Small Business

– in the Scottish Parliament at 2:30 pm on 7th March 2007.

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Photo of George Reid George Reid None 2:30 pm, 7th March 2007

The next item of business is a debate on motion S2M-5690, in the name of Jim Mather, on the economy and small business.

Photo of Jim Mather Jim Mather Scottish National Party

Members will know that we in the Scottish National Party want to create the conditions that will make Scotland more populous and more prosperous. Members of other parties will no doubt claim that that can be achieved by sticking to the current constitutional settlement, but we know that to be a false hope. We believe that those objectives can be achieved only through independence, which has energised and enriched many other small countries. It is our absolute conviction that such a resurgence is impossible in this union and that the proof of that is there for all to see.

Those who attended last night's meeting of the cross-party group on Scotland's financial future heard Professor Robert Wright show us the challenge that we face in relation to our population decline. He characterised the input of people from the European Union accession states as a blip and told us that the issue is urgent and that, if we do not do something about it, the solution will be neither easy nor obvious. However, he outlined a path that we can take, which involves economic powers and immigration powers.

More important than those issues, at least in the short term, is the need to focus on Scotland's economic growth. Even a poor measure such as gross domestic product, which overstates wealth retained in Scotland, shows us an interesting picture, especially when we cut through the deceit.

At the moment, the Executive indexes Scotland and England's GDP to equal 100 points as at 2003. It does not show much of a difference just now: the United Kingdom is at 105.3 points and Scotland is at 104.4 points. But if we clock the base back to 1998 and calculate it forward, the difference is six points; if we clock it back to 1985 and calculate it forward, the difference is 14 points; and if we clock it back to 1975, we see that Scotland is at 170 points and the UK is at 198 points, which is a difference of 28 points. That understates the position, as can be seen by examining other supportive data, such as VAT registrations.

Between 1999 and 2006, Scottish VAT-registered businesses grew at a level of 4 per cent, compared with 9.5 per cent in England, 7.1 per cent in Northern Ireland and 4.4 per cent in Wales. During that same period, Scotland's share of the UK population of businesses dropped to 7 per cent, even though we have 8.5 per cent of the population.

The Scottish people have a compelling rationale for putting the SNP in power to sort that out and to get Scotland back on the right track.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The problem is that people do not know which SNP to put into power. Is it the SNP of Jim Mather, who wants to cut taxes, or the socialist republic SNP of Christine Grahame, who said:

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

Photo of Jim Mather Jim Mather Scottish National Party

We will raise taxes by growing the economy. The member should read his newspapers. If he had read The Scotsman five months ago, he would have seen the editorial that said that the SNP's blend of enterprise and social democracy could be a winning formula. I would go further and say that it will be a winning formula. We should not take lessons from the Liberal Democrats, who dot around the political spectrum.

Photo of Allan Wilson Allan Wilson Labour

Jim Mather talks about raising taxes by growing the economy. By how much will he grow the economy to fill the £11 billion gap that is the differential between the taxes that are raised in Scotland and the amount that is spent on public services in Scotland? How will he fill that black hole?

Photo of Jim Mather Jim Mather Scottish National Party

The minister wears his fantasy like a badge of pride, which it is not.

If the calculations included our oil, a proper allocation of civil service jobs and defence spending, and the fact that people are cross-border trading into Scotland with no corporate representation or headquarters here, we would see that Scotland's economic growth can exceed that of any of the small countries around about us.

A native of Edinburgh, Professor John Kay, who wrote "The Truth About Markets: Why Some Countries are Rich and Others Remain Poor", tells us that countries that have embedded institutions, legal systems, banking, local government, good infrastructure, health and education are predisposed to be wealthy, especially if they share borders with other wealthy countries and do the right things. The Executive has been doing the wrong things. We are going to do the right things. We will take things forward.

Photo of Murdo Fraser Murdo Fraser Conservative

Will the member tell us how the SNP's plans for a local income tax of 6.5 per cent, which would be paid on the profits of every unincorporated small business in Scotland, would help to grow the economy?

Photo of Jim Mather Jim Mather Scottish National Party

If the member listened to the Institute for Fiscal Studies, which tells us that the rate will be about 3 per cent, he would perhaps copy our policy on that, just as he copied our small business policy.

We intend to give Scotland a unifying worthy aim that will link everyone in Scotland, including Scottish Water, the Scottish Environment Protection Agency and the rest of them. Our objective is to have an ever-increasing number of working people in fulfilling and rewarding work in Scotland. We think that that will unify Scotland, and the big token that we are putting down now is the practical step of our small business bonus scheme, which will take 120,000 businesses out of the rates net—those with a rateable value of less than £8,000—and give graduated relief for those with rateable values up to £15,000. It will invigorate the quiet parts of our towns and cities and provide a lifeline and an important sign of hope to rural Scotland.

That step, like our other practical steps on procurement and more cohesive support for small businesses, is a signal of what else we will do when the Scottish people enable the Parliament to claim more powers and roll back the adverse trends. We will adopt and customise good ideas from elsewhere. That will encourage co-operation and competitiveness in Scotland in pursuit of our worthy aim. After all, Jean-Philippe Cotis, the chief economist of the Organisation for Economic Co-operation and Development says that a failure to converge is a failure to learn. Scotland and its people have some rewarding and life-enhancing converging to do.

We will aim to achieve a 4 per cent growth rate. We will do that by being empowered. We will follow the lines of John Kay and his advice and we will make the Scotsman editorial come true by delivering enterprise and social democracy in taking Scotland forward.

I move,

That the Parliament recognises the need to make the Scottish economy and hence Scottish businesses increasingly competitive and therefore welcomes the SNP's Small Business Bonus Scheme, which will remove 120,000 small businesses from eligibility to pay business rates and reduce the rates burden on a further 30,000 small businesses by either 25% or 50%, thereby increasing small business viability and bringing increased vibrancy and job opportunity to cities, towns, villages and rural Scotland.

Photo of George Reid George Reid None

I call Allan Wilson, to speak to and move amendment S2M-5690.3. [ Interruption. ]

Photo of Allan Wilson Allan Wilson Labour 2:37 pm, 7th March 2007

The fact that I am being attacked before I have said anything is a badge of pride that I wear in the chamber.

In the five minutes that are available to me, it would be impossible to scotch all the myths that we have just heard on the Scottish economy and, indeed, the United Kingdom economy. Today's debate should focus on small businesses. I thought that its purpose was to focus on the importance of small businesses to Scotland's growing economy. It is important to have the debate in the wider context in which the Scottish economy is set. I do not dispute that for a minute. It is important to have a stable environment in which Scottish businesses, large and small, can thrive.

After decades of instability, we have achieved sound economic management, which has brought us unprecedented stability against which we can pursue the necessary changes that are critical to Scotland's success. Gone are the previous Administration's days of boom and bust, which afflicted so many of our communities in the 1980s and 1990s. The Scottish economy is now in a strong position.

Photo of Jim Mather Jim Mather Scottish National Party

We are in a global boom at the moment, but all Scotland can muster is 2.3 per cent, so yet again we are working on low growth. Does the minister equate low growth with stability?

Photo of Allan Wilson Allan Wilson Labour

What I equate with stability are the fundamentals of economic growth. That view is held not simply by the Labour and Liberal Democrat Scottish Executive but, more important, by the business community. If the member asks any business, large or small, anywhere in Scotland, what the business community thinks is critical to economic growth in this country, he will receive a one-word response: stability. With all due respect to Jim Mather, businesses do not want the instability that he promotes at every cut and thrust.

Photo of Allan Wilson Allan Wilson Labour

No. I will carry on, if the member does not mind.

We have almost the lowest unemployment since quarterly records began—the rate is below the UK rate for the first time for generations. The most recent GDP data indicate that during the year to the third quarter of 2005, the Scottish economy grew by 2.3 per cent. Growth has been above the long-term annual average for nine successive quarters. Growth in gross weekly earnings is higher than the UK rate as a whole in three of the past four years and productivity growth is above the UK rate in each of the past three years. Who can dispute that the Scottish economy is strong and growing?

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The minister is fond of saying that Scotland is being subsidised by the rest of the UK to the tune of £11 billion. I do not accept that figure, but the minister clearly does, so will he say whether that gap is being closed as a result of the economic success that he describes? When will his policies bring the gap down to zero?

Photo of Allan Wilson Allan Wilson Labour

Unlike Mr Morgan, I am not a nationalist who thinks that the gap necessarily requires to be closed—[ Interruption. ] Members of the Scottish National Party are laughing, but Scotland benefits from the devolution dividend that the £11 billion expenditure represents. SNP members are fond of promoting the idea that taxes are too high and should be cut so that we can match Irish levels of social services spend, but do the Scottish people want the levels of spend that exist in Ireland, where people have to pay to see their doctor? Do they want to follow the Norwegian example, in which the basic rate of income tax is well beyond the rate in Scotland? SNP members cannot have it both ways: they cannot promote a low-tax economy and high social services spend. The £11 billion that they regard as a drag on economic growth benefits this country, because it helps to fund the levels of social services that we require. We are able to provide a free health service out of the UK Exchequer as a whole. That is the devolution dividend.

We want to—and we can—do more. We want to help Scottish business achieve the competitive edge that is necessary to succeed in an increasingly dynamic global economy. That is why we took the decision to halve the rate poundage gap with England this year, which benefits not only small businesses, but all businesses, in Scotland. We are determined to build on that, which is why we announced our intention to go further and cut the poundage to the level in England on 1 April 2007. The new rate for Scotland represents a full 2p cut in rate poundage since 2005-06. The average non-domestic ratepayer in Scotland will pay around £800 less in 2007-08—a reduction of around 9 per cent—as a result of our policy of equalisation with England. That will give Scottish businesses a competitive edge.

I noticed recently that the SNP proposes to shelter small and medium-sized enterprises from open and genuine competition for public procurement contracts. The SNP set a target of 20 per cent. That would represent a cut in the current level of participation by Scottish SMEs in public procurement. It demonstrates the level of the SNP's ambition in relation to public procurement contracts for small and medium-sized enterprises—the SNP actually wants to cut their rate of participation in public procurement.

As part of our on-going work, the Executive is gathering data on procurement spend on goods and services across the public sector. That data-gathering exercise is far from complete, but preliminary analysis indicates that spending with SMEs in Scotland is well in excess of the SNP's proposed target. I suggest that SNP members send their researchers back to think again.

Far from being complacent, we believe that the decisions that we have taken are vital to growing a successful, dynamic and stimulated economy. When we are returned after the election, as we undoubtedly will be, we will make further proposals for growth in the SME sector, to build on the economic growth and the success that has already been achieved here in Scotland.

I move amendment S2M-5690.3, to leave out from "to make" to end and insert:

"to continue to grow the Scottish economy and to support the competitiveness of Scottish businesses; welcomes the steps that the Scottish Executive has taken to achieve that by listening to business and reducing the level of business rates; supports measures to encourage innovation, including supporting links to Scotland's science and research base and easing access by business to public sector contracts; welcomes support from Scottish Enterprise and the Business Gateway through investing in a highly skilled workforce in Scotland, such as through the modern apprenticeships scheme, and increasing investment in the infrastructure necessary to build a modern competitive economy."

Photo of Murdo Fraser Murdo Fraser Conservative 2:46 pm, 7th March 2007

I welcome this afternoon's opportunity to debate the future of the Scottish economy and, in particular, support for small businesses. The debate is timely as, only on Monday, I launched our Scottish Conservative business manifesto, which proposes a range of measures to benefit small businesses in particular. We have produced a fully costed package for annual business rates reductions of £150 million, aimed at small businesses. A small business with a rateable value of £7,000 or less would receive a 100 per cent discount on its rates. It would pay nothing at all. There would be a sliding scale of discounts for businesses with rateable values up to £15,000.

I know that such measures would deliver a real saving to more than 100,000 small businesses across Scotland. Small businesses have been struggling with the weight of business rates, water charges and overregulation over the past 10 years of Labour government at Westminster and over the past eight years of the Lib-Lab pact in Edinburgh. We should never forget that it was Jack McConnell who, when he was Minister for Finance, raised the business rate in Scotland above the rate that was payable south of the border—a measure that has cost Scottish businesses more than £900 million in additional taxation.

Our proposals do not stop there. We are also planning a £20 million annual town centre regeneration fund, which would be available for local communities throughout Scotland to bid into to pay for much needed improvements to, for example, car parking, signage or toilet facilities—or to pay for a shop-front scheme, for instance. We all know that many of our traditional town centres are suffering because of the growth in out-of-town retail parks and the construction of many new supermarkets, which are cheap and convenient and have free parking on their doorstep. We have to start levelling the playing field and breathing life back into our traditional town centres. That is exactly what our policies will do.

There are many communities in my region—towns such as Kinross, Crieff, Blairgowrie, Brechin and Kirriemuir—where a package of business rates cuts for small businesses and a town centre regeneration fund would go a long way to reduce the number of empty properties and "to let" signs, which seem to be a feature of too many small town centres.

Our proposals go even further. We are determined to tackle red tape and to bring in sunset clauses on new legislation. We will charge all quangos such as SEPA and Scottish Natural Heritage with an overriding obligation to promote economic growth. All too often, it is the actions of those quangos that hold up and hinder businesses that are trying to grow.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

If the Conservatives are so against quangos, why does Murdo Fraser's amendment propose a new quango—a dedicated skills agency? How much would it cost? How many employees would it have?

Photo of Murdo Fraser Murdo Fraser Conservative

It will have a budget of £170 million. We are proposing to transfer away from Scottish Enterprise—which is a largely discredited organisation that deals with economic development—its remit for skills and training. We propose also to take Careers Scotland, which is currently an orphan organisation that nobody wants to have, and create a new skills agency that is focused on upskilling the economy. The current Scottish Enterprise budget for dealing with skills and training would be transferred over to that new agency. That is a sensible suggestion that I hope the Scottish National Party will be prepared to support—if it gets round to costing its own manifesto.

We will bring in new procurement rules to create a single point of entry to the public sector for businesses, and we will examine the application of European Union tendering rules to ensure that small businesses and social enterprises get a fair slice of the cake.

One key difference between our plans and those put forward by the SNP is that, unlike it, we would not penalise small businesses with the introduction of the ludicrous local income tax. We need to remember that the vast majority of small businesses are unincorporated, so they pay income tax rather than corporation tax on their profits. Every penny of their profits is taxed at income tax rates and would be subject to the 6.5 per cent local income tax proposed by both the SNP and the Liberal Democrats.

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Neil is now going to justify that outrageous tax grab against small businesses.

Photo of Alex Neil Alex Neil Scottish National Party

Not at all—Mr Neil is simply going to ask two straightforward questions. First, how are the Conservatives going to fund the council tax rebate to pensioners that they have promised? What are they going to cut to fund it? Secondly, in the Conservatives' fund for roads—a key part of their regeneration package—they have set aside £15 million to take out bends and straighten roads. How many bends will they be able to straighten for £15 million?

Photo of Murdo Fraser Murdo Fraser Conservative

We have made it perfectly clear where the money to fund our pensioner council tax discount will come from. When we move Scottish Water out of the public sector and create it as a mutual company, we will save the revenue subsidy that is currently paid. It is interesting that we have talked about mutualising Scottish Water for years and that we have been derided for being out of touch and extreme in proposing it, yet we now hear that the Liberal Democrats are joining us and support our policy. Is it not reassuring that Ross Finnie—the Scottish Executive minister responsible for Scottish Water—has now adopted our policy on Scottish Water? That proves that the Conservatives are the trend setters in Scottish politics.

Mr Neil did his best to deflect us from talking about the local income tax, but he is not going to get away with it. The SNP is proposing uncosted plans for rates cuts for small businesses and proposing to take the money back through imposing a local income tax. The SNP and the Liberals would clobber small businesses with tax rises. They cannot be trusted.

Photo of George Reid George Reid None

You have a maximum of about two minutes.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

Have the policies that Mr Fraser is outlining been met by an explosion of indifference across the country because the Tories have said that they have no desire to implement any of them after the election in May? They do not want any role in government.

Photo of Murdo Fraser Murdo Fraser Conservative

Nobody can prejudge the outcome of the election. Who knows where we will be after it? The Conservatives may be sitting here with a much expanded group and—as everybody is starting to accept—holding the balance of power. Let us not rule anything out. Who knows what may happen?

We already see other parties taking their lead from us. I am pleased that Mr Purvis and his party have taken our lead on Scottish Water, and I am pleased to see other parties reacting to the lead that we have given on drugs policy. The Conservatives are setting the agenda. Even the SNP is following, with Alex Salmond talking about procurement on Monday. I am delighted that he has read our manifesto on procurement and is taking some lessons from us. It is encouraging to see that; it is just a shame that he will not be here after May to implement any policies.

Small businesses in Scotland have been neglected by government at all levels for too long. It is time to give them a boost. They are the backbone of our economy. For too long they have borne the brunt of high rates, high water charges, poor transportation and excessive regulation. It is time to redress that balance, which is exactly what the Scottish Conservatives will do. I have pleasure in moving my amendment.

I move amendment S2M-5690.1, to leave out from "welcomes" to end and insert:

"condemns the proposals put forward by the SNP and the Liberal Democrats for a local income tax which would represent a significant new financial burden for the many small businesses that are unincorporated; further condemns the policies of the Lib-Lab pact which have done so much to harm business, especially the decision taken by Jack McConnell MSP to abolish the uniform business rate in 2000 which has cost Scottish businesses an extra £900 million, and welcomes the fully costed proposals put forward in the Scottish Conservatives' business manifesto, including the abolition of business rates for all firms with a rateable value under £7,000, a tiered rates cut for all firms with a rateable value of between £7,000 and £15,000, a £20 million annual town centre regeneration fund, a dedicated public procurement unit to cut through the bureaucratised process of approval when businesses are tendering for public contracts, five-year sunset clauses on all primary legislation, a presumption against gold-plating of EU regulation, a new dedicated skills agency to work with business, schools and colleges to tackle the skills shortage, extra investment in the road network to prioritise improvements on key links such as the A9, A75, A96 and A82, and the building of a new Forth crossing, a package which will deliver real benefits to Scotland's small business and lead to higher economic growth."

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat 2:54 pm, 7th March 2007

I find it interesting that the SNP motion is on small businesses rather than the large business sector and that Jim Mather provided a pretty rosy-eyed romp through the few statistics that suit the SNP vision but ignored the multitude that pick up on the big holes in the SNP view.

We know that big business has seen through the SNP hype. When the SNP could not answer the simple questions about the economic impact of Salmond's separate state, the Confederation of British Industry was understandably as dissatisfied as the rest of us. Alex Salmond's response was that the CBI should butt out of politics. As the representative organisation of some of the most influential companies in Scotland—indeed, some of the most influential companies in the world—the CBI has every right to seek information and state its views on how a supposedly prospective Government wants to direct the economy in which companies work.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

No. If the SNP had not shoehorned two debates into the time that is normally allowed for one, we would have had more time to debate the issues properly.

Of course, if the CBI had agreed with the SNP on the creation of a separate state, we would never have heard the end of it. Alex Salmond is fond of name dropping the Royal Bank of Scotland as a former employer, to try to boost his economic credentials, but the SNP accuses that bank of mounting a conspiracy as soon as it points out that his sums do not add up. Basically, the SNP's economic policies do not stand up to scrutiny, and its reaction in attacking the CBI was unacceptable and immature. That is no way in which to debate the future of Scotland's economy.

The unanswered questions on the economy are not just questions for big business. Increases in personal and business taxation, the level interest rates are set at, by whom they are set and the costs of a new pay-as-you-earn system will affect all businesses. It is interesting that Jim Mather did not answer the minister's question about the funding gap.

I am surprised that the Conservatives have at last come out in favour of the small business rate relief fund. When the rate relief package was announced back in 2000, Annabel Goldie pledged to abolish it. She said that it was no more than

"an exercise in gloss and spin" and that

"Scottish Conservatives are strongly opposed to any divergence away from the principle" of the unified business rate. The Conservatives are U-turning yet again—although, because they are opposed to being in government, as Mr Purvis pointed out, there is little point in noting their policies on business.

In government, the Liberal Democrats have made a difference for Scottish business. As the minister said, Scottish business rates and English business rates have equalised. A further cut in business rates to below English levels would give Scottish business a real competitive edge. Liberal Democrats want to make that happen.

Photo of Mr Andrew Arbuckle Mr Andrew Arbuckle Liberal Democrat

No. As I explained, SNP members should not expect to make interventions if they limit the time for their debates.

The Liberal Democrats will maintain the very successful small business rate relief scheme.

Cutting business costs is vital. Energy costs can be significant for small businesses. When a business installs microgeneration, which is supposed to cut its costs, its rateable value goes up, so it loses some of the money it might have saved. We would end that anomaly. Small businesses, which are the life-blood of local rural communities and were once a feature of every town and village in the country—the local corner shop, the post office, the butcher, the baker and the chemist—now battle to survive. We want to support those crucial local shops by allowing them to be exempt from business rates. That could make a huge difference to their overheads and give them a chance to invest in improvements and survive. Local authorities would be given the power to exempt essential local shops such as post offices from paying business rates. The Liberal Democrats will tackle excessive costs, regulation and inspections without introducing any of the uncertainty that is associated with separation and independence. That package of support would make a difference for Scottish business.

Photo of George Reid George Reid None

We move to the open debate. There is a bit of time in hand, so members may add a minute to their four-minute speeches if they take interventions.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party 2:59 pm, 7th March 2007

I want to be parochial and talk a little about my constituency of Banff and Buchan. It is approaching 20 years since Scottish National Party parliamentarians began to represent Banff and Buchan. The constituency provides a micropicture that illustrates what can be done when people put their trust in the SNP as a party and in SNP parliamentarians.

I will start with unemployment. In the first quarter of 1987—the last quarter in which the Conservative party represented the constituency—116 out of every 10,000 unemployed people in Scotland were in the constituency that is now Banff and Buchan. That figure is according to the offices that measure unemployment in Banff, Fraserburgh and Peterhead. Today, the equivalent figure is 92, which represents a 20 per cent drop in unemployment in Banff and Buchan relative to the rest of Scotland. I express the unemployment figures in that way because to do so takes account of the change in unemployment levels in Scotland as a whole and the change in the way in which unemployment is measured. The improved employment levels are the first indication of the success that Banff and Buchan has enjoyed since moving from Conservative to SNP representation.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I point out that the SNP was not in government at any level during that period. Aberdeenshire Council is run by the Liberal Democrats, the Scottish Executive is run by a Liberal Democrat and Labour coalition, and the UK Government is run by Labour. The SNP has had nothing to do with that success.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I am extremely grateful to Mike Rumbles for making my point for me. In the two other seats in Aberdeenshire—which were not represented by the SNP but were subject to exactly the same local council, Scottish Executive and Westminster Government regimes—unemployment relative to the rest of Scotland has risen rather than fallen. Therefore, the distinguishing feature of Banff and Buchan is its SNP parliamentary representation; the distinguishing feature of Mr Rumbles' constituency is its Liberal representation.

Similarly, although we are told that a deficit economy is good for Scotland because our good old pals in the south will bail us out, Banff and Buchan has moved to a position in which the average wage in the constituency is above the Scottish average. Previously, our average wage was below the Scottish average. We also have the second highest level of self-employment, whereas our levels of self-employment used to be much lower than those for the rest of Scotland. Finally, VAT registration in Banff and Buchan has not fallen at the same rate as it has in the rest of Scotland. The bottom line is that, in the most entrepreneurial constituency in Scotland, people have confidence that the SNP will represent them, promote their interests and deliver for small businesses as well as big businesses.

Banff and Buchan now has businesses that did not exist when SNP representation of the constituency commenced: for example, we have 650 people who work in the offshore oil industry for Score Limited, and 180 apprentices are being trained there. Our problem—which we would love to see in the rest of Scotland—is that we, in our SNP-represented area, do not have enough people to fill those good-quality jobs, which are paying the wages of people across Scotland.

I promised that I would be parochial and I have delivered on the first promise that has been made in this debate.

For VAT registrations, between 1999 and 2006 Scotland had a 4 per cent increase whereas England had a 9.5 per cent increase. That picture is repeated across our whole economy.

When the SNP runs things, things are run better—as in Banff and Buchan, so would it be in Scotland.

Photo of Malcolm Chisholm Malcolm Chisholm Labour 3:04 pm, 7th March 2007

I apologise for being two minutes late for the debate, which I had thought would begin at the usual Wednesday afternoon starting time of 2.35.

However, I managed to get the general drift of Jim Mather's opening speech, which Stewart Stevenson tried to back up. Their speeches showed three characteristics: first, they displayed the usual doom and gloom about the current state of the economy; secondly, they ignored all the action that is currently being taken to support small businesses in Scotland; and thirdly, they were completely silent about all the negative features of the SNP's economic policy and constitutional position.

In relation to so-called doom and gloom, this very week, as it happens, the Committee of Scottish Clearing Bankers' quarterly statistics were released. They show that the number of new business start-ups last year was up from 21,383—in itself a significant figure—to 23,468. In fact, over the past seven years the stock of small businesses in Scotland has risen by over 33,000, which is in keeping with the general economic good news that we have experienced during the years of the Scottish Parliament.

More than 210,000 people have entered employment since 1999, which gives us the second-highest level of employment in the European Union. Growth is significantly above the long-term average and above that of the United Kingdom in the past nine quarters. I hope that that serves at least partially to redress the general analysis of the situation that we had from the SNP and, to a considerable extent, from the Conservatives.

The Opposition parties were silent about the action that is being taken. I cannot go into the detail of all the support schemes that are available to small businesses, but among the grant schemes that we have are, for example, the small firms merit award for research and technology, or SMART, support for products under research, or SPUR, and SPUR plus, which are being improved and extended. Those schemes have already helped hundreds of small businesses over the past few years.

Partly on the back of the debacle of the SNP's public procurement announcement a couple of days ago, we know that 22 per cent of public contracts already go to small businesses. I am not sure where that puts the SNP commitment to reduce to 20 per cent the award of such contracts to small businesses.

We have a new model for the business gateway, a key principle of which is change that will make business support accessible to a larger number of businesses. We have a robust better-regulation agenda, which Scottish businesses are working in partnership with the Executive to deliver. I remind members that we will from April have a competitive advantage over English small businesses because of a change in the rate poundage. That is over and above the existing small business rate relief scheme, which is generous and is already helping nearly three quarters of small businesses.

Photo of Jim Mather Jim Mather Scottish National Party

If everything is so rosy, will Malcolm Chisholm explain why in the middle of a global boom, Scotland is forecast to grow at 2.3 per cent while Ireland grows at 6.6 per cent?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

As I said, the Scottish growth rate in the past nine quarters has been above the long-term trend. Even in an extended speech, I would not have time to go into all the obvious differences between the backgrounds of the Irish economy and ours.

I am the last person to stand here and say that everything is rosy. I want to do better. Of course we want to do better, so I will describe how we intend to do that. My party has robust policies for the election that will build on existing success, but it is not just the Government that must take responsibility. I was shocked by the news this morning—I am sure that members who saw it were, too—that women who start up small businesses appear to be charged higher rates of interest than men who start up small businesses. I was pleased that my Westminster Government colleague, Margaret Hodge, has said that she will address that issue vigorously in the next few days and weeks. We have to deal with various problems.

Small businesses have flagged up the key issue of skills shortages. That is why that is at the heart of our election proposals. We recognise that Scotland's top economic priority has to be learning and skills, which is why investment in schools and colleges is at the top of our agenda. There will be 100 skills academies, regional science centres and more flexible modern apprenticeships to meet the needs of small and medium-sized businesses. Skills do not seem to be a priority for the SNP; it makes the wrong things its priorities.

Were we to go along with the SNP proposal to offer further help with non-domestic rates to small businesses, that would cost £180 million. No doubt arguments can be made for that proposal, but we must again ask the SNP where, on top of all its other spending pledges, it will find that £180 million.

The success of the Scottish economy depends on greater openness, improved competition and more flexibility, but very many SNP policies run counter to those objectives. For example, Murdo Fraser was quite right to point out the effect that a local income tax would have on unincorporated businesses. Moreover, if the SNP wants to start talking about a tax of 3p in the pound, it will have to explain where the corresponding £1 billion of cuts will have to be made. In any case, its stated plans for a local income tax of 6.5p in the pound would be bad for small businesses and worse for all the individuals who work for or use them.

If the SNP believes in a competitive economy, why is it proposing to cancel the Edinburgh airport rail link and the Edinburgh tram project, which are fundamental to the city's economy? Why was it so opposed to planning reform, in spite of the fact that, before the Planning etc (Scotland) Bill was passed, its front-bench spokesperson was telling business groups something different? Why is it proposing in the long term a different regulatory regime for businesses in Scotland from the regime in England? Finally, why is it presenting policies that pose a direct threat to fundamentally important Scottish sectors such as financial services and life sciences, which are directly embedded in the UK market?

The choice before us in this debate—and, more fundamentally, in the coming election—is between maintaining stability and creating instability, between investing in skills and investing in statehood, and between building up Scotland and breaking up Britain.

Photo of Shiona Baird Shiona Baird Green 3:11 pm, 7th March 2007

I am grateful to the SNP for spending part of its debating time on a discussion of the role of small businesses in Scotland's economy.

We feel that it is impossible to overstate the economic and social importance of small businesses. Economically, the figures speak for themselves. The vast majority—98 per cent—of Scottish businesses employ fewer than 50 people, and small to medium-sized enterprises account for 41 per cent of business turnover and 52 per cent of all private sector employment. These businesses are at the base of the economic pyramid, so we ignore them at our peril.

Statistics apart, there is a very good reason for taking our small businesses seriously: most are firmly rooted in their local communities and have a vested interest in the long-term viability of the local economy as well as the larger Scottish economy. If a supermarket is not making money, it is closed down. Head offices do not care about the local area; all they care about is making money. However, a small business cares about the community and small businesses in many areas play an absolutely essential role in holding communities together.

How do we give small businesses the support they need and deserve? I agree that the system of business rates needs to be overhauled, but instead of supporting the solution in the SNP's motion, I argue that small businesses would benefit from a shift towards a more sustainable tax base, which is why we support a move away from business rates to land value taxation. Such an approach would immediately level the playing field between large and small businesses. Not only would LVT stop the practice of land banking—which might be why it has never received a fair hearing—it would also tackle the inequalities that flow from out-of-town developments with free parking and ensure that town-centre landlords make the most efficient use of their properties. There would be no more empty shops on the high street.

We can support our small businesses by ensuring that they receive a fair share of the public sector pie. The current public procurement system discriminates against small operators, many of whom do not even bother to tender for public contracts because they know that they have next to no chance of success. Under our proposed sustainable communities bill, the Greens would ensure that sustainable procurement was mandatory, which would help to support small local businesses that have a stake in Scotland's sustainable future.

We can also help small businesses by making the regulation that they work under fitting and appropriate to the size of business. For example, a waste management license fee is petty cash for a large waste company, but for a community recycling organisation it represents the difference between staying in business and going bust. All companies need to be governed and regulated effectively, but the current one-size-fits-all system is not doing our small businesses any favours.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The member keeps talking about sustainable business. Does that mean that she is in favour of economic growth?

Photo of Shiona Baird Shiona Baird Green

We have always maintained that economic growth is essential, but that it must be sustainable. When I say that, I am referring to the terms of the Brundtland definition of sustainability. If Mike Rumbles looks that up, he will find out exactly what we mean.

Photo of Shiona Baird Shiona Baird Green

Does the member not know the Brundtland definition of sustainability? I am sorry. [ Interruption. ]

Photo of Trish Godman Trish Godman Labour

You should be finishing now, Ms Baird.

Photo of Shiona Baird Shiona Baird Green

It is desperately disappointing that none of those members seems to know the Brundtland definition of sustainability, when the Scottish Parliament is supposed to be mainstreaming sustainability.

Photo of Shiona Baird Shiona Baird Green

Of course I do.

Scotland's future sustainability will rely on the ability of our small businesses to meet the challenges of a world that is scarred by climate change and hampered by resource depletion. In the future, local economies will be more important than national economies. Increasingly, we will turn to small businesses. We must acknowledge that and put in place measures that will ensure their long-term survival.

I will meet Mr Rumbles outside for cup of coffee, when I will tell him what he wants to know.

Photo of Fergus Ewing Fergus Ewing Scottish National Party 3:16 pm, 7th March 2007

In the intervening period, before the Greens take power in Scotland, when we are still able to use the internal combustion engine to drive up the A9, I urge members to visit the Tomatin Distillery Company Limited in my constituency, which is located conveniently off that road, 15 miles south of Inverness. I recently had the pleasure of visiting the distillery. At a meeting of Inverness churches thereafter, I was asked by constituents the question that is most frequently asked about independence and which is, I believe, the key question as far as a great many people are concerned. Can Scotland afford independence? Having just visited the distillery, I was able to give a different answer because I had found out that the value of the stock—including its value to the Exchequer—that is held in storage at that distillery alone is £640 million. The distillery is just off the A9, which will be lucky to have received 1 per cent of that figure for improvements, even though it is one of the most dangerous roads in Scotland, on which many people lose their lives. That sends a stark message—which the minister will now explain to us.

Photo of Allan Wilson Allan Wilson Labour

I am interested in the analogy that is being drawn. Can we assume from it that an independent Scottish currency would be tied to the whisky standard rather than to the gold standard?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

That is one of the minister's many suggestions that we will not take up.

Can members think of any other country in the world that has a sustainable industry, such as the whisky industry, which produces so much wealth, which is exported throughout the world and which has almost unparalleled opportunities for growth in the century ahead, as the people of the world become more able to afford our national product? Every country in the world would give its eye teeth for such a product.

The point that I am making is that Scotland has wealth in abundance, both in natural and human resources. At the beginning of this century, as we look forward to the next 100 years, we must ask ourselves what the nation most values. The answer is not oil—even though we still have it in abundance, to the tune of £6 billion or more a year—which was the gift of the last century, but it might well be water, natural resources or renewable energy, all of which Scotland has in abundance.

I turn from Tomatin to Trident, which, surprisingly, Mr Chisholm failed to mention in his tour de table, although he spoke about the alleged financial deficit that there would under the SNP. Of course, the UK runs a deficit every year. If we take Scotland's share of it and then add back the oil revenues, there is either no deficit or it is very small. The deficit argument is simply an attempt to scare the Scottish people out of their birthright, which is independence. We hear about the deficit—as members know, we hear about it all too frequently—because it is designed deliberately and calculatedly to scare Scotland out of the birthright that every other country in the world takes for granted.

One of the benefits of independence will be that we will be able to make the right choices. I have always thought that tolerance is among the many pleasing qualities of the good people of England. They have a lot to tolerate, given the number of Scots members in the Cabinet who are misgoverning their country, as they have in the past and will do in the future. No doubt, Mr Chisholm will agree that, instead of spending money on a replacement for the Trident system, we could spend it on all kinds of alternatives. The Trident costs were originally estimated at £15 billion; now, the figure is over £100 billion. The Government at Westminster is also considering investing £9 billion in the London Olympics—originally, the figure was £3 billion. We can see that the choices that Scotland will have made for it if we remain in the union will be simply the wrong choices. With independence, we will have the ability to decide how our money will be spent.

Photo of Karen Gillon Karen Gillon Labour

Does the member agree with the choice that was made by his SNP colleague, Angus Robertson MP, that any money that is saved from Trident should be spent on conventional defences?

Photo of Trish Godman Trish Godman Labour

You should be finishing, Mr Ewing.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I think that I have another minute, Presiding Officer. Mr Reid said that I would have six minutes.

Photo of Trish Godman Trish Godman Labour

He said five minutes, and you are at five minutes and 14 seconds. Please start to wind up, Mr Ewing.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I will wind up. The savings from not having Trident and the Olympics would be so large that they would, to be frank, more than cover any fiscal problems that we may have.

The SNP's plans for business rates will end eight years of complete hypocrisy from both Labour and the Liberals—a period in which we have had higher business rates than England, despite the minister's having talked in his opening remarks about a "policy of equalisation". If the Executive's policy was about equalisation, why have we had higher business rates for the past eight years? It is bare-faced hypocrisy and the minister knows it. When we take power in May, we will bring that to a close.

Photo of Frances Curran Frances Curran SSP 3:22 pm, 7th March 2007

I am a believer in honesty in politics, so I would not pretend that the Scottish Socialist Party's manifesto has been drawn up with the interests of small businesses at heart. Nevertheless, Parliament may be surprised to learn—as I was surprised to learn—that a number of the Scottish Socialist Party's policies chime with those that have been put forward by the Federation of Small Businesses. A number of our policies would benefit small businesses, but before I come to that I will say something about the emphasis on growing the economy.

I welcome the fact that Murdo Fraser has come round to our previous manifesto commitment to abolish Scottish Enterprise and to spend that £450 million better—although perhaps we will disagree about our priorities. However, there is a strategic problem with the debate on growing the economy, which is a question that nobody has answered. For whose benefit is that growth? The reality of globalisation of the world's economies means that the whole economy is skewed towards benefiting the big transnational corporations. The lack of regulation of those companies, which trample the planet, means that—not just in Scotland and the UK, but in many other countries—small businesses are held to ransom.

There is no better example of that than the stranglehold that the big supermarkets have over local producers. Property developers have a similar stranglehold in our town centres. It is almost as though every spare part of our cities and towns is being gobbled up by big companies for retail development or housing. That is capitalism—if we go along with untrammelled free-market capitalism, that is what we will get. Every other party here is in favour of deregulation and wants more deregulation of the big companies.

HBOS and the Royal Bank of Scotland continue to post record profits and cannot provide a bank in every town in Scotland, but local banks are one of the big priorities for small businesses—74 per cent of them say that a local branch is a priority, because otherwise they have nowhere to bank their cash and cheques. I would force banks to provide that service. Banking should be a social service; it should not just be about international free-market capitalism with its teeth bared. Local branches benefit local businesses enormously, so the question that members must answer is how we provide that for small businesses throughout the country. The vast majority of small businesses rely on their local area for sales. Only 13 per cent derive the majority of their sales from regional markets.

Internationally, the G8, the European Union, the World Trade Organisation and other bodies take the view that we need to prise open public services, because the public sector is an enormously lucrative market in which a lot of money is spent. A conscious decision has been taken, particularly by the WTO, to open up that market. Given that public services are local and are delivered locally, we might think that small businesses would have access to some of that money and some of those contracts, but although the Government's policies are prising open the public sector and those services, local businesses and local economies do not benefit because only 9 per cent of them can tender for public sector contracts. The other 91 per cent must give up that opportunity to multinationals and big business. They benefit from opening up the public sector—none of those policies benefits small local businesses.

My final point is on the Scottish Socialist Party's free public transport policy. I could not agree more with the policy of the Federation of Small Businesses, which has stated:

"A modern and integrated transport system fit for the 21st century is a prerequisite for economic growth."

I hope that many FSB members will vote for us on the basis of our policy of introducing free public transport throughout the country, which would benefit workers and businesses through reduced congestion. We have not given up on that sector yet and we will campaign for the votes of people in it during the election by explaining how our policies will benefit them.

Photo of Marilyn Livingstone Marilyn Livingstone Labour 3:27 pm, 7th March 2007

I am pleased to take part in this debate on the economy and small businesses. Small businesses need a strong and stable economy to thrive. Working with the UK Government, we have delivered and are continuing to do so. We have made growing Scotland's economy our top priority. For more than half a century, our biggest economic challenge has been unemployment, but that is being tackled. More Scots are in work today than ever before and Scotland is second top in the European employment league. Population decline is being reversed and the growth in Scottish standards of living is outpacing the average for all OECD countries and the average for the EU 15 countries.

Photo of Marilyn Livingstone Marilyn Livingstone Labour

I want to make my points.

Since the creation of the Parliament, 160,000 Scots have entered employment. Full employment is now not just a vague aspiration, but a realistic target that is within our grasp. Of course, small businesses play their part in that. Compared with 1999, an additional 19,000 people were employed in small businesses in 2006.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Does Marilyn Livingstone agree that it is entirely unacceptable that, in the past 25 years, Scotland has had the lowest growth rate in the European Union?

Photo of Marilyn Livingstone Marilyn Livingstone Labour

I am setting out the progress that Scotland has made. We are now second top in the employment league.

We must continue to make progress by investing in our key sectors, including life sciences, financial services and energy, all of which are strongly integrated in the UK market. We must move further and faster together. We are committed to ensuring that the conditions for business are fit for purpose, which is why we are investing in the necessary infrastructure and why we have made a commitment to a new crossing across the Firth of Forth—I am not being parochial when I talk about that.

The regeneration of our town centres is an imperative and members should look out for our manifesto commitment on that. Forty per cent of people in Scotland live in towns that have populations of between 20,000 and 100,000. The Executive has done well on the regeneration of our cities, but it is now time to work on our towns.

Our commitment to skills and training is important. I am passionate about that issue. We must ensure that businesses can employ appropriately trained and skilled workers to meet their needs. As convener of the cross-party group in the Scottish Parliament on construction, I know that that message is coming out loud and clear from the construction industry.

In the short time left to me, I will talk about the excellent contribution of the skills and learning agenda to our economy. We should celebrate that contribution. The modern apprenticeship programme is making a real difference. More than 17,500 businesses are involved in the programme; that is a record number since the programme began and represents a 36 per cent increase over the past two years. In my constituency, I have seen at first hand how modern apprenticeships are making a difference. Only last week, I visited BiFab to speak to engineering apprentices, who are being given an opportunity and are helping the business in the success that it has achieved. Recent research has shown that 70 per cent of businesses participating in the programme show improvements in productivity.

All businesses begin life as small businesses, when one person invents or develops an idea for a new product. Only by supporting such businesses will we give them a chance to develop into Scotland's major employers of tomorrow. We can support them by providing grants, by investing in innovation, by embracing science and technology, and by investing in skills and training to ensure that businesses have ready access to the skilled workforce that they will need if they are to grow.

Do we want to trade in a track record that has been built on strength, on certainty not risk, and on stability not instability? Or do we want to build up Scotland? I will support the Executive's amendment to the motion this evening.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat 3:31 pm, 7th March 2007

The problem facing the SNP in this debate, and in wider debates across Scotland, is that people do not know which SNP they might be voting for. Is it Jim Mather's pro-business party, or is it Christine Grahame's Scottish socialist republican party? Socialist republican Christine Grahame disappeared from the chamber as soon as I made that point earlier.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

In a moment. Come on—I am only 30 seconds into my speech.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Nice try, but be serious. I will come back to the SNP later, but I turn to the Conservatives first because I do not have a lot of time.

Murdo Fraser outlined the Conservative party's plans for business very well. Unfortunately—and it is unfortunate—I am astonished that anybody would be interested in the plans of the Conservative party. Why? Because the Conservatives have gone out of their way to make it absolutely clear that they have no intention of entering a coalition with anyone else after 3 May. They do not want to work in Government with anybody else to implement any of their proposals. The message is clear: "Don't bother voting Tory, because they're not really interested in Government."

Photo of Murdo Fraser Murdo Fraser Conservative

Perhaps Mr Rumbles will enlighten us on Liberal Democrat policy. Is it still the policy of the Scottish Liberal Democrats to propose a 2p tartan tax cut, or has that now been ruled out?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

We have never proposed a 2p tartan tax cut.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I want to move on.

My friend and colleague Andrew Arbuckle spelled out clearly what the Liberal Democrats have done for business and pointed out that we want to go further and reduce business rates. We want to go further and gain a competitive edge for businesses here in Scotland.

I am glad that Stewart Stevenson has returned to the debate, because he made his most bizarre speech yet—and that is saying something. As MSP for Banff and Buchan, he praised the Liberal Democrat-run Aberdeenshire Council's help for Banff and Buchan; he praised the Liberal Democrat and Labour Scottish Executive's help for Banff and Buchan; and he even praised the Labour Government in London's help for Banff and Buchan. He claimed that Banff and Buchan was SNP run. The fact is that the SNP runs absolutely nothing—no administrations that impact on Banff and Buchan, not the council, not the Executive, not the UK Government. In fact, I cannot think of any reason why the good people of Banff and Buchan voted for Stewart Stevenson in the first place. He has no influence on Government whatsoever.

I am conscious of time—I am in my last minute. However, I cannot miss out the Green contribution. It was interesting that Shiona Baird could not give us a definition of what she meant by being in favour of economic growth. It seems to me that the Greens are completely against growing Scotland's economy—that is a real tragedy.

Frances Curran outlined a Scottish socialist view of growing the economy; I wonder whether it is a bit like that of the Greens. At one point, after saying that transport in Scotland should be absolutely free, she said that banking should be a social service. She should realise that this is a joke, but I felt that she might be advocating free money for all from the local hole in the wall. I might have misunderstood her. In contrast to Frances Curran, Marilyn Livingstone gave a strong exhibition of Scotland's vibrant economy—an economy that can of course be improved and expanded, which is exactly what the Liberal Democrats are committed to doing.

We have seen Scottish business rates equalised with those of England, but we want a further cut in business rates to below the English levels; from our perspective, that would give Scottish business a real competitive advantage. We will maintain the successful small business rates relief scheme; cutting business costs is vital. That is what the Liberal Democrats want to do for Scottish business.

Photo of Derek Brownlee Derek Brownlee Conservative 3:36 pm, 7th March 2007

The debate has been interesting, albeit rather brief. The minister's amendment to the SNP motion is rather self-congratulatory, which is what we are used to from the Executive. It talks about the Executive's record of

"listening to business and reducing the level of business rates".

The Executive did not listen to business when it put those rates up in the first place, did it? It did not appear to listen to business in relation to the much-trumpeted but now quietly forgotten research and development business rates cut, which has vanished from the utterances of any Executive minister. In fact, the Executive will not even tell us in Parliament how much it cost to break business rates parity with the rest of the United Kingdom. We know that the figure is £900 million only because the Government had to answer freedom-of-information requests on the matter. It is ridiculous that the Executive, having imposed a burden of an additional £900 million on Scottish business over the past eight years, turns up today and tries to pretend that it is the champion of Scottish business.

Members might remember Henry McLeish, when he was First Minister, launching the improving regulation in Scotland unit with some fanfare. It is worth speculating on just how important the burden of regulation is to the Executive, because we hear a lot of warm noises about it. In April 2006, unable to find a copy of the IRIS annual report because it had not emerged, I decided to ask the Minister for Enterprise and Lifelong Learning a series of questions about its effectiveness. As Stewart Stevenson has recently demonstrated, that is not always a quick or even a fruitful process, but I asked the minister what I considered to be a relatively simple question, which was how many calls the IRIS hotline had received in 2005. That was on 11 April 2006. On 12 May, the minister promised to reply as soon as possible. Six months later, a relentless enterprise minister had finally finished totting up all the calls to the reducing business red tape hotline. There were four calls in 2005, none of which was substantive. That demonstrates the Executive's record on regulation.

Of course, there are other ways of tackling the burden of regulation. Some might say, for example, that we should set deregulation targets. The Liberal Democrats say that—they passed a motion on it at their October conference—so I asked Nicol Stephen whether the Executive supports deregulation targets. Mr Stephen replied:

"The Scottish Executive does not set deregulation targets."—[Official Report, Written Answers, 28 August 2006; S2W-27534.]

What a bizarre attitude to deregulation from a party that talks about deregulation.

As the Burt report revealed, local income tax would be 6.5p in the pound on the basic rate of income tax. The tax burden of a small business that pays the basic rate of income tax would increase by a third. That is supposed, in some way, to help small businesses. At a time when the rest of the world is reducing the tax burden on businesses, a local income tax would increase it. In the debate on the SSP's service tax, we heard from the Deputy Minister for Finance and Public Service Reform—also a Liberal Democrat—that if we put up taxes in Scotland above the level in England, there would be fiscal flight out of Scotland. He does not seem to have considered that when it comes to local income tax.

Of course, we also have the statement on the tartan tax. Mr Rumbles says that there are no Liberal Democrat plans to reduce the tartan tax. Perhaps Mr Stephen should not have told Scottish Business Insider that there were.

In the final few seconds of my speech, I turn to the Executive's record and that of the Westminster Government. Much has been made of economic stability. This country has seen continual economic growth since the second quarter of 1992. However, as anyone who checks the records of the Finance Committee will find—and according to Professor Brian Ashcroft, no less—since 1996 there has been economic decline in Scotland relative to the rest of the United Kingdom. The question for the Executive is how effective stability has been and how much more the Scottish economy could have grown had the Executive not pursued the policies that it has.

Photo of Allan Wilson Allan Wilson Labour 3:40 pm, 7th March 2007

I, too, am grateful to Stewart Stevenson for his valuable contribution to today's debate. Let no one be in any doubt that the key to our future prosperity is a successful Scottish economy populated by successful businesses that drive economic growth. As Stewart Stevenson testified, we have in place an excellent business environment and support framework that works for Scottish businesses in Banff and Buchan as it does for those throughout the country.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Why is the success in Banff and Buchan, which is represented by the SNP, not replicated in Mr Rumbles's seat, which is represented by the Liberals?

Photo of Allan Wilson Allan Wilson Labour

Obviously that is down to Mr Stevenson's astute leadership of the good people of Banff and Buchan, as it is undoubtedly down to the astute leadership of Mr Rumbles that his constituency has the lowest unemployment rate of any in Scotland.

With all due respect to Mr Stevenson, he knows that that is bunkum, as was most of Mr Mather's predictable doom-and-gloom speech. I was shocked and appalled to be accused by the nationalists of promoting doom and gloom when I was, in fact, pointing out how successful the Scottish economy had been by saying why Scotland was performing well during Mr Mather's global boom.

To answer the questions that were posed by the Conservatives, in quarter 3 of 2006, Scotland's growth was well above the G7 average. It was above that of Japan and France and it was equal to that of the United States of America and OECD average. That does not suggest in any shape, manner or form an economy that is performing below average.

Scotland is one of the richest countries in the world. Based on the OECD definitions, it would fit comfortably into the category of high and middle-income groups along with the likes of Japan, Sweden and Australia.

Photo of Allan Wilson Allan Wilson Labour

If the member does not mind, I would like to make my point.

Not being a nationalist, I am accused of negativity in relation to nationalism but if I could see anything positive about it, I would be positive about it. It is just so destructive and divisive. If I was going to be positive about nationalism, I would be a nationalist.

The Government expenditure and review in Scotland statistics are not misleading; Jim Mather refused to answer that question. Nor are they inaccurate. The existence of a fiscal transfer, or the union dividend as I like to call it—

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

It is the subsidy of a failing economy.

Photo of Allan Wilson Allan Wilson Labour

That is where Stewart Stevenson is wrong, for the second time this afternoon. It is part of a resource, risk and revenue sharing that provides the economic rationale for the union. Derek Brownlee referred to it.

In the 1980s, Scotland was in technical surplus—I remember it well. We were also in the midst of recession and mass unemployment. Scotland receives greater value as a consequence of the union dividend and its population share of expenditure for legitimate geographical and social reasons. A growing UK economy, of which Scotland is a fundamental part—we are part of the second most successful global economy—along with Government policy has led to a rapid increase in Government expenditure and, as such, the union dividend has grown in recent years and will continue to grow. That is why we are able to enjoy low relative taxation and increasing public expenditure.

We have the best of both worlds. We have US-style low levels of taxation and Scandinavian levels of expenditure on health and social services. I say to Jim Mather that that is why not only the business community but the people of Scotland will return us on 3 May, when we put that rationale before them and they are asked to choose between us.

Photo of Alex Neil Alex Neil Scottish National Party 3:46 pm, 7th March 2007

The minister argues that Scotland is doing very well under the union and after 10 years of a Labour Government. If that is the case, why is the level of child poverty in Scotland 10 times that in Denmark and—this is based on the Scottish Executive's official statistics—two and a half times what it was 40 years ago under Harold Wilson? The minister should go and tell the children of Scotland, in particular the quarter who are living on or near the poverty line, that we are doing well.

An Executive, like any Government, has to be judged by its actions in relation to policy—in this case, on business. Let us consider recent examples of where the Scottish Executive has utterly failed the business community in Scotland. One such example, which is close to your heart, Presiding Officer, is that, at the stroke of a pen, by making a ship a grey ship, the Executive could award a contract to Ferguson's shipyard and save the 99 jobs that are under threat there.

Today we learned that the Executive has wasted £15 million—apparently, the BBC's figure was out by £2 million—on a tendering process for Caledonian MacBrayne services, whereby we have ended up with the status quo. That £15 million would have been better spent on creating jobs and tackling poverty or invested in education.

I turn to some of the other aspects of Executive policy. The finances of Scottish Water have been engineered to ensure that businesses have to face the highest water charges in the whole of the UK. High water charges, which are a tax on business and jobs, have been a mainstay of the Executive's policy.

The minister said that we have to stay part of the union with Britain and referred to the false black hole of £11 billion. The Executive does not mention that, according to its UK Government's figures, Scotland loses out to the tune of £550 million a year in what we pay towards the running of the UK Government, which is spent south of the border, not north of the border. If that money, which has already been paid for by the Scots, was spent in Scotland, an additional £550 million would be brought into the Scottish economy, with all the jobs that that would entail.

The Executive then paraded its expensive private finance initiative programme—the biggest backdoor privatisation programme in Europe—in relation to schools and hospitals. By a simple switch from PFI funding to bond funding, which an SNP Government will introduce, for the projects in the pipeline, we will save £106 million a year. That money could be invested in schools and hospitals, which would ensure that the taxpayer not only got a good deal but would own the asset that they had paid for at the end of the period.

As Fergus Ewing pointed out, Malcolm Chisholm did not mention the reason for his resignation from the Scottish Executive—a very principled resignation that was based on his quite correct belief that neither the UK nor Scotland requires Trident or the son of Trident. If we remain part of the union with England, we will have to pay our share of the £100 billion that the son of Trident will cost over a 30 or 40-year period. If our share of that money, about £10 billion, was invested in transport, education, housing and the health service, it would create far more jobs and be of far more benefit to the people of Scotland. If the Government spends £100 billion buying a system from America, it will create a lot of jobs in America but not many in Scotland or the rest of the UK. Does the Executive not understand basic, year one economics?

The Executive tries to tell us that it is financially competent. However, let us remember that this is the Executive that announced a new policy on business rates one week, telling us that it could give breaks to companies that were doing research and development work, but which had to withdraw the policy the next week because it had not checked its facts. This is the Executive that presided over the financial fiasco at Scottish Enterprise and the fiasco of the CalMac tendering process. It has no claim to financial or fiscal competence.

The reality is not that which is painted by the minister; it is that a quarter of our children and a fifth of our pensioners are living in dire poverty and that 150,000 of our people are willing to work but cannot find a job. That is the union dividend. That is the result of 10 years of Labour misgovernment. That is why, on 3 May, the Scottish people will turf out that lot and put people in place who will put Scotland first.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

On a point of order, Presiding Officer.

I have just received further information about a serious matter that arose during this debate. During his speech, Mr Arbuckle made a claim about the views of the Royal Bank of Scotland, asserting that the Royal Bank of Scotland has expressed a view that the SNP's sums do not add up.

I want to make it clear that the position of the Royal Bank of Scotland is that it categorically denies that that is the case. It has not expressed any view on the sums or policies of any political parties. I seek your guidance on whether such a serious misrepresentation of a leading Scottish institution should be dealt with by the member concerned withdrawing the accusation and issuing an apology to the Royal Bank of Scotland.

Photo of Trish Godman Trish Godman Labour

As I am sure you know, Mr Ewing, that is not a point of order. However, your point is now on the record.