The next item of business is a debate on motion S3M-2779, in the name of Tavish Scott, on the importance of HBOS to the Scottish economy and jobs.

The Liberal Democrats welcome the opportunity to initiate—in our parliamentary time—another debate on the economic issues that confront Scotland. We believe that it is the right thing to do. We remain disappointed that other parties—including the Government, which has much more parliamentary time—have not yet managed to do that. We encourage them to take our approach in the coming weeks, because we should consider the future of our economy in great detail as the pace of change that we face continues.

There are few occasions in history when global events have happened quite so quickly and have changed so thoroughly the world and the way in which we see it. The backdrop is one of global economic chaos. Stock markets and people's pensions have lost nearly half their value—more than that in places such as India. There is real concern about whether we face downturn, recession or depression. Things have moved fast—that is the point of today's debate. Decisions that seemed clear cut on 18 September are not so obvious now—that is why we lodged the motion that we are debating today. We have included the words suggested by my good friend Mr Alex Neil in order to gain maximum support for our case.

We say that the Parliament should unite to save a 300-year-old national institution—to save not just a bank, but the jobs in that bank and all the jobs that rely on the scale of the Mound's operation. I refer to the sandwich shop that serves staff through the working day, the taxi companies that cross the capital and towns throughout Scotland, and the cleaners and many more who keep the bank operating. We should unite not just for the thousands of HBOS staff but for the many thousands more who depend on the banking sector and on HBOS, in particular.

Has the member had any dialogue with staff representatives on the content of his motion?

I have talked to many members of banking staff over the past few weeks, both within and outside my constituency, where a bank branch will probably go if we follow the Labour Government's current proposals. I am sure that John Park does not wish that to happen. I assure him that I have met banking staff to discuss the matter and will continue to do so.

This morning we argue that we should say no to the takeover of HBOS by Lloyds TSB. A few short weeks ago the takeover was the only game in town—the UK Government was correct to make that case at the time. However, in those few short weeks the global banking system has changed more than it has changed in a generation. The UK Government now needs to change. On 8 October, it decided to create taxpayer-funded banking institutions. That decision was right, but it means that today the Government should re-examine what is in the best interest of taxpayers, because now we are shareholders in those institutions. Small businesses and customers rely on local banks, with competition in high streets and towns across Scotland.

On 22 September, party leaders joined the Government and the Scottish Council for Development and Industry here in Edinburgh. We were united then in saying that Scottish banking expertise, the tens of thousands of banking jobs and the strong Scottish financial sector are huge arguments in favour of retaining an HBOS headquarters here in Scotland. The First Minister made those arguments; I supported them in September, and I support them absolutely today. That should now mean that HBOS is retained as an independent bank, in Scotland, for the long-term benefit of the Scottish economy. The action of the UK Government can make that happen. Our First Minister should be meeting the Prime Minister and the chancellor.

One issue that has not changed is the impact of the situation on customers. From day 1, I warned about the impact of a loss of competition on the high street. I want us to stand up for the individuals and small businesses that will face loss and threat as a result. Let us look at what the Federation of Small Businesses is saying. Its members—small businesses in Scotland—are saying that they have seen increases in the cost of borrowing facilities from the clearing banks. More than half have seen an increase in payment times from invoicing to full payment, putting their cash flow at risk. Small businesses are being asked to secure overdrafts and loans on their homes. Banks are shortening business lending review dates. One small firm that is involved in the tourism industry told the Federation of Small Businesses:

"Our bank facility has recently been up for review at the moment. The bank has informed us that in addition to them taking a £150 'renegotiation' fee they are going to increase our overdraft rate from 2.5% over base to 6.95% over base."

This morning the president of the National Farmers Union Scotland said on the radio that banks are shortening credit and pulling in overdrafts on farm businesses across Scotland. The last thing that businesses need is a collapse of competition in banking that will threaten their access to the overdrafts and borrowing that keep them going in tough weeks and months. That is the impact of what has happened.

Since the Government announced its support for the takeover in September, everything has changed. Now the Government also needs to change. The UK Government has nationalised Northern Rock, bailed out banks and even subsidised the losses of Icelandic banks, so why should we wipe out Scotland's bank? The collapse of competition in banking is already biting small business. Unless Parliament unites and the UK changes its policy, there is a real danger that more Scottish businesses will enter the jaws of bankruptcy. What was urgent for the short term in September was swept away by the transformation of banking in October. We need to look again at those decisions and to take the route that gives strength to the Scottish economy in the long term. That is the case for an independent HBOS in Scotland. The Scottish Government should make that case in the Scottish Parliament today and to the Prime Minister and the chancellor. We should unite to support that case today.

I move,

That the Parliament gives a general welcome to the measures taken by the UK and other governments to tackle the current banking crisis; considers, however, that the recapitalisation plans announced by HM Treasury in October 2008 have fundamentally changed the landscape under which competition rules were waived to enable a merger between Lloyds TSB and Halifax Bank of Scotland (HBOS); further considers that inconsistent statements have come from the UK Treasury about whether or not the banks would independently have access to the recapitalisation funds; believes that this ambiguity is not serving anyone's interests in the present environment; further believes that losing HBOS corporate headquarters and jobs in Edinburgh would seriously jeopardise the city's position as a financial centre; sees no reason why HBOS should not be able to access UK Treasury recapitalisation and, therefore, liquidity funding on the same independent basis as other major banks, and, with this in mind, considers it a very real possibility that an independent HBOS solution could be found that may well be in the best interests of shareholders, employees, customers and the Scottish economy at large.

All members want to ensure that Scotland retains as many jobs as possible in the financial sector and that as many decision makers in the sector as can be are based in Scotland. We are all concerned to ensure that, if the merger proceeds, Scotland retains as much as it can. There is cross-party consensus on the importance of the financial services sector to the Scottish economy and to our long-term prospects.

Initially, there was a great deal of cross-party consensus on the subject that we are debating. Perhaps it was unrealistic to expect that that should remain for long. In his speech, Tavish Scott talked about the events of the past few months, which are certainly unprecedented. He said that decisions that appeared appropriate on 18 September have been overtaken by events. That may be true, but it is worth considering that, given that the situation has changed so quickly over the past six weeks, it may yet change significantly over the next six. This is truly an unprecedented situation.

Regardless of whether it is borrowed from Alex Neil or is the Lib Dems' own work, the language of the Lib Dem motion is, in part, reckless and unwise. Whatever the consequences of the merger of Lloyds TSB and HBOS may be, the suggestion that it seriously jeopardises Edinburgh's "position as a financial centre" is a gift to our competitors and does a gross disservice to the many other financial institutions in Edinburgh that will remain here regardless of whether the merger proceeds.

Is the member aware that this morning an eight-person senior management team for the merged organisation was announced? Only one member of the team is from HBOS and all will be based in London—not one will be based in Edinburgh.

I move on to the consequences of our supporting the motion tonight.

Scotland and Edinburgh have a successful track record in attracting investment in the financial services sector. We have won against competitors within the United Kingdom and overseas. If, for whatever reason, we support Tavish Scott's motion tonight and the merger proceeds, imagine what our competitors will say when in future we argue the case for investment? Does anyone think that, if the Scottish Parliament—and, possibly, the Scottish Government—believes that Edinburgh's status as a financial centre is seriously jeopardised, that will help to protect and attract Scottish jobs? That is one reason to reject the Lib Dem motion, but there are others.

Some have argued that there are alternatives to the merger—that another party might step in or that HBOS could survive as an independent entity. Mr Scott has made the latter argument today. Although there has been much speculation about an alternative suitor, so far it remains just that—speculation. We must consider what would happen if the merger fell through without the emergence of a new party and HBOS remained an independent entity. In all candour, no one can be sure what would happen, but further falls in its share price, a collapse in investor and depositor confidence and—ultimately—nationalisation cannot be ruled out. That, too, should give members pause for thought before they support the Liberal Democrat motion.

The UK Government has made available £57 billion of his and my money—taxpayers' money—so I presume that Derek Brownlee would concede that his suggestion that that the bank would simply collapse and disappear is not the case.

The point is that if the bank were nationalised there would be serious implications for the taxpayer. I will elaborate on that point in a moment.

Questions have been asked about whether Government support would or should be available to Lloyds TSB and HBOS independently if the merger was not in prospect. That is a reasonable question, although it remains hypothetical. It is important that the UK Government should have a plan B if the merger does not proceed for whatever reason. Some people tell us that HBOS could remain an independent entity because the Financial Services Authority says that it is financially sound. However, the FSA said the same thing before the merger was proposed and, only a few weeks ago, the voices that now pray in aid the FSA were berating it for being asleep on the job and failing to regulate properly.

To offer an independent HBOS the same recapitalisation package as the combined Lloyds TSB-HBOS might be enough, but it might also not be sufficient and the taxpayer's exposure might be significantly higher. Suspending the competition rules does not require the merger to proceed, but it permits it to do so. Shareholders retain the final say. If the HBOS board believes that there is a better alternative, it can advocate it and, if the shareholders believe there is one, they can vote for it.

The Conservatives do not believe that politicians should interfere in commercial decisions taken by financial institutions and shareholders unless there is no other option. Others may take a different view. That is their right, but they ought to remember that it is as easy to lose business confidence as it is to win headlines. In a few months' time, the Lib Dems will be chasing different headlines, but our financial sector will still be dealing with the consequences of whatever decisions are taken in the next few weeks, including those made in this Parliament. Supporting the Lib Dem motion may win favourable comment in some newspapers and might even win public support, but it is not a risk-free option by any stretch of the imagination. It is quite the reverse.

I move amendment S3M-2779.1, to leave out from first "considers" to end and insert:

"reaffirms the importance of the financial sector to the Scottish economy; notes that the boards of both Lloyds TSB and Halifax Bank of Scotland remain in favour of the merger and that shareholders will soon have the opportunity to vote on the proposal, and believes that decisions on the future of individual institutions should be made by shareholders, not politicians."

In recent weeks and months, we have heard members from all political parties and people from outside politics express their concern about the financial crisis, particularly the proposed merger between HBOS and Lloyds TSB. Tavish Scott is right to assert the need for debate. The concern about Scotland's economy and jobs is genuine and widely shared. The Greens share it too. Unlike Derek Brownlee, I do not feel the need to oppose the motion if it reaches the vote unamended, but to come to the Parliament merely to emote together without addressing the deeper causes of the financial crisis that we face is pointless. It amounts to little more than a group hug on the deck of the Titanic. It might feel like it helps a little bit, makes us feel a bit better and gives us some comfort in the short term, but it does nothing to change the problem that is at the heart of the crisis.

We can understand why the Government sees the need to bail out some of the major banks. Sadly, however, the bailout amounts to an attempt to refloat the same failed model of deregulated financial services that has been supported by all other political parties in this Parliament and at Westminster. Attempting to tweak and reboot the system that has crashed without finding out what went wrong in the first place simply will not cut it. However, the recognition is growing that reshaping our economy is as important for our financial system as for our society and environment.

The question at the heart of the matter is whether Government has the guts to challenge the perverse notion that growth is as essential as the air that we breathe and that we must aspire to unbridled economic growth. That notion is a fundamental flaw in the Scottish and UK Government approaches. Gordon Brown tried to encourage us to think that he had abolished boom and bust; what he meant was that he thought that he had abolished bust and could have boom for ever. The Scottish Government's central purpose—that is how it describes it, but I describe it as a central contradiction—of sustainable economic growth amounts to the same: more stuff for ever!

Growth is an exponential function and cannot be continued for ever without causing a collapse. The Prime Minister, the First Minister and others know that their action in response to the current crisis is only a short-term solution—it aims to get everybody back to business as usual as soon as possible. The bottom line for both Administrations is that the demented pursuit of economic growth must be protected at all costs. In effect, the captain of the Titanic is trying to set sail for the next iceberg. If members regard the financial sector as the engine of the Scottish economy, that course of action should give no comfort to the people who work in the engine room. Tim Jackson, an adviser to the UK Government on sustainable development, wrote recently in the New Scientist:

"With the environmental situation reaching crisis point, however, it is time to stop pretending that mindlessly chasing economic growth is compatible with sustainability. ... Figuring out an alternative to this doomed model is now a priority before a global recession, an unstable climate, or a combination of the two forces itself upon us."

In his opening speech, Tavish Scott described a 300-year-old institution, but HBOS is not the same as the Bank of Scotland any more than Lloyds TSB is the same as the Trustee Savings Bank. Before the mergers—and, indeed, before the latest proposed merger—we had organisations that began as different beasts and operated on a more socially sustainable and socially just basis.

I do not have time to go into the detail of that argument and I think that members are familiar with it. The essential purpose of Government in responding to the current economic crisis must be to assert that the future of the financial sector in Scotland should be based on the old-fashioned values of sustainability and thrift, which are more important now than they have ever been.

Will Patrick Harvie give way?

Do I have time for an intervention, Presiding Officer? I apologise. I will attempt to address Jamie Stone's remarks in my closing speech.

I move amendment S3M-2779.2, to leave out from "gives" to end and insert:

"recognises the need for short-term action by the United Kingdom and other governments to tackle the current banking crisis; rejects, however, any effort simply to refloat the failed model of deregulated financial services, which has been supported by Labour and Conservative UK governments and by Labour/Liberal Democrat and SNP administrations in Scotland; calls on the UK and Scottish governments to commit to a future for the financial services sector that is based on sustainability and self-reliance rather than the impossible objective of limitless economic growth fuelled by reckless lending and excessive leverage, and, in the short term, demands that an element of democratic control be exercised over the lending and investment activity of banks that have been bailed out by taxpayers' money to ensure that economic, social and environmental sustainability are prioritised through that activity."

I welcome the debate. It follows the statement that the First Minister made to the Parliament on 24 September on the Lloyds TSB takeover of HBOS, which was followed by a debate in Government time. As I made clear to the Parliament yesterday, the Government will take to the Parliamentary Bureau proposals for further debates on the wider economy, although we used the opportunity of yesterday's debate on the British-Irish Council and the earlier Liberal Democrat debate this morning to set out our points on that matter.

Will the cabinet secretary cast any light on why, over the past 10 weeks, his Government has initiated no debate on the impact of the credit crunch on Scotland? I think that that is a unique position in the western world. Perhaps he could clarify that.

Perhaps Wendy Alexander did not listen to what I said. I just mentioned that we had a Government debate on 24 September that examined many of the issues and that those issues have been discussed in the Parliament.

The Scottish Government has a duty to work at all times to protect the Scottish interest. We have set out our position on the transaction that Lloyds TSB proposes. Our preference would be for HBOS to continue as an independent organisation. The fears about the effects of a merger on jobs and decision making, including the concern about the lack of competition, are well known. Equally, however, we have a responsibility to put to Lloyds TSB the case for retaining jobs and decision making in Scotland, which is the focus of what the Government has done in recent weeks. As members know, we encouraged a dialogue with other parties through the Scottish Council for Development and Industry. That was warmly supported by other political parties, which we welcome, and we continue to operate on that basis to ensure that the Scottish interest is protected.

Will the cabinet secretary give way?

I ask Jamie Stone to forgive me, but I have to make some progress.

Lloyds TSB is, of course, pursuing a legitimate interest in the transaction. It is entitled to pursue its interest, and the Government will continue to engage in dialogue with its senior management and leadership—as the First Minister did—to ensure that the Scottish interest is protected.

We have already referred to the fact that the Lloyds TSB transaction is the only game in town.

That remains the case, but the circumstances have changed significantly in the intervening period. That is why the First Minister wrote to the chancellor to ask a number of questions about the Lloyds TSB transaction and, in particular, to establish what conditions would be available if other bidders decided to enter a contest to engage in the takeover. The First Minister asked for details of the terms of the recapitalisation of HBOS and Lloyds TSB. He asked whether the competition law concessions that the UK Government announced in September would be available to any other credible bidder. He also asked whether the recapitalisation of HBOS was in any way conditional on the merger going ahead and, if so, on what basis. The chancellor has replied to that letter and I would like to share the contents of his helpful reply with the Parliament. The correspondence will be available in the Scottish Parliament information centre in due course.

Although the chancellor does not answer all the questions, his response is a helpful intervention. In it, he makes clear:

"When the recapitalisation scheme was triggered the boards of both HBOS and Lloyds TSB had decided it was in their interests to merge, and it was in the expectation of the merger going ahead that the FSA made the assessment of each bank's recapitalisation requirements. If for any reason the merger did not go ahead, the FSA would need to re-assess both banks to determine the extent to which each would need to recapitalise."

That would take place within the context of the Government's recapitalisation scheme.

The chancellor has made an important statement that opportunities exist for other propositions to be considered, and we will continue to have dialogue with him to ensure that those propositions are fully and properly considered by the UK Government.

Like many other members, I think that it is absolutely right that we are having this debate, which follows on from the statement that we had a month or so ago. It is right that people can look to the Parliament and see that we are discussing issues that really concern them.

We cannot deny that HBOS and Lloyds TSB have made a significant contribution to the Scottish economy in recent years. That contribution should not be underestimated. I am sure that all members will agree that no matter what happens in the future—as John Swinney outlined, other possibilities exist—we want that contribution, whether by both banks or by a joint bank, to be sustained for as long as possible and to continue to be as big as it has been in the past.

The discussions that we have in the Parliament in the coming period must be about securing Scottish jobs. The Parliament must listen to and respect the views on the proposed merger of shareholders and, most importantly, the workforce. There are well-established industrial relations structures in place in both organisations, and we should respect them and listen to what the workforce has to say. We should remember that many members of HBOS's workforce are shareholders, too.

This week, along with Iain Gray, I met officials from Accord and Unite who represent HBOS workers. They have significant concerns. Although we can hold debates such as today's, we should not forget that the workers are the people who really matter and the people to whom we should listen first and foremost. They are the people who will do everything that they can, whether as union reps or individuals workers, to maximise employment opportunities in Scotland. We must remember that, as shareholders, many of those workers will have a direct say in what happens to HBOS.

As we all know, HBOS provides 16,000 jobs across Scotland. Lloyds TSB is a big company, too. There are huge centres of employment in Edinburgh and Glasgow and smaller but not insignificant centres of employment in Motherwell and Dundee. I am acutely aware of what those jobs mean for the local economies and can remember HBOS setting up call centres in my constituency. I know many of the workers who could be affected by the merger.

Many of those jobs are part time, flexible and relatively well paid. They provide a level of flexible working that has greatly improved standards of living across Scotland. Above all, the development of such jobs in Fife over recent years has facilitated the restructuring of our economy. In the coming months and years, regardless of how the proposed merger develops—even if HBOS and Lloyds TSB remain separate institutions and the recapitalisation scheme that has been put in place helps other banks—I have no doubt that we in Scotland will go through a period of significant change in our economy.

We will support the measures that the Scottish Government is taking to maximise the number of jobs in Scotland in the current crisis, but it must place a renewed emphasis on helping workers who might face redundancy in the future. There are vacancies in a number of key sectors, and we should not lose sight of the fact that people in the banking sector have transferable skills. The PACE—partnership action for continuing employment—teams do a valuable job, but I urge the Scottish Government to beef up support for those who face unemployment. There is no reason for it not to take a proactive stance on the matter, and I encourage it to do so. In addition, I believe that all banks, not just HBOS and Lloyds TSB, have a moral obligation to their workforces to ensure that redeployment, retraining and other opportunities are available.

We are a little concerned about the Lib Dems' motion, which we think does not focus on a number of the issues that Derek Brownlee mentioned or on some of the workforce's concerns. It looks as if the only deal on the table is the proposed merger with Lloyds TSB. We will listen closely to the workforce but will not support the motion, which iterates some matter-of-fact statements about the merger. I am not sure that any member can say for certain that they know what will happen. The workforce in the financial services sector faces a difficult period and its members need our support as a Parliament and as parliamentarians on a day-to-day basis.

We move to the open debate. Speeches should be of around four minutes.

It is said that a week is a long time in politics but, as we have come to appreciate over the past few months, it is clear that a day is a long time in the banking sector.

As the member for Glasgow Kelvin, I represent Glasgow city centre, to the western edge of which, between Finnieston and Anderston, lies the international financial district, which is often nicknamed the "Square Kilometre" or, as I prefer to call it, "Wall Street on Clyde". In developing a district that we hope is to become the third-largest financial quarter in the UK after the City of London and—of course—the city of Edinburgh, Glasgow City Council adopted a visionary strategy. Glasgow's financial district has a strong reputation. Of the 10 largest general insurance companies, eight have a base or their headquarters there. The current global financial situation will not give the district the certain future that it was on course for, so there is a lot at stake for the Glasgow economy. There will, of course, be a wider impact, given that Glasgow and Edinburgh are the twin economic drivers of the Scottish economy.

There are too many branches of the Bank of Scotland in my constituency to count. Like many other members, I am a customer of the Bank of Scotland and have a strong affinity with it on account of its good products, good services and strong Scottish identity. The Liberal Democrats have chosen to debate whether HBOS can have a future that is different from the one for which it is on course. I believe that the debate should not be about who cares most about retention of HBOS as a Scottish bank; it should be a serious debate about how we can preserve the Scottish interest. That should be measured by how we can best safeguard the best terms for ordinary account holders and Scottish businesses and, as John Park outlined, Scottish jobs.

The motion is written in cautious language—indeed, the Liberal Democrats are not its authors—but in the current climate it is fair and legitimate to raise the issues that it raises. However, it is risky for politicians to assert that they have the right answers for the current situation. Although the whole country has lost confidence and trust in the banking sector's ability to make sound decisions we must, as Derek Brownlee said, support the decision-making processes that exist so that we arrive at the solution that will best safeguard the future of HBOS and all its interests.

Tavish Scott argued that we should take the route that gives strength to Scottish banking interests. I do not disagree, but I do not think that the motion focuses 100 per cent on that option; I believe that it leaves questions. I am sure that, ultimately, those who take the decision will be—they should be—well aware of the demands that we continue to make on Scottish jobs. On that issue, we must be heard. When the time comes to stand up for those interests, Labour will not be slow to do so. We are only at the beginning of the process—there is a long way to go.

The Parliament and all the parties must unite around the demand to protect Scottish jobs and Scottish interests. Although we have a difference of opinion about the conclusion, we must stand together on that point.

If the merger proceeds, the new body will almost certainly be a strong institution, and it will represent almost one third of the UK savings and mortgage sector. HBOS shareholders will have a 44 per cent share of the new company and, arguably, a strong share in the future of the company. The Bank of Scotland is a powerful brand. As Eric Daniels, chief executive of Lloyds TSB said, it has international iconic status. To some extent, we must trust market forces and the HBOS brand.

It is absolutely correct for the Government to call for decision making to remain in Scotland and for Bank of Scotland bank notes to continue—I support that approach. However, in the current financial situation, Parliament has a responsibility to use its powers—as it is expected to do—to assist people in these difficult times. The First Minister must spend less time on the UK stage and a bit more time at home. If the Government were to design an action plan, not only will it get the support of other parties, but people will feel that Parliament is taking its responsibilities seriously. If the Government takes that approach, it will have Labour's support.

I congratulate the Lib Dems on copying my motion word for word and suggest that if they made more of a habit of that, their standing in the opinion polls might rise substantially.

On the face of it, the debate is about banks: in fact, it is about people. Up to 40,000 people could lose their jobs as a result of the merger. We all know and expect that there will be significant job losses in the banking sector, and the two banks that are involved in the merger will not escape that. However, on top of the natural—if you like—job losses that will result from the financial tsunami, there will be many thousands of unnecessary job losses as a result of the merger. Those job losses will not occur only in Edinburgh and Halifax, and I am as concerned about job losses in Halifax and elsewhere south of the border as I am about job losses north of the border. If Lloyds TSB's corporate policy of offshore and backroom activities is carried through, many thousands of jobs will be lost in Scotland, and many of those will be in Fife.

The two unionist parties say that politicians should not interfere, while the reality is that the merger has been driven by two politicians: Gordon Brown and Alistair Darling. Now that we, as taxpayers, have a major investment in both banks, including £7 billion in Lloyds TSB, we are entitled as shareholders to require them at the very least to minimise job losses and the damage that they can do unnecessarily to people's lives.

Let us not kid ourselves by hiding behind the idea that this is a decision only for the private shareholders. It is a decision that affects the public interest and, especially since recapitalisation, the public interest should be properly represented, which means that the UK Government must act. With all due respect to John Park, he did not mention that Gordon Brown has it in his power to stop the merger going ahead.

There are three possible scenarios for the future of HBOS. One is to allow the merger to go ahead, which is the worst possible scenario from the point of view of competition, and the impact on Scotland and on every high street the length and breadth of the UK. It is what the Labour and Tory parties have been arguing for this morning. Many of Mr McLetchie's constituents will be directly affected by the merger that he supports, so I hope that he can explain to them why he did not defend them.

Will the member take an intervention?

I do not have time, unfortunately.

The second scenario is for someone from outside the UK to come in and take over HBOS, which would be better than the first scenario. Coming from outside the UK, the chances are that they would keep HBOS's headquarters in Edinburgh. Not only that, but by taking over HBOS entirely, or a bit of HBOS—particularly the "BOS" bit—they would reinforce those headquarters. I and many others have been working towards that solution. We have said from the beginning that if there is to be a takeover, it would be better to have a takeover from outside the UK, from an institution that does not have its headquarters in London.

The third, probably optimal, solution is to allow HBOS to remain as an independent organisation. According to Hector Sants, the chief executive of the Financial Services Authority, that is a perfectly workable solution. The decision on the merger lies with Gordon Brown and Alistair Darling. Every unnecessary P45 that is issued as a result of the merger will have their signatures on it, as well as those of their Tory poodles.

I welcome the opportunity to take part in the debate, which addresses some important issues. There is no doubt that many of us have HBOS employees, shareholders and mortgage holders in our constituencies, and that we see the extent of the impact on the Scottish economy of the crisis.

It is disappointing, therefore, that nothing has really been achieved as a result of Alex Salmond's meeting with Lloyds TSB in London the other day. It appears that the iron laddie has been patted on the head and sent homewards. That is reinforced by this morning's announcement on the stock exchange that many of the senior positions at Lloyds TSB have been filled. Indeed, the crisis has raised questions about Alex Salmond's credibility. At the start of the crisis, he told us that in an independent Scotland, he would come up with a mythical £100 million from a Scottish central bank, and that he would reduce corporation tax. That is one to tell to the fairies at the bottom of the garden, particularly as one of Mr Salmond's economic advisors recently told us that a move to independence would result in a shortfall of £1.1 billion.

I disagree with Alex Neil's comments about Gordon Brown and Alistair Darling. Recently, they have exhibited strong leadership and have very much steadied the ship. The people of Scotland are looking for practical advice. I will offer some suggestions. First, the Scottish National Party Administration could ditch the local income tax policy. If it is trying to attract jobs and investment to Scotland, it should not introduce a policy that would make Scotland the highest-taxed part of the UK. In addition, the SNP should abandon the discredited Scottish Futures Trust. Here we are, 18 months into the Administration, and no finance has come forward from the trust and it is not funding any capital investment programmes. The Government should speed up the capital investment programme and projects such as the Raith interchange.

In addition, the Government should ensure that it pays its bills on time. Recent analysis of the consolidated accounts for last year shows that rather than meeting the 100 per cent target for paying bills, the Government was paying its bills only 93.6 per cent of the time, thereby putting business cash flows under pressure.

It would also be practical to introduce incentives to council tax payers to introduce microgeneration into their homes. That would encourage business innovation, help to stimulate growth and encourage the economy. Those are important matters.

The merger is an issue for the shareholders. However, if HBOS were to stand alone, a greater amount of money might have to be invested in recapitalisation, which could undermine shareholder confidence. We do not want to end up in a situation that is worse than it was a month ago.

This is a time for practical suggestions, not for punditry or posturing. Parliament has to give practical suggestions to the Scottish people today.

When Tavish Scott spoke to the motion, he talked about the backdrop of economic chaos in the world. We are talking about one of the worst-ever experiences at the end of a trade cycle, which has developed into a banking crisis of massive proportions.

I am old enough to have been involved in the battles when the TSB tried to stop the Lloyds takeover. I was also active in the SNP when we had to try to save the Royal Bank of Scotland from takeover by various other banks. Lessons can be learned from that process, and they will have to be learned quickly in Scotland, in Britain, in Europe and elsewhere.

In this debate, we can acknowledge the way in which deregulation of banking in the 1980s has led to many of the problems that companies now face. The companies all took the bait in pursuit of the kind of profits that seemed possible from the derivatives markets. Countries now have to sort that out. In the 1980s, Norway and Sweden sorted out their banks after deregulation, which showed what small countries can do when they have the powers.

I want to talk about the European situation. There has been a big silence from Gordon Brown and company, after years of lecturing Europe about deregulation. Internal market commissioner Charles McCreevy of the European Commission said:

"I would like to have by the end of this year concrete proposals as to how the risks from credit derivatives can be mitigated."

This Parliament, our Government and others have to feed into the European debate. Smart regulation will liberate us from the pitfalls of the past.

I was amazed by John Park's suggestion that everything is fine and dandy and that Gordon Brown and Alistair Darling are serving Scotland well. I have to disagree. In The Herald last week, Eamonn Gallagher wrote:

"It was extraordinary that in the midst of an international financial crisis—and even as his own country is slipping into recession—Gordon Brown chose to argue that somehow global banking problems mean that Scotland should dare not consider questions of good governance any further. Is this not a rather curious assertion from the man who has held the reins of financial power in the UK for the past 11 years? The argument seems to be: 'Things have gotten really bad on my watch—best to let me keep handling things.'"

The question now is whether this Parliament can state that there are ways of applying Government controls to enhance the ability of HBOS to survive as HBOS rather than as part of a merged company. What issues arise as a result of European competition rules? No one has discussed those yet.

The scenarios that my colleague Alex Neil laid out have to be considered seriously. We have to give HBOS the space to rebuild. We have to allow liquidity for it to rebuild the real economy in the place where the Bank of Scotland was based for so many centuries and we have to secure the jobs in the bank to support the real economy. The wider economy will benefit from clear-headed thinking. This debate is not just about the immediate prospect of a merger but about learning lessons on the way in which banking has to be regulated. There has to be a European framework for that, and Scotland will have to have a direct say in that framework.

Members should support the motion. It is the only proposal that allows us to consider the options and allows us not to accept the way in which Scotland has been downplayed. Mr Brown has said that he can deal with a recession, but he caused many of the conditions in this country that have led to the problems for HBOS and many others in the real economy. Members should support the motion and reject the amendment from the Tories.

It is a real pity that Rob Gibson and Alex Neil did not listen to John Swinney when he quoted from Alistair Darling's letter. It is easy to score petty political points in a debate such as this, but if we are really debating the future of the banking system, let us listen to what the bankers have been saying, let us understand the dynamics of the system and let us have a much more critical and honest discussion of why the banks in this country have gone wrong over the past few years. Let us have that discussion; let us not have simple points scoring.

Corporate social responsibility should not just be a paragraph at the end of an annual report; the idea should inform the values that all our banks work to uphold. Gordon Brown was right to criticise excessive short-termism, the culture of massive bonuses and the lack of long-term investment, which are not in the interests of ordinary shareholders. As John Park said, those shareholders are the staff of the banks and are among the thousands upon thousands of Scottish consumers who have shares as part of their pensions packages. All our local authorities have pensions tied up in the banks.

There are huge issues to be debated. However, as Pauline McNeill said, the debate has been about how much we care for HBOS. That is not what the debate should be about. It should be about what the Scottish Parliament can do to support the people who are currently in charge of the banking system, to work with the UK Government, and to work with the trade unions, so that we can ensure that the maximum number of jobs stay in Edinburgh and Scotland, and so that we can ensure that the maximum amount of headquarters functions stay in Edinburgh. We should also be considering what we can do to support the banking sector in Scotland—not just to stay here, but to attract more jobs and to invest more. We have to be positive about what Edinburgh and Scotland can offer and not simply adopt a defensive posture. These are tough times, but people expect us to do what we can and not just to moan. We have to get on to the front foot.

The Scottish banking system is part of our identity—there is a lot to be proud of. The system is linked to our legal and higher education institutions. As an Edinburgh MSP, I completely understand how tough the past few years have been. We have had the Lloyds TSB shake-up, we have had demutualisation of Standard Life and, most recently, we have had the takeover of Scottish & Newcastle. Times have been tough for our major traditional companies in the city. It is not our job to tell them exactly how they should operate or how they should be structured: our job is to support them and to work with the UK Government to ensure that the framework is right. Parliament has to do what it can in terms of investment, in order to keep Edinburgh attractive and to maintain relations between Glasgow and Edinburgh and the rest of central Scotland. People have to want to invest here.

Will the member take an intervention?

No, thank you. I have only one minute left.

No bank will invest out of sentiment, but they will invest if we have good schools, good public transport and good housing to offer to their staff. They will invest if we have high-class transferable skills, and if we give people the confidence to work in the industry. That is why I want the Scottish Government to do more on investment and it is why we do not want the local income tax, which would set us back. It is why we have been so angry about the lack of progress in investment and about the diversion that has been caused by the Scottish Futures Trust. We need practical investment.

It was an irony to hear Mike Rumbles quoting from George Kerevan and posing consumer expenditure and public expenditure as alternatives. Surely we need both. Consumers will be confident if they have jobs and if they can afford to pay their mortgages or rents and their taxes.

We need to invest now to make a difference, so I call on the Scottish Government to consider housing in particular. The SNP-Liberal council here in Edinburgh has a new plan to ensure that we can invest in housing, but it will require investment from the Scottish Government. We have to put the £100 million that Alex Salmond launched a couple of months ago in context. We have criticised the announcement for not involving real money. We need huge amounts of money in Edinburgh every year—£83 million in 2009-10 and £95 million in 2010-11. That would give local companies the money to invest. They are not getting the money from the banks now, so we need to play our part in ensuring that the money comes through the public sector. That is what the Scottish Government should focus on.

Before I begin my winding-up speech, I cannot help but observe that it would have been nice if the member who lodged the motion for debate had stayed in the chamber for longer than a few minutes at the beginning of the debate.

The debate has been characterised in part by an emotional attachment to what Tavish Scott described as "a 300-year-old national institution". I agree with Sarah Boyack that the debate should not be about simply how much we care. Nevertheless, I could have an emotional attachment to a financial sector that was characterised by the values that I described in my opening speech. I am thinking of institutions such as the old Halifax Building Society, which began as a prudent building society that operated for the mutual benefit of local working people, and the Trustee Savings Bank, which was an aggregation of small savings banks that was run by trustees according to democratic and philanthropic principles. I could have an emotional attachment to that kind of financial sector—one that was not dominated by a few megabanks but was composed of many smaller institutions rooted in local communities.

As well as the emotional attachment, the here-and-now issue of jobs has characterised the debate. I apologise to Jamie Stone, who is just leaving the chamber, for not being able to take his intervention when he wanted to mention jobs in his constituency. Many communities, not just those in Edinburgh, are affected by the current situation. I argue that there could be not only more jobs, but more satisfying jobs in an alternative financial sector that was composed of smaller institutions rooted in communities and motivated by those communities' values.

John Park rightly talked about the need to work with representatives of the workforce. Those people are elected to advocate for their members' interests, so it is right that we should regard their views. However, there is another argument to make about democratic control of newly public assets. Alex Neil urged us to use such democratic control to protect jobs and nothing else. I agree with that as far as it goes, but we would serve Scotland's long-term interests better by ensuring that our banks—they are now, in large part, directly our banks—put sustainability, self-reliance and the community values that I mentioned ahead of executive pay and the interests of hedge funds and shareholders.

If the public are to own a substantial share of the banking sector, we should ensure that those assets work in our interests by shifting money away from the polluting technologies of the previous century and toward the renewables technologies of tomorrow. At a Sustainable Development Commission event last night, Ian Marchant argued that the financial crisis requires a specifically green investment-led recovery. James Kelly's remarks in support of investment in microgeneration are quite compatible with that vision of a green-investment led recovery. Therefore, I fully expect Labour to support the Green Party's proposals on the budget that are designed to achieve just that.

We also need financial institutions to give priority to that agenda not only by shifting their investment, but by developing financial products that make it affordable for householders and businesses to retrofit their buildings. All that would mean that something far more substantial would emerge from the present disaster than simply the protection of existing jobs. The rebuilding of our economy could be based on those sensible values and provide a genuinely sustainable future for us all.

I welcome the fact that the Liberal Democrats have allocated part of their business time today to a debate on the future of HBOS and its significance to the Scottish economy. HBOS has 17,000 employees in Scotland, many of whom are resident in Edinburgh and in my constituency, as Alex Neil pointed out. Along with the bank's shareholders, savers and customers—both private individuals and businesses large and small—they are genuinely worried about their jobs, mortgages, savings and business loans.

Although the debate is commendable, I am concerned that it may advance a false prospectus. Essentially, the Liberal Democrats and the SNP are trying to suggest that there can somehow be a painless escape for HBOS from its present situation if only the chancellor does not make a merger with Lloyds TSB a condition of Government financial support and, instead, offers to recapitalise an independent HBOS. The subtext is that, if that were to come about, not only would every job be safeguarded, every business be financed, every mortgage be extended and every pound of savings be assured, but Scotland would still have a major bank headquarters here in our capital city. If that happy state of affairs could be assured, I would be the first to sign up to the proposition. However, I fear that that may not be the case.

First, given the financial state of HBOS, could a recapitalisation be achieved for the same amount of taxpayers' money as would be expended following a Lloyds TSB-HBOS merger? Or would we end up with a wholly nationalised bank? Secondly, would the capital investment that was made by taxpayers be more or less secure in a single entity than in a merged operation? Before the SNP or the Liberal Democrats rush to thwart or denounce a merger of HBOS with Lloyds TSB, they must get answers to those questions.

We need to know—and have not yet heard—what alternatives the private sector offers to the Lloyds TSB bid. For weeks, we have been constantly told that there are any number of white knights who are ready to ride to the rescue. Alex Neil has raided his piggy bank, and Tavish Scott and the Liberal Democrats are keen to follow suit. But are those white knights real or illusory? Is there any hard cash, or is it just hot air?

In The Scotsman yesterday, I read the headline, "Buyers line up for parts of HBOS empire". It appears that the HBOS subsidiaries Clerical Medical and Insight Investment are being eyed up. Eagerly expecting more hard news and details, I read on. On page 4, I was told that there are two obstacles to that:

"First, the pricing of financial assets and businesses in today's turbulent conditions would present a major problem. Secondly, while rival UK insurers might be interested, firms in the sector face pressures of their own and do not have the cash for a bid."

The article continued:

"In addition, raising finance from banks in the current conditions would be virtually impossible."

It seems that those particular white knights do not have the money, cannot borrow the money and do not even know what price to pay—and that is meant to be the good news.

As matters stand, and as many members have commented, a merger with Lloyds TSB is the only offer on the table. Everything else is a mixture of speculation and wishful thinking. If anyone out there has a viable, realistic alternative, they should come forward. The Government and the directors of HBOS would be obliged to give serious consideration to any such proposal, and I would be the first to criticise them if they failed to do so. However, it appears that, until a white knight with deep pockets puts his head above the parapet, there is no alternative. It would be wrong and a cruel deception for Parliament to pretend otherwise.

We have had a useful discussion. I mentioned that I had been in contact with union representatives earlier this week, and I will highlight some of the concerns that they raised with me. The unions have a number of general concerns, but there are three main concerns that we need to take on board and do something about as a Parliament.

The first main concern is the potential for the offshoring of jobs. One of the partner banks has that as a policy whereas the other does not. The second main concern is over pension guarantees and the future of pensions. That would be a concern for workers in any company that was going through a merger. The third main concern is over bonuses. When we talk about bonuses in the financial services sector, everybody thinks about the executives. However, we must remember that there are people who work in the banks who rely on bonuses as part of their salary package, along with the share-save schemes and other options that they may have.

I absolutely agree with the member about the concerns that have been raised. However, given that, if the merger goes ahead, the Government will control 43 per cent of the shares, has Mr Park put those concerns to Gordon Brown and Alasdair Darling? If so, what are they going to do about them?

Mr Neil has stolen my thunder yet again. I was just about to say that I made a commitment to the people I spoke to—who, I point out, were not union general secretaries, but local shop stewards and representatives—that I would put their concerns directly to the Treasury and the Scotland Office and ask for their comments. I have done so today, and I am sure that the Scottish Government will want to do the same.

When, at the very beginning of the debate, I asked Tavish Scott whether he had had dialogue with representatives, he said that he had spoken to individuals in various bank branches and different areas of the company. However, we must recognise that, like the Parliament, the unions have to take a wider view, not just represent the views of individuals. The unions are quite clear that, at the moment, the current option is the least worst one; indeed, that is what they have said to me in the meetings that I have had with them.

Although I welcomed Derek Brownlee's comments about jobs and although he made many good points in his speech, his amendment mentions nothing about the workforce having a say in what will happen. Patrick Harvie made a valid point about regulation, and I have no doubt that there will be structural change in the financial services sector and that more robust financial regulation will be introduced in the future.

Will the member give way?

I am sorry; I must get on. I will say, though, that it is only right that such change happens. After all, the landscape in Scotland has completely changed.

Mr Swinney highlighted the importance of working together on this issue, and I am pleased that he mentioned the correspondence that he had received from the Chancellor of the Exchequer. That shows clearly that we can work together— which is, after all, what the people expect the Parliament to do.

Pauline McNeill talked about standing up for Scottish interests. We on this side of the chamber will certainly do so, no matter whether the issue concerns backroom functions, Scottish jobs or anything else.

I admire Mr Neil's passion; however, he needs to speak directly to workforce representatives on these matters. In my regular discussions with those representatives, there has not been much support for some of the proposals that he has highlighted.

Finally, as Sarah Boyack pointed out, the skills and talent that we have in Scotland give us a competitive advantage. Of course, we also have a productive and efficient workforce.

It is absolutely right for the Parliament to focus on the jobs issue in this debate. Indeed, I cannot reiterate that point enough. It is up to the Parliament and parliamentarians to maximise the debate's impact and ensure that we secure the maximum number of Scottish jobs.

I appreciate the speeches that have been made from all sides of the chamber in this important debate and will reflect on them as I sum up on behalf of the Government.

As many members have pointed out, the Bank of Scotland is one of the cornerstones of our nation's economic life, and the detrimental impact on the Scottish economy of any loss of decision-making functions from or employment in Scotland would reach far beyond Edinburgh into every part of the country. In the current climate, that impact would most certainly not be painless.

This Government has been doing everything possible to secure the best deal in the event of the merger going ahead. The First Minister made early representations to the management of Lloyds TSB and HBOS and those lines of communication very much remain open and active. However, our overriding consideration must be to get the best deal for Scotland in line with the broad, worthy goals of avoiding job losses and contraction; retaining key decision-making functions in Scotland; and creating a climate that will allow our banking sector to play the fullest possible and most positive role in the new beginning that will follow the impending recession. I believe that all that is best served by retaining in Scotland HBOS's competitive presence as the Bank of Scotland.

For the sake of clarity, will the minister confirm whether the ministerial team agrees with Mr Neil's suggestion that we seek a solution to this problem from the middle east?

We continue to press for the best possible opportunities that might emerge and will consider every proposal on its merits. However, there is a compelling reason to pause for consideration. Since the merger proposal was first announced on 17 September, the international financial landscape has changed dramatically. On 19 September, the short selling of UK financial stocks was banned; on 3 October, the UK increased its deposit insurance coverage to £50,000; on 8 October, the UK Government announced its credit guarantee scheme and plans to recapitalise the UK's major banks; and yesterday we had the successful take-up of HBOS's £2.4 billion two-year bond scheme. That is not to mention the material movement in share prices and the growing realisation of what all this could mean for Scotland. The UK Government must now confirm whether recapitalisation funds would be available to HBOS as an independent institution.

In that respect, I am pleased by Alasdair Darling's letter, which leaves the door open. The letter says:

"If for any reason the merger did not go ahead, the FSA would need to re-assess both banks to determine the extent to which each would need to recapitalise."

That sends a clear message to the shareholders of Lloyds TSB and HBOS. In addition, we must have either the early and open publication of the Office of Fair Trading's report on the proposed merger or—at the least—an interim report.

Our duty in the meantime has been to work positively on both scenarios. That is what we are doing: the amicable meeting that the First Minister had on Tuesday morning with Sir Victor Blank, Eric Daniels and Archie Kane of Lloyds TSB was the continuation of that process. The Lloyds TSB integration team know that this Government and its agencies can offer the type of location and other targeted assistance that will help with any integration process that might come to pass. The response so far has been encouraging and, throughout the process, we will continue to defend Scotland's interests. Indeed, a strong business case is being made to those managing the merger to retain jobs and headquarters functions in Scotland and a promotional booklet in that respect will be lodged in the Scottish Parliament information centre for members to take a look at.

In the current climate, we welcome Lloyds TSB's assurance in its acquisition document that

"the management focus is to keep jobs in Scotland".

In response to John Park, I point out that the First Minister has had very useful meetings with Unite and Accord.

The question remains whether the merger between HBOS and Lloyds TSB should go ahead. As we know, it remains the preferred option of both banks, but as the Cabinet Secretary for Finance and Sustainable Growth and I have made clear, the Scottish Government's job is to ensure that, no matter whether the final outcome is a merger or some other alternative, as many as possible of the decision-making functions and jobs are retained in Scotland. That means that the UK Government must reassess the merger in the context of the new financial regime. The merger might have made sense six weeks ago, but when we take into account long-term public interest considerations, past experience and the indication that even the chancellor is recognising the force of these arguments, it might no longer be the best option.

My plea to members and, in particular, the Conservatives is that we consider what has happened with previous mega-consolidating mergers. As research and intelligent opinion have made clear, such mergers have rarely benefited shareholders and have almost never—absolutely never, I would say—benefited customers, employees, suppliers, taxpayers or the communities that they serve. Such a situation is very different from what is happening in Norway, Sweden and Finland, which are properly moving towards regulation and are developing proper levels of corporate social responsibility.

In summing up, I will try to distil the debate to its key elements.

The Liberal Democrats have some sympathy with the Green party's amendment. We certainly support any call for the introduction of a very different regulatory regime and agree that certain issues must be examined seriously. However, that debate is for another day. This debate is on the urgent issue of HBOS's future and what the proposals might mean for its employees, shareholders and everyone else who is associated with the bank.

As for the Conservative amendment, I must be honest and say that we have no difficulty with the proposition that shareholders should decide on the proposals. However, in response not only to David McLetchie but to John Park, I make the point that the Liberal Democrats believe that employees are being asked to vote on a false prospectus. At no time have we suggested that there are any easy options and solutions to this difficult proposition.

That is not the language that we are using and it is not what we are saying in this debate.

I do not know whether the Liberal Democrats have had any dialogue with the workforce representatives. I am sure that those representatives will have information at hand on the matter. Does the member think that it is possible that members of the workforce might know what they are going into, given that many of them are shareholders, which is why they are taking a particular approach to the merger?

I will explain why I think that shareholders are being asked to vote on the basis of a false prospectus. I do not think that all the information has been made available to anybody. The Liberal Democrats accept that the false prospectus was created, curiously, in good faith. It was created by the Government, which asked, "How do we save HBOS?" and said, rightly, that it would support the HBOS-Lloyds TSB merger not just implicitly but explicitly by undertaking to waive competition considerations. However, that failed. The second question that the Government asked was, "How do we save the UK banking system"? Its answer was to introduce a recapitalisation support package, which appears, by and large, to have succeeded.

Our contention is that, given that the politicians and the Government created that false prospectus, we are entitled to ask whether it is still legitimate today. We can now move forward. We can ask the Government to ask different questions, rather than just, "How do we save HBOS?" Having saved the banking system, what sort of system does the Government want? What kind of financial centre do we want to see in Edinburgh and in London? Are we content that a near duopoly should exist? Should we encourage alternative bidders or should we signal to the market—to allow the market to decide—that, under recapitalisation, HBOS might survive as a separate institution?

Of course, the Liberal Democrats believe that it would be better for Scotland and for the UK's financial services sector if HBOS were to remain an independent institution that was allowed to trade its way out of the present difficulties and restore value to all aspects of its business. However, that is not quite the issue. The issue is, as John Swinney said, if the Treasury has not ruled out the question of recapitalisation on its own, it has to be more explicit about that.

The motion asks the Westminster Government to confirm that HBOS would be eligible for support. Shareholders and employees would then have a proper choice. They could vote to be subsumed into Lloyds TSB. They could make their own judgment about whether that would be a better or a worse option. They would know that the deal would involve a fire-sale price and terms and a massive dilution of shareholders' interests. Nevertheless, that would be a decision for the shareholders to make.

It is nonsense that we have to have another bidder before there is a proper choice. We need the politicians who created these circumstances to create a genuine choice, so that the shareholders and employees could vote for HBOS to remain as an independent company, albeit with substantial Government support. The bank could be allowed to add value to its employment and its shares going forward. We believe that the Scottish economy, Scottish financial services and the wider UK economy would be improved immeasurably if that proper option were available to all parties.

We call, therefore, for the Parliament to allow that question to be put. We do not suggest that others will not have to come to a final view, but they cannot come to a view unless that opportunity is available to them. The only way in which it can be made available is if the Government signals that it is not just a question of backing a merger and that it is perfectly possible for HBOS to reconstruct itself to survive as an independent company. I hope that members will support the motion.