Scottish Economy

– in the Scottish Parliament at 9:30 am on 26th March 2003.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 9:30 am, 26th March 2003

Our main item of business today is a debate on motion S1M-4057, in the name of Iain Gray, on the Scottish economy.

Photo of Iain Gray Iain Gray Labour 9:35 am, 26th March 2003

It is right that one of the last debates in this session of the Parliament allows us to focus on the Scottish economy, which is the issue that underpins all others. We have made it clear that devising, implementing and sticking to a strategy for improved economic growth is at the centre of the Executive's priorities. Without a prosperous economy that creates wealth, we cannot do the other things that we want, which are to create first-class public services, and a more socially just Scotland.

The context of the debate is the devolution settlement, which allows the Parliament and the Executive to focus on policies that will enable the Scottish economy to maximise its potential and achieve sustainable growth in the medium to long term. In the debate we must, therefore, acknowledge the stable macroeconomic environment from which the Scottish economy benefits and which is a consequence of the United Kingdom Government's sound handling of the UK economy.

That approach has delivered the longest-ever period of sustained low inflation and historically low levels of interest rates—they are less than half the levels of the 1980s and early 1990s. Best of all—I make no apology for saying this—the UK measures to tackle unemployment, along with our training and enterprise policies, have delivered a 25 per cent reduction in claimant-count unemployment since May 1999.

Photo of Phil Gallie Phil Gallie Conservative

Does the minister believe that Scotland's economy will benefit from the block grant, given the current balance of trade deficit, which was induced by the national Government and which now stands at £35 billion? Does he believe that the economy will benefit from record levels of taxation? What will happen to the block grant in the immediate future?

Photo of Iain Gray Iain Gray Labour

When we want to look forward, we must look back and judge the handling of the economy on the record of the current UK Government. We all know about the record of the Tories in Government, when unemployment stood at 3 million.

Not only is the rate of unemployment historically low, but the employment rate is as high or higher than the rate anywhere else in Europe. Youth unemployment has fallen by 54 per cent since May 1999, while the number of unemployed older people has fallen by 32 per cent in the same period.

From a global perspective, Scotland has a small and open economy. In 2001, the growth in gross domestic product slowed simultaneously in the United States, Europe and Asia—the first time such a slow-down has happened in the three major global economies for almost 30 years. That situation has inevitably impacted on businesses in Scotland and, as a result—as we have made clear repeatedly—our GDP growth figures are not good enough. Of course, current events continue to cast a shadow of uncertainty across the global economy. That is why it remains absolutely essential that we continue to lay the foundations for our future prosperity. Stability in interest rates, inflation and the labour market and sound public finance through adherence to clearly defined fiscal rules give us the opportunity to invest in physical, human and knowledge capital.

"A Smart, Successful Scotland: Ambitions for the Enterprise Networks" sets out the Executive's vision of a more productive, competitive and prosperous Scotland. That vision, which is being implemented by Scottish Enterprise and Highlands and Islands Enterprise, is exactly about investing in physical, human and knowledge capital. Proof-of-concept funding, which is unique in the UK, small firms merit awards for research and technology—the SMART scheme—support for products under research, or SPUR, and SPUR plus are all investments in the commercialisation of Scotland's excellent academic research. The Scottish co-investment fund and the business growth fund form a £40 million package that is intended to help Scottish companies grow. Regional selective assistance has been refocused to provide better support for Scottish companies and smaller companies and to provide investment in knowledge capital as well as physical capital. There is a new research and development support grant scheme.

We have also made the most far-sighted investment of all: £450 million over a 10-year period in three intermediary technology institutes to commission and commercialise market-driven research. That investment is a bold long-term initiative to address the unacceptably low level of research and development in Scotland's private sector.

It is the investment in our people and their skills, however, which must be the greatest driver for economic growth in the years ahead.

Carly Fiorina, the chief executive officer of Hewlett Packard, once said:

"Keep your tax incentives and highway interchanges; we will go where the highly skilled people are."

Our obligation is to ensure that the highly skilled people are right here in Scotland.

That is why we have delivered 50 per cent participation rates in higher education; the highest graduation rates in Europe; over 20,000 new apprenticeships; 500,000 students in our further education colleges; and a network of trade union learning representatives throughout our industries.

It is also why we will further increase the apprenticeship programme to 30,000; reintroduce individual learning accounts; and roll out educational maintenance allowances throughout Scotland so that no young Scot has to leave school or college in order to boost the family income.

When we issued "A Smart, Successful Scotland" in 2001, we also established a new joint performance team to measure progress. The joint performance team's second report is published this morning. We continue to do very well in relation to exports, e-business and the core reading and mathematical skills of our schoolchildren. We do not do so well in relation to GDP, productivity, business investment in research and development, entrepreneurial activity and new business formation. We will address the areas in which we do less well and seriously address the last two.

We need a cultural shift in Scotland—a shift towards entrepreneurism. If someone wants to change the culture, they start with the young.

Photo of Annabel Goldie Annabel Goldie Conservative

Will the change in culture extend to political thinking? Does the minister recognise that bureaucrats do not deliver business start-ups and that the business sector is best left to do that itself?

Photo of Iain Gray Iain Gray Labour

Of course the change in culture has to extend to politics. That is why, as I am about to say in a moment, we have made a political decision to invest unprecedented sums in a shift towards entrepreneurism. I agree that we have to streamline the support that is provided for growing businesses. I have spoken about how we have reduced the regional selective assistance bureaucracy in respect of grants of less than £50,000 to allow businesses to get a quick answer on their application. If Miss Goldie is referring to what I think she is referring, I will address her question later in my remarks.

Over the next three years, we will invest over £40 million to provide every young person in Scotland in every school in Scotland with education for work and enterprise at every stage from primary 1 to secondary 6. That is an effort that is simply unparalleled in the creation of a more aspirational, enterprising nation. We are not aware of any country in the world that can beat that investment. It is a sign of a cultural shift in politics—one that is required.

In addition to enhancing our smart, successful Scotland strategy with further investment in people, last year's Scottish budget allocated unprecedented sums to transport over the next three years. In the years to 2006, spending will rise by more than 50 per cent with almost £1 billion per year being spent on transport at the end of that period. We have also put in place financial planning procedures that will allow us to commit to a transformation of Scotland's infrastructure.

Our investment in transport will see the completion of the M74, the M8 and the M80, the extension of the M77; rail links between Airdrie and Bathgate, Larkhall and Milngavie, Stirling and Alloa; £375 million for Edinburgh's transport system to bring trams back to the city; rail links to both Glasgow and Edinburgh airports; a new crossing over the Forth to open up central Scotland; and a route development fund that has already supported four new direct air routes to Scotland.

However, infrastructure is not just about transport. We are also investing more than £200 million in improving access to broadband, which has been added to, in recent months, by £24 million to bring ADSL-standard access to 70 per cent of Scotland's people by this time next year.

Photo of Alex Neil Alex Neil Scottish National Party

Can the minister update members on the current state of the accessing telecoms links across Scotland project in relation to broadband and tell us whether the European Commission is likely to give it clearance in the light of the legal action that is threatened by Thus?

Photo of Iain Gray Iain Gray Labour

As Mr Neil probably knows, the first stage of project ATLAS came online early, and the second stage is still on time. Nevertheless, Scottish Enterprise has publicly made it clear that it has sought from the European Commission a ruling on any state aid implications. I remain confident that those issues will be resolved and that project ATLAS will allow better broadband access for businesses throughout Scotland.

So all this is a smart, successful Scotland, with the addition of investment in company growth, in research and commercialisation and, above all, in skills; investment in transport and communications infrastructure and investment in a culture of enterprise and aspiration as well as macroeconomic stability. This is a strategy based on which we are building new industries in biotechnology, photonics, software design and renewable energy.

There is no doubt that that strategy is a necessity across the economy. What is a successful, home-grown financial services company such as Intelligent Finance, if it is not built on innovation, the skills of its work force and investment support for its back-office functions in Rosyth and Livingston? Last November, I met senior executives of the JP Morgan bank to discuss with them their experience of setting up their European technology centre in Glasgow. They explained that they had chosen the site from 18 possibilities on the basis of infrastructural support in the financial services district and the available skills. Earlier this week, the bank announced an expansion of the centre and the creation of 150 highly skilled jobs. When I met State Street Bank, in the United States, to discuss its plans for the Edinburgh-based fund management operation of Deutsche Bank, it was assurances about investment in Edinburgh's public transport system that the bank sought. It has now taken out a long lease on its Edinburgh office and has thereby committed to Scotland.

Dundee has world-renowned biotech companies such as Cyclacel. It also has Michelin Tyres—traditional manufacturing, surely—which is driving up productivity by innovating in the production process, investing heavily in the skills and training of its work force and benefiting from the new, shorter and cheaper link to its markets that is provided by the Rosyth to Zeebrugge ferry. We are investing in innovation, in infrastructure and in people, whether in manufacturing, in the financial services sector or in retail. We are investing in every sector of our economy, old and new.

We will pursue this strategy with determination. It is for the long term, but we will continue to refine it. The Executive's response to the Scottish manufacturing steering group's report was published this morning. When I reconvened the Scottish manufacturing steering group, I set a tight timetable for it to report under Dr Masters' leadership. I undertook to respond to the group before the end of March, and today I did so in a letter to Dr Masters and the other members of the group. We have accepted 21 of the 23 recommendations that were directed at the Scottish Executive. Seven more will be discussed with UK ministers before August.

One initiative that flows from the report will target small businesses by establishing a pilot scheme of at least 300 business learning accounts over the next two years. A number of those will be targeted specifically at the manufacturing sector. Employers who are engaged in the pilot scheme will be reimbursed for 50 per cent of all business growth training.

All the effort and investment in economic growth is driven by the recognition that our growth rate is not good enough and that there is no quick fix. Our annual growth rate to the third quarter last year was 0.1 per cent, compared with 1.3 per cent for the UK. However, it is instructive to compare the rates when the electronics sector is removed from both figures. Growth for the remaining 94 per cent of Scotland's economy was 2.4 per cent, which outperformed the UK's figure of 2 per cent. Those figures are not offered as spin, but simply as an indication of the importance of electronics to our economy. It would be foolish to deny that factor and we must address it.

The electronics sector is performing poorly worldwide. However, there is evidence in the electronics industry in Scotland of what we need to do. For example, Wolfson Microelectronics was born from world-class research in the University of Edinburgh and now designs and sells from Scotland—production is done overseas—components contained in cutting-edge, must-have products such as the X-Box games console and the iPod MPEG player. That is a clear example of Scottish ideas coming out of the lab, on to the test bench and into global products.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Even if one were to accept that taking the electronics sector out of the minister's GDP figures was a valid exercise, how does he explain the fact that for the past 25 years we have lagged behind the UK? Is that also due to the electronics sector?

Photo of Iain Gray Iain Gray Labour

The question posed is extremely interesting, because we know that for 25 to 30 years Scotland's GDP growth has lagged behind the UK's. One aspect of considering the figures for 2002 to the third quarter, excluding the electronics sector, is that that consideration identifies a trend: 94 per cent of the Scottish economy turned round in that year. I would have expected a party that says that it stands up for Scotland to welcome that, but I am not surprised that it does not.

Photo of Phil Gallie Phil Gallie Conservative

Does the minister agree that between 1989 and 1996 the Scottish economy grew at a rate that placed it either in the third or fourth position in the UK charts?

Photo of Iain Gray Iain Gray Labour

Nonetheless, the fact is that for 25 or 30 years—for a generation—Scotland's growth rate has lagged behind the UK's. However, we also know and understand—I want to come to this immediately—that growth in the 1980s and 1990s was largely fuelled by a kind of foreign direct investment that brought important jobs to Scotland. To a certain extent, however, the jobs were brought to Scotland on the basis of our having a low-wage economy. We are no longer prepared to compete with the rest of the world on that basis. In addition, that kind of foreign investment is simply no longer available to us in the 21 st century. Therefore, the methodology of the 1980s and 1990s is not available to us now.

An example of that in our electronics industry is Motorola. That company's assembly plant at Easter Inch has gone and the Scottish Parliament rightly paid much attention to that change. However, the work force has found new jobs and training and started new businesses. Unemployment in West Lothian has gone down rather than up. Moreover, Motorola's huge wafer fab operation in East Kilbride is not only still there, but is thriving and expanding. Why? Because it operates further up the production chain and it stays where the highly skilled people are—and they are here in Scotland. For the same reason, Sun Microsystems has just opened a new extension and a new line in Linlithgow.

When I visited Motorola recently, I met a young woman who had completed a modern apprenticeship there, after which she had undertaken a company-sponsored degree in electronic engineering. Now, she works on cutting-edge design and the manufacture of new silicon, which is found in almost every make of car that is produced in Europe today.

A growing company using research and innovation with Scottish knowledge, upskilling staff and moving production up the chain in providing global markets with Scottish products—that is the paradigm that we pursue in the quest for economic growth. At its heart is investment in what will drive that growth sustainably. The nationalist and Tory amendments should be resisted, because they contain the seeds of that strategy's destruction.

The nationalists would cut £120 million to £150 million from the budgets for investing in skills and business growth.

Photo of Iain Gray Iain Gray Labour

An SNP document says that as a first step, the SNP

"will use savings from the reform of the local enterprise network to reduce business rates to a level lower than the rest of the UK."

That would involve £120 million to £150 million coming out of the budgets for skills that support the Executive's strategy.

The nationalists would destabilise our economic stability with an independence referendum and, if they succeeded, they would have to fund a fiscal deficit and the costs of a separate Administration from further cuts and higher taxes. Stability would be gone and investment in our future would be gone, and then the jobs would go, too.

The Tories would go one better. They would cut £250 million from skills and business support. Their amendment says that they would increase spending on transport by £100 million, but our transport budget is set to rise to £1 billion a year, so the Tories would pay for a 1 per cent increase in the transport budget with a 100 per cent cut in skillseekers, modern apprenticeships and other programmes.

Photo of Iain Gray Iain Gray Labour

I am finishing.

As we look forward to a new parliamentary session, it is time for the Scottish Parliament to choose investment in Scotland's future, in Scotland's skills, in Scottish ideas, in Scotland's infrastructure and, above all, in Scotland's aspiration.

I move,

That the Parliament endorses the Scottish Executive's policy to increase the sustainable growth of Scotland's economy over the long term as set out in A Smart, Successful Scotland and believes that this, along with the investment in Scottish transport infrastructure outlined in Building Better Transport and the introduction of education for work and enterprise for every pupil at every stage of school to create a culture of aspiration and entrepreneurship, will deliver increased prosperity, thus providing resources for first-class public services and a more socially just and sustainable Scotland.

Photo of Andrew Wilson Andrew Wilson Scottish National Party 9:57 am, 26th March 2003

Iain Gray nearly got going at the end of his speech. We almost got into a debate, and then he had to sit down.

My throat is failing me at this early stage in the election campaign, but I would like to say that it has been a privilege to be part of the Parliament's proceedings for the past four years. I contend that, in the next four years, the Parliament must acquire the power and responsibility of independence if we are to achieve all that we can. Many members do not yet agree publicly with that contention, but I ask all in the debate to open their minds and to engage in the debate on the basis of reason, not bluster, and of truth, not smear. As part of our contribution to a better debate, we have set out in our amendment our support for much of what the Government has said and for almost all of Iain Gray's speech. Any change of Government must be accompanied by some continuity, which we offer. We cannot compete on cheap labour and subsidies. We must go up the value chain.

The thrust of the strategy in "A Smart, Successful Scotland" is correct and we will back it, but that approach has not been, is not and will not be enough. Scotland has enormous potential, but we are not achieving it. The evidence is there for all to see. Our population is falling and aging. In the past 30 years, our growth rate has been one of the lowest in Europe. Since Labour came to power, the rate has been the worst in the European Union.

Our unemployment rate, which Iain Gray welcomes, is the highest of the UK countries and 20 per cent higher than the average in small European countries. One in four Strathclyde households has no adult in employment, and a range of regions, from Glasgow to Fife and beyond, has significant employment problems. Since Labour came to power, long-term sickness has risen by 23 per cent and the number of those who are inactive but want work has risen by 31,000—they are off the Government statistics and out of the Government's mind. We must acknowledge those people and not be complacent about the labour market, as the Labour party is.

Despite a commitment in the programme for government—the Liberals had better listen up, because that involves them—to create 100,000 new businesses in 10 years, which means 10,000 a year, the stock of businesses in Scotland is smaller than it was in 1994 and has remained virtually static since Labour came to power. If Labour and the Liberals had met their target and created 40,000 businesses during the parliamentary session, the rates income, to which Iain Gray referred, would be nearly £500 million more.

The point is that if we hit our targets, we achieve growth and create businesses. We get rate income and investment for public services. That is the growth prize to which Scotland has to wake up. That is what we all have to aim for. Labour, it appears, just does not get it, but that is what happens in every other country.

Over the past 12 months, Scotland's economy has shrunk, as the Fraser of Allander institute for research on the Scottish economy confirmed this morning. Indeed, Scotland's economy is now smaller than it was when Jack McConnell took power and sacked so many people. It is not his colleagues who have lost out over that period. Members should think about this: since Jack McConnell became leader of the Labour party and Scotland, the economy has shrunk, but he spends his whole conference in Dundee trying to lecture others about economic risk.

The biggest economic risk that Scotland now faces is to stick with the mediocrity of leadership and poverty of ambition that we have at present. Not only I and the SNP say so; Labour's own strategy note to Iain Gray said that the SNP's economic policy was clearer, stronger and more consistent than Labour's. The minister for interruptions, Wendy Alexander, resigned a year ago, saying that she could not get the First Minister to take the economy seriously, and then wrote to a former nationalist MP saying that the Scottish Labour party had not had an original idea in 100 years. Then it was revealed that more than 100 Labour business backers from 1999 had been contacted. Thirty had gone bust and were untraceable; 55 refused to support Labour; and one of the key leaders, David Murray—not a known SNP supporter—said that our economic case was logical and pragmatic.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I will take Iain Gray if he can tell us why a number of those in the advert said that they had not been contacted by Labour and so their support had been made up. The Labour party is making up support, and those that did support it have deserted it. What does Iain Gray have to say about it?

Photo of Iain Gray Iain Gray Labour

I have this to say about it: one chooses who to ask to pass judgment on one's success. I choose not a single Labour activist who expressed a view with which I clearly disagreed, nor the 17, I think it was, out of 100 in the figures that Andrew Wilson rather spun; I choose to ask the 138,000 Scots who are in jobs now who were not in jobs in 1997. I choose their judgment on Labour's handling of the economy.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

That is terrific. If the minister is complacent and thinks that things are fine, why did his predecessor resign saying that she could not get the economy to be taken seriously?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

No, thanks.

Why have 55 of Labour's business supporters said that they will not support Labour in the election? Why did 30 of them go bust?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I will not.

The reality is that some of those people have even said that the Labour party did not contact them. It was making up support that did not exist.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

How can we possibly trust a party that has made up supporters and spun the truth when most of those who backed it previously will not back it now? Why should we believe a word that Labour says? [ Interruption. ] I will take all the interventions that come, but I need to complete the answer to the first intervention before I take the next. That is called the tradition of debate. If the resigned minister would like to intervene now, I say to her to come ahead.

Photo of Wendy Alexander Wendy Alexander Labour

I challenge Andrew Wilson now because I have heard him repeat his false allegation so often. I challenge him to provide a sourced quotation from anywhere that suggests that the Government and the Executive are not committed to growth. He has regularly repeated one commentator's hearsay as being my view. He cannot support that allegation. I invite him to withdraw it.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I have to rely for my sources on Alf Young in The Herald , who reported Wendy Alexander as having said it. If it is not true, I am sure that she will have written to The Herald and asked for a retraction or made a complaint to the Press Complaints Commission. If she has not, she should not wait until four weeks before an election to try to defend herself.

The truth is that we cannot believe a word that the Labour party says on the economy. It made it up in 1999 and it is making it up now. The Labour party feuds internally, with one minister—unnamed and unsourced—attacking Iain Gray and Scottish Enterprise eight weeks from an election. It cannot unite itself and it certainly cannot unite the country behind growth.

We need such unity, because the UK model as it stands does not work. One growth region attracts the business, finance, transport, influence, skilled people, talent and businesses. It has a magnetic pull on the growth of the rest of the United Kingdom. We must overcome that. We must have the powers to compete with and outcompete the other regions.

The system of having one growth region and higher public spending in the rest of the UK reinforces a focus on symptoms, not root causes, and engenders a sense of dependency in Scotland. We must overcome that system. It has not worked in 30 years and it will not work in the next 30 years. We require the power to compete. We require the power to encourage businesses to register their headquarters here—and, we hope, to declare profits here—and so bring their top staff here.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I need to move on. We have to complement the right-headed strategy that the Executive has set out, with the full powers of competition, and we have to be as competitive as every other country in the economic mix. We need to build the confidence of the Scottish business community in the fact that we have what it takes in the collective leadership in Scotland to take on the malaise that exists.

Photo of Annabel Goldie Annabel Goldie Conservative

If that argument is correct, would Mr Wilson care to comment on the economic growth forecast in "European Business Strategies", which predicts that there will be greater economic growth in Scotland than in the United Kingdom as a whole in 2003? If that is delivered, it rather undermines the argument that greater growth can be achieved only in an independent Scotland.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am long enough in the economic tooth not to believe economic forecasts, wherever they come from. That forecast is welcome, but I recognise that economic forecasts have not been very accurate in the past year. We can outperform the rest of the UK in one year—that has happened in the past, and I am sure that it will happen again—but I point out to Miss Goldie that, over the long term, and specifically over the 30-year period for which we have figures, Scotland has grossly underperformed in relation to the rest of the UK. That is what concerns me.

Before hearing Iain Gray's speech, I thought that everyone now accepted the fact that we have a problem. Obviously, this close to an election, complacency returns. How can we move forward and make our positive case when we get such a negative, smearing approach from Labour? Having delivered a shrinking economy and the first recession since Mrs Thatcher's time, as well as the lowest level of growth in Europe and the desertion of business leaders from their case, Jack McConnell now bases his attacks on a campaign of smearing and undermining the other parties, rather than looking to his own record. There is a London-funded campaign to smear the SNP. The ideas that we present are logical and pragmatic and are stronger, clearer and more consistent, yet all Labour is interested in is what the brother of the minister for interruptions said was a campaign to engender fear. That is what we will hear from the Labour party in the coming weeks.

If we are to assess the future of the economy, we must look to the real experience of what has happened, is happening and will happen. We have huge potential, but we will not achieve it if we do what we have always done. We have to make a change. If we do not act now, it will mean separation and divorce: family separation, as young Scots educated at home are forced to head south or abroad to make a living; economic separation, as Scotland is cut off from competing in world markets; and divorce from our own potential.

Labour's rhetoric is decades out of date. I do not know whether anyone has told the Labour speech writers this, but we now live in a big world, with unfettered movement of labour, capital and goods across Europe. Empowering Scotland does not mean having economic borders, because there are none. How can Labour sustain its claims that we would be cut off from our main market under independence when that is demonstrably not true? Independence is about empowering Scotland to compete in our biggest markets across our islands and Europe. If there is a positive case for keeping Scotland divorced from its potential, powerless in the face of increasing globalisation and hard-wired into relative decline, let us hear that case from the establishment that has delivered just that. We will not hear it, and we must leave Labour to its internal feuding and to the politics of the past. We must look forward.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am moving on; my time is tight.

An SNP Government will make a start with the limited powers of devolution. Even here, the Labour bluster machine has been spinning out of control. Let us take business rates as an example. Early last month, I outlined a policy commitment to get the business rate below the UK rate within four years. Stage 1 of that was to replace the Scottish Enterprise local enterprise companies with regional offices. Has a Labour spokesman said whether it agrees with that idea? No, they have not. One leading back bencher—whoever that might be—said that there was agreement on it in the context of Dunbartonshire. It has been amusing to watch the Labour bluster on our commitment.

The commitment was set out in our initial briefing on 4 February, and it has not changed. It said:

"Immediately on taking office we will legislate to replace LECs with Scottish Enterprise regions and focus the savings on cutting business rates. This is stage one in achieving our target of getting business rates below the UK rate within our first term".

Since then, Labour has attacked, smeared and misrepresented us. When I was with Iain Gray on "Newsnight Scotland" and repeated our commitment, a rather embarrassing pamphlet was issued, saying that our commitment had crumbled because I had—as the facts indeed showed—repeated it. That is bizarre.

Labour seems to feel that, if it bends the truth and shouts it loud enough, people will believe what it says. They will not. Labour has been proven to have told fibs in the past and it cannot be the case that people will believe it today. That will not happen if all that Labour ever does is to attack. If Thomas Edison had been a member of the SNP, Labour would have condemned the light bulb as a dangerous and uncosted anti-candle project.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

No, I am not taking it.

Let us look at the detail. Labour's attacks on our pledge, which has not changed and which will not change, have been proven to be demonstrably wrong.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am developing the point.

Labour said that our pledge cannot be afforded, yet the budgets are to be cut, so that is also demonstrably wrong. In the 14 days to yesterday, the Executive announced £1,487,274,000 of spending commitments. That is what Governments do; it is what the Government will do over the next four years. That money is not Labour's, it is the people's. The election should be about the budgets that will come to us in the next four years, and it should be a battle of ideas.

We can expect those spending commitments over the next four years, but over the past four years the Parliament has spent £4 billion more than was allocated and anticipated in 1999. Is Labour saying that the budget will be static for four years and will not change? That is absurd. The four-year commitment, at its present highest estimated cost, is one tenth of what the Government has announced in the past fortnight.

Rates in the rest of the UK are set to rise in the coming year. In Scotland, the Executive's policy is to freeze rates. That one policy choice—which has already been made, is costed and is in the plans—takes us one fifth of the way to achieving our target. If that simple policy, which the Executive did not put in its manifesto, remained in place while the rest of the UK raises inflation, the remaining gap to be financed in the fourth year would be less than £20 million. The underspend in the enterprise department's budget last year was two and a half times that.

Let us not talk rubbish about ideas being unaffordable. If the Labour party does not agree with the policy, let us have a debate about it. Let us not have this nonsense that things cannot be afforded, because they can, as we have demonstrated in the past four years and will demonstrate in the coming four.

Photo of Rhona Brankin Rhona Brankin Labour

The member talked about the SNP business rate, yet in the past he has referred to it as a first step in enhancing competitiveness. Now, it has been downgraded to a four-year target. Will the member please clarify its exact status?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I know that Rhona Brankin is reading from a document that my party produced and it is a bit embarrassing for her to do that.

The business rate is a target, a commitment and a pledge: it is what we want to achieve in the next four years. The member can obfuscate all she likes, but that sort of student politics is out of date. All those smears come from a party that made a pledge in a white paper on devolution in 1997. That pledge on the cost of the Scottish Parliament emerged as being wrong by a factor of eight. The widow of the architect of the project now says that the party made up those figures and put them in a white paper.

Photo of Phil Gallie Phil Gallie Conservative

The member's party backed it.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Phil Gallie should relax. The Labour party makes things up, invents support that does not exist and spins against opponents with demonstrably untrue attacks. By the Labour party's own admission, the SNP is stronger, clearer and more consistent on the economy—and no wonder. We recognise the core truth that we must get growth up to boost revenues. Labour does not seem to grasp that.

As I said earlier, if in the past four years Labour had met its target for creating new businesses, there would be £500 million more in the Exchequer—think what we could afford with that. Our pledge on business rates helps to set our strategy and the direction that we will take when entrusted with financial independence. In the meantime, it will help hard-pressed businesses to survive and to engender hope.

We offer hope and try to raise the level of the debate. Labour peddles fear and smears. In the past four years, it has been caught making up costings, inventing supporters who do not exist and making pledges that it does not keep. Its smears have been exposed as unfounded. However, once again it is asking Scotland to believe the same tired old lies in a campaign that will be funded from London. My big comfort is that Labour members' attacks on us are far less fierce than their attacks on one another. If Iain Gray could count on the support of the Cabinet and of his ministerial colleagues, he might be in a stronger position in this debate. In reality, enough is enough.

We have had four years of in-fighting, sackings, resignations and denials from the minister at the back of the chamber—Wendy Alexander. It is time to move on. We have huge economic potential. Our amendment focuses on how we can begin to earn our way to that. Our country and economy cannot wait any longer.

I move amendment S1M-4057.1, to leave out from "endorses" to end and insert:

"believes that a dramatic improvement on the underperformance of the Scottish economy should be the top priority of Scotland's leaders and calls for all parties to work together to place growth and competitiveness at the top of our national agenda; supports initiatives such as set out in A Smart, Successful Scotland and effective investment in infrastructure and skills improvement but believes more must be done to deliver maximum growth and a competitive advantage for the Scottish economy; calls on all parties to support positive reform of the Scottish Enterprise network and a reduction in Scottish business rates to below the United Kingdom rate in the course of the next session of the Parliament, and believes that the optimal policy to release Scotland's full economic potential requires the Scottish government to be equipped with the same competitive policy tools as Scotland's independent competitors focussed on delivering the maximum possible competitive advantage for the Scottish economy."

Photo of Annabel Goldie Annabel Goldie Conservative 10:13 am, 26th March 2003

Mr Andrew Wilson resembles Harry Potter in more ways than one. Both seem to occupy the same magical environment, in which a wand is waved and results are achieved. A game of quidditch has as much prospect as the Scottish National Party has of delivering for the Scottish economy.

"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."

Those are not my words, but the words of the then Minister for Enterprise and Lifelong Learning, Henry McLeish, when he spoke in the first debate on the Scottish economy in this Parliament on 24 June 1999. He went on to say:

"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."—[Official Report, 24 June 1999; Vol 1, c 819.]

How has that cheering and bold prospectus fared as we reach this debate, nearly four years later? Gross domestic product in Scotland rose by 0.6 per cent in the third quarter of 2002. That followed a rise of 0.2 per cent in the second quarter, after two successive reductions in quarter 1 for 2002 and quarter 4 for 2001. Of course, that saw Scotland in recession for the first time in 20 years. In comparison, GDP in the UK as a whole rose by 0.8 per cent in the third quarter. That means that by any comparison, the economy did better under a Conservative Government. Britain has slipped from ninth to 16th in the world competitiveness league since 1997 and productivity has halved under Labour.

I turn to business start-ups. In the fourth quarter of 2002, 4,020 new businesses were recorded in Scotland. Although that is welcome, it represented a decrease of 7 per cent over the year. Business rates in Scotland are almost 9 per cent higher than they are in England—Scottish business rates are currently charged at 47.8p in the pound, compared with the English rate of 43.7p.

Photo of Iain Gray Iain Gray Labour

I know that we have discussed this point before, but this is my last chance in this session to try to get a rational answer to the question. It is true that the rate poundage in Scotland is higher than it is in England, but it is also true that, at the last revaluation, rateable value went up by only 15 per cent in Scotland compared with an increase of 25 per cent in England. Is it not the case that the most important thing for business is the take in rates? Does that not depend on both rateable value and rate poundage? Will Miss Goldie at least admit that mathematical fact?

Photo of Annabel Goldie Annabel Goldie Conservative

There are two components and, as any business person who has paid business rates will tell us, the one stable component is the business rate poundage element. The businessman can then make decisions about the type of premises to occupy, knowing that he has within his control a calculation of the ultimate rates bill. If the Scottish Executive has not visited an uncompetitive business rates regime on Scottish business, why has it sought to freeze business rates over the next year?

On top of the stealth taxes already imposed, the average family in Scotland will pay an extra £445 a year following the rise in council tax, the national insurance contribution increase, which is to come into effect on 1 April, and the freeze on income tax allowance. I quote from a letter to The Herald on 20 March from Iain McMillan, the director of CBI Scotland. He said:

"We make no apologies for spelling out that by 2005 firms will have paid out just under £6bn extra in tax for each of the years since Labour came to power, a total of £47bn.

We would be failing in our duty if we did not point out the impact of rising taxes on company finances. The chancellor would be wise to take note, because this cannot continue without damaging investment and jobs."

Photo of Bristow Muldoon Bristow Muldoon Labour

Will Annabel Goldie confirm whether, if she believes the tax burden to be too high, she subscribes to the view of the UK Conservative party, which wishes to cut investment in public services by 20 per cent? If she does not, by what figure would she wish to cut public services?

Photo of Annabel Goldie Annabel Goldie Conservative

I am certainly not going to agree to what is a distortion of the Conservative party's position in Westminster. For the purposes of this devolved Parliament, I say that we are the only party that will present a tax-cutting agenda to business. As the amendment indicates, we are prepared to undo the wrong visited by the Scottish Executive on the business community in delivering the most uncompetitive tax regime in the United Kingdom.

Photo of Annabel Goldie Annabel Goldie Conservative

I would like to make further progress.

Before I took Mr Muldoon's intervention, I was indicating the extent to which the tax base has risen in the British and Scottish economies. We can be clear about what has been taken out of the economy in tax, but it is only fair to the Executive to give some thought to what has been put back in to help business.

It is interesting that the Scottish Government's budget document, "Building a Better Scotland", which was published on 12 September 2002, lists a combined budget of £521 million for the enterprise networks. The fact that the population of Scotland is just over 5 million people, according to census day 2001 figures, means that Scottish Enterprise and Highlands and Islands Enterprise have spent more than £102 for every taxpayer in Scotland in 2002-03. Indeed, grants to selected businesses from the enterprise networks have amounted to as much as £27 million in one year—that is £5 for every man, woman and child in Scotland.

What has been the effect of that expenditure? If we look at the dismal record on business start-ups, we see that the effect has been negligible. I quote from what Mr Tom Hunter said, as a director of the Prince's Scottish Youth Business Trust—I declare an interest in that regard—at a meeting of the Enterprise and Lifelong Learning Committee on 18 March of this year. I am sure that Mr Hunter's political views are very divergent from mine. On helping business start-ups and making them work, he said:

"We should take £50 million out of the Scottish Enterprise budget and give it to the PSYBT ... If the PSYBT was given the money that is available from elsewhere it would not be extra money, but it would be money that was being better used and better focused. The PSYBT has a system and it bloody works."—[Official Report, Enterprise and Lifelong Learning Committee, 18 March 2003; c 3191.]

I could not put it better myself.

Although the Labour and Liberal Democrat parties made a sensible assessment of an enterprise economy in June 1999, they stand damned by their own record in March 2003. While those two parties have masqueraded as the friends of business, Labour at Westminster has massacred pensions, strangled business in red tape, sucked tax out of the economy like a vacuum cleaner and seriously damaged stock-market confidence. It has done all that, and the tax on jobs is still to come from 1 April.

In Scotland, Labour and the Liberal Democrats have proudly presided over the highest business rate in the United Kingdom, have neglected essential investment in transport over four years, have overseen stagnation in the growth rate in the number of nurses and have stood by as business start-ups have declined sharply. The bulk of the money that they have spent has gone on that jewel in the crown of economic dynamism and efficiency, Scottish Enterprise—an organisation whose capacity to absorb money is like that of blotting paper.

Photo of Alex Neil Alex Neil Scottish National Party

I note that the Tory policy is to reduce Scottish Enterprise's annual budget by £250 million. Will the member give us three examples of the big budgets within Scottish Enterprise that would be cut?

Photo of Annabel Goldie Annabel Goldie Conservative

The Tory policy is to take £264.8 million from the enterprise networks overall, not just from Scottish Enterprise. We would leave intact the budgets for skills, training and modern apprenticeships.

Photo of Annabel Goldie Annabel Goldie Conservative

We would remove from the enterprise networks the decision-making process and the funding mechanism, which allow bureaucrats to make decisions about starting up businesses, because it has been proved that the enterprise networks' role in that regard is not working. I refer back to the quotes from Mr Tom Hunter.

I will expand further. The Scottish Conservatives have a clear policy commitment to create an annual fund of £5 million for young entrepreneurial business start-ups for people between the ages of 18 and 30.

Photo of Alex Neil Alex Neil Scottish National Party

I seek clarification. If everyone in Scottish Enterprise were sacked, that would save only £80 million. Where would the other £170 million of cuts come from?

Photo of Annabel Goldie Annabel Goldie Conservative

We must consider the budget for the enterprise networks overall, not just the budget of Scottish Enterprise. It is apparent that the sums that we have in mind could be stripped out. That would leave a signpost facility and a deliverer of training, modern apprenticeships and skills. We would take away from the enterprise networks much of the bureaucracy, which, as I have already said, has acted like blotting paper on resources.

Photo of Annabel Goldie Annabel Goldie Conservative

I am sorry but, given the time, I need to make progress.

That is the reason why business needs a break from the current nightmare. I submit that business needs the Conservatives' tax-cutting agenda, which would take money from the bureaucrats and reinvest it in business. The amendment in my name indicates exactly how that money would be redirected and how it would be delivered to business to give a direct and immediate benefit to the Scottish economy.

Our proposal contrasts interestingly with Mr Wilson's monologue, which might have been strong in rhetoric and in its condemnation of the Executive, but seemed to be pointedly deficient on what specific benefit would accrue to Scotland's economy on 2 May if people were misguided enough to support the Scottish National Party.

My party offers a chance for a real difference: a chance for business to do something about the current situation and a chance for Scotland's economy to be lifted back out of the slough in which it has been placed by the Scottish Government.

I move amendment S1M-4057.2, to leave out from first "Scottish" to end and insert:

"objectives of A Smart, Successful Scotland and, while welcoming the introduction of education for work and enterprise within Scottish schools, expresses concern that, at the end of the first devolved parliamentary session, business start-ups have declined, business regulation has intensified, strategic transport investment has been neglected and business rates have increased, and calls upon the Scottish Executive to recreate a competitive business environment by increasing the annual transport budget by £100 million, cutting the business rate poundage to the level of England and taking pro-active steps to reduce the burden of red tape on Scottish business."

Photo of Tavish Scott Tavish Scott Liberal Democrat 10:26 am, 26th March 2003

If Andrew Wilson is Harry Potter, Annabel Goldie did a passable imitation of Hermione Granger—complete with blue stockings.

I will share two thoughts on Mr Wilson's speech. It is a bit rich of him to lecture other parties on positive campaigning, when his party's idea of what that means is to put up a picture of the First Minister being stubbed into an ashtray. Let us have some standards from Mr Wilson's party as well. Also, I am sure that we will all hold Mr Wilson to his commitment that he will now take economic statistics over a 30-year time line. I applaud that long-term view and I look forward to hearing his comments when the next quarter's gross domestic product figures are published. We will then see how consistent he is on that point.

I begin by making one or two brief points about the international situation. It is interesting that neither of the Opposition parties touched on that in their opening speeches. Indeed, it seems extraordinary that they should not be at least conscious of the difficulties that are being caused to economies worldwide by what is happening internationally. No one should underestimate the long-term economic impact of US unilateralism and the Bush Administration's approach to old Europe.

The schisms within Europe create significant economic uncertainties in Scotland's major export market for manufacturing. Last Friday's EU summit was meant to be about economic reform within the EU but, for understandable reasons, that was forgotten. Instead, Europe's leaders spent more time postponing for another year discussion on how to make Europe the most competitive economy in the world. That is very important because the European Union has the legitimate right to impose £2.5 billion of trade sanctions against the United States because of American exporters' use of offshore financial means to circumvent the trading system. There are economic difficulties brewing internationally.

We should also consider tourism against the international background. Present estimates forecast potential losses to tourism of 3 per cent if the war is geographically and time limited—which must be pretty doubtful. Business tourism is uncertain given the present economic position.

Another important industrial sector that should be borne in mind in the overall international context is oil and gas, which is a mature Scottish industry. Recent job cuts by BP and Shell in Aberdeen and in my own part of the world have caused few ripples, but the North sea is now a mature and declining field. The oil majors have considered their international investment criteria and want to invest in fields that are growing rather than ones that are declining.

Last year, only 14 wells were drilled in the North sea. In the northern North sea there was despondency about the failure to strike any new fields in the Faroese sector. However, there are still 55 companies that are extracting oil and gas from 300 fields and the Clare field, west of Shetland, is still to come on stream. Those 300 fields raise some £4.5 billion in taxes for the Government. Smaller companies are now purchasing assets from the BPs of this world—witness last week's sale of the Forties field to Apache.

The Scottish Executive must be aware that last year's budget will cost the industry some £8 billion by 2010. Energy companies like stability. Even if the Government tells them plainly that they should plan for bad financial news, they still want financial stability. They need to know what is coming. What caused the fiscal difficulties last year was the bolt out of the blue. That needs to be recognised.

In the spirit of the growing businesses theme in "A Smart, Successful Scotland", I want to mention renewable energy, which the minister referred to in his opening remarks. That must be an area where we can build on Scotland's strengths, natural resources and manufacturing excellence. Yesterday, my colleague Ross Finnie stated the Executive's intention to work towards a target of 40 per cent of energy being produced from green resources by 2020. The Executive's commitment allied to the expertise and enterprise in the Scottish renewables sector will enable Scotland to succeed in that area.

If I agreed with anything that Annabel Goldie said, it was that it is not the job of the Executive or any Government to develop renewables projects. That is for the industry. It is the Government's role to develop a policy, economic and planning framework that supports the development of our renewables potential in new business start-ups.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Obviously the member will welcome the 40 per cent target that was announced yesterday. The SNP would have gone further, but we welcome the road to Damascus being followed. Does the member support the idea of a green jobs strategy for Scotland so that we can capitalise on the potential for renewable energy? Is he not a bit disappointed that that green jobs strategy did not form a central part of "A Smart, Successful Scotland"?

Photo of Tavish Scott Tavish Scott Liberal Democrat

Mr Crawford should look closely at what the Executive announced yesterday because such a strategy was inherent in the announcement. There is the opportunity to undertake and commercialise research through such projects and existing manufacturing expertise. That is very much part of the approach of the Executive and my party to renewables and to many other areas of environmental advancement.

Scotland cannot rely on hydro and onshore wind alone as established technologies for reaching that 40 per cent target. The development of marine energy—energy from waves and tides—is at an early stage, but it represents a huge opportunity for Scotland and is an area where the country can definitely become a world leader. It is especially important to build on the synergies with and the expertise of the oil and gas sector.

The new £5.65 million marine energy test centre in Orkney will provide a state-of-the-art testing facility for marine power technology with £2 million of Executive funding. That is where Highlands and Islands Enterprise is so important; it is the very body that helped to bring that centre about, and I now know that the Conservatives would all but abolish that body. The project is of international significance. It will put Scotland at the forefront of research and the commercialisation of wave and tidal power. In a rural or island context, the issue is about exporting power to where it is needed. The Government must therefore ensure that the reserved issues relating to upgrading and investment in the electricity grid are resolved.

Renewable energy is not all about harnessing wave and tidal power on Scotland's coasts. On the business pages of one of the newspapers this week there is the example of a company called Renewable Devices Ltd, which is based outside Penicuik. Through the innovation of two former scientists turned businessmen, that company will produce the first household wind turbine, to be unveiled later this year. That is the kind of innovative project that we should be encouraging through business start-up funding in Scotland.

Photo of David Davidson David Davidson Conservative

Will Mr Scott tell us whether the Liberal party has a different set of policies for growth from that of the partnership of which it is part? If so, will he describe them to us?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I will make the speech that I want to make, not the speech that Mr Davidson wants me to make. I do not plan to abolish Highlands and Islands Enterprise.

Photo of Tavish Scott Tavish Scott Liberal Democrat

Yes the Conservatives do. I do not plan to cut £260 million from the budget of Scottish Enterprise, because I believe in investment and skills and training. I note that the Conservative party does not believe in investment in skills and training and would cut £260 million from those budgets. That is the difference between my party and the Conservative party.

Another industry that can and must grow is food and drink production. Food and drink are worth £4.3 billion per annum to Scotland and there is a strategic aim to increase that to £7.4 billion by 2010. It is important to drive for innovation. One of those areas of innovation is healthy foods, which are increasingly important to consumers in this consumer society. Research by the Edinburgh-based Dr Ron Lewis demonstrated that Shetland lamb has high levels of the fatty acid known as conjugated linoleic acid, which is known to have healthy benefits because it reduces the risk of cardiovascular disease. [Interruption.] Members might laugh, but I would have thought that a farmer such as Alex Johnstone would have known that it is quite important to develop such innovative projects and to use the produce from our countryside. If the member does not agree with that approach, that is his problem.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I do not mean to lower the tone of Tavish Scott's considered speech but, given that he is focusing on the food and drink sector, and given the minister's comments that all the problems of the Scottish economy are to do with electronics, does the member agree that the fact that the food and drink sector today is producing less than it did a year ago is another area for concern?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I do not think that it is producing less. An article in The Herald today illustrates that sales of whisky—if that is the statistic that Andrew Wilson is using—are down, but their value is up. In that context, I am not sure that he is correct.

Photo of Iain Gray Iain Gray Labour

In a similar vein, Tavish Scott might wish to note that when we examine proof-of-concept funding, the Scottish agricultural and biological research institutes, which bring the innovation to the sector that he is talking about, do extremely well as recipients of those funds. "A Smart, Successful Scotland" is supporting exactly the kind of innovation that he is talking about, and that is important.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I take the minister's point. It is an area in which I am sure the parties on this side of the chamber would wish to continue investing. The parties opposite clearly would not.

I will make one other point on food and drink resources, which are important for Scotland as a whole, and that is on fish. The fish sector is under-utilised in terms of quality. It is an important area that must be driven forward at this time, despite all the difficulties that the industry faces.

The more central point is to do with the power of the supermarkets, which is an issue that I raise as an island representative in view of the price of the product on supermarket shelves. For example, why does salmon in the Sainsbury's down the road from me cost between £12 and £25 a kilo retail price, when the price to the farmer is £1.50 a kilo? The same applies to many products. The power of the supermarkets is immense, but to what benefit to primary producers? The importance of food retailing and production, through initiatives such as the development of organics and farmers markets, is important in that context.

I finish with a couple of points on skills, for which the Conservatives have little regard. It was disappointing to note, in an article in The Scotsman on Monday on the developing Inverness economy, Highlands and Islands Enterprise's concerns about being able to get enough young people to become labourers or to work in the construction industry. That shows why it is so important that Highlands and Islands Enterprise and Scottish Enterprise are allowed to develop skills training. It also shows why the Enterprise and Lifelong Learning Committee's report on lifelong learning, and the minister's response to it, rightly emphasised parity of esteem—the importance of using vocational routes to work and valuing them equally with academic careers.

Glasgow College of Food Technology published a survey that suggested that Scotland's tourism and hospitality industries are facing a shortage of skilled staff, which was illustrated by the fact that 66 per cent of those who were questioned said that in the next 10 years there would be a lack of sufficiently skilled workers. Those are the challenges. They are long-term challenges, and they must be met by the enterprise network and the Scottish Executive.

I do not find compelling the arguments of those who argue for the cutting of budgets in areas where there is clear evidence of skills shortages. That must be addressed. It is profoundly worrying to me that some people appear to think that that is the right approach to business development, training and investment in the future of the Scottish economy.

It is right to concentrate on Scottish growth, which is what we will do. That is why enterprise in education—running right through to secondary 6, as the minister mentioned—is so important. It is why modern apprenticeships are so important. It is also why it is important to allow younger people from 14 to work partly in a business, where they can gain a time-served apprenticeship in conjunction with their school work.

Photo of Tavish Scott Tavish Scott Liberal Democrat

No, I am finishing. Projects such as Columba 1400 in Skye are important, because they will take teachers and create the inspirational beliefs and structures that are so important for the future of enterprise in our education sector. In time, such initiatives will serve to promote the growth that we all seek.

Photo of Murray Tosh Murray Tosh Conservative

We come to the open debate, with speeches of five minutes, plus time for interventions. That may tighten up a bit later.

Photo of Richard Simpson Richard Simpson Labour 10:39 am, 26th March 2003

I have listened with great interest to the debate so far. Actually, I am not sure whether it should be dignified with the term "debate", because some of the interventions have been below the usual standard, although I see that Andrew Wilson has now left.

There is no doubt that we are living in a global economy and that is evident in my constituency. The textile industry was the bedrock of Clackmannanshire and what has happened with firms such as Coats Viyella, whose 200-year association ended in 1999, demonstrates the kind of changes that we face.

When I stood for election in 1999, I went round those textile plants for the first time. It was like returning to a previous century, as the working conditions were very poor. I even discovered that, in one plant in Alloa, the wages that were paid to workers were still below the minimum wage and were illegal at that time—low pay and tough conditions.

Where previously we had thousands of workers in the textile industry, we now have very few. However, the workers whom we have represent a new Scotland. The cashmere industry in Kinross, for example, has the biggest bank of dyes, material and thread anywhere in the world. There is a superb research and development department to support design. That industry is fighting in a world market, but it is fighting successfully. It manages the product from the goats in Asia through to the thread that is then used in the most modern designs. That shows how an industry can modernise itself.

Other companies in my constituency have followed the same path. Tavish Scott referred to fish and food. Landcatch Natural Selection, a new company in Alloa that has a £15 million investment, was helped by the Executive's change in attitude when the investment was about to be made and there were some problems. Building on genetic research of the past 20 years at the University of Edinburgh and the subsequent knowledge base, Scotland will lead the world in the natural breeding of fish. In my constituency, we have applied that knowledge not only to fish, as we are the world leaders in chicken breeding and have made great advances in that area. We developed the same technology in relation to pigs, although that has been exported to America. We have to make sure that such companies are built, developed and retained in the United Kingdom and in Scotland in particular.

Quest International, another company in my constituency, deals with flavours. It provides an interesting illustration of the changes that we face. There has been a reduction in the number of workers in that plant, but there has been an increase in the percentage of graduates employed, from 10 per cent to more than 30 per cent. That company employs a highly skilled, highly educated work force and that position is reflected in many of the newer companies in my constituency. That can occur only with the stability that the UK Government in Westminster has provided in partnership with the Scottish Government. It has provided the stability on inflation, interest rates and business taxes that we need.

Stability can develop only if we create the educated work force that we are currently creating. We now have the highest number of young people going into higher and further education of any developed country in the world. That must produce benefits. When that is backed by the modern apprenticeship scheme, which offers over 20,000 modern apprenticeships—that will rise to over 30,000 modern apprentices under the next Government—we will create the work force we need. I very much welcome the educational maintenance allowance because it will help many people in my constituency as well.

What are the alternatives that are being offered? How long have I got, Presiding Officer—another minute?

Photo of Richard Simpson Richard Simpson Labour

The SNP sends out highly mixed messages to our community. There is a poster in my constituency, which the Quest workers pass every day on their way to work, saying "People not profits". That is a ridiculous sound bite. If the poster had said "People and profits", that might have been worth while. People and profits are not alternatives; both are important. The SNP has to make up its mind whether it is pro-business or anti-business. It is entirely appropriate to make profits.

The SNP's inconsistency on the matter is rich. In the 1999 elections, the SNP plumped for a 1p rise in tax worked out on the back of a cigarette packet—a penny for Scotland—and then dropped it just as quickly. How is that consistent and how can that party accuse us of inconsistency today? What is the SNP doing about that? The SNP wants fiscal autonomy, which would lead to cuts in public expenditure because of the substantial deficit in the Scottish economy and the fact that the public sector here gets 18 per cent more than the rest of the UK. That is a big hole; that party would have to explain to public sector workers how it planned to fill it.

Turning to the Conservatives

Photo of Murray Tosh Murray Tosh Conservative

You have about half a minute left.

Photo of Richard Simpson Richard Simpson Labour

I do not have time, then, to deal with the Conservatives in the detail that I would like. However, I will ask them the question that is being asked by everyone out there. How do they square a reduction in taxation with maintenance of the public sector? People value our public sector, and if the Conservatives are going to destroy it, they do not deserve to win any more seats in the next election.

I welcome what the Government is doing in developing the strategy for "A Smart, Successful Scotland". Its intermediary technology institutes will shift resources across to create a virtuous circle: ideas will flow from business into the universities, and then back out into developing new industry and new technology. The policy that the Labour party is following in coalition with the Liberals is the right one. I urge members to support the motion.

Photo of Fergus Ewing Fergus Ewing Scottish National Party 10:46 am, 26th March 2003

Presiding Officer, I apologise that I will be unable to stay until the end of this debate because of important engagements that were undertaken before I was asked to speak on this debate. [MEMBERS: "Aw."] Yes, I know that that is a great disappointment to members.

Dr Simpson said that Scotland is at the pioneering edge in the breeding of fish. He may tell that to the people in the Ardtoe marine fin fish farming research institute, which is facing closure. It is the only institute dedicated to such research into aquaculture in Britain. Tavish Scott is shaking his head, but I am afraid that he is wrong. That institute carries out research on halibut and is the only institute of marine fin fish farming in Scotland.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I am afraid that Mr Ewing is just wrong. The North Atlantic Fisheries College in Scalloway carries out work on halibut, cod, monkfish and any number of other species.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I think that Tavish Scott is wrong, but let us move on. Marine fish farming is essential to the Scottish economy and we need research on that, but the facility at Ardtoe has been closed down by new Labour. How does that fit in with "A Smart, Successful Scotland"?

Yesterday evening, I attended a meeting in Carrbridge. Many of the people there would not recognise the glowing picture of the rural economy that Iain Gray painted. They were concerned about losing services, and particularly about losing 42 auxiliary fire stations throughout the Highland fire brigade area. Thank goodness we beat the Executive on 8 January, when it wanted to deny the people of those communities the opportunity to take their case to their own Parliament by submitting a petition.

What I heard about last night was the threat to pharmacists in rural Scotland from the Department of Trade and Industry and the Office of Fair Trading report, which is fundamentally flawed, as all members who participated in the Health and Community Care Committee debate understood. The people in Carrbridge were also concerned about the threat to rural sub-post offices from the withdrawal of benefits and the introduction of a card that seems to be designed for banks to take over business from post offices. We heard about that in a recent members' business debate that no Labour members other than the minister bothered to attend.

I have asked people in rural Scotland about the state of the infrastructure. What investment has there been in the A75, the A82, the A96 or the A9 over the past four years? We have had the pre-election announcement of minor tinkering. We have had a route action plan for the A82, where there is a stretch along Loch Lomondside that has been single track with traffic lights for well over a decade. The Executive has suddenly realised that there is a problem, but I suppose that even Rip van Winkel had to wake up eventually. The Executive has let down the aspirations of rural Scotland in that respect.

The exchange rate is a serious problem, particularly for the mainstays of the rural economy. Not only does it impact on exporters, including some in Inverness in my constituency who have gone out of business because of the competitive disadvantage that they have suffered—an engineering firm with competitors in the euro zone finds itself at a distinct disadvantage—but it affects those engaged in farming and in tourism. As tourists, we are getting used to travelling to euro zone countries without having to change currency. We just spend our euros in Germany and then if we happen to go to Ireland, as my wife did at the weekend for the British-Irish Inter-Parliamentary Body, we can take the same currency with no exchange costs and no hassle. It is a great advantage. We do not have such an advantage because we are thirled to the pound that Mr Davidson's party is so fond of retaining.

What is the effect on the forestry industry? Leading Scottish entrepreneurs that have been associated with the forestry industry for centuries are setting up new businesses not in Scotland but in the Baltics. How does that demonstrate the success of the stable macroeconomic regime? Incidentally, on that subject, what is the comparison between the interest and inflation rates of the developed economies in the west? We have not heard much in the way of comparative data in that regard. In fact, the UK has relatively high interest rates among the countries with which Scotland would compare herself.

What about the burden of indirect taxation?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

No, I will not. I will deal with Richard Simpson later when I come to talk about the private finance initiative and the firefighters.

As far as indirect taxation is concerned, the burden on the whisky industry is crippling. Why do we in Scotland have excise duty rates that are double or triple the level in other European countries? Furthermore, why is the tax—which is not based on the amount of alcohol in the drink—so much higher than the tax on wine in France, Spain and Italy? Is it because those countries look after their industry and because the UK does not really give two figs for the Scotch whisky industry? The UK was embarrassed into freezing the rate because of constant pressure, not least from the SNP.

What about the impact of the aggregates tax, which will see £50 million leaving the country for the towns? What about Highland Council's campaign for a decent sustainability fund? Money is leaving many quarries in the Highlands, and we will not see the benefit of it because the Executive has reneged on its promise to provide us with even a reasonable fund.

Richard Simpson mentioned the slogan "People not profits". Of course, that specifically refers to PFI. One particular failing of the Labour party is its espousal of a policy that it has plagiarised from the Conservatives. For example, although the terminal at Inverness airport cost £9.6 million, the cost of the PFI contract over its life might come to £30 million even if there is no increase in passenger numbers. Furthermore, we have the ridiculous situation in which the more passengers that Inverness airport gets, the higher the PFI payments will be. It is also absurd that retail development at the airport terminal is prevented because of the terms of the PFI contract.

Under Mr Neil's tutelage of the Enterprise and Lifelong Learning Committee, the Parliament has said that the matter must be dealt with. We all know that that is true, but the Executive has not dealt with it, because it knows that doing so would be an admission that PFI is a failure. It puts excess, unreasonable and unfair profits ahead of people. Those profits could be used for public services, which is why the slogan "People not profits" is correct.

Photo of Murray Tosh Murray Tosh Conservative

We are not desperately short of time this morning. However, members were invited to speak for five minutes, including time for interventions. I would be grateful if members could get within an approximation of that time limit.

Photo of John Scott John Scott Conservative 10:53 am, 26th March 2003

In speaking in support of the Conservative amendment, I want to raise matters that are specific to Ayrshire, where job losses are mounting and threats to jobs are increasing. Indeed, it is regrettable that, in the month of March alone, BAE Systems at Prestwick has announced 195 job losses and the Scottish Agricultural College has announced plans to cut 140 jobs at Auchincruive. However, those developments are just part of a picture of on-going deterioration, and much as I want to speak up positively for Ayrshire—which is something that I usually do—one has to take a reality check now and again and confront the facts.

Let me start first with the Government's own figures, as published in "Towards a National Planning Framework", which unequivocally show that employment in Ayrshire is in decline. For example, employment in knowledge industries fell by 5 per cent between 1995 and 2000 in Ayrshire but rose by 25 per cent in the west of Scotland and by 26 per cent in Scotland as a whole.

Employment in Ayrshire is concentrated in the hands of large employers—they generate 43 per cent of employment in the area—which leaves Ayrshire vulnerable to global economic trends that impact on the large corporate sector. For example, September 11 might mean job losses at BAE Systems if its principal customers, Boeing, build fewer aeroplanes because fewer people are flying. This week, 27 temporary staff were laid off at GE Caledonian because aircraft engines need less maintenance as a result of the cancellation of flights all over the world because of the gulf war.

Dependency on the vagaries of the global financial markets makes companies less willing to take on apprentices. School leavers who want to join BAE Systems must compete for the 30 or so places that are on offer, where once there were many more. The human impact is that school leavers and children must either go into further or higher education or leave the area to find a job, as there is little or no work locally. That is why the working-age population in Ayrshire is forecast to decline by 4,000 by 2010. Outmigration from Ayrshire is a fact of life and it must be addressed strategically—hand wringing by the Government is no longer acceptable.

Photo of Alex Neil Alex Neil Scottish National Party

I agree with John Scott's analysis of the Ayrshire economy but, as Miss Goldie failed to answer the question, will he say how much of the £268 million cut that the Tories propose in Scottish Enterprise's annual budget would come out of Scottish Enterprise Ayrshire's budget?

Photo of John Scott John Scott Conservative

I am afraid that Miss Goldie must answer that question, and I am sure that she will do so in her own time.

Economic activity in Ayrshire is lower than activity in Scotland as a whole, which is reflected in the poverty levels in Ayrshire. GDP per head in the UK is £12,500 and in the west of Scotland it is £11,500, but in Ayrshire it is only £9,300. Unlike in the central belt economy, job losses in Ayrshire are not absorbed by similar industries. Job losses in Ayrshire mean just that and relocation packages take people away from the Ayrshire economy because their pay packets are spent elsewhere.

Our able and capable people have always been Scotland's greatest export, but nowhere in Scotland is the effect of that more profound than in Ayrshire. Fortunately, we have a strong gene pool—Alex Neil is an example of it—and we continue to produce talented and able young people but, sadly, most of them leave Ayrshire, to return only on holiday, which is not good enough.

The A77 is being upgraded at last, but it would have been built long ago if the Tories had been returned to power in 1997. Our railways are improving at last, but more needs to be done, particularly at Paisley Gilmour Street station, to increase capacity to and from Ayrshire. Greater connectivity by road, rail and air offers the potential for a brighter future, but steps to create and develop new and existing businesses are not being taken fast enough.

The talk about a smart, successful Scotland is just that. Ayrshire needs action, which means creating a better fiscal climate to encourage new business start-ups, the rate of which is falling in Ayrshire, as the minister admitted earlier. We need lower business rates to give relief to our hard-pressed corporate global businesses, which often relocate to eastern Europe or the far east because survival for them is measured in lower unit costs of production. We need lower water and sewerage charges, which are higher in Scotland than in the rest of the UK. We also need an active Government policy to disperse Government jobs from Edinburgh and the central belt to the less-favoured parts of Scotland.

We need action and results to lift the Ayrshire economy, because fine words, glossy brochures, strategies and forums have never been enough. I look forward to the Executive's response, both to the debate and to my letter to the minister on the subject last week.

Photo of Wendy Alexander Wendy Alexander Labour 10:59 am, 26th March 2003

I realise that Mr Wilson's speech might have been his valedictory address, which could account for some of its tone. The true character of politicians is revealed in speeches in which they eschew smears, but go on to smear members of the Scottish Parliament, Westminster and the Scottish Executive. In my own, case, not a single member would regard me as a shrinking violet. If members cannot find quotations to back up their claims, they should do the decent thing and stop trying to fabricate them. Otherwise, it could be said that protestations of eschewing smears become simply the crude politicking for which politicians can become known. We all may be driven to the conclusion that the throwing of mud is just an unsubtle way of trying to silence some of the most trenchant critics' analyses of the issues.

I will turn to some of those issues. Firstly, in five weeks, the Scottish people will choose whether further constitutional change is the answer to the economic challenges that face us. In its pre-manifesto document, the principal Opposition party has put forward just one policy, which, as we heard this morning, is the cut in business rates. Although Mr Wilson said that that cut would be covered in part by the reorganisation of Scottish Enterprise, he refused to put a figure it. That leaves the SNP open to exactly the sort of probing questioning of Annabel Goldie and John Scott that we heard from Mr Alex Neil.

I want to address where the money will come from. In other forums, the SNP has said that front-line services will not be affected, as some of the savings will come from a reorganisation of the local enterprise companies. The truth is that the entire discretionary budget for the local enterprise companies next year is only £111 million. I say to SNP members, more in sorrow than in anger, that those of us in the Labour party have learned that to be fit for Government one cannot be pro the easy promises—one has to be pro-enterprise.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

We would be delighted if the member was speaking in sorrow and in anger. In the past 14 days, the Executive has announced £1,487,274,000 of spending commitments. She and the Executive, which she left, said that, in the unlikely event that the Labour party is re-elected for the next four years, they will not make a single spending allocation. Is that what she is saying?

Photo of Wendy Alexander Wendy Alexander Labour

For a year, I have loyally supported the Executive that I left. That is clearly a matter of frustration to the member and the reason why he has to resort to making up issues.

The substance of the member's intervention is important. It is true that the Executive has made important spending commitments, but I am perplexed that a party that purports to be pro-enterprise has set out in its pre-manifesto document that the only budget in which it wishes to make direct cuts is the budget that supports enterprise.

Secondly, is a party that alleges to be pro-enterprise prepared to work in partnership with the private sector? I think that all of us concede that the public sector could do better in that respect. The main instrument for those of us in the Executive is public-private partnerships, whereas the SNP has called its alternative scheme not-for-profit trusts. I say to its front bench today that its alternative is not a not-for-profit trust, but another easy promise. The SNP's schemes are financed exclusively by debt, not equity; they are certainly not "not for profit". If the SNP so dislikes PPPs, what are its plans for 2 May in respect of the 12 PPPs to provide new schools that are currently under negotiation in local authorities throughout the country?

Therefore, the story so far is that we have had one promise, but we do not know how it will be paid for. It seems that PPPs are to be cancelled—the SNP has not told us otherwise—yet the not-for-profit trusts are not "not for profit".

Thirdly, as we heard, the choice for Scotland under devolution includes the SNP's continued support for "A Smart, Successful Scotland", which we welcome. We also heard about one policy, but we have not heard how it will be paid for. The SNP had an independence policy that it used to call "full fiscal independence", but it now calls it "full fiscal autonomy", in the hope that we will not catch on. The key question is, if the SNP has plans for fiscal reform within the United Kingdom, why has it not published them? We have not heard a word about those plans today, nor have we seen the numbers. That is because there are no plans for fiscal reform within the UK; the SNP plans reform outwith the UK.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am grateful to the member for giving way twice. We are clear that we want Scotland to be independent—that is no shock. Is Wendy Alexander saying that, for the next four years and for the foreseeable future, Labour will oppose any more powers being given to the Scottish Parliament?

Photo of Wendy Alexander Wendy Alexander Labour

No. There have clearly been changes in how Scotland is financed. The graduate tax did not exist four years ago and we did not have a tax-varying power.

The issue is—I invite the SNP to comment on this—that the SNP has not produced any proposals for financial reform within the UK because it would have to deal with the fact that there would have to be a balancing mechanism across the United Kingdom, or son of Barnett. If we were to say that Scotland should hold on to everything that it makes and that the city of London—which is also in the UK—should hold on to the taxes that it raises, there would have to be a balancing mechanism. As soon as any flesh was put on the bones of that balancing mechanism, the SNP would have to face the uncomfortable fact that not a single academic economist in Scotland thinks that the SNP's estimates for Scotland's fiscal position are more accurate than those that have been produced by the Government and its economists. The reason why SNP members will not come up with a scheme for financial reform within the United Kingdom is that the falseness of their own figures would be revealed.

I ask SNP members, over the next few weeks, not to parade the many people in Scotland who would like to see change within the United Kingdom—we have seen it before and we will see it in the future—as people who are covert supporters of change outwith the United Kingdom. The SNP is free to continue to argue for independence, but let us be clear that the choice is between continuing reform—both constitutional and financial—within the United Kingdom and leaving the United Kingdom. I am sure that the views of the people of Scotland will be as clear in five weeks' time as they have been in the past.

Photo of John Farquhar Munro John Farquhar Munro Liberal Democrat 11:07 am, 26th March 2003

I am concerned that much of the debate has focused on the central belt. We heard from Iain Gray about the great work that is going on in the central belt and the millions of pounds that are proposed to be spent on initiatives to develop that area. My concern, however, is with the rural parts of Scotland, where the economy is quite different, as most members will be aware.

Many people would suggest that Inverness, the capital of the Highlands, is vibrant and buoyant and has a strong economic base. That might be so, but we see little evidence of it out on the periphery. Many commercial activities in the Highlands have gone over the past few decades, including the commercial yards at Nigg and Ardersier, which are now mothballed, and the Kishorn yard, which was one of the great units in the Highlands when the Chevron central platform was built but which is now closed down. I therefore come to the debate from a quite different perspective.

Much of the decline in the Highland economy has been caused by the distance of rural areas from the commercial centres and by poor transport links, many of which are not integrated. People jump on a bus or a train hoping to catch the ferry only to find, on arrival, that the ferry left half an hour previously. That does not do much for the economy of those areas. A lady complained to me recently about the concessionary travel fares scheme that has been introduced, which people can use outside peak times. That might be all right in Glasgow or Edinburgh, but if there is only one bus a day leaving Portree or Lochinver, when is peak time? That issue must be addressed.

Much of the rural economy is based on agriculture, fishing and tourism. The on-going problems in agriculture were aggravated by the foot-and-mouth disease outbreak, and many small crofting units have found it difficult to recover from the restrictions that were imposed then. The current support mechanisms for less-favoured areas are creating quite a bit of difficulty because the criteria for getting on to those rural schemes are causing problems for small agricultural units and crofters. I suggest that the support mechanisms that were introduced for larger agricultural units be adjusted to take account of small units, particularly crofts.

Photo of Maureen Macmillan Maureen Macmillan Labour

John Farquhar Munro seems to be all doom and gloom about the Highlands. I noticed in his leaflet, which came through my door the other day, how much he welcomed the roll-out of broadband. I believe that Lewis Macdonald was in Cromarty yesterday, continuing the roll-out of wireless broadband, which will greatly benefit the rural economy in the Highlands. That is one of the ways in which the problem of distance will be overcome.

Photo of John Farquhar Munro John Farquhar Munro Liberal Democrat

I am sure that many people, including me, support that view. Broadband is the development of the future, but such facilities are not available in many areas in the Highlands and Islands, so we have a long way to go.

I do not need to tell anybody in the chamber about the problems that the fishing industry has experienced. We have had protracted debates on the restrictions, hardships and other problems that fishing communities face. Concerns have been expressed in the chamber about fishing effort moving from the east coast to the west coast, which is, in fact, happening. I have had reports of 40 vessels coming into the west coast fishery in the Mallaig and Kyle of Lochalsh area and of another 30 being expected in the near future. That will mean that 70 extra vessels will come into that fragile fishery, which is based mainly on scallops and prawns. The larger effort in that fishery will result in the market being flooded and prices and profits diminishing. That is a big problem, which must be addressed.

We have heard about tourism on many occasions in the chamber and about efforts to resurrect that industry within Scotland. There is no doubt that tourism is one of Scotland's main economic planks. Anybody that questions the value of tourism to Scotland has only to think back to the effect of the events of 9/11 and the restrictions that were imposed because of the foot-and-mouth outbreak. There was a decline in the number of tourists in rural areas, and the rural economy is struggling to recover from the detrimental effects of those events.

As I have said on many occasions, more support must be given to our tourism promotion body, VisitScotland. It has the expertise and the skills to develop our tourism industry, but we should give it much more support so that it can create an identity that is to Scotland's advantage. VisitScotland is promoting a campaign that suggests that, despite world events, Scotland is a safe destination. We have a clean environment and a sociable community, and I am sure that many tourists would enjoy the experience of visiting Scotland. Let us support VisitScotland.

Photo of Murray Tosh Murray Tosh Conservative

No. The member is over time.

Photo of John Farquhar Munro John Farquhar Munro Liberal Democrat

We heard earlier about opportunities for the Scottish economy. One of the main opportunities that is being discussed at present is the prospect of renewable energy. Most of that debate seems to have been directed towards wind turbines, for which applications are being submitted daily. Wave power is also an important new technology, but I suggest that tidal power is even more important. We have an abundance of tidal power around our coast that we should harness for the benefit of our rural economy.

Just yesterday, a petition came—

Photo of Murray Tosh Murray Tosh Conservative

Could you conclude quickly, Mr Munro?

Photo of John Farquhar Munro John Farquhar Munro Liberal Democrat

I am just going to wind up, Presiding Officer.

A petition that the Public Petitions Committee discussed yesterday suggests that the Erskine bridge tolls should be removed. The argument presented is that the tolls are detrimental to the economy of the area. I agree with the petitioners that that is probably the case, although the toll is only 40p each way. I am delighted to report to members that my party has campaigned diligently for the removal of the Skye bridge tolls. Our leader, Jim Wallace, has made public statements on that issue. I am encouraged by the fact that our First Minister, Jack McConnell, said that, with the support of his party, he will remove the Skye bridge tolls. However, I ask the Parliament when that will be done.

Photo of Murray Tosh Murray Tosh Conservative

We have now had serious overruns by all parties. As the time has been distributed reasonably fairly, I have recalculated and will have to insist on speeches of five minutes from now if everybody is to participate.

Photo of Adam Ingram Adam Ingram Scottish National Party 11:15 am, 26th March 2003

The problem with the Executive's motion is not the aspiration to deliver prosperity,

"first-class public services and a more socially just and sustainable Scotland."

It is obvious that we can all sign up to that. The problem lies with the Executive's inadequate policy prescription and its stubborn refusal to contemplate taking over control of the Scottish economy.

We can all agree on measures that are designed to develop the skills base of our work force, to internationalise our business and to stimulate research and development, innovation and the development of the knowledge economy. All are necessary to improve productivity and increase competitiveness and, by the same token, we can all welcome planned improvements to our transport infrastructure. The Executive woke up late to the importance of infrastructure but, unfortunately, it has not woken up to the scale of investment that is required.

The fact is that we must do all that I have described because our competitors are doing so, and many of them are ahead of us. In the globalised economy of the 21st century, we must run hard to stand still, but standing still is not good enough, given our dismal underperformance in economic growth. We need a step change in competitiveness to boost our long-term growth rate to the UK level, never mind the level of other small European countries, which have averaged an annual growth rate of 3.1 per cent in the past 25 years whereas our rate has been 1.7 per cent. If we had grown at a rate of 3.1 per cent, our GDP per head would be a staggering £5,000 higher than it is today.

What is more, the situation has worsened under Labour. Contrary to Labour's propaganda, Gordon Brown has not turned round the Scottish economy. It is not strong or stable, compared with our competitors' economies. In addition to lower growth rates, we have constantly had a higher unemployment rate than the British average and a population growth rate that is much lower than that in England and which is turning into absolute decline.

John Scott highlighted the situation in the Ayrshire economy, which has suffered about 3,500 redundancies in the past year. Those redundancies were not confined to the electronics sector but were also in food and drink manufacturing, pharmaceuticals and the service sector, particularly tourism.

The truth is that nothing has been done to correct the disequilibrium of the Scottish economy, which is constantly drained of capital and labour to feed the main engine of the UK's economic growth, which is London and south-east England. In that context, it is interesting to note the observation of Brian Lang, who is the principal of the University of St Andrews. He said:

"I came back to Scotland about two years ago and was immediately struck by the paucity of international headquarters and the lack of control we have over business in Scotland. It seems the influence is less than we need."

The fundamental problem is that we are stuck in a political and economic union that, among many other things, cannot vary uniform tax rates in the UK to bring the economies of a multinational state into line with one another. The needs of the centre will always be addressed first, whether or not that is at the expense of the periphery, which is, sadly, Scotland's lot in the UK.

I commend Andrew Wilson's amendment because it connects means to ends, unlike the Executive's motion. We will not be able to release the potential of Scotland's economy until the Parliament takes over control of the economy.

Photo of David Davidson David Davidson Conservative 11:19 am, 26th March 2003

I recall that, in June 1999, when we had our first debate on the economy, I raised the prospect of a policy based around wealth creation and was barracked by Labour members. I love their conversion—it is quite splendid—but will they deliver on wealth creation?

The minister talked about unemployment and made a fantastic comment. He said proudly that there are now fewer unemployed people among the older population. Does he not realise that that is to do with necessity? It is to do with the hits on pensions and the astronomic increases in council tax that have happened since Labour and the Liberal Democrats came to power. When I was knocking on doors last weekend, that was all that I heard from people. The Liberal Democrats in Aberdeenshire have put the council tax up by 63 per cent since they came into power. Do pensions go up that much? Of course not—it is absolute nonsense. The minister ought to be congratulated on his honesty in admitting what is happening, but he ought to deal with the problem.

Does the Labour party consider Gordon Brown to be a friend or a foe to the Scottish economy? Wherever I go, business moans about higher taxes and back-door taxes. There is not much point in the SNP smiling, because I seem to recall that it supported the increase in national insurance contributions at Westminster. The SNP will not exactly be friendly on the fiscal front whether it gets independence or gains power here. In Westminster, which still controls tax, the SNP is no better than the rest of the parties. SNP members should bear that in mind.

The Government's role is to create an environment that will encourage investment. That is not happening in Scotland.

Photo of David Davidson David Davidson Conservative

I will give way to Mr Neil in a minute. I will recognise the superiority of his gene pool a bit later.

We are not creating an environment in which people will invest. As Tavish Scott said, the oil majors are looking twice at the Scottish cost base. I refer to a document from the United Kingdom Offshore Operators Association that came to me the other day. It states four issues that relate to the competitiveness of, or the economic attraction of coming to, a province: prospectivity, which is finding the oil and gas; the costs of developing and operating when the oil or gas has been found; the fiscal regime; and the political risk. I questioned UKOOA about the difference between the fiscal regime and the political risk. As far as it is concerned, across the UK, they are the same.

Photo of Alex Neil Alex Neil Scottish National Party

I share Mr Davidson's aspiration of creating an environment in which investment is encouraged. As Miss Goldie could not tell us the answer, will Mr Davidson say how much of the £268 million cut in the enterprise network budget that the Tories propose Scottish Enterprise Grampian would take and what that would do for investment in the Grampian area?

Photo of David Davidson David Davidson Conservative

Mr Neil has only to look at the documents that we published this week. I give him a guarantee that, under our manifesto, the skills budget will be maintained—it will not alter. We can take out some of the costs on the peripheral issues, such as the overlay of schemes or the time, cost and performance that are necessary to try to get in on a grant scheme. Some of the SNP's figures from Andrew Wilson are not too clever. Unfortunately, he is not in the chamber.

Photo of David Davidson David Davidson Conservative

I beg his pardon. He has moved seat.

The Liberal Democrats—or perhaps we should call them the Labour Democrats—once again went through a 13-minute litany of all that is bad but said nothing about their policies. We live in a vacuum. Do the Liberal Democrats support what Labour proposes? We do not know. John Farquhar Munro illustrated problems in his area, but we have not heard anything else from a party that says that business is getting a hard deal but voted for the business-rate increases.

On tourism, it is a scandal that the area tourist board report has not been published when the ministers know what is to happen. Does that mean that we will lose the ATBs, which are primarily business based? In Stonehaven, which is local to me, 90 per cent of the money that the group Stonehaven ... It's Special uses is raised from the industry. The 10 per cent that came from the Government has been withdrawn. Is that how we take tourism seriously? I doubt it.

Let us consider the north-east's economy, especially fishing and fish processing. There is no help at all for fish processing companies to amalgamate or to dispose of premises as they downsize. There is nothing for the service industries.

The rural economy will get a bit of help from broadband. We will put some extra money into that to ensure that it gets into rural areas. However, why is the Executive closing down the Scottish Agricultural College's campus at Craibstone, which is a fundamental support for the farming community and an expert centre? We have fought hard for the Food Standards Agency Scotland to be based in the north-east, but the Executive is taking its work out of the north-east and bringing stuff down to Edinburgh. That is completely against Government policy. It is an absolute nonsense.

We have heard nothing from the Executive this morning that will inspire people to start new businesses. Without new businesses, we are in deep trouble. In Scotland, 90 per cent of the working population works for firms with fewer than 10 people. Such businesses are our future—that is the reality. Nothing that we have heard from the two Government parties in the past four years is inspiring indigenous businesses to take risks. The two parties that are currently in power do not understand risk and, when SNP members say that profit is an evil word, that means that they are against it.

Photo of David Davidson David Davidson Conservative

The SNP wants all jobs to be in the public sector. It does not like PPP, because somebody might make a profit and reinvest in training and so on.

Photo of David Davidson David Davidson Conservative

It is probably too late for me to accept an intervention.

It is always a delight to come to the chamber and to listen to the nonsense that comes from Labour members, totally backed up by their humble friends, the Liberal Democrats, who have not uttered a word against anything that ministers have said on the economy in four years. The Liberal Democrats are tarred with the same brush, whether they like it or not.

I am still waiting to hear from the SNP, particularly its representatives in the north-east, how it would turn the economy around. We have heard nothing about the new fishing plan and nothing about—

Photo of Murray Tosh Murray Tosh Conservative

I must hurry you, Mr Davidson. You keep breaking new ground.

Photo of David Davidson David Davidson Conservative

I will wind up simply by saying that we have not heard anything from the other parties this morning that will inspire anybody to invest in a business in Scotland.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party 11:26 am, 26th March 2003

Listening to the Minister for Enterprise, Transport and Lifelong Learning, I was reminded of Harold Macmillan's phrase:

"You've never had it so good."

My colleague Andrew Wilson ably showed that that is not the case, from the point of view either of people in our society as a whole or of the business community. The other Harold Macmillan phrase that springs to mind is his criticism of the Tories for selling off the family silver. That reference was used against a Tory Government, but it could equally be used against the current Lib-Lab Administration, which is selling off schools, hospitals and other parts of the public sector and leaving us to pay for years to come.

Mr Davidson will be keen to know that we support an aspect of public-private partnership: the harmony that must exist between the state and the private sector in driving forward our economy. We recognise that the dynamo for the economy will be the business community. However, the state has a clear and pivotal role in providing the transport and telecommunications infrastructures and the skills.

As I and other members have said before, it is not the responsibility of an employer to ensure that a worker is literate or numerate; that is the responsibility of the state. It is not the responsibility of the employer to ensure access to broadband; that is the responsibility of the state. It is not the responsibility of the employer to ensure that goods can be taken to market; it is the responsibility of the state to ensure that we have adequate road, rail and other networks. That is where PPP has to come in, not in the context of selling off our schools and hospitals.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

Not at the moment.

We must recognise that we have to go for growth. It is fundamental that we have a consensus. Nobody owes us a living. We are a small nation and we must recognise that we have to punch our weight. Sadly, we have not been punching our weight and people in all strata of our society have paid a price for that.

Transport impacts and impinges on our arguments for cutting business rates. We are a small, geographically peripheral nation that is distant from its markets. We have a difficult terrain on our mainland and we have remote island and Highland communities. We must provide adequate transport and telecommunications infrastructures and we have to punch above our weight in many areas if we are to compete. We have not been competing because we have not been punching above our weight. We must take that fact on board.

The problem has mainly derived from the stop-startism that is reflected not just in the UK economy, but in how the UK has dealt with transport policy. That approach continued even under the Labour Government down south after 1997. Prescott came in and stopped road building; we passed through Byers and we are now at Darling, starting again. There has been an on-going, stop-start, rail-in, rail-out, buses-start, buses-stop policy. That cannot go on. We require instead to build a consensus to move forward.

One criticism that is levelled at the SNP is that there would be a lack of stability if we came to power. However, the current situation is inherently unstable. At present, we have control over roads, but not over rail. We control the Highlands and Islands flights, but not international flights. Those two matters are inherently unstable. We must be able to deal with international flights as much as we can protect Barra. We must be able to deal with rail as much as we can deal with road, because both are equally important in punching our weight in the 21st century.

Photo of Wendy Alexander Wendy Alexander Labour

Although I am mindful not to misquote anyone, does Kenny MacAskill stand by the direct quotation attributed to him by a newspaper in which he said that he wanted to acquire the real assets of ScotRail on a cost-neutral basis, independent of any valuation that may have been made?

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

The company has said that it has a car pool and an office building. It does not own one train. That may come as a surprise to the minister, but the trains are leased and leases can be taken over.

Yes, we wish to take the ScotRail franchise back, because privatisation of the rail network has been an unmitigated disaster. To its credit, Labour in London has taken Railtrack back into the public sector as Network Rail. The next logical step is to take the ScotRail franchise back into the public sector and to integrate it with the Strategic Rail Authority and Network Rail in Scotland. That would provide not just a better service, but cost savings, because we will stop the proliferation of situations in which three people in three organisations are doing the same job. I must say that there is a great deal of sympathy among the minister's back benchers about where we want to go with that idea, never mind among the trade unions.

We must decide where we are going as a nation. We must have a partnership between the business community and Scotland. However, we must recognise some of the fundamental aspects of the matter. As we come to the end of this four-year session of Parliament, it is no good continually to make excuses or for Labour to say that it has had insufficient time and that it was all Margaret Thatcher's fault. The fact is that this session of Parliament is drawing to a close. We should draw a line under it and decide where we want to go.

Photo of Murray Tosh Murray Tosh Conservative

I ask the member to wind up his speech.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I am just winding up now.

We must stop making excuses, we must start taking responsibility and we must release our nation's potential. I support the SNP amendment.

Photo of Bristow Muldoon Bristow Muldoon Labour 11:32 am, 26th March 2003

I congratulate Kenny MacAskill on getting the slogan in at the end of his speech.

The economy is undoubtedly the central issue in the forthcoming election campaign. The Labour party recognises that. It also recognises that the need to increase the growth rate in the Scottish economy is the most important matter that faces Scotland. In my speech, I will highlight transport, but, before I do that, I will consider some of the economic fundamentals on which we are building that base.

Those fundamentals are sound, contrary to the criticisms that some members have made. We have the lowest interest rates since the 1950s. We have the lowest unemployment rate since the 1970s and we have steady, low inflation. Those are good building blocks for the economy. Government debt has been reduced considerably from the levels that were inherited from the Conservatives. That has enabled the Labour Government at Westminster to increase the resources that are available to us so that we can invest in public services. By Andrew Wilson's admission, he expects those resources to continue to grow in the next session—presumably because he expects Gordon Brown's sound financial management of the economy to continue.

Mr Davidson said that he was barracked when he talked about wealth creation. That happened not because we do not believe in wealth creation, but because of the Conservatives' appalling record in delivering it when they were in power. That is not just my view. The Conservative leader Iain Duncan Smith said that, during that time, businesses went to the wall, the Conservatives broke their pledges on taxes, there was negative equity on homes and the public felt hurt. Until the Conservatives in Scotland recognise that, they will go nowhere. They will be no threat in the forthcoming election, so I do not intend to spend any more time dealing with them today.

As a result of the previous Scottish elections, the second-biggest party in the Scottish Parliament is the SNP, which undoubtedly represents a threat to the people and economy of Scotland. The SNP is trying to sneak in independence by the back door. In future speeches from SNP members, I would like them to set out for the people of Scotland their budget for independence and what cuts in public services would be required to pay for the infrastructure of the independent state that they propose.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Will Bristow Muldoon apologise to the people of Scotland for the fact that in the white paper that led to the establishment of the Scottish Parliament the Labour party made up the figure for the cost of the new Scottish Parliament building?

Photo of Bristow Muldoon Bristow Muldoon Labour

I will not apologise for the Scotland Act 1998, which has brought power closer to the people of Scotland and unprecedented investment in the public services of Scotland. I am proud of that. I thought that the SNP got behind our proposals at the last minute and campaigned as Johnnies-come-lately in the devolution campaign, but perhaps I was wrong about that.

Photo of Bristow Muldoon Bristow Muldoon Labour

Not at the moment, thank you. I have only five minutes.

The SNP needs to explain what cuts it would make to public services and what higher taxes it would impose to pay for the costs of independence.

I have addressed the two Opposition parties and I now wish to concentrate on one area where the Parliament can have a major impact on our economic prospects, which is transport. On "Good Morning Scotland" this morning, I heard John Downie of the Federation of Small Businesses in Scotland talking about the FSB's manifesto launch. When he was talking about issues that he believed the Parliament should be addressing, the first item that he mentioned was investment in transport infrastructure. That backs up evidence that the Scottish Council for Development and Industry gave to the Transport and the Environment Committee last year, when it identified transport as one of the key issues in surveys of its members. The business sector recognises transport as an important contributor to the Scottish growth rate.

On the actions that we have taken, I will concentrate on the key drivers of the Scottish economy—the city regions around Edinburgh, Glasgow and Aberdeen. I apologise to the Highlands and Islands, because I will not have time to talk about that area in detail in the limited time that I have.

In Edinburgh and the Lothians, we have had the introduction of the cross-rail project. We have seen the successful introduction of park-and-ride projects, including the Ferrytoll project. This year, we will see enhanced rail capacity in Fife and West Lothian. We have dedicated resources to invest in the tram network and links to our airports.

In Glasgow and the west, we have been completing several key parts of our motorway network, including the M8 and the M74, and we are committed to a rail link to Glasgow airport. Extra resources are being provided for Strathclyde Passenger Transport. Moreover, new rail lines, such as the Larkhall to Milngavie link, and extra capacity on the East Kilbride line are forthcoming.

In Aberdeen, the Executive has given a commitment on the peripheral bypass road and has given development funding to the cross-rail project. Scotland-wide, we have made a commitment to £3 billion of transport investment over the next 10 years. As the minister said, under the Executive's plans, £1 billion a year will be spent on transport by 2006.

The economy must be central to the political debate in Scotland over the next five years and transport is an important aspect of that debate. The Executive and the Labour party, in the election campaign, will recognise that. My appeal to the other parties is that, if they are going to engage maturely in the economic debate, they should be honest about the cost of their plans.

Photo of Alex Neil Alex Neil Scottish National Party 11:37 am, 26th March 2003

If there is a theme to the Executive's contribution, it is that of déjà vu. I am old enough to remember the 1962 Toothill report, which I sat in my pram and flicked through in great detail. It outlined all the infrastructure plans for the future of Scotland and what we needed to do. Harold Wilson was Prime Minister and Michael Noble was Secretary of State for Scotland. Throughout the rest of the 1960s, and through the 1970s, the 1980s and the 1990s, we heard the same old story about how we would sort out the growth rate, how we would get the infrastructure and how Scotland's economy would eventually grow to the same level as the UK economy. We were told that that would happen, but that we had to take the long view. We have taken a 40-year view but, after 40 years, the gap between the UK growth rate and the Scottish growth rate is not closing; it is getting bigger almost year on year.

We have had 40 years of unionist failure under the Tories, then under Labour, then under the Tories, then under Labour, then under the Tories and then under Labour again. No matter which has been in office, the reality is that we in Scotland have never been in power in terms of controlling our own affairs.

Only an idiot would not welcome the vast bulk of what Iain Gray outlined. Of course it is right that we are investing in broadband. Of course it is right that we are investing in skills, higher education and all the rest of it. However, no matter how good the microeconomic policy, if the macroeconomic policy is running against that tide, the microeconomic policy will never succeed.

Photo of Bristow Muldoon Bristow Muldoon Labour

I thank Mr Neil for that kind reference. Does he agree with the SNP's policy in favour of the euro or does he advocate an independent Scottish pound instead of the euro?

Photo of Alex Neil Alex Neil Scottish National Party

My views on that are well known and I have no need to repeat them.

I will give a good, serious example of why I believe that economic and financial independence is so important. If the Scottish Parliament were an independent Parliament, I honestly believe that, instead of spending between £250 million and £300 million on the unjust war in Iraq, which is roughly our share of the cost, the Parliament—including, I suspect, most Labour members—would want to use that money for international aid. That is the kind of choice that an independent Parliament could make. Independence is not just about economic choices; it is about morality and, as I am sure Tom McCabe will remember, what Nye Bevan called the language of priorities.

Photo of Tom McCabe Tom McCabe Labour

I am sure that Mr Neil has the greatest respect for the Scottish electorate. Will he explain to us why, if the apparent failure that he mentioned has lasted for more than 40 years, his party has failed to convince the Scottish electorate of that alleged failure?

Photo of Alex Neil Alex Neil Scottish National Party

There is no doubt that the majority of Scottish people are still not in favour of independence but, after all, it took many years for the Labour party to convince people about socialism. Once it had done that, Labour abandoned socialism.

We live in a democratic society. The position of the Scottish National Party has always been the same. We will not achieve our objective of independence until the majority of Scottish people are prepared to vote for it. I do not know when that will be and Tom McCabe does not know when that will be, but the one thing that I am sure of is that independence will come. As Rabbie Burns said,

"For a' that, an' a' that,

It's comin' yet for a' that".

In my final minute, I want to make two points on the economy. I return to the micro agenda that Iain Gray outlined. Although all members, with the possible exception of the Tories, would agree with the vast bulk of what he said, there is an issue about the scale of investment. Let me take the example of higher education. It is true that in Scotland we are spending 20 per cent more per head on higher education than is being spent south of the border. However, we are still spending 30 per cent less per head than our competitors in the Organisation for Economic Co-operation and Development countries are spending. Until we judge and benchmark ourselves against the best, rather than the worst, we ain't ever going to lift ourselves out of the mire of low growth.

Interest rates are a good example of macro policy. The United States interest rate is a third of the Bank of England's interest rate and interest rates in Europe are a third less than the Bank of England's interest rate. We will not be able to compete unless we get monetary and fiscal policies that allow us to do so. That is why I believe that the Bank of England is not the bank of Britain. It is not only the Bank of England; it is the bank for England. Until we change that, we will go on having low growth for the next 40 years and we will be here in 40 years' time—I certainly hope to be here then—making exactly the same speeches that look to the longer term.

Photo of Marilyn Livingstone Marilyn Livingstone Labour 11:44 am, 26th March 2003

I hope that Alex Neil will have achieved retirement in 40 years' time.

As someone who has been a member of the Enterprise and Lifelong Learning Committee for the whole parliamentary session, I am proud of the contribution that the Parliament has made to shaping a skilled Scottish economy that is capable of coping with the current difficulties in the global economic market and a Scotland that is ready to capitalise on the opportunities for enterprise in the future. I believe that the devolved Parliament has meant that the political contribution to shaping Scotland's economy has been greater than before and more matched to Scotland's needs.

I am pleased that the Scottish Executive has made it clear that it is making economic growth a priority. Scotland already benefits from high employment, but we need to ensure that that contributes to greater economic growth and that we get even more people back into work. Such aims are a far cry from the days of the Tories, who claimed that unemployment was a price worth paying. That was certainly not the case for the people in my area, many of whom, thanks to the Tories, lost their jobs, especially in the coal-mining industry.

Labour has got people back into work. People have been given the pride that comes from sustaining themselves and their families and from raising their aspirations. Labour recognises that our current rate of economic growth is, as the minister said, not good enough and does not match our aspirations for our country. We have put in place infrastructure and investment to change that.

Our partnership with the Labour Government in Westminster has provided us with economic conditions that we could only have dreamed of a decade ago. We have low unemployment, low interest rates and low inflation. Like Bristow Muldoon, I have every faith in the Chancellor of the Exchequer and his economic policies.

I take this opportunity to thank Iain Gray for his recent visit to my constituency to discuss with Fife Council and Scottish Enterprise their action plan for an economic and social strategy for Kirkcaldy and its travel-to-work area. I thank the Executive for agreeing to continue to support that strategy. We need to ensure that the increase in tourism from the Zeebrugge ferry benefits everyone who lives in Fife.

I believe that the Executive has the right strategy to create economic growth, as the strategy invests in enterprise, education and our people. In my constituency as in others, we can now see a learning environment from which young people and those returning to learning are benefiting.

We know that the best way for Scotland to compete is by improving the skills and knowledge of our people. We are capitalising on that by investing in the new technology institutes, which Richard Simpson mentioned. The technology institutes will turn good ideas into good business and they are one of the things that Alex Neil and other members of the Enterprise and Lifelong Learning Committee, including me, have said that we need. That is now being done.

By expanding the modern apprenticeship schemes, we will ensure that our people have the skills that they need for the modern workplace. By rolling out education maintenance allowances, we may be able to do even better than at present by getting more than 50 per cent of our students to continue into education—whether that be further or higher education, academic or vocational.

As the minister said, there is no quick fix. Only last week, we showed our long-term vision to create a strong economy in Scotland through encouraging enterprise education in our schools. Last week, the Enterprise and Lifelong Learning Committee heard at first hand from primary school children who showed their enthusiasm for the project. The programme is working. As we have heard, the Executive has announced that it is working with entrepreneurs, including Tom Farmer, on our enterprise programme so that education for work and enterprise will be embedded in every school in Scotland from primary 1 to secondary 6.

Our commitment to investment in skills, in our people and in enterprise is a sharp contrast to the approach of the Tories and the SNP. They would cut investment in training and enterprise schemes for the short-term electoral benefit of cutting business rates. That is not the way in which to build long-term prosperity for Scotland and it is not a responsible way in which to meet the challenges that we face. It is typical of the Opposition's opportunism.

Photo of Marilyn Livingstone Marilyn Livingstone Labour

I am in my last second.

Such opportunism will ensure that those parties remain in opposition. Scotland needs to make progress away from the Tory days of economic underachievement. Scotland cannot afford the economic turmoil that nationalist constitutional wrangling would bring. There is still much more to do, but the Executive has put forward the right strategy for the Scottish economy in the years to come. I am confident that the Scottish people will recognise that and that they will reap the benefits when we continue in the next session of Parliament to put into practice our blueprint for success.

Photo of Michael Russell Michael Russell Scottish National Party 11:49 am, 26th March 2003

I commend to the Parliament the speech of my colleague Alex Neil, not only because of the style in which he delivered it but because of the analysis that he provided.

I will start by using part of his analysis, which referred to the difference between micromanaging things and having the ambition and vision that will achieve the goals that have been set. The Executive, particularly under First Minister Jack McConnell, is an Executive of micromanagement; it spins small solutions that have little to do with the whole problem, but it dresses them up as if they were big ideas. If there is an example that one might use in this debate, it lies in one phrase in the Executive's motion:

"the introduction of education for work and enterprise for every pupil at every stage of school".

What a grand statement. Marilyn Livingstone just expanded on it by saying that that idea would be at the heart of education from primary 1 to S6. How? The Executive does not explain that in its motion, so let us ask how it could be done. I shall start with the five-to-14 curriculum, which represents the basic guidelines for education for that age and stage.

In the paper that the Minister for Education and Young People presented to the Parliament in response to the great debate, she accepted something that is well known throughout education and that we have been talking about for two years: the five-to-14 curriculum is massively overcrowded. Every teacher and parent will say that we need to deconstruct that curriculum before we can have effective primary and early secondary education.

We also know that the curriculum is massively overcrowded because attainment figures tell us so; we know that many young people are not meeting the literacy and numeracy attainment targets. How is education for work and enterprise to be introduced into the five-to-14 curriculum without knocking something else out of it or without overcrowding it even more? The Executive has no answer to that.

I will go further. How is education for work and enterprise to be introduced into the post-five-to-14 curriculum? How is it to be introduced into the standard grade and higher still years? Is it to be a subject? If that is the case, where are the proposals for that? If it is not to be a subject but is to be taught along with other generalities such as social and moral education, how is it to be taught? The Executive has given no answer to that.

The reality is that although the idea might have some merit, it is being promoted as if it was the solution to the problem. We have heard the solution to the problem from my colleagues Andrew Wilson and Alex Neil. They gave the correct analysis of the political problem in terms of Scotland's growth rate and dismal performance for several generations. We then heard from them the solution to tackle the problem in our growth, but we heard none of that from the Executive. We have heard instead about micro-measures that are dressed up as solutions.

The education situation is grim. If we are to have a smart and successful Scotland it must be based on literacy and numeracy, which are the basic skills that people require to go anywhere and on which are built the skills of thinking and learning. What is the reality under new Labour? The reality under new Labour is that those skills are not being achieved by 50 per cent of our young people. New Labour can build all the castles in the air that it wants and it can create spin about all those micro-measures. New Labour can talk about education for work and enterprise as if it is "nirvana"—to quote Helen Liddell—but the reality is that we can achieve none of that unless we have an education system that works and which is based on the basics.

Photo of Marilyn Livingstone Marilyn Livingstone Labour

Michael Russell says that he wants to support increased investment in skills, and I hear what he is saying about primary education and further and higher education. He talks about wanting to increase investment in skills, but how will he square that with cutting £150 million from the agency that helps to deliver vocational education, training and skills? That is a question.

Photo of Michael Russell Michael Russell Scottish National Party

I know it is—I recognise a question when I hear one.

As my colleague Andrew Wilson said, we will not do that. I was talking about something else that we should be focusing on. Before people get to acquiring skills in later life, they have to be able to read, write and count. If we have an education system that does not achieve those aims for 50 per cent of Scotland's young people—

Photo of Michael Russell Michael Russell Scottish National Party

Let me finish. If our education system does not achieve those aims, it has failed. By that definition, the Executive has failed in the past four years and, indeed, the past six years.

Photo of Michael Russell Michael Russell Scottish National Party

I am winding up.

The reality of the situation is that the Executive has come to the chamber, as it has done repeatedly over the past four years, with either applehood and—[MEMBERS: "Mother pie?"] Indeed. My emotions are getting the better of me; I have never had mother pie, but there is still time.

The reality is that if the Executive continues to come to the chamber with such motions and ideas dressed up as solutions, it will continue to fail Scotland. That is why my party and I look forward to 1 May and the start of something new.

Photo of Murray Tosh Murray Tosh Conservative

We are now behind time, so I ask the closing speakers to respect the time limits.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat 11:55 am, 26th March 2003

I hope to God that I can get through my speech in that time.

Iain Gray painted a picture of the background of stability, and outlined the sorts of things that we want to do to grow and strengthen the economy, such as skills training and investment in intermediary technology institutes. He highlighted the fact that half of our young people are now going into higher or further education, but perhaps we need to consider rebalancing that. As the head of one college put it to me, "We should be turning out A-class craftsmen, not B-class academics." That should be examined.

Reference was made to the move from low wage to high skill, and the importance of infrastructure—road, rail and air, but also broadband and the national grid—in opening up opportunity. Andrew Wilson said that he agreed with the approach and the direction; he said that they are all the right things to do, but they have not yet taken effect and we are not hitting the targets. He then said nothing about what the SNP would do differently, aside from being independent and tackling business rates. That was the only positive thing that he said. I do not see where he moved the argument on.

I take exception, however, to one of his throwaway remarks. He described Scotland as "Glasgow ... Fife and beyond": that betrays the central belt bias that has crippled some economic developments in Scotland. What about Grampian? What about Inverness? Andrew Wilson talked earlier in relation to the UK about the pull towards London, but we in Scotland have a pull towards the central belt. We must fight continually against that centripetal force. It can and should be done.

Oh, dear—I was so depressed when Annabel Goldie had finished, because she presented a picture of unrelieved gloom. I will pick out two things from her speech. First, she failed totally to say what the comparison north and south of the border would be if she multiplied the rateable value and the rate poundage. Secondly, she outlined the cost of Scottish Enterprise to the individual taxpayer and said that she would take money from Scottish Enterprise and put it into the Prince's Scottish Youth Business Trust. However, that money also comes from the taxpayer, so she would not lighten the burden on the taxpayer. She might put the money where it can be put to better use, but that would not cut the burden.

Tavish Scott sketched the global background and what might be called the collateral damage of the war in relation to management of global trade and the European dimension, which are important because they impact on what happens in Scotland and have widespread implications. He outlined direct and immediate implications for tourism and oil and gas, which are important sectors. He also referred to renewable energy; our natural resources and engineering excellence are obvious areas of potential for us. Tavish Scott said that the job of Government is to supply the framework and that business will do the business. Innovation and niche markets are important. Tavish Scott also mentioned the power of the supermarkets and whether that power benefits or damages primary producers. He referred to investment in skills, training and education and to better integration between schools and work.

Photo of Alex Fergusson Alex Fergusson Conservative

In this interesting wander round the houses that Nora Radcliffe is giving us—

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

It is a wander round the debate.

Photo of Alex Fergusson Alex Fergusson Conservative

Or a wander round the Parliament. Could Nora Radcliffe tell us what is the Liberal Democrats' policy on enterprise? Is it simply to follow slavishly where Labour leads? We have not heard from any Liberal Democrat speakers what their policy is.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

We touched on aspects of policy. The underlying theory is that Government exists to provide the infrastructure, and business will do the rest. We are not thirled to ideology and we are not—[ Interruption. ]

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

We are not thirled to thinking that only one party has good ideas. We are looking for consensus in Parliament that will move the whole of Scotland forward. That is reflected in the set-up of the Parliament—it is what proportional representation ought to deliver.

Richard Simpson illustrated—using examples from his constituency—how we have moved from low pay to high skill, which has been backed up by technology, research and development, design, good management and the virtuous cycles of business and academia. Those are all important.

Fergus Ewing highlighted the rural economy, but he was a bit savage about what has been achieved. I happen to have before me the statistic that there have been 579 rural transport developments in the past four years; two weeks ago, there was major investment in the A96 and Newtongarry climbing lane. He spoke about pharmacies and the Office of Fair Trading report, which has been squashed. He also spoke about benefits being paid through post offices; we have banking facilities in post offices now, so we have managed to do something about that. I agree with him about our going into the euro zone.

John Scott underlined the impact of global events on local economies. Wendy Alexander did a fairly clinical dissection of SNP policies. John Farquhar Munro mentioned the Skye road bridge tolls and I say, "Well done," to him for that.

Adam Ingram made a comparison of growth of the economies between different small companies. Percentages are fine, but they mean nothing unless one knows what the baseline and the total volume are. He also mentioned the drain of capital and labour to London and said that the union is stifling Scotland.

I take exception to David Davidson's criticism of Aberdeenshire Council's council tax—it is still among the lowest in Scotland and that council has one of the most efficient service delivery spends per capita—public services are very good in Aberdeenshire.

We heard about the business rate myth again. The fish processing sector has not yet spent all the money that was allocated to it by Rhona Brankin. The Craibstone closure is a Scottish Agricultural College board proposal, not a Scottish Executive proposal.

I say to Kenny MacAskill that hospitals and schools have always been funded by borrowed money that must have interest paid on it. The mechanism might change, but the underlying reality does not. I agree with him that the Government's role is to supply infrastructure.

I commend Bristow Muldoon for mentioning the fact that Aberdeen is one of the drivers of the economy. Alex Neil agreed that that the Scottish Executive is doing the right things, but that the macro would squash the micro. Would not that apply to an independent Scottish economy? Mike Russell had small solutions and big ideas—

Photo of Murray Tosh Murray Tosh Conservative

Mrs Radcliffe, I really do not have any more time to give you.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

I have two more sentences. The Opposition can make sweeping statements, but the Government must take incremental steps to get there. I agree with some of what Mike Russell said about education, but the foundations and basic competence in reading, writing and counting come at the earlier learning stages where much is happening in reducing class sizes, on early intervention and in nursery education.

Photo of David Mundell David Mundell Conservative 12:02 pm, 26th March 2003

I do not quite know how to follow that speech.

There have been some good debates about the economy of Scotland—most of which have been instigated by opposition parties—but no one could say that today's debate has been one of them, because it has reflected tiredness among the members who are present. Members have set out their stalls; it is time for the electorate to decide because we will not convince one another.

We have nearly convinced the Labour party that transport and the economy matter. We have convinced it to the extent that ministers make statements about it—three years and 10 months into the Parliament, the Minister for Enterprise, Transport and Lifelong Learning says that transport and the economy are inextricably linked. The Labour party obviously thinks that the topics are important, otherwise we would not have had the string of announcements over recent weeks, days and hours about them.

What is at the heart of the problem of transport and the economy in Scotland is that one cannot sit by and do nothing—for six years, as with the UK Labour party, or four years, as with the coalition Government—and then spend only the last three months of the Parliament saying that transport and the economy are important. I give credit to Iain Gray because he made no pretence of believing the statement that he read out earlier, although his maths is cause for concern for all of us if he thinks that £100 million is 1 per cent of £1,000 million.

I would not like Andrew Wilson's speech to be his valedictory statement to Parliament, although he has at least contributed to the debate. I do not often agree with him—in fact, I rarely agree with him—but he has added something to the debate, as has Ms Alexander who again showed that her being on the back benches is a waste. However, her clinical analysis would be well used on analysing her Liberal Democrat coalition colleagues' policies. We now know what that party's economic policy is—it will abolish the tolls on the Skye road bridge. That was its policy at the previous election but, after four years, it has still not achieved it.

Photo of Tavish Scott Tavish Scott Liberal Democrat

The member is talking about matters of detail, so will he tell me specifically what his party's policy is with regard to Highlands and Islands Enterprise?

Photo of David Mundell David Mundell Conservative

Our policy is to cut the budgets of both Scottish Enterprise and Highlands and Islands Enterprise. We believe that there are hard choices to be made about whether we want to upgrade the A9 and A82 or spend money on administration. Tavish Scott might want to put out a press release about how shocked he is about the level of administration charges in Highlands and Islands Enterprise—he is happy to raise the matter in the Enterprise and Lifelong Learning Committee—but now he is rushing in to defend HIE. I am happy that the Labour party and the Liberal Democrats defend Scottish Enterprise and Highlands and Islands Enterprise as they go into the next election. I say to Alex Neil that we have the detailed figures and he will be able to read them in the weeks ahead.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am grateful to Mr Mundell for his kind words, and also for giving way. His front-bench spokesperson, Murdo Fraser, said that the Conservatives want to abolish Scottish Enterprise, but Mr Mundell says that they do not. Perhaps he can tell us why: has Mr Fraser been sacked for saying something that is not politic?

Photo of David Mundell David Mundell Conservative

Andrew Wilson usually has a wider perspective on the political process than that. As he well knows, and as I explained to Mr Gray, Mr Fraser submitted that view in the policy formulation process that takes place in all parties. He is perfectly entitled to it, but it is not the policy of the Conservative Party. In the SNP, in the Liberal Democrats and in the Labour Party, we see people who have a wide range of views on all sorts of issues, but they are not the views that appear in party manifestos.

We would not abolish Scottish Enterprise and we would not cut its skills and training budget because we believe that it should be a skills and training organisation. I say to Mr Neil—who will in all probability be coming back to the next Parliament—that what we do not believe is that SE should be a source of funding for consultants. [Laughter.]

Photo of Alex Neil Alex Neil Scottish National Party

I totally agree, now that I am no longer a consultant.

Will Mr Mundell please tell us the breakdown—Miss Goldie was unable to do so earlier—of the £268 million? For instance, will the new technology institutes be safe? Will the £80 million that was to be spent on bureaucrats all go?

Photo of David Mundell David Mundell Conservative

As Mr Neil knows from the Enterprise and Lifelong Learning Committee, it has taken a great deal of time to elicit information from Scottish Enterprise. However, using its budget headings, we would cut £70 million from growing business, £71 million from global connections, zero from skills and training and £26.57 million from people and programme delivery. We understand that those are cuts in the SE budget, but we believe that the money can be better spent and that it will have a better effect on the Scottish economy if it is deployed to cut business rates and improve transport. We are happy to argue that case and we are happy to argue against the firestorm of argument that says that we would somehow cut skills and training. We are committed to skills and training because they are at the core of the Scottish economy. The people who stand up to defend the current enterprise organisations are committed to consultants and to a bureaucracy that produces no jobs. The system has not worked and it is not working. It is time to change it—the Conservatives will do that.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 12:08 pm, 26th March 2003

I begin by reflecting on some comments that were made by other members. John Farquhar Munro obviously had an off day, because he got seven minutes into his speech before he mentioned the tolls on the Skye bridge. I would have thought that he would, after four years, have stopped drawing attention to yet another Liberal commitment that has not been met.

I would like to pick up on a point that Iain Gray made about the difference between rates in Scotland and those south of the border. He said that the fact that we have an increased poundage means that the rates end up the same, because we have lower rateable values. However, for many businesses that is not the case; the rates for many small hotels and similar enterprises are based on turnover, so their rateable value is not lower than it would be in England and their total bill is higher. The method of valuation for various types of large plant has been harmonised throughout the whole United Kingdom, so having the same rateable value in Scotland means that such businesses pay higher rates bills. An increased tax rate increases costs, which is what businesses are rightly concerned about.

Richard Simpson was right to highlight success stories in his constituency. He said that we must ensure that we build, develop and retain successful businesses in Scotland, but that one of the major problems is that we do not, under the current system, retain many such businesses. He made a jibe about the SNP's "People not profit" poster. However, he knows very well, as Fergus Ewing also pointed out, that that poster refers to the excess cash that is being paid under PFI contracts because the interest rate is 3 per cent to 4 per cent higher than the rate at which the public sector would normally borrow. I concede that profits are at the heart of business; however, it was Dr Simpson's party that, in 1997, introduced a windfall tax on excess profits—he is clearly familiar with the concept.

Iain Gray tried to tell us what the growth statistics would be if the electronics sector were taken out of the picture. Apart from the obvious point that figures can show anything when one begins to fiddle about with them, the fact is that energy and water, engineering, textiles and clothing, and chemicals and petroleum products are still in recession in Scotland while sectors such as financial services, metal products, food, drink and tobacco, agriculture, fishing, forestry and mining and quarrying are not yet in recession but are producing less than they did this time last year. As a result, the matter is not just about electronics.

Scotland's economy has a real problem. I know that such comments bring cries from the Labour benches that we are "talking Scotland down"—anything that challenges the orthodoxy that all is well in the best of all possible worlds does not go down well with the comrades. However, we are not talking Scotland down if we acknowledge the facts and highlight essential solutions to problems. We talk Scotland down if we bury our heads in the sand because of an ideological hang-up that ties us to a political system and solution that has long outlived any economic utility that it might once have had.

Photo of Wendy Alexander Wendy Alexander Labour

Will the member clarify that, apart from support for "A Smart, Successful Scotland", the SNP's pre-manifesto statement contained one policy for the economy under devolution, which was a proposed cut in business rates that the nationalists have yet to tell us how they will fund?

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Ms Alexander is right that the solution to turning Scotland's economy around does not lie in carrying on with the devolution settlement—that is the whole thrust of our argument.

We would be talking Scotland down if we acted like Labour members do and allowed our ambitions to become so limited that we can pretend that what we have is as good as it gets. If we compare our economic performance over the past 30 years to that of the UK, it is clear that we are falling behind. If we compare our performance to the rest of Europe, the picture is even bleaker. The reason for that is simple: the UK's economic policies are geared to the south-east of England, not to Scotland. Apart from the ability to cut income tax by 3 pence in the pound or to set local business rates, we have no say at all in the level at which taxes are set. We cannot cut, or even increase, most of the taxes on business that would give our economy a competitive edge or to boost growth.

Furthermore, to the extent that we are able to incentivise business and grow the economy with the limited tools that are at our disposal, most of the benefits of increased revenues from a more buoyant economy would come not to our Minister for Finance and Public Services, but to the Chancellor of the Exchequer.

Photo of Bristow Muldoon Bristow Muldoon Labour

We were asked earlier to address the question of microeconomic and macroeconomic policy. Why do some SNP members favour a move from the central bank in London to a central bank in Frankfurt? After all, that would mean that policies would be dictated by the priorities of central Europe.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

We will be interested in answering that question when we find out what Gordon Brown's policy is. At least SNP members have a healthy debate on economic policies, unlike the party in Scotland that takes its economic policies from the Chancellor of the Exchequer in London.

Growth matters. In the past five years, our economy has grown by just 1.4 per cent, which is half the rate of growth of the UK. As Iain Gray said, that is not good enough. If Scotland had merely kept pace with the rest of the island, we would have earned an extra £2 billion for public services.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

No. I will carry on for a while and see how my time is going.

To make matters worse, Westminster also decides how much of our taxes we get to keep. The formula that it uses is based on our population, which means that as our population shrinks so does our share. Our declining population is not only an illustration of the failure of Scotland's economy over the past decades but an indication that, despite such a fall, we still need to support the same infrastructure. More than that, we must—in order to reverse the decline over recent years—invest in Scotland's ailing economy, and in our transport systems and training to improve our infrastructure and skills.

The problem is that although Scotland is a rich nation we are not fulfilling our potential, because economic policy in the UK is designed for the overheating economy of London and the south-east instead of for Scotland. That has been a long-term problem and, as a result, Scotland's growth rate in the past 30 years has been among the lowest in Europe, despite the fact that Scotland is a wealthy country. As Alex Neil said, successive Governments have promised to address the problem, but we are still in the same mess. The solution is to put Scotland, rather than London, in control of the Scottish economy. If we were able to make decisions on the future of our economy and our country, we could give Scotland the power to compete. More competitiveness would mean more investment and jobs, higher living standards and improved health and life expectancy.

Part of the solution is to reduce Government taxes on growth.

"We need to look at the tax regime in Scotland and make sure it properly takes Scotland's economic circumstances into account. The United Kingdom economy is doing well. Scotland's economy is not. Why are there these differences?"

Those are not my words. They are remarks made by the principal of the University of St Andrews following those that Adam Ingram quoted earlier. It is not as if small countries cannot be successful; indeed, small and successful countries are the norm within Europe.

The economy is not an end, but a means to an end. We all agree that Scotland's public services need to be improved, but few of us think that that improvement can be obtained by squeezing more revenue from the economy. We need to make a step change if we are to make the most of Scotland. The parties that are in charge of the economy have changed at regular intervals, as have the policies. If we try something for five or 10 years and it does not work, it is reasonable to try something else. However, I say to the other parties that, given that we have tried something for 40 or 50 years and it has not worked, it is no longer their turn.

Photo of Murray Tosh Murray Tosh Conservative

The member is in his last minute.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Our economic problems and the missed opportunities that flow from them are not accidents and have not been arrived at by chance or as a result of one or two politicians occasionally picking the wrong policy. Our problems have structural causes and are inevitable because of Scotland's position and status within the United Kingdom. Only a Scottish Government and national Parliament with normal powers can begin to tackle the situation. The Westminster Parliament has controlled our economy and finances for 296 years, but that system is not working. In corporate language, it is time for a demerger; it is time for Scotland to build a new and better future. [ Interruption. ]

Photo of Murray Tosh Murray Tosh Conservative

Order. I think that some members are a little overexcited by the fact that the next debate is about football. Before we get to that debate, I call Peter Peacock to wind up on this one.

Photo of Peter Peacock Peter Peacock Labour 12:18 pm, 26th March 2003

The debate has been interesting. I want to make it clear that growth in Scotland's economy is top of our agenda. Growth provides people with jobs and the dignity and prosperity that come with employment, as Marilyn Livingstone said. Growth helps to fuel our ability as a nation to improve public services. It is vital that we achieve better growth, which is why the matter receives so much attention from this Administration. We have used our devolved powers effectively—I point out to Alasdair Morgan that we have had those powers for only four years—and in a way that complements the work of the Labour Government in the UK.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Does the minister recognise that Scotland had administrative devolution of all the powers that we currently have and all the powers that the Executive has used before the Parliament was created?

Photo of Peter Peacock Peter Peacock Labour

That is a rather surprising point from Andrew Wilson. Alasdair Morgan's point was that there has been a consistent pattern of Government for 50 years, but that is not the case. The Parliament has produced a change in the governance of Scotland, which will help to focus attention on the issues that require attention.

The stable economic conditions that Iain Gray and many other members have mentioned result from our being part of the UK. In turn, we have used our powers to increase the knowledge and skills of the work force; to improve attainment in schools and further and higher education; and to roll out educational maintenance allowances, the education for work initiative and 30,000 modern apprenticeships. We are using our powers to invest in and commercialise research and to invest in growing businesses—the very budgets that the Tories and others seek to cut from Scottish Enterprise—and in the infrastructure through which businesses in Scotland can flourish.

We have responded to calls from business to raise our transport investment and to secure that investment for the long term. We are delivering transport improvements that are designed to support growth in the same way that we are delivering the necessary investments to support the development of broadband infrastructure, which is another vital component of our drive for the competitiveness that in turn will drive growth in the Scottish economy.

Many members on this side of the chamber commented positively on the measures that we have taken and on the wider economic benefits of our membership of the UK. Members including Tavish Scott, Richard Simpson, Wendy Alexander, Bristow Muldoon, Marilyn Livingstone and Nora Radcliffe commented on the importance of having such a stable economic environment. In contrast with those positive comments, the Tories offered us nothing in their contributions to the debate and they offer nothing to the nation.

Photo of Phil Gallie Phil Gallie Conservative

Before the minister says more about the Tories, will he describe the specific infrastructure improvements that the Executive has achieved, as opposed to those that it aspires to achieve?

Photo of Peter Peacock Peter Peacock Labour

Mr Gallie has only to look around Scotland to find the improvements that Iain Gray listed in the debate. If he did that, he would see the improvements that are being made all over Scotland.

It is important that the Tory party's record of economic incompetence is held up for examination, because it left a lasting and bitter taste in all our mouths. The Tory party inflicted mass unemployment, crippling interest rates, high inflation rates and mortgages, and boom and bust economics on the country. It crippled our health service with bureaucracy and cut investment in our roads, schools and further education service—the very foundations in which we need to invest if we are to see economic growth. The Tory party strives, at the UK level, for £20 billion more cuts across the UK. It will destroy the enterprise network, as Annabel Goldie and David Mundell set out. The Tory party has nothing to offer Scotland; it is a small party that is declining further with every day that passes towards the election.

The SNP is struggling, as it always does, to make sense of its nationalist position. The SNP has but one idea—independence. When SNP members are out on the doorsteps of Scotland, however, they might try to disguise that idea because they know the Scottish people do not want it.

The SNP's convoluted amendment to the motion uses 38 words to try to disguise the party's plan for independence. Another SNP trick is to hide the word "independence" behind the label of fiscal autonomy.

Photo of Karen Gillon Karen Gillon Labour

Will the minister acknowledge that in the 9 minutes and 40 seconds of the SNP's final speech on the economy in the first session of the Parliament, it failed to use the word "independence" once? That idea is now referred to as a de-merger.

Photo of Peter Peacock Peter Peacock Labour

Karen Gillon is absolutely right. The SNP uses a series of tricks to try to disguise its real intentions. As Wendy Alexander said, one of the SNP's main tricks is its hiding behind the label of fiscal autonomy.

Whatever the label, we should be in no doubt that the SNP's real agenda would bring a barrow load of problems for Scotland. The SNP's central problem, which is why SNP members cannot come clean about it, is the fiscal deficit—the £5.4 billion black hole that is to be found at the centre of the SNP's financial plans.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am enormously grateful to the minister for giving way a second time. Does he recognise that the Scottish Executive's chief economist, in supporting the debate today, said that the figure that the minister quoted said nothing about independence and everything about devolution and how the current policy is working?

Photo of Peter Peacock Peter Peacock Labour

Yes. I recognise that. What the chief economist said holds out the prospect that the situation might be even worse. Within the devolved settlement, the position is that the £5.4 billion deficit is entirely manageable. Outwith that settlement, however, a problem of enormous proportions begins to loom.

The SNP's first defence is to tell us there is no such deficit. Some SNP members go so far as to claim that there is a fiscal surplus; they simply omit some figures and change the assumptions to get there. The SNP tries to go back in time to breathe life back into the money that was spent in the 1970s and 1980s. In believing that there is a surplus, the SNP stands completely alone in Scotland. No academic commentator who examines Scotland's Government revenues and expenditure over time believes that there is a fiscal surplus. Even the SNP's favourite economists, the Cuthberts, state that there is a deficit. The SNP had better believe it; the deficit is real. The most comprehensive analysis shows the deficit to be £5.4 billion.

Photo of Alex Neil Alex Neil Scottish National Party

What is the UK deficit over which Gordon Brown presides? Is it not now in the order of £80 billion? If so, does that mean that the UK is not a viable proposition?

Photo of Peter Peacock Peter Peacock Labour

I will come to that point. It all depends on the scale of the deficit relative to the scale of the economy and the expenditure at home.

The analysis that shows that there is a £5.4 billion deficit—"Government Expenditure and Revenue in Scotland: 2000-01"—is widely regarded as the most comprehensive analysis of the fiscal position. No commentator disagrees with the broad thrust and conclusions of that analysis, which is widely recognised as a comprehensive and professional piece of work.

Not only is the deficit real, but the SNP plans to increase it through its wild spending promises, which we have heard in recent times. Real deficits require real actions. We must borrow cash to cover the deficit, cut services or raise taxes. The SNP pretends that we can ignore those three fundamental choices. The SNP says—as Andrew Wilson said again today—that it would use fiscal autonomy to cut taxes, thereby increasing the deficit in the short term, at the very least, so that we would somehow have to trade our way out of trouble. What the SNP does not say is how long it would take us to trade our way out of such a huge deficit and to turn around what it claims are 30 to 40 years of low growth.

In the real world, as each year passed, the borrowing would rise. After just one term of the Scottish Parliament, more than £20 billion of debt would hang round our necks, turning money that we currently have for services into money to pay the interest on the rising debts that the SNP would force upon us. If the SNP had its way, at the end of the next term of the Scottish Parliament, close to £2 billion would have to be used to pay the interest, which would rise inexorably, forcing cuts in services to fund interest payments.

Photo of Richard Simpson Richard Simpson Labour

Before the minister moves away from the SNP, would he like to comment on the fact that Ireland—which has been mentioned often by the SNP in economic debates—has not been mentioned today? Could that be because the Irish are in deficit and are making cuts and because the inflation rate in Ireland is three times the average rate in the European Union?

Photo of Peter Peacock Peter Peacock Labour

Richard Simpson need have no fear: I am not moving away from the SNP—I have a bit more to say about it. He makes a good point about the Irish.

The nationalists claim that only fiscal autonomy can produce the right conditions for growth. However, we do not need fiscal autonomy to get the basic conditions right. We already have low inflation and low interest rates, and we have had them for some time. We have low personal taxation and the powers to alter that if we want to do so. We have a low corporation tax environment, compared with that of many of our competitors. We also have a tax credit system and incentives to work, and we have good labour market policies. All those things are provided by our place in the UK and the sound economic management of a UK Labour Government.

Many competitors would envy and dream of the fiscal conditions that exist here, and we have the power to do the rest of what is required—a fact that is recognised by all the key business organisations.

Photo of Peter Peacock Peter Peacock Labour

I am afraid that I shall have to make progress.

We have the powers to address the key issues for growth within the stable economic environment that the UK provides. We have the powers to deliver the education and skills that Iain Gray pointed to—the crucial missing element in our economy; the powers to invest in transport and broadband; and the powers to invest in growing companies and in developing our public services. That is exactly what we are doing, through "A Smart, Successful Scotland", through our transport strategy and other strategies and through our budget for growth.

It is that budget for growth that the SNP would immediately put at risk with its reckless policies. The SNP's only real policy—the one that it tries to disguise and hide on the doorsteps—is to divorce Scotland from the UK. The SNP offers divorce and the fiscal deficit that would immediately follow it. It offers the extra cost of embassies and new departments of state and the cuts in public services, the tax rises and the crippling borrowing costs that would follow from that divorce. Let us be clear that it is not growth in the economy that tops the SNP agenda, but simply independence. That is the reckless path that the SNP seeks to take us on. The SNP is prepared to gamble our economic future and growth in public services; prepared to play poker with our personal care; and prepared to plunge Scotland into a future of risk and uncertainty. There would be risk to our public services; risk to our programmes for delivering economic growth; risk to our low interest rates; risk to our mortgage rates; and risk to our employment prospects. That is what the SNP offers: risk and uncertainty.

On this side of the chamber, in stark contrast, we stand with certainty of purpose within the UK, which gives us the economic stability that we require. We support the financial settlement that devolution gives us. It is predictable and secure and we have growing budgets, the conditions for economic growth that are provided by the UK, as I have described, and the powers and resources to build growth through investment in education, skills and infrastructure. The choice for Scotland is clear, but the people will trust those on this side of the chamber to be the Government, and they will be right to do so.