We welcome the decision to shelve the increases in the fuel price escalator, but the damage has been done. The area has suffered from a depression in its traditional industries that has caused much financial hardship.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

With regard to the impact of high petrol prices in extreme rural areas, Ian Robertson suggested that the revenue that has been raised from those areas in fuel duty should be invested in those areas. Does the Liberal party support that suggestion?

Photo of George Lyon George Lyon Liberal Democrat

As Fergus will know, the Liberal party has argued consistently that rural areas should be compensated for the constant increases in the fuel price escalator, which was designed to deal with congestion in major towns and cities. We support the principle of that money being returned to rural areas.

I will mention some of the area's economic indicators. Unemployment statistics for 1998 put Campbeltown some 36 per cent above the Scottish average. South Kintyre has suffered the greatest population decrease in Argyll and Bute: 15 per cent between 1991 and 1997. A recent Highlands and Islands Enterprise strengths, weaknesses, opportunities and threats analysis classifies Kintyre as a fragile area. On a scale of 1 to 5, with 1 being the highest, Highlands and Islands Enterprise rates the area's development needs at 1 and its need development support at 2. At the last count, around 26 shops in Campbeltown were lying vacant. Those indicators demonstrate the scale of the problem that we face.

The agriculture sector has seen a 30 per cent decline in prices. It suffers from extra regulation and cheap imports and the agricultural business improvement scheme fiasco has exacerbated the current problems and knocked confidence once again, as we heard last night.

The fishing industry has been hit by the never-ending scallop ban. We are taking action there: some of the Highlands and Islands MSPs are demanding that we have a meeting to decide on a long-term strategy on the issue. Another serious problem is infectious salmon anaemia.

The timber industry is important to the area and provides a significant number of jobs. The industry was identified by Scottish Enterprise as a potential key sector in the next two decades. Timber production is set to increase by 50 per cent in the next five years. However, haulage costs add 25 to 33 per cent to the cost of Scottish timber delivered to the processors and the industry is struggling to compete with imports from Scandinavia and the Baltic countries, which undercut their prices by some 25 to 30 per cent because of the strong pound.

Almost 200 tourism-related jobs have disappeared in the area in the last four years, partly due to the strong pound, which has caused a downturn in foreign visitors. That situation is worsened in an area such as Kintyre that suffers from a seasonal employment pattern.

Before going on to talk about some solutions, I want to talk about the impact of large shopping chains on our rural communities. I live in a small town on the Isle of Bute called Rothesay. Since Safeway opened up, there has been a major downturn in the number of viable shops in the town. The Scottish Executive needs to consider that. There is not only a major Tesco in Campbeltown, but a Co-op outlet as well. Some estimates show that £100,000 per week flows out of the town—every single week, 52 weeks of the year. When it comes to planning, especially if we mean community planning, that issue has to be tackled. Such large supermarkets rip the heart out of many of our small towns.

I highlight the debate on the Irish ferry. The peninsula does not have its problems to seek, yet the introduction of the Campbeltown to Ballycastle ferry service was a major opportunity to help regenerate the area's economy. There was a vision that if the peace process in Northern Ireland paid off, we would see an influx of visitors through that gateway. That would not only assist Kintyre, but the benefit would flow on to the Highlands. It would be the gateway to the Highlands for much of the Republic of Ireland and Northern Ireland. Those who are visiting the Republic of Ireland and Northern Ireland would see it as a link to mainland UK.

Yet there has been debate about the future of the ferry service. Will it continue? The public purse has been used to the tune of £4 million to invest in setting up infrastructure. It is vital that that service continues. Three years is not long enough to make any clear judgments about whether the service will work in the long term. It needs time to develop and it needs to be marketed.

The peace process, which we all hope will end up with a resolution and devolution in Northern Ireland—we hope in the near future—could be the catalyst to make that service work. A large amount, £150,000, of public money has been invested in advertising the service this year. It has shown results: a significant increase in passengers in July and August, which shows that throughput and traffic numbers can be increased if the service is properly marketed.

Areas such as Kintyre look to the Scottish Parliament to put their concerns at the top of the political agenda. That is why this debate is happening here tonight. Over many years, much of rural Scotland has felt disfranchised by the Westminster political system; it is up to us to demonstrate that we can address some of these key issues.

There are opportunities. On wind power, for example, I ask the minister to assure us that the Scottish Executive expresses support for renewable energy and, above all, does everything possible to help investors come to Machrihanish and locate a factory there. We are in competition with the Republic of Ireland; it is a commercial decision. Kintyre is looking for political will and expression of support to ensure that the decision comes our way.

I suggest to the minister that, in apportioning the £220 million of European money, geographical targeting should be used as one of the key indicators, and ask that Kintyre be recognised as a key area that needs investment. The new tourism strategy must address the key challenges facing the industry in areas such as Kintyre, where quality and lengthening of the season are key issues. I ask for the minister's support for that type of approach.

It is crucial that the Executive does everything it can to ensure the Irish ferry continues to operate. I seek an assurance from the minister on that.

Photo of Jamie McGrigor Jamie McGrigor Conservative 5:24 pm, 25th November 1999

The Kintyre peninsula is a very special part of Scotland, particularly to me, as I have lived in Argyll for more than 40 years. It used to be one of the more prosperous areas in Argyll, with some good agricultural land that suited mixed farming and dairy farming, unlike most of the rest of the county, which is limited to disadvantaged hill farms.

Kintyre suffers now because it is a peninsula and therefore similar to an island. I remind the Executive that Argyll does not yet have special islands needs allowance. Perhaps the Executive ought to consider awarding that to the area. Peripheral communities are being forgotten under the present Executive.

The disastrous downturn in all areas of agriculture in the past two years has hit Kintyre very hard. The cost of transport to faraway markets exaggerates the hideously low prices that farmers are receiving for sheep and beef cattle. The extra slaughterhouse procedures and charges have made older sheep virtually worthless. The Government should never have imposed those procedures and charges without working out how to tackle the ensuing chaos, in which it is not worth taking animals to market. Many are being shot on the farms, to the great distress of the owners.

Why will this Executive not take the lead on lifting the beef-on-the-bone ban in order to put Scottish beef back on the most prominent shelves of European shops, where it deserves to be?

On the dairy sector, it is vital for the area that Campbeltown Creamery continues to be successful. Dairy quotas must continue to be ring-fenced. The dairy sector has been very hard hit by milk prices falling as low as 16p per litre, yet we continue to import cheap milk from abroad at the expense of our dairy farmers.

Photo of George Lyon George Lyon Liberal Democrat

Given that the fundamental problem facing agriculture is the strength of sterling, will Mr McGrigor support all the other political parties, which are committed to making progress towards the euro as one solution of the problems that he highlights?

Photo of Jamie McGrigor Jamie McGrigor Conservative

That is irrelevant to this problem. A fall in interest rates would be much more to the point.

Is it impossible to persuade Argyll and the Islands Enterprise to take some notice of the agricultural sector and its importance to Kintyre? The present chaotic debacle concerning ABIS must be resolved, as farmers have put out thousands of pounds in good faith, only to be told that there is now no money to support the applications.

There is hardly time to mention Kintyre's fishermen, but I believe that its scallop fishermen, whose boats have been tied up due to the ban, are due some retrospective compensation.

As I keep saying, the key to prosperity in the Highlands and Islands is much cheaper fuel, good roads and better access. We need a good infrastructure for businesses to survive and expand. When one considers what it costs people to fill up their cars and lorries in Kintyre, one realises the disadvantage that businesses face from the word go. The paltry £66 million that this Government has committed to expenditure on roads is insultingly useless to rural Scotland.

It is estimated that there are 120,000 tonnes of timber waiting to come out of Kintyre. Why not take it by coastal shipping, which would save millions of pounds on damage to roads?

Kintyre, and Campbeltown in particular, used to be a thriving tourist area. It has a mild climate, some beautiful beaches and a very famous golf course at Machrihanish. The problem now is that it is too expensive for tourists to go there. Income has dropped, and new investment is badly needed to upgrade facilities for tourists. It is up to the Scottish Tourist Board and Argyll and the Islands Enterprise to come up with some ideas to achieve that.

The situation in Campbeltown is dire. I imagine that incomes average little more than £120 a week. Twenty-seven shops have recently closed and nearly all the hotels are for sale. If it were not for the Jaeger textile factory, employment would be even lower. The future of that mainstay of the Kintyre economy must be assured.

There is an exciting possibility that there will be a major investment in wind farming, in the renewable energy sector in Scotland. That would be a tremendous boost to the area, as it would create, perhaps, 100 jobs. However, as George Lyon has said, the company that is involved cannot get an answer from the Executive on what its policy is on wind farming in the Scottish Highlands. Unless the company gets some assurance that there will be a market for its turbines, this valuable possibility may be lost. I ask the Government not to let that happen.

Good access to and from Kintyre is paramount. The ferry link to Ballycastle in Northern Ireland is especially important to people on both sides of the water. With the present operator withdrawing, it is imperative that another is found as soon as possible to continue a link that is so vital to trade and tourism.

Photo of Duncan Hamilton Duncan Hamilton Scottish National Party 5:29 pm, 25th November 1999

I congratulate George Lyon on securing this debate. I echo what has been said about the potential for the Kintyre economy. I hope that the minister will acknowledge what we have heard about the depths in which the economy finds itself at the moment.

I will speak briefly about the potential way out of the current crisis. First, we must consider the possibilities that exist within the people of Campbeltown. I am acutely aware of how many of them are coming forward with innovative and enterprising ideas. In particular, they are taking advantage of the challenges of information technology and e-commerce as a way of overcoming the physical barriers of which everybody is well aware. A good example of a recent project in which people are generating economic activity and dynamic thinking is the Quarry Green project, with which I am sure members are familiar.

The business community and the people of Campbeltown are looking for several guarantees if the ferry service is taken on by Caledonian MacBrayne—that is what the SNP wants. We need to know that the marketing will be sustained and that the services will also be sustained, that the ferry will not be wheeched off to the Isle of Man halfway through the year. That would destroy any sense that the service could be relied upon by either tourists or local business. Most important, there needs to be proper public consultation. The people of Campbeltown do not feel that they have been brought into the process; they feel that they have been moulded by events. If a publicly owned company is to be involved in the route, let us ensure that the mistakes of the past are not repeated.

There is another aspect that George Lyon did not mention. There are continuing problems with the road network and transport. The A83 issue dominated the elections in Argyll and Bute. The problems of getting to Campbeltown and of accessing the Kintyre peninsula are not yet over. I have a reply from the Minister for Transport and the Environment which suggests that the improvements that we have asked for are too expensive at the moment. I urge Mr Morrison to go back to Ms Boyack and ask her to reconsider that. If the Executive really believes in bolstering the economy of Kintyre, it must consider the context of improved ferry links, guaranteed links with Ireland and ways to unleash the potential of the peninsula. Campbeltown is not a lost cause, by any means. The potential is there. Let us tap it.

Photo of Maureen Macmillan Maureen Macmillan Labour 5:31 pm, 25th November 1999

As George Lyon has said, the economy of Kintyre is very fragile and is made more so by the uncertainty of the link with Ballycastle.

I want to talk about another area of the economy that needs some input from the Executive. Last week, Rhoda Grant and I visited Aquascot's salmon processing factory in Alness. We discussed with its directors their fish farming interests in Orkney, Ross-shire and Argyll. One of the things that interested me in particular was the fact that they were farming turbot in Kintyre, at Tayinloan. It was pointed out that the waters of Kintyre are perfect for farming turbot. The gulf stream makes the sea conditions just warm enough for turbot to thrive. Turbot is a high-quality fish, and those of Kintyre are of a consistent high quality and command a high price on the market.

Photo of Jamie McGrigor Jamie McGrigor Conservative

The only turbot experiment that I know of is the one off Islay, which ended in a disastrous outbreak of viral haemorrhagic septicaemia.

Photo of Maureen Macmillan Maureen Macmillan Labour

I am just about to address the VHS issue. Aquascot is experimenting with a hatchery at Tayinloan. In Alness, Aquascot employs about 30 people: fish processors, administrative staff, quality control staff and production managers. If Aquascot can get the right conditions, it would consider a similar development in Kintyre, processing turbot for the supermarkets and adding value to the product.

The right conditions are important. Before the fish farming company can take the risk of stocking up their fish farms, it must be assured that there will not be a repetition of the infectious salmon anaemia fiasco, which affected salmon farming. VHS is a virus in the wild which affects white fish, but has no effect on humans. The Executive must ensure that Europe does not classify VHS as an exotic disease; it must be treated by control, rather than by eradication measures. Otherwise, it will be impossible for the aquaculture industry to raise capital for development using their fish stock as collateral and a potentially multimillion pound industry will be stillborn.

Demand for fish is growing and growing and, as we know, quotas for white fish have been cut. A demand is there that can only be met by white fish. I call on the Executive to do all that it can to ensure that such developments—of great potential to the Highlands and Islands economy—are not strangled at birth by European regulations. Farmed white fish can bring jobs and income to fragile areas such as Kintyre, which is specially suited to the industry. We must do all we can to ensure that such investment is possible.

Photo of Linda Fabiani Linda Fabiani Scottish National Party 5:35 pm, 25th November 1999

Having lived and worked in Argyll for many years—some of that time in Campbeltown—I am pleased to endorse George Lyon's concern about the state of the economy in Kintyre.

Like many parts of rural Scotland, Kintyre depends on good-quality transport links and an investment in its infrastructure. Though much maligned, Caledonian MacBrayne is a crucial component of the transport infrastructure of Kintyre and of the whole west coast of Scotland.

Members will be aware that CalMac was ordered to dispose of a ferry, which they needed, at a rock-bottom price to a private sector company. The Argyll and Antrim Steam Packet Co, a subsidiary of one of the Conservatives' favourite companies, Sea Containers Ltd, was hand-picked by Michael Forsyth, then Secretary of State for Scotland, to run one of the most promising recent developments in the Kintyre economy—the Campbeltown to Ballycastle ferry, which has already been referred to. It is becoming obvious that that was a blatant example of the private sector asset-stripping the public sector.

Recently, we learned that the Argyll and Antrim Steam Packet Co had sold the ferry and was leasing it back. That financial engineering benefits no one, except the Argyll and Antrim Steam Packet Co. It certainly does not benefit the public purse or, indeed, the people of Kintyre.

This week, the Executive has confirmed that Argyll and the Islands Enterprise, having invested heavily in providing the harbour and infrastructure for the ferry, may now have to repay up to £1.3 million of European regional development grant in the event of the withdrawal of the Ballycastle-Kintyre service.

I believe that this episode warrants full public investigation by the National Audit Office or another appropriate agency. We need that investigation to determine whether Michael Forsyth properly exercised his powers as a principal shareholder in CalMac and as a guardian of public assets. An SNP motion to that effect will be lodged, and I invite members from all parties to support it.

The Tories try to portray themselves as the friends of rural Scotland, but I see that Kintyre has only one wee pal in Jamie McGrigor sitting here today. Any party of Government that gets a contract between the public and private sectors so badly wrong should be grateful to be labelled as just incompetent and nothing more.

In conclusion, my main concern is, of course, the economy of Kintyre. In that respect, my concern about the current Executive is its tardiness in realising that this issue was going to come up and hit it between the eyes. To partly atone for that oversight, minister, pressure should be put on the Scotland Office to underwrite any potential financial loss to Argyll and the Islands Enterprise and, therefore, to Kintyre.

Photo of Alasdair Morrison Alasdair Morrison Labour

I welcome this opportunity to discuss a number of important issues that affect the economy of Kintyre. I fully understand and share the concerns that have been expressed by George Lyon and by other members about the economic difficulties that are being experienced by Kintyre. All of us here are aware of the serious problems in the rural economy throughout Scotland. Representing a rural constituency myself, I am fully sensitive to the problems that face the agriculture and fishing industries, and the other industries that have been mentioned. I can assure George Lyon—and other members—that he has my sympathetic concern for the particular difficulties that affect his constituents.

I would like to make it clear that the Scottish Executive, along with the relevant economic development agencies, Highlands and Islands Enterprise and Argyll and the Islands Enterprise, fully recognises the economic problems that are being experienced in Kintyre. We are committed to doing everything that we can to support the development and diversification of the local economy.

I will refer to some of the points that members raised. I agree with Duncan Hamilton when he says that Kintyre is not a lost cause. I will certainly be happy to convey the specific points that he raised to my colleague Sarah Boyack.

Maureen Macmillan raised the issue of viral haemorrhagic septicaemia and its potential classification. I have to confess that I am not aware of the various nuances of that debate but, again, I will be more than happy to convey Mrs Macmillan's concerns to the relevant minister, John Home Robertson.

While acknowledging the difficulties that are being experienced in Kintyre, I think that we should recognise the measures that are already being taken to assist its economy. Mr Lyon has called for co-ordinated and effective action to ensure that the necessary investment is made to safeguard the long-term viability of Kintyre's communities. I assure Mr Lyon that the local enterprise company, Argyll and the Islands Enterprise, is already making concerted efforts to assist local businesses to strengthen Kintyre's economy. In recognition of the difficulties being experienced by the area, AIE made Kintyre its highest priority area in early 1998.

Photo of Alasdair Morrison Alasdair Morrison Labour

I am keen to address a number of points that have been raised, Duncan, and I want to make some progress.

By providing the necessary assistance to companies, AIE is helping to ensure that companies stay in Kintyre and develop successfully.

Mr Lyon will be aware that, last year, Jaeger confirmed its commitment to the area by investing £2 million to modernise its production methods, with assistance of £570,000 from AIE and AIE's European research and development fund. The investment will upgrade machinery and provide for further training and staff development. That substantial investment from a major local employer in Kintyre is extremely welcome news, particularly for the 230 employees at the company's Campbeltown factory.

Another Campbeltown company that has received significant assistance from AIE is Argyll Bakeries Ltd, which has been trading in the area for the past 20 years. The LEC leased purpose-built premises at Snipefield industrial estate in Campbeltown to the company. I hope that I have pronounced Snipefield correctly; otherwise, Fergus will correct me as I corrected him in a previous debate. The company has invested £200,000 and has received assistance worth £54,000 from AIE to develop the business. That is another example of the LEC providing significant assistance to help to secure the future of local business in Kintyre.

I do not intend to go through a list of companies that have received AIE assistance, although that list goes beyond the two examples that I have mentioned. However, it is important to acknowledge that much effort has gone into developing the local economy.

A major problem for Kintyre, and indeed for my own Western Isles constituency, is the narrow base of the local economy, which results in overdependence on certain industries and businesses. AIE is investigating how the area's economic base can be broadened by encouraging new businesses and industries into Kintyre. On Tuesday, the Minister for Transport and the Environment, Sarah Boyack, met with a Danish company, Vestas, which is considering locating a wind-turbine manufacturing facility at the RAF base at Machrihanish. That presents a significant new economic opportunity for Kintyre that I hope will come to fruition. Both the Executive and the enterprise network will be doing all they can to assist the project to locate in Kintyre, which I hope all members will welcome.

Furthermore, we are addressing the future of tourism in Kintyre and considering how to capitalise on the considerable scope for improving the role of tourism to the local economy. The Kintyre tourism management programme is providing assistance for the development of the tourism industry in the area. The initiative intends to undertake a variety of approaches such as improving marketing and targeting niche markets such as golf and wildlife watching.

Photo of Alasdair Morrison Alasdair Morrison Labour

Duncan, I have 30 seconds left.

Photo of George Reid George Reid Scottish National Party

You have actually got a minute and a half, minister.

Photo of Duncan Hamilton Duncan Hamilton Scottish National Party

As the minister has correctly identified, AIE has a crucial role to play in developing the Kintyre economy and has targeted the area as a No 1 objective. That said, what is the Executive's attitude to Linda Fabiani's revelation about the potential for AIE to lose more than £1 million?

Photo of Alasdair Morrison Alasdair Morrison Labour

Those issues are being debated legitimately in the area. I need to press on to deal with the important issue of the Ballycastle ferry.

Mr Lyon has raised concerns about the future of the Ballycastle-Kintyre ferry service should Sea Containers withdraw from the route. I want to assure members that we recognise the importance of the service and its part in helping to boost Kintyre's economy. We are pleased that Sea Containers has been able to operate the service for the past three summers.

However, the terms of the agreement with the sponsors of the project, AIE and Moyle District Council, required Sea Containers to operate the route for three years and the company is now reviewing its options for the future operation of the service. A decision is expected soon.

I assure members that the Executive is maintaining a dialogue with Sea Containers to explore the possibilities. Officials have met representatives of Sea Containers and Mr Hamish Ross, managing director of Sea Containers Irish sea operations, will meet Sarah Boyack on 2 December. We are hopeful that a solution can be found. This year, there are some encouraging trends on carryings compared with last year. With the possibility of peace in Northern Ireland, it seems likely that carryings on the route may grow further.

Just before I came into the chamber I was passed a note from Brian Wilson, Minister of State at the Scotland Office, who met Sea Containers today. He said:

"Sea Containers are not committed to withdrawing from the route so long as they feel that there are reasonable prospects for its successful operation."

He continued:

"I believe that, particularly with a greatly improved political climate in Northern Ireland, it is eminently possible to increase traffic on the route by the 25 per cent required to secure its future."

He continued:

"It is far too soon to write off the potential of this service which means so much to the economy of Kintyre."

I see that my time is up, Presiding Officer.

Photo of George Reid George Reid Scottish National Party

That concludes the debate on the Kintyre economy.

Meeting closed at 17:46.