Economy

– in the Scottish Parliament at 9:30 am on 3rd February 2005.

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Photo of George Reid George Reid None 9:30 am, 3rd February 2005

Good morning. The first item of business this morning is a debate on motion S2M-2361, in the name of Nicola Sturgeon, on the economy, and four amendments to that motion.

Photo of Jim Mather Jim Mather Scottish National Party

I would like this debate to examine Scotland's great potential for economic resurgence, but I would also like it to be evidence led, to consider the current and projected outcomes of policy and to realise the dangers and futility of many of those policies, constrained as they are by the inadequate powers of the Parliament. Any objective assessment could easily produce a 10-point charge sheet.

The first charge is our low rating in the International Institute for Management Development competitiveness ranking, which destroys the myth of the United Kingdom level playing field, as it places Scotland 36th against the UK's 22nd place out of 60 nations and regions. Secondly, our lack of power to borrow, tax or save reinforces our built-in competitive disadvantage. Thirdly, the lack of forecast for the top priority of economic growth leaves the Government rudderless and unaccountable and our competitors laughing.

Fourthly, the projected loss of 550,000 economically active people by 2043 is disastrous and promises to weaken our economy further and to undermine our basic services. Fifthly, the low economic growth that has been endemic for 30 years will continue to do further social and economic damage.

Sixthly, the historic emphasis on lean foreign direct investment with little research and development means that we are now suffering disproportionately from the downturn in manufacturing. As a result, Scotland, which is spending 0.6 per cent of its gross domestic product on research and development, faces an unbridgeable gap to reach the Lisbon target of 3 per cent spend, the level that is deemed necessary for a country to participate fully in the knowledge economy.

Photo of Jim Mather Jim Mather Scottish National Party

I will give way when I have finished reading the charge sheet.

Seventhly, this week's evidence that economic development is getting a falling share of the Executive budget tells us either that economic development is not, in fact, the top priority or that the Executive does not believe that such spending works in powerless Scotland.

Eighthly, the Government expenditure and revenue in Scotland—GERS—exercise, which inflates deficit and dependence and fails to add back oil revenues, the potential from higher growth and the proper share of Government spending, tells us that the Government and the union are failing Scotland. As we can see from its amendment, the Executive will always try to generate fear, uncertainty and doubt; it is willing to sacrifice confidence to increase its chance of being re-elected.

Ninthly, unemployment has been understated by 250,000 people, which means that labour market participation is grossly overstated. Low unemployment and high levels of employment are two sides of the same counterfeit coin.

Photo of Jim Mather Jim Mather Scottish National Party

I am about to make the final point on the list; I will let the member in after that.

Tenthly, the Executive assumes a zero-sum game and exhibits nihilism by saying that Scotland is stuck in a rut at a financial maximum that limits our prospects and ability to match Ireland, Norway and Estonia. That is the charge sheet.

Photo of Phil Gallie Phil Gallie Conservative

I am sure that the member would like to be factually correct. He said that economic growth in Scotland has been extremely low for the past 30 years. However, does he agree that in the mid-1990s economic growth in Scotland was very acceptable and, indeed, far better than in any other area of Europe?

Photo of Jim Mather Jim Mather Scottish National Party

In using the word "acceptable", the member highlights how pathetic that record is—a 30-year average growth rate of 1.6 per cent when the UK average was 2.1 per cent. That is a pathetic record and a comprehensive, multifaceted badge of shame for the Tories and the Labour Party. It condemns many Scots to underachieving, not realising their ambition, tholing poverty or leaving. It limits the success of those who manage to overcome the plentiful supply of economic inhibitors that are put in their way. More important, it allows competitor nations, inward investors, indigenous companies, bright young Scots and potential migrants to conclude that the Scottish Executive is not serious about growth.

We are awash with evidence that the Executive is systematically undermining its top priority, wasting money, wasting our potential, wasting our time and damaging our individual and collective futures. The Executive is weakening our economy and attractiveness and allowing our competitors to say that the home of Adam Smith, banking, audit, actuarial fund management and legal competence and probity is bad at economic management and not serious about growth.

That would be bad enough if the economy was just an abstract concept, but the economy is at the heart of everything—it impacts on the life, income and location of everyone who could be in Scotland. That is why this debate will never go away. This debate exposes the disastrous consequences of the status quo and the perpetual flow of adverse and unintended consequences that is the result of denying Scotland its full right and powers to compete.

Photo of Jim Mather Jim Mather Scottish National Party

Sit down.

It is no wonder that Executive politicians such as Mr Purvis hate this debate. It is also no wonder that month after month, in their desperate attempts to sell a failed economic model, they paint themselves into a corner. Their position is less than tenable and more and more likely to condemn them in the eyes of Scottish voters.

Photo of Jim Mather Jim Mather Scottish National Party

I will not.

Scotland has enormous potential and the related ability to match all that Ireland and Norway have achieved: sustained and sustainable high growth; high living standards; a growing population; a high level of investor and public confidence; and a fully engaged and constructive place at international top tables.

The Irish proposition is simple and powerful and is being emulated in most of the new accession states. It offers sustained high growth; businesses grow faster in Ireland and that makes Ireland an attractive place to be. Competitive rates of corporation tax—

Photo of Jim Mather Jim Mather Scottish National Party

I will finish my point and let George Lyon in.

Ireland has competitive rates of corporation tax relative to its big neighbour, so companies retain more, reinvest and so fuel growth. It has a burgeoning and affluent population, which will overtake ours in numbers by 2019—the Irish population will be 5 million in 2019; it was 2.8 million in 1973. That means more demand and more people with more money. Ireland also has an overall competitive rating of 10th against Scotland's 36th, which means that new and retained investments continue to flow.

Photo of George Lyon George Lyon Liberal Democrat

Given the member's espousal of the Irish economic model, does he agree with Christine Grahame, who said in the chamber that Scotland needs the socialist option? She said:

"We need to raise taxes and redistribute the wealth in Scotland."—[Official Report, 19 January 2005; c 13601.]

What does the member say to his colleague?

Photo of Jim Mather Jim Mather Scottish National Party

A social democrat agenda is very compatible with what the SNP is about. Raising taxes does not mean raising tax rates. It means moving away from George Lyon's definition of Scotland as a zero-sum game. I want a burgeoning Scotland. The good news is that we can match Ireland's burgeoning economy and we can match Norway's, for we, too, have oil reserves. With those reserves looking good for at least another 30 years, with extraction technology improving, with the rise of indigenous oil companies that will pay more of their taxes here and with the price of oil at $44 a barrel and likely to stay that high, we have a second chance to fuel a renaissance and for the Executive to redeem itself. However, this time we should use oil as a platform to create a competitive, sustainable and modern economy, in which we transfer the emphasis to renewables and to the knowledge industry, with new fiscal and operational competitiveness, which are absolutely crucial.

After that transition, we will be building our oil fund and creating a programme of continued economic growth, in which we have the virtuous circle of more people, more people in work, a lower total benefits bill, a much higher tax take even at competitive rates and the chance to reinvest in our people and infrastructure and to reduce the sums that are being spent on failure and failed programmes. That is what we are holding out as a suggestion.

I am embarrassed by the Executive's amendment, which I hope does not meet international eyes. It shows the little-dog syndrome, raising fears about complexities in the long term. It contains a plethora of buzzwords, failed programmes and misinformation. It also ignores oil and the chance for us to have a crucial second chance. More important, it contains no vision, no leadership, no macro-targets—because the Executive has no macro-policies—no desire to be held to account and no credibility.

The amendment peddles fear, uncertainty and doubt. It questions our continued membership of the European Union—that suggestion is rubbish. It says that we would face

"a drawn out and messy" situation—like the amendment itself—when that is what we have at the moment. It pushes us towards continuing with micromanaged policies, which give us a false-hope syndrome: those policies have not delivered for more than 40 years and can never deliver. The amendment refers to a "lasting legacy", but the Executive has created a legacy of bureaucracy and barriers to trade, which 46 per cent of the business community want to do away with and about which 26 per cent are neutral. I hope that this debate moves that 26 per cent forward into the camp that wants more change. I have great pleasure in moving the motion in Nicola Sturgeon's name.

I move,

That the Parliament calls for Scotland to acquire the economic powers currently enjoyed by other similar-sized European nations; recognises that there are many lessons to be learnt from other such nations, many of whom have fewer natural resources than Scotland but are more globally competitive and have far higher standards of living; notes, in particular, that, unlike Scotland, Norway has benefited enormously from its oil and gas resources with living standards that are amongst the highest in the world and an oil fund for future generations that is now worth well over £80 billion; notes that our oil revenues are projected to reach at least £6 billion in 2005 and to continue well into the future, and calls for Scotland to have control over offshore resources as one aspect of an economic strategy designed to make us a much more competitive nation with world-class public services, constantly-improving skills and infrastructure and our own Scottish oil fund to provide a lasting legacy.

Photo of Jim Wallace Jim Wallace Liberal Democrat 9:40 am, 3rd February 2005

I am sure that this must have been said before, because it is so often the obvious response to what we hear from the Scottish National Party, but Jim Mather sounded much like Private Fraser from "Dad's Army": "We're a' doomed!" If there was ever a party that purports to speak for Scotland but spends all its time running Scotland down, it is the SNP. We have just had a good example of that.

There are many reasons why we need to feel positive about the Scottish economy. I will give members a couple of quotations, which do not come from partisan people such as Jim Mather. We have

"the largest and most active investment promotion networks, which has successfully targeted high-value-added sectors, such as microelectronics, life sciences and financial services ... The excellent international reputation of Scotland's workforce is supported by the statistics: 27% of the population of working age has been to university and 33% of young people aged 18 to 30 hold a university degree."

Those are not the Executive's words or findings.

Photo of Jim Wallace Jim Wallace Liberal Democrat

Och, sit down, Jim.

They are only some of the reasons why the Financial Times "fDi" magazine recently made Scotland the European region of the future. That is a real achievement for Scotland. The accolade was given by people who have been looking at Scotland's economy objectively and not through partisan eyes, such as those of Jim Mather and his team.

Photo of Phil Gallie Phil Gallie Conservative

The minister is right to boast about the index, but does he accept that that index covers a 10-year period and not just recent years?

Photo of Jim Wallace Jim Wallace Liberal Democrat

With all due respect to Mr Gallie, I should explain that he has picked the wrong index. I am talking about a magazine that speaks about Scotland as the European region of the future. That is not historic; the magazine considered things that are happening today and was looking to the future. I am happy to stand by that accolade.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

The minister is talking about the European region of the future. Of course, it is only two days since he gave me two parliamentary written answers about his view of the future, both of which showed that he does not know, or have a target for, how many companies there will be in Scotland in 2014 or how many will be registered for VAT. Has he the faintest vision for a long-term future for Scotland that will guarantee prosperity for its people?

Photo of Jim Wallace Jim Wallace Liberal Democrat

Quite frankly, when I received those questions, I just thought, "For heaven's sake, who's asking questions like these?" As if anyone could have that kind of fine-tuned crystal ball. It just beggars belief.

We have an excellent business environment and support framework, which works for Scottish firms and for inward investors. Our workforce is skilled and well educated, higher education participation in our world-class universities is at a rate that other countries envy and major investments have been made in the transport and electronic infrastructure. Moreover, in sectors such as life sciences, microelectronics, energy, financial services, food and drink and the creative industries, Scotland is simply world class.

I was proud last week to be able to lead a life sciences delegation on a trade mission to China. The credentials of the companies involved were impressive and the reception from our Chinese hosts was warm and genuinely enthusiastic. Jim Mather talked about fiscal and operational buzzwords that have no policy substance. What we were looking at were real examples of companies getting out there and winning business for themselves and for Scotland. For example, the successes of Bio-Rad Laboratories Europe Ltd from Perth and Axis-Shield Diagnostics Ltd from Dundee in the fields of neonatal testing and diabetes are not surprising, given their strengths. However, given Chinese demographics, what those companies can achieve is potentially hugely significant. Furthermore, Integrin Advanced Biosystems Ltd from Argyll, in the constituency of George Lyon, is on the verge of signing important agreements with the Shanghai Institute of Materia Medica and the China Aquatic Product Processing and Marketing Organisation. Those examples give just a flavour of the ambition of the sector and of Scotland's world-class reputation.

Scotland's recent economic performance has been good. We are above trend in gross domestic product growth over the year to 2004, with a third-quarter figure of 1.8 per cent. Our most recent quarterly growth rate of 0.9 per cent is above that of the United Kingdom's 0.5 per cent.

Photo of Alex Neil Alex Neil Scottish National Party

Although we all applaud the examples that the minister has given, is it not the case that two weeks ago, in front of the Enterprise and Culture Committee, he agreed with me that to achieve the objectives of the smart, successful Scotland strategy we need to boost research and development spend in Scotland by a factor of two? When I asked the minister what he would do to achieve that, he said: "I do not pretend to have any of the answers."

Photo of Jim Wallace Jim Wallace Liberal Democrat

I think that that is a slight paraphrase of what I said. I said that I do not pretend that there is any easy answer to that question. I am not particularly sure that the SNP has any answer to it, either. What I can say is that we are actively working on how to get the answers. R and D spending under this Administration has gone up and significantly moved forward. There is still much to do; I am not complacent. However, credit must be given where it is due. We have identified R and D as an important priority and we will work to ensure that we deliver on it.

It is always dangerous when one uses statistics, so I point out, just for the record, that Norway's growth for the third quarter of 2004 was minus 1 per cent. We can always trade statistics.

Our strong performance in the service sector should not distract our attention from other sectors that continue to experience difficulties, particularly manufacturing. Global demand has strengthened, but the manufacturing sector is still going through a period of restructuring. Recent survey evidence, in the form of the Royal Bank of Scotland's purchasing managers' index report, acknowledged that the rate of growth in manufacturing continues to improve. Moreover, CBI Scotland's industrial trends survey last week reported robust growth in all measures of volume of activity and increasing optimism among manufacturers.

Meanwhile, the Scottish labour market continues to perform remarkably strongly. Unemployment is at its lowest level since quarterly records began in 1992; there are more participants in the Scottish labour market than ever before; our economic activity rate is above that of the UK; and employment is at its highest level since quarterly records began, with a rate that is above that of the UK and second only to Denmark in the regional trade statistics data EU25 measurement. I think that we can be justly proud of that record.

Scotland has a small, open economy and the increasing globalisation of trade, international capital flows and financial markets means that the linkages between Scotland and the rest of the world have a critical influence on our economic performance. In a world in which global trade has grown twice as fast as world GDP over the past decade, the Executive's internationalism is no longer an optional add-on, but a fact of economic life.

The Executive, of course, does not control the global factors that have such a great bearing on our open, trading economy; neither do we control the key fiscal and monetary macroeconomic levers. However, we can benefit from those levers. We continue to benefit from the stable and supportive macroeconomic environment at a UK level and we benefit from being anchored in a member state of the EU. We have considerable powers to influence growth and prosperity and we have the tools at our disposal to improve the microeconomic capability of our economy.

The priorities that we set out in "The Framework for Economic Development in Scotland" underscore our on-going commitment to raising productivity across the economy and enhancing basic education and skills. I inform Alex Neil that we are committed to supporting R and D and innovation and to improving on our record. We are also committed to fostering entrepreneurial dynamism, investing further in our infrastructure and managing fiscal resources more effectively. We treat those priorities seriously, as the 2004 spending review demonstrated. We are now fully focused on effective delivery.

On the other hand, the SNP is determined to cut corporation tax, to lower business and water rates and to lower national insurance, on top of its commitment to lower fuel and whisky duty and to lower tax for low earners. That is all laudable, but scarcely credible from a party that simultaneously demands greater spending on higher education and transport and on whatever else happens to be on the front pages of the newspapers in any particular week. That is fantasy politics and the politics of separation, which is in stark contrast to the ambitious but credible approach of this devolved Government. Our ambitions for Scotland are to provide every Scot with opportunities for good jobs, fulfilling careers and safe communities, and to fulfil their potential—

Photo of Jim Wallace Jim Wallace Liberal Democrat

Stewart Stevenson asks what our ambition is. It is to provide every Scot with opportunities for good jobs, fulfilling careers and safe communities; it is to help every Scot to fulfil their potential and ambitions. All of that will be achieved in an international economic environment.

My visit in October last year to the United States reminded me of the need to maintain relationships with existing inward investors—companies that are positive about their operations in Scotland and that recognise the skills base that we have here. Last week, I saw evidence of companies from Scotland that are seizing opportunities in China. The China Construction Bank has chosen KAL, a Scottish software developer, as a provider for its automatic teller machine networks. The Royal Bank of Scotland and Standard Life have recently increased their engagement in China. Clyde Blowers Ltd, a developer of boiler-cleaning systems and other heavy industrial products, has been in China for 10 years and is stepping up its R and D activity.

There is no doubt that Scotland must match and better the high level of engagement at Government level that other countries are putting in. The real challenge is to take practical action with the powers that are available to this Parliament. It is not to engage in another bout of constitutional navel gazing, which will only take our eye off the ball when there are more important things to be done. Our skills agenda is going in the right direction. We need to sustain our investment and momentum. Only by doing so can we maintain our competitive edge. We must achieve sustainable growth and we must close the opportunity gap if we are to create wealth. Through creating wealth, we can reach a more prosperous and more socially just Scotland.

I move amendment S2M-2361.3, to leave out from first "calls" to end and insert:

"welcomes the progress that the Scottish Executive is making towards delivering the priorities of Framework for Economic Development in Scotland by working to improve productivity throughout the economy; welcomes, in particular, the record investment in Scotland's transport and electronic infrastructure, world-class universities and colleges and in the wholesale modernisation of Scotland's schools; notes that the Financial Times' fDI European Region of the Future accolade was awarded to Scotland because of this public investment, favourable business environment, level of skills and quality of life; believes that raising Scotland's rate of economic growth sustainably over the long term requires a focus on improving skills, regenerating communities and supporting companies and others to internationalise and invest in research, and recognises that a drawn out and messy separation from the rest of the UK, and prospectively the EU, would undermine these strengths, play into the hands of Scotland's competitors and provide Scotland with a lasting legacy of cost, bureaucracy and barriers to trade."

Photo of Murdo Fraser Murdo Fraser Conservative 9:51 am, 3rd February 2005

When I heard that today's debate was going to be about North sea oil, I felt a certain nostalgia. Was this the SNP going back to the 1970s? Perhaps the debate would be like a 1970s revival concert. Would Nicola Sturgeon turn up in flares or would Jim Mather turn up in a kipper tie, with the Bay City Rollers playing in the background and our impending national disaster in the world cup in Argentina on the horizon?

I certainly remember those badges that everybody seemed to be wearing in the 1970s, which said, "It's Scotland's Oil". It may cause some consternation on the SNP benches to know that I wore one myself—but that was before I grew up. Today's back-to-basics SNP seems once again to be relying on North sea oil as the solution to all our problems. It is certainly true that Norway has benefited from its oil and gas reserves and that its oil fund has been a success. However, there is a major difficulty with proposing a replica of that in Scotland because, unlike Norway, Scotland runs a substantial annual revenue deficit.

I know that SNP members question the figures in the GERS report, but in the absence of any other figures to the contrary that they have produced, that report must at least be a useful starting point when it comes to addressing the question of Scotland's finances. On the basis of the latest GERS report, even if all the oil revenues were allocated to Scotland—which is highly unlikely in any case—the net borrowing figure for 2002-03 would have been £4.4 billion. That is a substantial black hole, which the SNP would be unable to fill.

Photo of Murdo Fraser Murdo Fraser Conservative

If Mr Swinney will explain how he would fill that hole, I shall welcome his intervention.

Photo of John Swinney John Swinney Scottish National Party

As Mr Fraser has made such a point about nostalgia, I remind him of a parliamentary answer given by William Waldegrave, whom I am sure Mr Fraser knows, when he was Chief Secretary to the Treasury. He confirmed that, between 1979 and 1995, even on the figures in the GERS analysis—the fiddled rubbish that Mr Fraser is talking about just now—Scotland contributed £27 billion more to the United Kingdom than we received in return. Where is his black hole now?

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Swinney has taken a selective period of 16 years to suit his agenda. As he well knows, in the balance of payments over that period there were three years when the figures for Scotland were higher than those for the rest of the UK, because of the high oil price. For every other one of those years, even within that period, the figures went the other way round. It is notable that the SNP has not produced any figures to challenge the GERS analysis. Where is the SNP GERS analysis? We have not seen it, so the SNP has no credibility in this debate.

One can spend money only once. SNP members seem to think that they can spend the same money over and over. In an independent Scotland, there would be no oil fund for future generations, because the money from North sea oil would be required to pay for current expenditure. That is not rocket science. We know that expenditure per head of population by Government in Scotland, at all levels, has always been high—substantially higher than spending south of the border. The previous Conservative Government ensured that Scotland got far more than its Barnett share of UK spending. By 2008, the Scottish Government will be the richest in the world in terms of the money that it has to spend per head of population, with the exception only of the Vatican city, which has a population of 740 and which, of course, does not have the same education and child care demands as we do. That world-record and world-beating level of expenditure is not matched by our income.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I am slightly confused by Mr Fraser's party's position on financial independence for the Parliament. Will he go on record and say whether he believes that the Parliament should have responsibility for oil revenues?

Photo of Murdo Fraser Murdo Fraser Conservative

I do not believe that the Parliament should have responsibility for oil revenues as things stand. I certainly think, as Richard Lochhead knows, that there is an argument that the Parliament should have more financial responsibility. A lot more work needs to be done on that issue. The problem for the SNP is that it wants independence and it wants to balance the books, but the books do not balance as things stand.

We know all about the difficulties with the Scottish economy. To be fair, those difficulties are not of the SNP's making; the finger has to be pointed at the Scottish Executive. We have heard the figures time and again in the chamber. Economic growth is trailing behind the rest of the UK. The latest GDP figures show that the gap has again widened. There is a low level of business start-ups. New figures last week showed that the enterprise gap between Scotland and the UK has widened, with total entrepreneurial activity in Scotland falling over the past year.

Photo of Jim Wallace Jim Wallace Liberal Democrat

Does Murdo Fraser accept that, in the quarterly growth to the third quarter of 2004, the Scottish increase was 0.9 per cent, compared with the UK increase of 0.5 per cent? In fact, in the most recent quarter for which we have figures, we are running ahead of the UK.

Photo of Murdo Fraser Murdo Fraser Conservative

The minister has just taken one quarter. If he takes the year to quarter 3 of 2004, he will find that the gap has widened. He is being selective with his figures.

Scotland's trade gap between 1998 and 2001 has ballooned from £3.9 billion to £6.8 billion. That is a dismal picture and no recipe for a successful independent country, even with North sea oil revenues.

Much of the blame for that state of affairs lies squarely with the Executive, whose policies have done little to help and much to hinder our economic competitiveness. The "IMD World Competitiveness Yearbook", published last year, ranks Scotland a lowly 39th out of 60 for

"the extent to which Government policies are conducive to competitiveness".

That puts the Executive behind not only the UK Government, but the Governments of Estonia, China, India and Columbia.

There is much that the Executive could do now to improve the competitiveness of the Scottish economy. It could cut the business rate to at least the level in England, thus giving our businesses a major leg-up. It could take action to reduce water bills—in many cases, water charges for businesses are a multiple of what they are in England. It could take action to reduce the size of Scotland's public sector, which has been estimated as up to 54 per cent of GDP. A public sector that is too large stifles private enterprise and we are starting to see a growing consensus that the problem has to be tackled. However, the Executive continues to preside over a rising payroll in the public sector, while the private sector, particularly in manufacturing, continues to struggle.

Photo of Alex Neil Alex Neil Scottish National Party

Earlier, Murdo Fraser cited the GERS figures, saying that they were reliable, and he is now calling for public sector savings. However, was he at the debate just before Christmas when Wendy Alexander, a Labour MSP, pointed out that the people who draw up the GERS figures had got the Government efficiency figures wrong by £700 million? How can he rely on anything that those people produce?

Photo of Murdo Fraser Murdo Fraser Conservative

I appreciate that the figures will not be perfect, drawn up as they are by public servants. I have yet to see the SNP's alternative figures; until we see them, the SNP will remain ill informed in this debate.

Unfortunately for SNP members, their proposed solution of constitutional change completely misses the point. Worse than that, it lets the Executive off the hook. At best, it would take years to deliver the sort of constitutional change that the SNP hopes for. I do not believe that Scotland should have to wait that long before we start to turn around our economic underperformance, but perhaps we should not expect too much from a party that cannot even remember to book itself a conference venue.

In contrast, the Tory solution works because the Executive has all the powers that it needs now. The Executive has the power today to cut business rates. It has the power today to reduce water charges. It has the power today to restructure Scottish Enterprise and increase investment in infrastructure. It has the power today to reduce the size of the public sector. It should be using those powers today to take action for all Scottish businesses and to improve our economy. The SNP offers merely a change of passport, not a change of policy.

It is little wonder that the SNP's policies on the economy have so little support in business circles. At the end of last year, CA Magazine carried out a survey of members of the Institute of Chartered Accountants of Scotland, asking them which political party best understands the needs of business. Unsurprisingly, a large number of them said that none did—we might expect that. However, 29 per cent said the Conservatives and 9 per cent said Labour. It will not be much consolation to the Deputy First Minister and Minister for Enterprise and Lifelong Learning to hear that only 4 per cent said the Liberal Democrats. However, only 1 per cent—one in 100—said the SNP. Would the lonely chartered accountant who supports the SNP please identify himself?

Photo of Murdo Fraser Murdo Fraser Conservative

I am sorry, but I do not have time.

Despite Mr Mather's best efforts, the SNP has no credibility on economic issues. The party is so obsessed with constitutional change that it cannot see that the Executive should be using its current powers to improve our economic performance.

The SNP needs to make up its mind. Is it a party that is in favour of enterprise, as Jim Mather would have it? If so, it should be pressing for less tax, less regulation and a smaller public sector. Is it, as Christine Grahame would have it, a traditional tax-and-spend, left-of-centre party? Many of its front-bench spokesmen seem to belong to the latter party, crying out weakly for additional public spending in one area or another.

The SNP has again raised the issue of North sea oil as the panacea for all Scotland's ills. As we know, the solution is not so simple. That approach might have worked for the SNP in the 1970s, but the Scottish people are not so daft as to think that it will work twice.

I move amendment S2M-2361.1, to leave out from first "calls" to end and insert:

"agrees that fluctuating prices and finite supplies make oil revenue an unreliable source of income; notes that, even if all revenue from North Sea oil had been allocated to Scotland in 2002-03, net borrowing would still have been £4.4 billion; further notes that Scotland's businesses, who are the core drivers of wealth and economic growth, are demanding concrete action, not constitutional change, and therefore calls on the Scottish Executive to take immediate steps to create a more business-friendly environment by reducing business rates and water charges and cutting red tape, thereby encouraging business development and boosting Scotland's economic competitiveness."

Photo of Shiona Baird Shiona Baird Green 10:00 am, 3rd February 2005

At the end of May 2002, during a meeting in Aberdeen, the Scottish Parliament debated an Executive motion on the oil and gas industry. During that debate, which took place less than three years ago, not one mention was made of climate change and scarcely any mention was made of the other adverse environmental impacts of the oil and gas industry. Did I dream that we had moved on, following the recent debate on climate change in which all parties appeared to recognise the need to address the issue? Here we are today, talking up the oil industry as if climate change is an annoying distraction and as if oil and gas still represent the only future for the Scottish economy.

Obviously, for the SNP, there is something comforting about oil. No matter how hard it tries to demonstrate its environmental credentials and champion the cause of renewable energy, the SNP cannot help but seek solace in the promise of an oily future in which everything will be paid for from North sea revenue. Oil has become an article of faith that is never to be questioned.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

The member will appreciate that, because of the lack of alternatives, 90 per cent of global energy use in the future will be met from fossil fuels. Does she propose that we should reduce oil exploration and production in the North sea in the coming years? If so, in which year will she choose to shut the taps on the North sea?

Photo of Shiona Baird Shiona Baird Green

The member needs to reflect on other debates that we have had. We need to look at reducing our dependence on oil and moving towards a more sustainable future. Oil will run out. When does Richard Lochhead think that that will happen? Is he prepared to base his economy on such a finite resource?

The lure of oil income is so superficially attractive that even the Scottish Socialist Party has succumbed to its lubricious charms. Independence needs to be bankrolled. The pro-independence parties say, "Never mind the social and environmental costs—it's Scotland's oil! Everything will be all right if we are in change of it." That debate simply has to go away.

We Greens think that there is a better way. There does not have to be a conflict between a healthy economy and a sustainable future. Indeed, without a sustainable future, there can be no economic stability. As John Swinney said in a speech in 2002:

"A clean environment is not a cost to business; it is an economic opportunity".

We agree with him on that one.

Photo of Alex Neil Alex Neil Scottish National Party

Does the member agree that some of the policies that the Greens advocate—such as the ending of cheap flights to Europe and into Scotland—would create mass unemployment, destroy the Scottish tourism industry and lead to a massive reduction in wealth in Scotland? In terms of economic policy, can anyone trust a party that demands a quorum to get into a lift?

Photo of Shiona Baird Shiona Baird Green

Can anyone trust a party that ignores the precarious state that we are in with regard to our carbon emissions? Aviation is the most subsidised and the most polluting form of transport. What Alex Neil said is rubbish. The SNP has no idea of what a real vision for Scotland is.

To create a sustainable economy for Scotland, we need a green jobs strategy that greens the whole economy and not just bits of it. We need serious investment in new renewables such as marine energy, in which the current level of investment is a fraction of that which is needed to fast-track the technology to the marketplace and a tiny fraction of the amount that is wasted on nuclear energy every year.

Photo of Shiona Baird Shiona Baird Green

No. I am sorry, but I have to keep going.

To develop a truly sustainable economy, we need to talk less about GDP and more about quality of life and livelihoods. As far as the SNP and others are concerned, burning oil is good for the economy; it is good for GDP, as is storm damage. As my colleague Mark Ballard has said before, it is a bit like me measuring my personal happiness by how big my waistline is. Perhaps the most important thing that we can do is to ask ourselves exactly what we want our economy to deliver. It is relatively easy to measure the graph of GDP and to make it go upwards. It is a lot more difficult to translate the illusion of growth into genuine well-being.

The men and women in our constituencies and regions do not care whether Scotland's GDP rises by 1.3 per cent or 2.3 per cent; they want the Government, at United Kingdom and Scottish levels, to make a real difference to their lives. They want a good health service and effective schools and other public services. I believe that they want their children to inherit a healthy environment.

Photo of Shiona Baird Shiona Baird Green

No. I am sorry, but I have no time left.

If we rush headlong into a future in which funding everything relies on an unsustainable, polluting energy source, we are doing our constituents no favours. Instead of supporting more oil burning and doing more for the oil industry, we should be growing our own manufacturing and engineering industries—

Photo of Shiona Baird Shiona Baird Green

Aberdeen is already building in the renewables market. That is the market that we need to go into, because it will use existing skills.

We need to address the demise of local businesses and economies at the hand of globalised markets and marauding multinationals. The Greens agree that more fiscal powers should be devolved to the Scottish Executive. However, the adoption of such powers is a longer-term process; it is a means to an end, not an end in itself.

Our amendment encourages the adoption of a "'just transition' policy", which is Scottish Green Party policy and the policy that is proposed by progressive trade unions such as GMB Scotland. Under that policy, Government and trade unions would work together to transform unsustainable industries, such as much of the oil industry, in a sustainable direction that would not simply dump workers back into the labour market but would get them more control over their destiny. The policy would use the skills, ideas and interests not only of shareholders but of workers. The oil industry should be replaced in large part by a renewable energy industry—an engineering and manufacturing industry. It is just and essential that workers are central to that process I move amendment S2M-2361.2, to leave out from "recognises" to end and insert:

"rejects the notion that Scotland's independent economic future depends on oil; recognises that an economy founded on fossil-fuel use contributes to climate change and other environmental damage, which in turn threatens Scotland's economic future; recognises that oil is a finite resource which future generations will not be able to depend on for economic security; further recognises that oil is valuable as a chemical resource which should be increasingly conserved for non-fuel uses; believes that building Scotland's economy on a foundation of renewable energy technologies, energy efficiency and sustainable transport is the way to achieve real sustainability, and calls on the Scottish Executive to give priority to exploring the concept of a 'just transition' policy, as advocated by Scottish trade unions, which sets out a path to transform polluting industries into sustainable enterprises."

Photo of Frances Curran Frances Curran SSP 10:08 am, 3rd February 2005

As a member of one of the three pro-independence parties in the Parliament, I welcome the debate on a Scottish economy. That said, I want to pose some questions to the Scottish National Party about why it wants independent economic powers as well as an independent state in Scotland. For those of us on the independence side of the constitutional debate, one of the major issues is the economic model that we believe Scotland should have in the 21 st century. For me, the question is whether that will merely be the neo-liberal model under which, instead of being draped in the union jack, we paint ourselves in the Scottish saltire. If so, our room for manoeuvre and ability to have control over economic powers in Scotland will be severely limited.

Photo of Frances Curran Frances Curran SSP

I will let the member in in a minute.

The most famous SNP slogan is, "It's Scotland's Oil". Given the policy that is outlined in the SNP's motion, the question is, is it really? The SNP cites experience in Norway—another European country with oil reserves—and argues that that shows how our oil reserves could bring wealth and the ability to invest in our public services at a higher level. Why does the SNP not take on board the entire structure that Norway used to achieve its £165 billion oil fund reserve? There is no question but that Norway's current situation, which is in contrast with Britain's, is a result of the interventionist policy that successive Norwegian Governments have employed.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I am sure that most people in the chamber would agree that we would have done things differently if Scotland had been independent in the 1960s when oil was discovered in the North sea. The member seems to suggest that she wishes to nationalise the offshore industry. How much would that cost and where would she get the money from?

Photo of Frances Curran Frances Curran SSP

I want to make my other points. The North sea oil industry is very fragmented at the moment, so it would be difficult to take over all the companies in one go. However, if we took over BP Amoco initially—

Photo of Frances Curran Frances Curran SSP

The issue is how much compensation we would be prepared to give in taking it over. I do not mind debating the issue, but I want to make points on Norway and the motion. However, the current assets of the main oil companies in the Scottish North sea are worth £20 billion.

In Norway, a state-owned company has a 51 per cent stake in the two Norwegian oil companies. There have been periods when the tax on revenues was 85 per cent, which has brought in more than 50 per cent of Norway's oil revenues. Is the SNP in favour of a state-owned company? Is the SNP in favour of taking North sea oil into public ownership, so that the revenues can be used for the benefit of a newly independent Scotland? If it is not, how can it justify the bulk of the revenues from our natural resource going to the shareholders and chief executives in the boardrooms of BP Amoco and the other companies in the North sea? The SNP is just going along with the neo-liberal model, and that is a flaw in its argument.

The biggest strategic issue for a newly independent Scotland would be energy, which is a huge resource. Energy in all its forms is probably one of the most important resources that we have, whether it is gas, nuclear—well, not nuclear. [Laughter.] I will be lobbied by the nuclear power industry next week and taken to dinner.

Energy in the form of gas, oil and renewables is a huge resource, but the big problem for the future is that every energy sector in Scotland—with the exception of nuclear—is in private hands. Are we to accept the neo-liberal agenda under which the plan for energy in Scotland depends on the investment decisions of big multinational private companies, whose main objective is to develop European integration of energy?

The biggest threat to an independent Scotland is private ownership of energy and oil, but private finance initiatives and wholesale transfer in the public sector are also a threat. We know what Labour thinks. It has not been prepared to renationalise or take into public ownership even one of the privatisations that Thatcher and the Tories carried out, despite all the demonstrations and the mealy-mouthed words that we heard for years in Scotland.

I say to the Tories that all the research indicates that there is absolutely no difference between privately owned and publicly owned industries on the narrow basis of labour capital and productivity. However, there is a difference in inequality and wealth distribution. That is the major change when industries are moved into the private sector. The research is available in black and white.

Is the SNP prepared to take into public ownership oil, electricity and the energy sector, and to invest in renewables? Is that the type of Scotland that we want, where we address the fact that three quarters of the people who live here are low paid, because they earn less than £25,000 a year? Why have the levers of economic power if not to redistribute wealth, create a more equal society and increase living standards? What is the point—to make a few of the elite in society very rich or to benefit the whole Scottish population? The SNP will not do the latter with the neo-liberal agenda. What will the SNP say to the people from Caledonian MacBrayne this afternoon—"Privatise it anyway"?

I move amendment S2M-2361.4, to leave out from "recognises" to end and insert:

"believes that these powers should include the power to take into public ownership our oil and gas reserves; notes that Norway has benefited enormously from its oil and gas resources with living standards that are amongst the highest in the world; notes that the main reason for this benefit is the interventionist policy of Norway, where the government-owned oil investment fund has now topped £165 billion and its state oil company, Stateoil, has a 51% stake in the two other Norwegian oil companies which brings in 50% of all oil revenues, and believes that a future Scottish government should take into complete public ownership all North Sea oil and gas reserves through a state-owned oil company so that oil revenues can be invested for the benefit of the people of Scotland and not oil company shareholders."

Photo of Maureen Macmillan Maureen Macmillan Labour 10:15 am, 3rd February 2005

I am pleased to open for the Labour Party in this debate. I oppose the SNP motion and support the Executive amendment.

I wonder whether others in the chamber noted the significant increase in the Scottish recycling figures that were announced today, for which the SNP can take credit. Not only does the SNP have a recycled leader, but it has a recycled policy and a recycled slogan. That slogan is not "Free by '93"—which of course has become "barely alive in 2005"—but something older and mouldier. I refer, of course, to "It's Scotland's Oil".

Photo of Maureen Macmillan Maureen Macmillan Labour

Sit down, Jim. Give us a chance.

As Murdo Fraser pointed out, how retro can we get? Those were the days when I wore my hair long and dark and my skirts long and flowery.

Photo of Maureen Macmillan Maureen Macmillan Labour

Murdo Fraser mentions kipper ties. I am surprised that Jim Mather did not turn up with flowers in his hair.

The slogan did not win elections for the SNP then, and it will not win elections now. I agree that oil revenues were squandered in the 1980s by Margaret Thatcher. She might not have come to power if the SNP—with the honourable exception of the Presiding Officer—had not joined the Tories, not for the last time, in voting against the Labour Government and putting back the cause of devolution by 20 years.

Margaret Thatcher used our oil revenues to fund social security payments and unemployment benefit while she destroyed our industries, but Labour at Westminster and Holyrood has used oil revenues to fund growth. Here and now in Scotland—as Jim Wallace has said, and as the Labour Party never tires of saying—we have the highest employment figures and the lowest unemployment figures in a generation, and low inflation and low interest rates.

Photo of Alex Neil Alex Neil Scottish National Party

Does Maureen Macmillan agree with Wendy Alexander, who stated in The Scotsman yesterday:

"the Executive need to tackle the issue of the proportion of spending going into ... farming, fishing and forestry ... in rural areas which do not bring economic growth."

Photo of Maureen Macmillan Maureen Macmillan Labour

Wendy Alexander often has a perceptive analysis of where our economy should be going. I would like to discuss the issue with her further before I answer.

The Herald reported last week that the Scottish economy grew at nearly twice the UK rate in the third quarter of last year, but we are not complacent. We know that some sectors are still underperforming, especially in manufacturing, and we are addressing that, as Jim Wallace said, through the renewed framework for economic development.

Scotland has benefited enormously from its oil and gas resources. Richard Baker will outline the benefits that have been brought to the north-east of Scotland and Aberdeen. Sadly, the days of the oil fabrication yards in my area have gone, but we hope to utilise the yards for engineering associated with renewables, which of course we will develop as oil declines.

We all realise that the UK continental shelf is a maturing oil field. Yes, we are fortunate that the oil has lasted longer than we predicted in the 1970s. That is because the technology has matured over the years, and we now have the expertise to extract oil from fields that were once thought to be played out. The big operators are withdrawing, and the smaller operators are busily extracting all they can, but the lower that the reserves fall in those mature fields, the more expensive it is to access them. Operating costs rose sharply in the past year by £0.5 billion, which is an increase of 12 per cent, and unit operating costs rose by 15 per cent.

Photo of Maureen Macmillan Maureen Macmillan Labour

No thank you.

The SNP motion glosses over that. The SNP would have us believe that oil has an indefinite future. We all hope that we will be granted another 20, 30 or even 50 years, but the fiscal plans for the country cannot be based for ever on a finite resource that depends on ever-more expensive technology to access it, and therefore on a high price per barrel in the marketplace.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

The member will be aware that the oil industry has just announced that it expects to invest £35 billion in developing the North sea over the next five years. Can she reconcile that fact with her statement that there is a decline in North sea oil and that all the major companies are withdrawing?

Photo of Maureen Macmillan Maureen Macmillan Labour

Yes, indeed. I am surprised that Richard Lochhead asked that question, because he was at the meeting of the cross-party group in the Scottish Parliament on oil and gas when the issue was covered in our discussion about the PILOT presentation to the Department of Trade and Industry. The industry is investing, but it does not expect the fields to last for ever.

The phrase "well into the future" in the SNP motion fudges the issue of just how long the oil will be there and for how long it will be extractable. The United Kingdom Offshore Operators Association estimates that there are another 11.5 billion barrels; the fact that 34 billion barrels have already been extracted gives us an idea of the timescale involved.

The SNP motion advocates setting up an oil fund as some sort of dowry for an independent Scotland. That is an old chestnut and does not take into account Scotland's year-on-year fiscal deficit with the rest of the United Kingdom. Everyone except the SNP members accepts the GERS figures and we have never seen the SNP figures. The deficit with the UK grows year by year. It was £4.2 billion in 1998-1999 and £9.3 billion in 2002-03. We cannot spend our oil revenues twice over; we cannot use them to bridge the fiscal gap—the £6 billion that the SNP quotes in its motion will not even do that—and to set up an oil fund.

The oil fund in Norway is used to fund pensions for an aging population, but the Norwegian Government has said that it will be able to pay only a quarter of Norway's pension obligations from the fund and will have to rely on taxation for the rest.

Although extraction of oil from the North sea is increasingly expensive—west of Shetland projects are stretching our technical capabilities to an end that we do not know—companies still choose to come to Scotland. As UKOOA pointed out to the cross-party group last week, the challenge is to maintain investor confidence. The chief executive of UKOOA in his foreword to the report on sustainability, "Striking a Balance 2004", said:

"Within all of the factors that build our relative competitive position, predictable and stable political and fiscal environments are probably the most crucial."

How much investor confidence will there be if Scotland splits from the UK? When honest John Swinney was leader of the SNP, he at least acknowledged that we could not build a case for prosperity on the basis of oil. The SNP motion is another cruel deception perpetrated by the present shameless leadership. I support the amendment in Jim Wallace's name.

Photo of Richard Lochhead Richard Lochhead Scottish National Party 10:23 am, 3rd February 2005

It is disappointing, if not predictable and depressing, that of all the amendments to the motion only the Government's does not mention the oil industry. That is bizarre, given that everyone knows that the debate is about Scotland's economic future and the role of the oil industry in it. The industry is one of the biggest spenders in the Scottish economy, yet the Government never mentions it in debates; nor does it carry out any initiatives in relation to the development of that vital sector. The industry is one of our biggest employers and is responsible for spawning some of Scotland's most successful entrepreneurs and biggest private companies. Of all the bigger private companies in Scotland that did not come out of the industries that were privatised, the oil industry has supplied the biggest and most successful. I urge the Government to start paying attention to it.

On the wider economic debate, the most successful nations in Europe and elsewhere in the world are countries of a similar size to Scotland that have fewer resources than we have. Surely it is about time that we had consensus in the chamber about the need for us to learn lessons from those countries.

The debate is, in essence, about the future opportunities for Scotland. Of course the SNP will say that we should learn lessons from the missed opportunities that Scotland experienced in the past. Scotland should be up there with the other economically successful nations in Europe, such as our neighbours Norway and Ireland or the others that are performing much more successfully than Scotland is.

We won the jackpot in the 1960s when we discovered the black gold in the North sea, but, unfortunately, we have stood back and allowed the UK Government to squander £203 billion in oil revenue since then, despite the fact that Scotland continues to suffer the same old social problems and lag behind the rest of the UK economically. We should have used our natural resources as the springboard to get Scotland to the top of the league. Control over revenue from the oil industry has not passed to this Parliament and we do not even have some of the leading civil service jobs relating to the North sea, which are still based in London. That is a shameful and ludicrous situation that no other small country would accept.

Contrast Scotland's position with that of Norway, which this year celebrates the centenary of its becoming independent. The Norwegians with their vision and foresight set up their oil fund in 1990 and starting putting cash into it in 1996. Today the fund for future generations is more than £89 billion.

Photo of Phil Gallie Phil Gallie Conservative

Does Richard Lochhead acknowledge that the glowing picture that he paints of Norway is perhaps something to do with the fact that Norway is not a member of the European Union?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

No. The fact is that Norway has utilised and taken control of its oil revenues. Scotland should learn a lesson from that.

I remind members that in 1978—some of us are too young to remember back then, but others have good memories—the Labour Government published its white paper on the challenges presented by North sea oil, in which it said that it would consider setting up a specific oil fund. After careful thought it decided to abandon the idea, because people might get confused about whether projects had been funded by general taxation or by the oil fund—a weak and lame excuse indeed. Just think—if the idea had been taken up, we could be sitting on a multibillion pound fund today.

Photo of Alex Neil Alex Neil Scottish National Party

I am old enough to remember the 1974 Labour manifesto, which promised that an oil fund would be set up in 1974.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

That is a good point.

The opportunity still exists for Scotland to reap the benefits from the North sea. The oil industry, which always makes conservative estimates, said that £6 billion would be poured into Gordon Brown's coffers in 2005, so a lot of opportunity remains. The predictions that were made in the 1980s had to be revised in the 1990s and the predictions that were made in the 1990s now have to be revised in the 21st century. That is the story of North sea oil—we always have to revise our predictions upward. Gordon Brown has had to revise his forecasts of oil revenues upward every time he addresses the issue. Are we going to continue doing that for the next 20, 30 or 40 years? Some of the oilfields that were expected to peak in 1992 are now not estimated to peak until 2009. The industry has a huge future and presents Scotland with a huge opportunity. We have not even begun to exploit the developments in the west of Shetland.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I am sorry, but I do not have much time left.

Let us not forget that there is more oil left in the North sea than has been extracted and that 95 per cent of the reserves are in Scottish waters. If we had control over our own waters, we would have 95 per cent of the revenues.

I want finally to address the environmental argument. The oil industry in the north-east of Scotland is responsible for trying to move us into renewables. We are transferring the skills from the oil industry to the renewables sector and it is ironic that the oil industry is playing the biggest role in trying to cut emissions, which perhaps the Green party will acknowledge. We have even more potential to help cut emissions. The issue of capturing carbon from oil and gas is on the agenda. The oil companies will lead the research into how we can capture the carbon, transport it and return it to store in the fields where the oil and gas came from. We have to support the industry, because it will help us to cut emissions in Scotland. I wish that the Greens would get their heads out of the clouds, come back down to earth and acknowledge the realities that we face.

Research and development has been mentioned. It is difficult to explain how we are losing out and why the minister is not paying any attention to the issue. Shell is going to spend $1 billion by the end of 2005 on developing renewable energy. Not one cent has been spent on Scotland. Given the trillions of dollars that will be spent, we have to capture that investment and make the most of the North sea oil industry for Scotland's economic future.

Photo of Duncan McNeil Duncan McNeil Labour 10:29 am, 3rd February 2005

As a compassionate unionist, I feel sorry for the SNP today. It reminds me of an aging rock band. Its last release, the experimental "Fiscal Freedom" EP was too subtle for its old fans and too thin to win over any new ones so, in an attempt to get back in touch, it is belting out the fans' favourites from the 1970s as loud as it can, hence today's rerelease of the old favourite, "Oil and Independence".

I will turn to the specifics of the SNP's motion in a minute, but I would first like to make a couple of brief but important points about the economy of my constituency. There is no doubt that the scars of the industrial vandalism that took place in the late 1970s and 1980s run deep. Although the issue was scorned this morning—"It was their fault," and "It wasn't our fault"—and an attempt was made to laugh it all off, real damage was done in those years and we are living with that now. We have come a long way since then. Unemployment now is nothing like it was under the Tories, when it was over 20 per cent in my constituency. New employers have moved into the area and sections of our waterfront—a real asset in the Clyde area—have been regenerated.

However, some of the legacy of those years remains. Our economic base is still too narrow, we are still too reliant on a small number of large employers in electronics and manufacturing industry and we have to deal with the problem that occurs every winter when companies lay off workers during the annual market downturn. We also face a challenge of global competition but, although we will never compete with sweatshop economies on cost—and nor should we—today's worldwide marketplace offers opportunities such as those that the Deputy First Minister and Minister for Enterprise and Lifelong Learning discussed with the Chinese company Lenovo, which is due to come into my constituency in the spring.

The only way in which we will be able to deliver sustained economic regeneration is by making Inverclyde the home of high-skill, high-value and secure jobs. The only way in which we can do that is to ensure that our workforce has today's skills and the ability to update those skills.

Photo of Duncan McNeil Duncan McNeil Labour

No.

The SNP is not interested in such mundane practices of economic regeneration. It is more concerned with playing another round of "The National Lottery Jet Set" and scouring the globe for a country that fits the case that it is trying to make that day. Today, we have won a trip to Norway, a land of milk and honey where standards of living are among the highest in the world, everyone has a widescreen TV with Sky Sports and fresh-faced children spend their days reading books under trees, although life expectancy in Norway is actually the same as it is for UK males.

Photo of Duncan McNeil Duncan McNeil Labour

Sit down.

What is the secret of this Norwegian nirvana? "Easy," says the SNP, "it's independence." Apparently, it has nothing to do with the fact that, as Mr Gallie mentioned, Norway is not in the European Union. Presumably, it also has nothing to do with the fact that anyone who is paid more than £26,000 a year—about two thirds of the Norwegian workforce—has a marginal income tax rate of more than 49 per cent or that there is 12 per cent VAT on food and 24 per cent VAT on almost everything else, or that taxes on cars and petrol are sky high. A terrifying fact is that the tax on beer in Norway is the second highest in the world, which makes the price of a pint double what it is in Britain. The web is a wonderful tool. I just plug in the word "Norway" and all these facts come out.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I note in passing that the number of manufacturing industry jobs in Mr McNeil's area has gone down from 31,000 to 26,000 in four years.

Can Mr McNeil tell us how much disposable income, after all taxes, someone in Norway has compared to someone in Scotland?

Photo of Duncan McNeil Duncan McNeil Labour

I have that information somewhere in the papers before me. I will provide Mr Stevenson with the answer at the end of the debate.

The SNP blithely asserts the line—without offering proof—that Norway's secret is oil and independence. In fact, the reports that I have read about Norway suggest that the high level of social provision in Norway is due to high taxation. Funnily enough, none of the reports mentioned that it is because Norway is independent.

We have been here before. The SNP spins the globe, picks a few countries and says, "If only we were independent, we would automatically have all the advantages that those countries have without any of the drawbacks." We cannot have Scandinavian levels of social provision with American levels of taxes, yet here we are again on this groundhog day. The parties on this side of the chamber are forced to deal with real politics, which is about making choices and striking balances.

Sadly, the SNP does not do real politics; it finds it hard enough to do "Rockin' All Over the World".

Photo of Phil Gallie Phil Gallie Conservative 10:35 am, 3rd February 2005

Jim Wallace talked about research. Given that he could not find any answers, one step that he could take would be to support excellent facilities such as the Hannah Research Institute in Ayrshire.

In contrast to the SNP's opening speaker, I recognise that Scotland's economy is an integral part of the United Kingdom economy. That fact cannot be avoided. When I hear the SNP argue that we should move outwith the UK in order to gain control of our economy, I cannot understand why it wants to take us into the euro zone. That seems like going from the frying-pan into the fire.

In 1997, the Labour Government inherited the strongest economy in Europe. That was the judgment of Tony Blair, who made that proud boast at the Council of Ministers in Amsterdam. I say to Maureen Macmillan that some of the reasons for that strength were the brave decisions—which were not always popular and were often difficult—that were taken by Margaret Thatcher in the 1980s and 1990s, when she pulled our economy into the real world. Her actions gave Labour a brilliant chance when it came into office in 1997.

The economy is perhaps not on as strong a basis at this point. In that regard, I draw members' attention to the current balance of trade. Since 1997, when the balance of trade was positive, it has got worse every year. We now have £32 billion on the negative side of the balance of trade. That suggests that the economy that we have today is a lot weaker than the one that we had a few years ago. That presents a threat to the amount of money that the Scottish Executive will be able to spend.

Jim Mather talked about economic growth. However, in the mid-1990s, Scotland's economic growth was in the top three or four places of the UK's regional league. Further, at that time, it was among the highest in Europe, whereas today it is at the bottom—the UK's growth is 3.2 per cent and Scotland's is 1.8 per cent. I reckon that there is a message there.

Photo of Jim Mather Jim Mather Scottish National Party

Mr Gallie makes an interesting point, but I would ask him to acknowledge that those peaks of growth were a function of foreign direct inward investment, which was an artificial measure to try to boost the Scottish economy. That did not work, of course, and we are now watching that manufacturing collapse. Would he accept that that is a function of having done the wrong thing and that it would have been better to have ensured that Scotland was more competitive in the long term?

Photo of Phil Gallie Phil Gallie Conservative

I think that the wrong things were done immediately after the Labour Government came into power. The introduction of the European social chapter did not help countries that had a lot of inward investment. We warned of that at the time and should bear that in mind in the future.

In relation to the Scottish block grant, I have another warning for the Executive. When we left office in 1997, the Scottish block grant stood at £14 billion—the highest level up to that point, to which it had gradually increased. Today, it stands at over £30 million, which means that it has more than doubled in seven years. I wonder whether that kind of growth is sustainable. Looking to the future, I wonder where that puts the chancellor when he makes decisions about raising taxes versus cutting public expenditure. I suspect that the latter option might be taken. I certainly do not believe that such an escalation in public expenditure benefits the business competitiveness of Scotland, on which we will continue to depend in the future. The Scottish Executive has been increasing taxes, for example through rates, and we are penalising our businesses with such backward steps. We have moved away from the uniform business rate, which the Tories took a long time to achieve but which was achieved by 1997. The Executive would do well to consider those issues.

I will mention the situation with respect to Europe and its effect on our economic stability. Let us consider some of the regulations that are coming out of Europe. There are sludge waste regulations, and there is the situation with Longannet. Let us consider all the directives on health foods and on animal medicines and the ever-extending single market regulations. Let us consider the costly effects of the social chapter and the European convention on human rights. I put it to the Executive that all those factors will affect our economic stability into the future.

Jim Wallace proudly boasted about the Financial Times "fDi" magazine's EU regional assessment. He was right to point out that Scotland has stood well, over the years, with respect to foreign direct investment. However, he failed to acknowledge that the conditions for that had been built up over 10 years. I urge him to read the documentation to which he referred when he was denying what I put to him during my intervention.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party 10:41 am, 3rd February 2005

Let me start with the essential paradox at the core of the Government's argument. Maureen Macmillan espoused and articulated it extremely well. It is very simple. She tells us that we have an enormous and growing deficit, but she concludes that we must therefore change nothing, stick with the people who are managing our economy and refuse to take the levers of power that would enable us to do anything about it. She says that we must endorse failure.

There is considerable discussion about efficiency in government spending. Efficiency is not about how much or how little we spend; it is about what we get for what we spend. We might be more efficient by employing more people in government; we might be more efficient by employing fewer people in government—it could be either.

In the most recent issue of Holyrood magazine, George Kerevan highlights an area where we in Scotland should perhaps be doing better. He indicates that women in Scotland are earning less than women in the UK as a whole and that the margin of difference is greater than that for the working population as a whole. That is a blot on our equality and economic ambitions. He also refers to the insidious price that we have to pay for the existing regime, in that we have to subsidise the people whom the Government chooses to have as its civil servants in London, while reneging on long-standing promises to transfer civil servants working in oil-related areas to Aberdeen, where such subsidies would not be required.

To be positive, here is some of the budget speech that I would like to hear being made:

"The theme of the speech and ... the Budget as a whole" is

"Open for Business ... a natural restructuring process was commencing within our economy and I" give

"notice that the Government" will

"do everything in its power to ensure that" our businesses

"remain competitive."

I speak

"of the need to sustain success in the face of ... changing times".

Our priorities are to remain

"competitive within an international marketplace, in which new rivals could emerge from anywhere around the globe and impact upon our ability to maintain our current standard of living and ... high quality public services ... However, in so doing," we must

"remember the social needs of all our citizens, especially those who are ... unable to directly participate".

I might continue:

"We have received confirmation of our Triple A credit rating from both Standard and Poors and Moody's rating agencies, providing further evidence of the esteem in which our finances are viewed externally ... In 2004-05, our economy is set to grow at a rate of 4.5% in real terms, a figure that exceeds the expectations of most other countries. We have a capital programme that will continue to afford work to many, full employment continues in all sectors".

We might take initiatives to create small but significant opportunities for us to position ourselves for the future—a future that Jim Wallace is unable to see. For example, we might launch a

"zero rate of tax to businesses operating within the space industry".

We might talk of the new opportunities in a

"small but exceedingly promising area", which would

"encompass the manufacture, operation, sale or other activities provided in respect of launch vehicles".—[Official Report, Tynwald Court, 17 February 2004; Vol 121, pp 729-738.]

Where is the country where that speech was made within the past 12 months? It was the Isle of Man—not a big country, and one that is a mere 30 minutes' flying time from here. If a little country with a modest budget and modest resources, including a modest human resource on which to draw, has the confidence and ability to engage in the modern world and to build up surpluses in its budget, how much better could Scotland do by comparison, given the assets that we have, both those of our people and those that lie offshore?

Instead, what we have, and what I want to engage Jim Wallace on, is an Executive that is not even prepared to speculate as to how the world might look in 10 years' time. I asked a range of questions on that subject, but hardly an answer did there come. There was certainly nothing in relation to the economic world.

Such long-term planning is routine in the business world. Over the last three years of my business life, I was helping the Bank of Scotland to look 25 years ahead. We had to understand the future to be able to engage with and influence it. I would remind Jim Wallace of the old saying that those who do not know to where they travel will be sure to arrive there.

Success comes to those who see the future that they want and are prepared to pay the price to create it. However, the Executive is blind to the future and deaf to the opportunity and it prefers to be a victim of world circumstances, rather than influencing the future of this country and the world and delivering for people in Scotland, whose needs continue to grow and whose future continues to suffer under a lacklustre and visionless Executive.

Photo of Richard Baker Richard Baker Labour 10:47 am, 3rd February 2005

Meanwhile, back on planet earth, we have once again spent our time during Opposition business discussing independence and matters that are largely reserved to Westminster, rather than discussing issues on which this Parliament can decide policy. As is normal in every area of debate and in every area of policy, the only idea that we have heard from the SNP to address the nation's challenges is independence, its one so-called solution.

In the interests of finding fresh pastures of political engagement, let me welcome the opportunity that the SNP has given us to debate our economy and the vital role that the oil and gas industry plays in it. However, the SNP has failed to point out that the Scottish Executive is playing a key role in encouraging success in the oil and gas sector and that, working in partnership with the industry and with the UK Government, it is creating the right environment for the industry to prosper. It is the SNP's determination to destabilise our relationship with the rest of the UK that would do the industry most damage.

I agree with the SNP that we want a successful oil and gas industry for a long time to come. That is vital for the prosperity of Scotland, in particular for Aberdeen and the north-east. I welcome the Executive's role in Pilot. With the Deputy Minister for Enterprise and Lifelong Learning as its vice-chair, Pilot was created to bring together the Government at the UK and Scottish levels and the industry and to act as a spur for investment in the sector, with goals for success by 2010 including the encouragement of more jobs, more investment and more production than would otherwise be the case.

It might gall the SNP, but that strategy is working. The United Kingdom Offshore Operators Association's activities survey shows that oil production in the rest of the decade will be higher than was previously estimated, and that spending on exploration and capital will be up 15 per cent. There will also be a shallower decline in production, which means that there will be a prolonged life for the industry in the North sea.

That is not to say that we cannot make even more progress. In the past, I have argued that we must step up efforts to encourage more exploration, particularly by the new independent operators, as other members have said. I commend to ministers a recent Amicus report on that matter, which excellently highlights some of the challenges.

Photo of Shiona Baird Shiona Baird Green

Is the member not concerned that, despite enormous profits, Shell has reported that it has not found sufficient fields and that its estimates are being revised further downwards? Oil is declining, but does the member agree that we cannot afford to burn it anyway?

Photo of Richard Baker Richard Baker Labour

Unfortunately, the Green party's intention seems to be to bring the industry to a halt, which would be disastrous for the north-east. Poverty is the worst thing for the environment. It breeds environmental damage. Shiona Baird's party's policy would be disastrous for the north-east.

The SNP's motion inaccurately argues that we in Scotland have not capitalised on our oil and gas reserves as others have. It compares our situation with that of Norway and calls for an oil fund to be set up. Even if we could invest in an oil fund, such a fund has not been the unqualified success in Norway that the SNP has said that it has. It is simply wrong to suggest that Scotland has not significantly benefited from the increased tax revenue that has been collected by the UK Government from the oil industry. As Maureen Macmillan and Murdo Fraser said, even if oil revenue is taken into account, Scotland benefits financially from membership of the UK and would be in fiscal deficit without such membership.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Will the member explain why he thinks that a fund that has reached £89 billion is a failure?

Photo of Richard Baker Richard Baker Labour

The fund has not always had an easy history and is not achieving what the Norwegians set it up to do in respect of pensions investment and the like. That is the reality and I will happily supply Richard Lochhead with more information about the matter.

In a recent debate on the economy, Alex Neil—despite the fact that he is an excellent convener of the Enterprise and Culture Committee—told us inaccurately that, based on our oil revenue, we could be fiscally independent. When he was rightly cautioned that long-term economic prospects cannot be based on fluctuating oil prices, he said that the situation was like a person winning the national lottery and saying that they did not want the money. The wit of his remarks was not matched by their wisdom, as the strategy would leave Scotland economically high and dry. We want oil to have a long-term future, but oil revenue is ultimately finite. It will not continue for ever, just as no one wins the lottery every week. If Mr Neil has found a way of winning the lottery every week, I wonder why he is here.

One need only consider Aberdeen and the north-east to see that we have reaped the benefits of the oil and gas industry in a far more responsible way. Some 100,000 jobs in Scotland depend on the industry and, of course, Aberdeen benefits from much of that employment. The Executive is putting in place the right economic strategy to sustain those jobs and to allow Aberdeen to continue its role as the energy capital of Europe in the future.

As I have said previously, I firmly believe that the SNP's strategy for fiscal autonomy is not based on what is economically right for Scotland—it is about independence and the SNP's obsession with the constitution. It is predictable that the SNP has ignored the general success of the Executive's economic strategy in the debate. That strategy has achieved record jobs and economic growth in Scotland and is the right strategy for capitalising on the skills and technology that have been developed through Scottish research and industries such as the oil and gas sector.

The establishment of the energy intermediary technology institute in Aberdeen—which will capitalise on expertise and new industries such as renewables—shows that the Executive has the right long-term vision for economic success in the energy industry and, indeed, for all Scotland's economy. That is why we should reject the SNP's strategy, which is based only on separation from England and the rest of the UK, and embrace the Executive's policy, which is based on long-term success for Scotland.

Photo of Mike Pringle Mike Pringle Liberal Democrat 10:53 am, 3rd February 2005

Again, we find ourselves discussing the Scottish economy—and rightly so. The Scottish economy is growing at its fastest rate for seven years. The Royal Bank of Scotland expects 2 per cent growth over the next year, which is what would be expected for a similar-sized European country.

Jim Mather talked about his table of 10. I suggest that the Scottish Parliament information centre's briefing that gives a snapshot of the latest economic indicators shows that the Executive's policies are being successful. The total gross domestic product is rising—there is annual growth of 1.8 per cent. Manufacturing GDP has risen by 0.4 per cent over the last quarter. The GDP of services industries is rising—there is 2 per cent annual growth. Scottish growth forecasts range from 1.8 per cent to 2.7 per cent for 2005. Unemployment is falling and the number of VAT-registered businesses is stable, with a 15 per cent increase in 2003. I accept that figures for manufactured exports have not been good, but the Executive's policies show that there was a 2.9 per cent increase in the index in the last quarter of 2004. There was a 5.5 per cent rise in total retail sales in September 2004 compared with the same month last year.

Photo of Jim Mather Jim Mather Scottish National Party

I ask the member to consider and possibly concede the fact that there is no level playing field in the UK. For 30 years, the Scottish economy has grown at 1.6 per cent and the UK economy has grown at 2.1 per cent. The much-vaunted figure of 1.8 per cent that the member has given us for last year compares with the UK's figure of 3.2 per cent. We are up against the competitive index and the dice are loaded against Scotland until he and I choose to load them properly. When will that happen?

Photo of Mike Pringle Mike Pringle Liberal Democrat

We are better than Germany and France. It is disappointing that the SNP is once again talking about our constitutional position when it should be focusing on the Scottish economy. It is time that the SNP stopped talking Scotland down and started to praise the work that millions of Scottish people are doing. The Scottish Executive has put in place sustainable long-term policies that are delivering a smart, successful Scotland. The SNP must be realistic and accept that, as part of the UK, Scotland is part of a larger economic machine that many small European countries dream of.

We should be talking Scotland up. New business start-ups are up by 15 per cent, we have removed tuition fees, which will encourage our young people to go on to higher education—the Executive has given more than £1 billion for that—and 32,000 people are now training in new modern apprenticeships.

Photo of Alex Neil Alex Neil Scottish National Party

Does the member accept that Scotland, like the rest of the UK, is now part of a market of 500 million people and that the day after independence and for ever after independence, we will still be part of a home market of 500 million people?

Photo of Mike Pringle Mike Pringle Liberal Democrat

I am not sure that that automatically follows. That is not right. Everything would have to be renegotiated.

We hear nothing from the SNP about how, thanks to our universities and colleges—including the University of Edinburgh at King's Buildings in my constituency—Scotland is now on a world-class level in respect of technology offshoots, which employ thousands of people. Jobs in the environmental sector come from our green jobs strategy. The SNP does not even mention such things.

However, the issue is not only economic growth; we must focus on the sustainability of our strategy.

Photo of Mike Pringle Mike Pringle Liberal Democrat

Let me finish.

The two things that I mentioned are not mutually exclusive. Economic growth will come from a sustainable strategy. The Scottish Liberal Democrats have put that at the heart of our economic policy and it is now at the heart of the partnership agreement for government. For the SNP to come here and say that oil, which is an inherently unsustainable resource, is the answer to our economic problems is frankly laughable. On the way to the chamber today, I heard on the radio that the SNP is encouraging Shell to invest more. When Alex Salmond launched his three-point oil strategy back in June, he was banking on prices of $40 a barrel. If we continue with a war, which I hope that we will not, perhaps that price will be sustained. Five years ago, the price was $10 a barrel. If the price of oil goes down, it will be uneconomic to take oil out of the North sea. There is no long-term stable oil price, and for the SNP to risk the future of the Scottish economy on an unpredictable and finite resource is a nonsense.

Photo of Mike Pringle Mike Pringle Liberal Democrat

I am sorry, but I must continue.

What would the SNP do with the vast wealth that it thinks that it would get from a possible oil windfall? Jim Mather wants trickle-down economics and tax cuts to help to grow the economy. That sounds like Thatcherism. We know that things never trickle down.

Christine Grahame has called for raising taxes to redistribute wealth—a number of members have mentioned that. We know that the SNP's tax rises would hurt middle-income families in Scotland. An average teacher or nurse with a salary of around £30,000 currently qualifies for the higher rate of tax. People who are on average earnings would end up paying more tax on any money that they managed to save. The SNP has also promised to reform tax relief to help to pay for its citizens pension. Who knows how much that will cost people? Not even the SNP seems to know.

At least the Liberal Democrats are honest about our tax policies. A 50p higher rate of income tax for those who earn more than £100,000 is simple. If the SNP had the powers that it wanted, there would be tax cuts for businesses and tax rises for everyone else, which is hardly a way to grow the economy.

There have been a number of debates on this subject, but the SNP is still offering nothing new or realistic. In the long or short term, there is no security from Scotland's oil. There is no fiscal surplus. An SNP Government would damage our economy. I support the Executive's amendment and urge other members to support it.

Photo of Des McNulty Des McNulty Labour 11:00 am, 3rd February 2005

I apologise for not being here at the start of the debate. I understand that Nicola Sturgeon, in whose name the SNP motion was lodged, did not speak to the motion. Perhaps she was not prepared to do so; she has certainly not been prepared to stay for the debate. It is also interesting to note that the last three members to speak have been from the Executive parties. One wonders whether the SNP has a problem in getting its members to speak on the subject. It is an SNP debate, but where are they?

Photo of Murray Tosh Murray Tosh Conservative

Mr McNulty, the order in which members are called to speak is my responsibility and I would be grateful if you did not criticise it.

Photo of Des McNulty Des McNulty Labour

I apologise if that is the case. However, when the Conservatives secure an Opposition debate they are all here. In contrast, when the SNP chooses to have a debate, very few SNP members are apparently prepared to be here.

Maureen Macmillan made the point that this is, in a sense, a retro debate. It calls to mind the words of Karl Marx, who said that history tends to repeat itself

"the first time as tragedy, the second time as farce."

The first thrust of Scotland's oil ended—through the actions of the SNP—in the tragedy for Scotland of Thatcherism. We have now reached the level of farce in some of the proposals that have been put forward today.

Jim Mather is fond of saying that the future of Scotland's economy is not a zero-sum game. He is right: economies are never a zero sum. Although he may dispute the accuracy of the GERS figures, the reality of separation is that we would start with a minus figure of £4.4 billion, as was pointed out by Murdo Fraser. SNP members cannot just say that they do not agree with the GERS figures; they have to say what they would do to make good that financial shortfall. Oil will not cover it in the short term, the medium term or the longer term. The only honest way in which SNP members can argue for independence is by accepting the misery, the pain and the problems of separation. They should be up front about it and say what separation would mean to people before arguing for the principle.

Photo of Jim Mather Jim Mather Scottish National Party

It is always easy to be nihilistic and to deny that a new proposition will have an impact. That is what British Airways did with Ryanair and what General Motors did with Toyota. The challenge that the Executive faces is to turn around the deficit that it is making, inflating and building up through its failure to take advantage of the mileage that we could get out of enlivening the Scottish economy. How will the Executive turn that deficit around if it chooses not to enliven the Scottish economy?

Photo of Des McNulty Des McNulty Labour

We must, first, find out where the real issues are and then point to where the real solutions might be.

If we are to have a debate about Scotland's energy policy, why have we not heard more from the SNP about renewables technology and how the generation of renewable energy can be developed? The SNP's position on that has been consistently inconsistent. Murdo Fraser has lodged an interesting motion, calling for wind farms to be sited on Salisbury crags. I am sure that that is a tongue-in-cheek motion, and it is amusing. Nevertheless, the reality is that we need to have a sustained debate about the use of wind energy and wave power and how that can be developed. We need to have a genuine debate about alternative energy sources, and we need to have a proper debate about how we can maximise the benefit of oil revenues. Have we had that from the SNP? What we have heard is a lot of stuff about powers. Ultimately, the SNP's economic approach has all the hallmarks of never-never land, and the economic driver from Tinker Bell must be more fairy dust. The arguments that the SNP has put forward lack substance.

There is a genuine process for scrutinising what the Scottish Executive is doing, and members of the Executive parties have individual issues on which they think that the Executive is not doing well enough. There needs to be a process in the Parliament whereby we can map out Scotland's economic future. I agree with Jim Mather that we should look ahead and decide what our priorities are and how we are going to achieve them. However, if the SNP always focuses on powers, we will not have a constructive debate because, ultimately, the route down which that takes us is not practicable. We can talk about powers in a constructive way, but simply saying that everything would be different if we had more powers does not make for a constructive debate.

The reality is that the European economy, within the world economy, is based on interdependence and economic frameworks that are established by Europe in broad terms. It is about engagement with other economies. The balance of advantages and disadvantages, regarding our economic position, cannot be transformed by a constitutional arrangement. That does not work; the focus should be on the whole alignment of the economy and the serious issues that the SNP constantly evades or attempts to mislead the public on. There are hard choices to be made in economics, concerning how much money we invest in rural and urban areas; what priority we give to city regions; and the balance of advantage in spending money on universities or on transport. Those are genuine issues of substance that, I am afraid, the SNP consistently avoids.

Photo of Jamie McGrigor Jamie McGrigor Conservative 11:06 am, 3rd February 2005

Countries with good economies generally have low tax regimes and good infrastructure: that is a fact. In the Highlands and Islands, one area stands out as a beacon of prosperity—Inverness. It was because of that, coupled with what I can describe only as the absent mindedness of the Scottish Executive, that the Highlands and Islands lost objective 1 status. The area had become too rich, on a per capita basis; yet, it is an area in which workers still have to be bought in from outside to fill job vacancies in the city.

In looking at the economy, we have to ask what made Inverness do so well. The answer is blindingly obvious: it is accessible by road, air and rail. From the moment that the A9 was made into a decent highway, Inverness and the surrounding area prospered. Accessibility is the key, and therein lies the big lesson for the Scottish Executive, which says that it wants to increase prosperity: it must improve access.

In the west, the A82 should be the main route to the Highlands; however, despite eternal questions and rhetoric in the Parliament, there is still a traffic light on the 9-mile stretch between Tarbet and Inverarnan. That piece of road is a disgrace. It should be the main gateway to Oban and Fort William, but it languishes in the state of a third-world bullock-cart track. It is a dreadful advertisement for Scotland.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I thank the member for giving way—this is a rare opportunity for me. Can he tell me how many jobs were directly created by the M77, one of the Conservatives' finest road-building projects in the 1990s?

Photo of Jamie McGrigor Jamie McGrigor Conservative

I cannot give the exact number. I will have to get back to the member on that.

Equally, the A83, which heads westwards from Tarbet, through Inverary and down towards Kintyre, is in a bad state and is full of potholes. A good infrastructure will bring investment and prosperity: that is true for ferry links as well as roads. I ask the minister what is happening regarding the new linkspan for ferries in Oban. Why is it not yet in place?

Eighty per cent of ferry journeys in Scotland commence in Argyll and 700,000 people passed through Oban last year, on their way to different holiday destinations. Why is there no help for that valuable part of the Scottish tourism economy? Access is the key, and a good infrastructure grants that access. Mr Wallace must often use NorthLink Orkney and Shetland Ferries. Why is NorthLink having to re-tender four years early?

Photo of Jamie McGrigor Jamie McGrigor Conservative

No.

The current tax infrastructure also disadvantages businesses in Scotland. How can small businesses cope with a business rate that is 10 per cent higher than the rate in other areas of the UK? That level of business rate is unnecessary and it is especially unfair on those who have small, independent businesses, which are the cornerstone of the Scottish economy. They do not need instruction from the Scottish Executive on how to run their businesses; they need less red tape, less tax and a better infrastructure. Even bureaucracy-bound Brussels has just announced its intention to reduce red tape. The Executive must do it here. Our salmon farming industry, for example, faces nine regulatory bodies, whereas the industry in Norway has a one-stop shop.

The present set-up discourages business, and the fact that there are more businesses in Birmingham than there are in Scotland is not surprising. We have a bloated public sector that accounts for 50 per cent of GDP, which is a very unhealthy situation that must be unsustainable in the long term. We are lucky that the previous Conservative Government gave Scotland such a good deal through the Barnett formula, because that is what is keeping Scotland afloat.

Our figures for growth and for tourism consistently lag behind those of the rest of the UK. Our young people leave because they do not see a sustainable future in Scotland, yet Jack McConnell calls for more people to settle in Scotland. That is okay, but why does his Executive not do more to keep our own young people here by enticing more Scots to return home to start up businesses here?

The countries with economies that are doing well are invariably countries that have low tax and low levels of Government interference. Why will the Scottish Executive not understand that ever so basic reality? The Executive can produce glossy brochures, but it is useless at delivering action to help businesses and the Scottish economy.

Another infrastructure-related factor that is holding Scotland back is the vast increases in costs that Scottish Water has passed on to business. That is holding back house building and projects in vital areas. Council plans cannot go ahead because of Scottish Water's limitations, which act as a break on development. Scottish Water achieved only 38 per cent of the score of the worst-performing water company in England.

If the Executive fails to get to grips with a proper energy policy for the future and fails to make its mind up soon about where our power will come from, we run the risk of the lights going out as well. It will be a case of "O power of Scotland, when will we see your lights again?"

Photo of Trish Godman Trish Godman Labour

You are in your last minute, Mr McGrigor.

Photo of Jamie McGrigor Jamie McGrigor Conservative

Jim Mather extolled Conservative values but, unfortunately, he will not be able to carry his party with him.

Murdo Fraser pointed out what Scotland could do—

Photo of Jamie McGrigor Jamie McGrigor Conservative

I am afraid that I am in my last minute, but I will give way, if I am allowed to do so.

Photo of Jamie McGrigor Jamie McGrigor Conservative

Richard Lochhead went on about oil, but oil is finite. This morning, Shell reported record profits because an oil shortage has led to huge price increases. However, Shell has replaced only 50 per cent of the oil that it used.

Murdo Fraser pointed out what Scotland could do economically if we had the right policies. The sooner we have those policies, the better we will perform.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party 11:12 am, 3rd February 2005

I propose to make some general remarks but I will also comment specifically on the oil industry.

The minister was correct to praise Scotland's many successful companies, which have done well in the face of sometimes adverse circumstances that have not been conducive to progress. The companies that have done well include not just low-level companies but organisations such as the Royal Bank of Scotland, which is now a global player. We need to look at the glass as being half full rather than half empty. What frets and frustrates SNP members is not how badly Scotland is doing but how much better it could do.

Let us compare what Mr Mather said with what Mr Pringle said. Mr Pringle made a great virtue of a catalogue of growth statistics that compared poorly with our competitors in the European Union and elsewhere. Rather than compare Scotland's performance to that of Liverpool or Edinburgh's performance to that of Dundee, we should compare how well Scotland is doing to how well its international competitors are doing. If we are continually being outperformed—

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I will give way to George Lyon in a minute, if he will make a point of substance rather than his usual schoolboy intervention.

We are being outperformed by countries such as Estonia, the Czech Republic and the Republic of Ireland, which are our competitor nations. As a city, Edinburgh must compete with the likes of Stockholm, Helsinki and Dublin.

Photo of George Lyon George Lyon Liberal Democrat

Mr MacAskill is right to say that we should compare ourselves with other small countries in Europe and throughout the world. According to the Scottish Parliament information centre's briefing, Scotland is doing a great deal better than many small European countries, such as Norway, Austria, Denmark, the Netherlands and Poland. In GDP terms, we are performing better than they are. It is easy for Mr MacAskill to be selective in the small countries that he mentions in the debate.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

The fact is that Scotland has had golden opportunities, which it has not taken. Scotland is beginning to fall behind not just competitor nations such as Ireland, Finland and Estonia but other new entrants to the EU. We need to do better.

If we are, as I believe we ought, to look at the glass as being half full rather than half empty, our view of the oil industry should similarly be that the barrel is half full rather than half empty. After all, oil is a resource. Many members have referred to the it's Scotland's oil campaign. I remind Mr Fraser that people attempted to put down that campaign by saying that all the oil would be gone by the 1980s. When we got to the 1980s, they said that it would be gone by the 1990s because of Thatcher's expenditure on creating mass unemployment to undermine the United Kingdom's trade union base as part of her economic changes. We were then told that the oil would be gone by the turn of the century. Today, in 2005, as much oil is still to come out of the North sea as has already been extracted from it. In addition, our gas reserves are even greater than our oil reserves. We should play up, rather than downplay, our success.

The great tragedy of Scotland's oil industry has been that people have been told a lie so often that they have begun to believe it. People do not see what should have been done. More important, they do not recognise what could still be done if we had access to this wonderful natural resource, regardless of what might be said by those who would rather see it remain under the sea. Although changes in the industry will take place, it still presents us with a golden opportunity.

The idea that oil benefits only north-east Scotland is another myth that persists. The major institution at the forefront of much of the technology is, after all, Heriot-Watt University. Companies that are situated in Glasgow and on the Clyde manufacture specialist bits for rigs in not just the North sea but Alaska, the South China seas and elsewhere. Oil is an all-Scotland industry and an all-Scotland resource.

Of course the industry will change. We need to move towards brown-field and fallow-field development. Changes have already had to be made in insurance policies to provide for the costs of decommissioning. Fundamentally, we will see a change like the one that happened in the Gulf of Mexico. As the bigger players such as Shell and Exxon move out, indigenous, smaller-scale, Scotland-based companies can move in.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

In a minute, Mr Wilson.

Even when the major companies go and even when the last drop of oil has been extracted from the North sea, we can still be a major player. Where are the oil fields around Houston, Texas? Apart from a few nodding donkeys, they have all gone. What matters is the knowledge and the technical capabilities that the industry has acquired. The skills that we have acquired in the North sea can be used in the South China seas, Alaska and wherever else.

Photo of Allan Wilson Allan Wilson Labour

I agree with a large part of that analysis, but the potential of such undiscovered fields will be fully realised and exploited only if they attract massive investment from oil companies, large or small. Such investment would be the last thing that oil companies, or any other companies, would do if a period of political instability and uncertainty was created by a constitutional crisis in this country.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

Mr Wilson should tell that to Dick Cheney's Halliburton and all the other companies that have chosen to go with economic and political instability and create havoc in Iraq. They are even tendering for possible havoc in Iran. Of course we do not want political instability, which would just undermine matters. However, we operate in a global market. For the European Union's 500 million people, we would be the major oil and gas producer, so we have a golden opportunity.

We need to bring through the companies such as Tuscan Energy Ltd that are taking over and developing the fields from which the global players are moving out. We need to have the resource, but we need the powers for that. The Parliament must dispel the myths and lies about oil and gas that have been perpetrated by the Executive. However, the Scottish Parliament and Scottish Government need the powers to be able to make the substantial changes that are needed and necessary.

Photo of Trish Godman Trish Godman Labour

We move to wind-up speeches.

Photo of Frances Curran Frances Curran SSP 11:18 am, 3rd February 2005

In today's debate, I have at least learned something about Duncan McNeil, who is not here at the moment. I really appreciate his approach to economics: he just puts the country's name into Google and that tells him everything that he wants to know. That is a worrying aspect of the analysis that has come from Executive back benchers.

Dare I say that I agree with Des McNulty that the debate should focus not just on a constitutional question on the powers of independence but on what those powers would be for? If I may put this to the SNP again, as a member of one of the Parliament's three pro-independence parties I want an independent Scotland with economic power because of what Scotland could do with that power. That is the most important thing, not our achieving those powers.

What Des McNulty went on to say worried me, because it showed the vision of those who are still in favour of having a UK economy. He said that once we have the powers, we will have to take hard decisions about whether to invest in rural development or research and development and about what we will do about new technology. However, those are the second-line issues. The big issue that we would have to deal with is whether we will have a neo-liberal economy.

What such comments tell me is that Labour members accept it as a given—it is not even questioned—that privatisation of all state assets is the norm in the economy and has no alternative. An international attempt to open up the public services that Governments provide and to have them provided by private companies is now also a given. All that we are left with is deciding the parts of the economy to which we allocate a small pocket of public money.

The reason for having independence in economic powers is to challenge that agenda. The cross-party group on international development attended a make poverty history campaign event yesterday, when the issue arose of multinational corporations moving in to say, "You must privatise water, transport, your health service and education." Des McNulty accepts that that is the economic framework in which we live internationally and thinks that we can do nothing about it.

In the independent Scotland in which I hope we will all live, what will the SNP say to the World Trade Organisation and the EU about partnership agreements on water? What will it say to the International Monetary Fund? Will it say that we are not prepared to accept such an approach and that we will protect our public services and our own market by taking a different approach? The opportunity is available for two approaches—or three, if socialism is included. I think that we will emerge as the left in the new independent Scotland and that socialism will be on the agenda. However, I will limit my comments to this morning's debate and the SNP.

The SNP refers to the Irish and Norwegian models. Which does it choose? They are two different models. Ireland built infrastructure—its skills base, new technology and physical infrastructure such as roads and transport links—on the basis of public money. That provided the biggest impetus.

Photo of Frances Curran Frances Curran SSP

I am getting there—Phil Gallie should have a wee bit of patience. I was going to say that that was not Irish, but European public money. That route is now closed, but the point remains the same: public investment was needed to allow Ireland to compete at its current level.

The other main strand of money was foreign direct investment, which created many insecure, low-paid jobs and did not lead to the Irish economy developing a manufacturing base, even though the Irish were first and were ahead in EU funding terms. Is Duncan McNeil saying that inward foreign investment has been a big success in Inverclyde? Is that how we will secure jobs? Many jobs in new technology have been lost in that part of the world. The wholesale privatisation that Labour members support has cost well over 200,000 jobs just in the electricity industry and other energy industries.

Photo of Trish Godman Trish Godman Labour

The member has one minute.

Photo of Frances Curran Frances Curran SSP

I had better make my last point.

What is the model to be? Does the SNP follow the Irish tiger model, with low corporation tax, foreign direct investment and public money that brought companies to make profits, or will it link with nordic countries, which have attempted to base a huge section of their economies on state ownership, co-operative ownership and a model of public ownership, and have resisted the deregulation that the UK has? The UK has the most deregulated economy in the European Union.

Duncan McNeil asked how we can follow Norway's model of taxation of workers who—I think—earn less than £32,000. We should not accept Duncan McNeil's Google answer about countries such as Norway. We should take the Organisation for Economic Co-operation and Development's answer, which is that Finland, Denmark and Norway have become the wealthiest countries in Europe through a level of protection, public ownership and developing indigenous industry. On 150 main indicators on a load of issues, those countries are constantly top in Europe, whereas the UK and Ireland frequently end up at the bottom. I ask the SNP what the model is to be—neo-liberalism or social democracy.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green 11:25 am, 3rd February 2005

Welcome to the economy debate of the 21 st century—it appears to have been Stewart Stevenson's 1970s space odyssey. We will have cheap flights not only to the continent, but to space. Richard Lochhead accuses the Greens of having our heads in the clouds, but at least we do not have our heads in the stratosphere—incredible.

Two weeks ago, the Parliament debated climate change. Most speakers in that debate acknowledged that we need to reduce our CO2 emissions by two thirds by the middle of this century. Jim Mather said today that the economy debate would never go away. I say to him that the climate change debate will never go away, either. If the cost of dealing with the damage of climate change starts to exceed the rise in gross domestic product, we will face economic collapse. Where would the economy be then?

Jim Mather said that we need sustainable economic growth. That is fine and supportable, but how will we measure that growth? Will we base that on the number of cheap flights to Cuba that Alex Neil takes? Are we talking about developing sustainable alternatives? Will we develop the Rosyth ferry, which could go to Norway, where we can drink expensive beer?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Does the member suggest that we should close down the North sea before we develop alternative energies, or should we develop alternative energies first?

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I suggest that we should move to a just transition and that we should phase out the use of fossil fuels this century. The SNP has not said how it will achieve that, but I will deal with that later.

The SNP and other parties present contradictions. For example, the only place in Scotland where I can get a Eurostar is my local Hornby model shop. We are still waiting for a Scottish Eurostar to give us an alternative to cheap flights to the continent. The reality is that policies to promote cheap flights have undermined the case for that service.

We need true measures of economic growth.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I will not, because the member did not give way to me.

I suggest that the index of sustainable economic welfare, which has been adopted in Wales, is a strong measure of economic growth. Many of the achievements that Jim Wallace outlined at the beginning of his speech would be better reflected through ISEW than through gross domestic product, so why do we not adopt the measure?

Oil is a finite resource—even the Tories acknowledge that. Their amendment says:

"fluctuating prices and finite supplies make oil revenue an unreliable source of income".

How true. The SNP says that we have only 30 years of oil left, so why does it want to suck all that out of the sea? Oil is a precious resource. We need it for plastics and chemicals and for future generations, not just for one generation or 30 years. I was born in 1972. We need oil for multiple generations.

My answer to Richard Lochhead's point is that we need a just transition from the polluting technologies of the previous century to a low-carbon economy in this century. As part of that just transition, we must take the jobs with us. I remind Richard Baker that that is why the unions back the concept of a just transition.

Stewart Stevenson talked about vision. We need vision. We need leadership to enable us to move towards a low-carbon economy in this century, because that is where long-term economic opportunities will lie.

We need renewable electricity, but we also need renewable fuel. Hydrogen, for example, is already being used; Shiona Baird drove a hydrogen-fuelled car in Aberdeen. Is the SNP really telling me that we have to wait 40, 50 or 60 years before we can develop a hydrogen economy in Scotland? Surely it is possible to develop such an economy now.

However, in order to deliver that just transition, we need the skills of Scotland's labour force. Indeed, Maureen Macmillan made that very point. The offshore skills that she mentioned are going to be needed to harness the tides and the resource that sits not on the seabed but on the surface of the north Atlantic frontier: the waves and the winds that pass over the sea. Although those resources can be harnessed, they need to be harnessed with the skills that we have in Scotland.

When I visit the ex-oil fabrication yard at Methil in Fife and look at the empty spaces and units, I see tremendous hope and opportunity. Those skills, which are exactly what we need to develop offshore technology, still exist in Fife. However, that area needs to be developed. For example, we need to invest more money in R and D, because £50 million is just not enough to develop wave and tidal energy technologies. In fact, we need to think more in terms of a £500 million investment and that very case has to be made to Westminster.

We also need to formulate a vision of how we can exploit Europe's future energy requirements and think about ways of raising revenue for Scotland by selling to Europe the electricity that we generate from the north Atlantic frontier and around the North sea coasts. As a result, we must make the case for developing sub-sea infrastructure and examine ways of getting that resource into Europe in the same way that we do with gas. After all, we have developed a fantastic infrastructure for gas over the past 40 years, but the same infrastructure for electricity just does not exist.

We need that vision of a low-carbon economy and we must take global leadership through a just transition that carries our workers with us into a sustainable economy fit for the 21st century, not for the 20th century.

Photo of George Lyon George Lyon Liberal Democrat 11:32 am, 3rd February 2005

I will begin by putting a bit of context into the debate. For a start, the statement that every small European country is performing better than Scotland does not stand up to scrutiny.

Photo of George Lyon George Lyon Liberal Democrat

We heard it from the SNP a number of times during the debate.

In fact, the majority of small European countries, including Norway, Austria, Denmark, the Netherlands and Portugal, are not performing as well as Scotland. Scotland performs very well as a UK region; indeed, we are one of the top regions in that respect. However, the real question is how we lift our performance to match the growth rate of London and the south-east, which is the major driver of the UK economy. That should be the nub of the debate.

Nevertheless, the motion invites us to look again at SNP policy. Unfortunately, the SNP has again failed to explain away the incoherence and contradictions that lie at the heart of its fiscal and spending plans for an independent Scotland. Two fundamental issues lie at the heart of the problems that the SNP faces in trying to explain what it stands for. First, a fault line splits the party between the big spenders who want a Scandinavian, high-tax and high-spend economic model, and the tartan Tories who believe that the correct way forward is the Irish model of tax cuts and lower public expenditure.

The second fundamental problem that the SNP must face is the underlying recurring fiscal deficit that Scotland has had over the past two decades, which, according to GERS, now stands at £4.4 billion. That figure even takes into account a 100 per cent allocation of all tax revenues to Scotland. Clearly, the SNP has no credible explanation of how that gap should be filled. Indeed, as Murdo Fraser rightly pointed out, it is not good enough for the SNP simply to rubbish GERS unless it explains honestly how it would fill that gap or provides alternative figures.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

How should the UK fill its similar pro rata deficit?

Photo of George Lyon George Lyon Liberal Democrat

As the member well knows, people have raised severe doubts and serious questions about Gordon Brown's ability to finance his current spending plans, which are about to reach the same percentage as we would have in Scotland. However, the difference is that this is a long-term problem for Scotland. Over the past few years, the UK as a whole has had a surplus and indeed, under the first few years of the Labour Administration, has been repaying debt.

Members have already referred to one clear example of the divide at the heart of SNP policy. In the chamber on 12 March 2004—he restated this today—the tartan Tory, Jim Mather, pledged trickle-down economics and called for cuts in tax, business rates and water tax. Here is a man who could clearly climb into bed with the Tories. However, a week later, Christine Grahame put forward the socialist option, saying that we need to raise taxes and redistribute wealth in Scotland. For obvious reasons, this time I will make no reference to the Tories. That example demonstrates the confusion and contradictions that lie at the heart of SNP economic policy.

Of course, the SNP now has a big new idea for the general election: its so-called oil windfall fund, which is similar to Norway's fund. According to the leader across the sea, Alex Salmond, it will be the answer to all Scotland's ills. In a press release, Mr Salmond claims that, within a few years, the fund will keep on delivering revenue, better hospitals and more schools and roads for Scotland. However, speaking in Washington DC, the chief of the fiscal affairs department at the International Monetary Fund said that having an oil fund makes no difference to a Government's ability to spend on public services and that using such funds for public services inevitably leads to start-stop initiatives that damage the economy and to services being cut. In other words, no one—especially an independent Scotland with a recurring fiscal deficit—can use an oil fund to fund hospitals, roads and schools.

Photo of Alex Neil Alex Neil Scottish National Party

I should clarify for the member's benefit that the oil fund will fund capital investment, not the current provision of services. It will fund long-term investment for future generations, which is why we call it a future generations fund.

Photo of George Lyon George Lyon Liberal Democrat

Using oil revenues to create such a fund would make the current deficit of more than £4.4 billion even bigger and would mean more cuts to public expenditure. Even Mr Neil should be able to work that out for himself.

The real choice in the debate is between the coalition and the Tories, who are at least honest enough to argue consistently for tax and public spending cuts. The Labour-Liberal coalition stands for investment in transport, skills and the communication infrastructure, which is what the five major business representative bodies called for in their 2003 manifesto. The coalition Executive is responding to business's needs, which is why the real choice is to vote for us, not for the Tories' cuts.

I support Jim Wallace's amendment.

Photo of Alex Johnstone Alex Johnstone Conservative 11:38 am, 3rd February 2005

Like all debates on the economy, this one has been interesting. As ever, because of the size of the subject, it is necessary to concentrate on a few specific issues and the SNP's motion helps us in that respect by focusing on the North sea oil industry.

We have probably learned more in this debate about the policies of the SNP than about those of any other party. First, Jim Mather gave us what we have become used to—

Members:

Where is he?

Photo of Alex Johnstone Alex Johnstone Conservative

Yes—where is Jim Mather?

Jim Mather once again explained how taxation would be reduced and development encouraged. However, he has not yet addressed the problem that exists in his party and that causes great fear on this side of the chamber. If such levers were available to the party that sits on the SNP benches, we would see massive—indeed, excessive—expenditure without the ability to raise resources.

One theme of the debate—that everything can be financed because it is Scotland's oil—has emerged from the dim and distant past. I wonder why we have not heard that for so long. Perhaps it is because oil prices were depressed for many years and, as a result, the argument could not be wheeled out that we could finance our nation on the basis of oil reserves. But oil prices are high again, and what do we get? We get an SNP debate that is predicated on the notion that high oil prices can once again justify an independent Scotland. If that is not opportunistic, what is?

We have also learned, in a theme that has run through the debate—I was going to mention some of the people who raised it but there were so many that I cannot—about the SNP's adopted practice of comparing Scotland to other successful small countries. The problem is that Europe—and for that matter, the world—now has such a large range of successful small countries, each of which occupies its own niche, that the SNP can happily compare Scotland to any one of them, depending on what it expects to achieve by its argument. If the SNP wants to argue for high growth, it picks a small country that is coming from a position of low development and therefore naturally assumes to produce high growth—a country such as Ireland or Estonia. If it wants an example of a wealthy nation with oil reserves, of course it picks Norway.

The problem is the ease with which the SNP can find an individual country that suits each individual argument, because it is just as easy for those of us on this side to come up with an argument to undermine the SNP's argument. For example, the SNP does not like the idea that a country such as Finland has developed a nuclear industry, but it did not mention that in last week's debate on energy reserves.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I thank the happiest man in the Parliament. I invite him to consider that the fundamental difference between us is that we aspire to emulate the successful small countries but others wish to compare us to, and track, the unsuccessful small countries in the world.

Photo of Alex Johnstone Alex Johnstone Conservative

My message to Stewart Stevenson is that the selective choosing of the country to which to compare ourselves can be used to prove Mr Stevenson's case, to prove the Executive's case, and to prove any case at all. The SNP's arguments are therefore undermined. They are unjustified and should not be brought to this chamber because they have been exposed. That has been all too obvious in the debate.

Photo of Phil Gallie Phil Gallie Conservative

We have heard a lot about small countries, but how about the larger countries and the federations? This debate is based on oil, but if we consider part III, title III, chapter III, section 10 of the European constitution, on energy, does Mr Johnstone agree that this whole debate about oil revenues is absolutely worthless?

Photo of Alex Johnstone Alex Johnstone Conservative

I acknowledge Phil Gallie's remarks and I read that chapter every day. Phil is a man with a great understanding of the European constitution and we would all do well to agree that he is right when he says that we should not sign it.

Before I come to the end of my speech, I want to run through one or two other points that were made. I will run very quickly past Shiona Baird's suggestion that waist measurement should be an indication of inner happiness. I am proof of that if it was ever required.

We must remember that the debate has largely been predicated on Scotland's oil reserves. However, anyone who knows the north-east should know that the benefit of the reserves is not simply the oil, but the companies that are based there. The real wealth is the expertise and technology that have been developed. We can therefore talk about renewable energy and dealing with climate change because those very companies—the major international oil companies with operational headquarters in the north-east of Scotland—are all working to achieve even the aims that Shiona Baird has described today. The contribution of those companies to the economy is enormous.

Photo of Alex Johnstone Alex Johnstone Conservative

I am afraid I cannot, for time.

We must also remember that if we are to go forward as a successful nation we must do so on the basis of political stability. It is from such stability that companies derive the confidence to base so many of their jobs here in Scotland. The SNP's suggestion that we can solve our problems by becoming independent and throwing ourselves on the world as a new small nation would, unfortunately, undermine the very success that this country has been capitalising on for the past 30 years.

I support the amendment in the name of Murdo Fraser.

Photo of Allan Wilson Allan Wilson Labour 11:45 am, 3rd February 2005

Alex Johnstone is absolutely correct to mention the nationalists' pick-and-mix strategy of choosing small countries and then choosing from their economies the bits that they like and ignoring the bits that they do not. One would think that they would at least have had the common sense to choose two countries that have enjoyed economic growth in the past quarter, rather than choosing Ireland and Norway, two countries with negative growth. Scotland's growth rate of 0.9 per cent is, of course, twice the UK's growth rate over the same period.

We could bandy statistics all day, but I agree with Shiona Baird, Mark Ruskell and others—the debate should be about vision. Although we are debating a nationalist motion, it is appropriate that we examine the Executive's vision for our economy. Our vision is one in which we encourage ambition, reward success and open up opportunity for all. It may be a retro reference, but that means re-igniting Scotland's enterprising spirit.

We have put growing the economy at the forefront; it is the number 1 priority of the Scottish Government. However, I say to Shiona that it is not growth at any cost. It should be growth that encourages people to make the best of themselves, to make the most use of their talents and to strive for opportunity, and it must respect the wider environment. That is fundamental to sustainable development.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

How do we measure the costs?

Photo of Allan Wilson Allan Wilson Labour

As Mr Ruskell knows, we have a three-pronged strategy that certainly favours economic development, but that also pays regard to wider environmental impacts. It also seeks to reduce the opportunity gap. We have targets for each of those objectives.

Our vision links growth in our economy with the regeneration of our neighbourhoods. It is about closing the opportunity gap between the affluent and the disadvantaged in our society, and about creating a modern, enterprising Scotland. In that context, there are clear dividing lines between this Executive and our opponents.

The Tories argue for growth at any cost, at the expense of economic stability. They want to support the private sector irrespective of the social consequences of their actions. The SNP, by contrast, wants an expensive divorce from the rest of the UK. That would put the economic stability to which I referred at serious risk. It would create uncertainty in the economy—Kenny MacAskill did not answer the question that I put to him—and it would almost certainly mean raising taxes, hitting hard-working families in the process.

Our relationship with the rest of the UK is key to our vision. Our vision complements the success of the UK economy. That is the national context in which we work. Thanks to our partnership with the Government at Westminster, unemployment in Scotland is at an all-time low and British inflation is the lowest it has been for 20 years.

Photo of Alex Neil Alex Neil Scottish National Party

Unemployment is not at an all-time low.

Photo of Allan Wilson Allan Wilson Labour

Alex Neil says that it is not, but unemployment is at an all-time low in Scotland as a consequence of the economic stability that we have produced. We have the lowest mortgage rates for 40 years, which saves mortgage payers an average of more than £3,400 a year. We are seeing the longest period of sustained growth since records began.

Photo of Frances Curran Frances Curran SSP

Would the minister agree that, although the statistics are all very nice, we now have a bigger gap in inequality? How does the minister explain that?

Photo of Allan Wilson Allan Wilson Labour

Our policies have led to an increase in personal wealth. I have said that one of our objectives is to ensure that the gap between the rich and poor in society is closed and that we provide opportunity for all. One of the principal means by which we sought to close that gap was, of course, the introduction of the national minimum wage. That has been welcomed the length and breadth of the country—except by the nationalists and the Tories.

The prospects for the economy in 2005 are positive. Business surveys on the Scottish economy predict that output and employment in both the service and manufacturing sectors will increase and independent forecasters predict that there will be above-trend growth this year and next.

A strong, growing, vibrant and inclusive economy is crucial for all Scots at all stages of their lives. I accept that if we are to take a medium and long-term view, we need to have the right economic strategies in place. Our economic strategy has been informed by the framework for economic development in Scotland, which is based on the understanding that economic growth is primarily determined by the success of enterprises in developing new products and new processes, gaining access to new markets, discovering new sources of supply and creating new organisations for economic activity that can compete effectively both domestically and throughout the world. I draw that to Frances Curran's attention. Although Government can make a contribution, it is the dynamism of the private sector that creates the wealth that we can then distribute.

I want to refer to the Norwegian petroleum fund that is mentioned in the nats' motion.

Members:

The nats?

Photo of Allan Wilson Allan Wilson Labour

It is a retrospective term from the 1970s.

The Norwegian petroleum fund helps with the management of fiscal policy; the income from it is designed to be the central Government's net cash flow. That is okay when one is running at a surplus—when the income from oil is greater than the level of expenditure—but, as we all know, here in Scotland we run at a deficit. Instead of proposing to set up a fund with a surplus, the SNP is proposing to set up a fund with an overdraft.

Photo of Allan Wilson Allan Wilson Labour

My concluding point is that, for nearly 20 years, the problem was not that there was not a Scottish Government, but that there was not a Labour Government. That was the choice that the SNP made in 1979 and it should never be allowed to forget it.

Photo of Trish Godman Trish Godman Labour

No. "In finishing" would be more appropriate.

Photo of Allan Wilson Allan Wilson Labour

The fact that the SNP is trundling out the argument on Scotland's oil says to me that it has nothing much to say.

Photo of Alex Neil Alex Neil Scottish National Party 11:53 am, 3rd February 2005

The entertainment value is always exceptional when the Deputy Minister for Enterprise and Lifelong Learning speaks.

The debate has been very interesting. Jamie McGrigor told us how Inverness has been booming since Fergus Ewing became its MSP. Duncan McNeil brought Marx into a debate on the Scottish economy; unfortunately, he got the wrong one. He was referring to Karl, but he sounded like Groucho. Mention has even been made—by Stewart Stevenson—of the Isle of Man space programme. All I can say is that if the Isle of Man manages to send a man to the moon, he will meet the Green group of MSPs while he is up there. In his opening speech—which was perhaps not one of his finest—the Deputy First Minister told us a lot about his trip to China last week. It must have been the slow boat that took him there.

To begin, I will deal with the nonsense of saying that Scotland's economic performance compares favourably with that of similar small countries. George Lyon told us that we are outperforming other small countries. That is nonsense. The most comprehensive index of countries' economic performance is produced by the United Nations development programme. It shows that Norway—which is celebrating 100 years of independence this year—is at the top of the list of the 20 countries with the best economic performance not just in Europe, but in the whole world. It has been claimed that the Norwegians' oil fund of £90 billion has been mismanaged. I wish that we had a mismanaged £90 billion in our bank account. Sweden is second on that list and is followed by Australia, Canada and the Netherlands. If we go down the list, the UK is in 12th place and we get to more than 20 countries before we get to Scotland. The idea that we are performing well as a small country is a total myth.

Photo of Murdo Fraser Murdo Fraser Conservative

I am grateful to Mr Neil for giving way. Does he acknowledge that, for 40 years post-independence, Ireland's economy was in decline? Does that not prove that, rather than constitutional change or independence, we need a change of policy?

Photo of Alex Neil Alex Neil Scottish National Party

Scotland is in a completely different situation because we have indigenous resources the like of which Ireland never had. We have 90 per cent of the UK's oil reserves, 50 per cent of the gas reserves and 300 years of coal reserves. Although we have a small population, we have some of the finest universities in the world. The reason why a third of our people are living on the poverty line, in spite of the fact that we have all that potential wealth, is that unionist Labour, unionist Liberals and unionist Tories have mismanaged Scotland's resources.

Photo of Alex Neil Alex Neil Scottish National Party

I will give way in a minute because I always enjoy the entertainment value.

Members should not just believe me. They should not take it from the SNP that Scotland's resources have been mismanaged; they should take it from the Scottish Executive's own agency, Scottish Enterprise, which commissioned a report from a consultancy called Local Futures. Although it received the report in August, for some reason it did not put it on the website until December, when we were all going off on our Christmas holidays. When the Executive was asked why the report did not appear for two months, an anonymous spokesman said:

"Our knowledge management team produces stuff like this all the time and people often don't hear about it until someone, well, stumbles across it."

We are talking about what is supposed to be a smart, successful Executive.

According to The Herald, the report says that Scotland continues to lag behind the rest of the UK in both earnings and employment rates. The report warns:

"This low-value service bias combined with a large public services sector is not likely to produce a globally competitive knowledge economy in Scotland."

It also says that Glasgow, which has 10 Labour MSPs,

"has a powerful base of knowledge-driven industries and public services, but it is also characterised by a high level of skills poverty and social polarisation".

The Executive should not tell us that everything in the garden is rosy. To find out that that is not the case, we need only look at the article in yesterday's edition of The Herald that had the headline, "Lives lost: Scots children who go straight from school to nowhere". The Executive does not even know whether 35,000 youngsters in Scotland are in employment, training or education, so it should not tell us about success.

A few months ago, a Royal Bank of Scotland report pointed out problems with the company base in Scotland. We are far too reliant on a small number of sectors and a small number of companies. I am sure that members of the Executive will have read that report.

Photo of Phil Gallie Phil Gallie Conservative

The SNP's motion is based heavily on the idea of Scottish ownership of the oil industry. Although Professor Sir Neil MacCormick once argued that the UK's oil belonged to Scotland, he recognises that under independence it is unlikely that that oil would be considered to fall within Scottish waters, as they are currently defined. What does Alex Neil have to say to that?

Photo of Alex Neil Alex Neil Scottish National Party

First, Neil MacCormick did not say that. Secondly, all the legal opinion—including unionist legal opinion, such as that of the late Lord Mackenzie-Stuart, a Tory who was chairman of the European Court of Justice—agreed that 90 per cent of the oil was defined as being in Scottish waters. It is not a matter of politics, but a matter of legal fact that it is Scotland's oil and will remain so. In the 1970s, I argued for an oil-sharing policy between England and Scotland. I still argue for an oil-sharing policy, but one with a slight difference: London has had its share and it is time that we in Scotland had ours.

George Lyon referred to a Scottish Parliament information centre paper on the Scottish economy's performance, but I will refer to the latest SPICe paper on the level of spend on research and development in Scotland. Scotland is the region in the United Kingdom with the fourth-lowest business expenditure on research and development. When the Deputy First Minister was asked what he would do about that at the Enterprise and Culture Committee, he said, "I don't know. I huvnae a clue. I've nae idea. We've nae answers." That was the message from a smart, successful Scotland.

Photo of Alex Neil Alex Neil Scottish National Party

I am in my last minute, and after that message, I suspect that Jim Wallace might be in his last minute, too. The message is straightforward. To borrow from William—not Jim—Wallace, there is only one way for Scotland to prosper, and that is through freedom.