"First Annual Report of the Scottish Council of Economic Advisers: December 2008" (Scottish Government Response)

Scottish Parliamentary Pensions Bill: Stage 3 – in the Scottish Parliament at 9:37 am on 22 January 2009.

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Photo of Alex Fergusson Alex Fergusson None 9:37, 22 January 2009

Our next item of business is a debate on motion S3M-3257, in the name of Fiona Hyslop, on the Scottish Government's response to the annual report of the Scottish Council of Economic Advisers. This debate is oversubscribed, so I ask all members to stick strictly to their time allocations. I call Fiona Hyslop. Cabinet secretary, you have 11 minutes.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party 9:40, 22 January 2009

We welcome the first annual report of the Scottish Council of Economic Advisers. It is an outstanding piece of work and, as is clear from the response that we published last week, we take the recommendations and considerations seriously.

The report sets out clear strategic priorities for Scotland's economy. In normal economic conditions, advice of such weight, detail and value would be extremely helpful. In these exceptional times, however, the council's recommendations assume even more gravity in helping us to do all that we can, within the limits of our powers, to deliver for the people of Scotland.

Over the past year, we have followed the council's advice on how to achieve our targets for economic growth, productivity, emissions, participation and cohesion. We have listened carefully to the council on planning, infrastructure, education and skills, and our economic statistics. We agree with the council that, had the Scottish Government more levers under our control—such as borrowing powers—we could make an even greater contribution to economic recovery.

It remains to be seen whether the announcements that were made by the UK Government on Monday will encourage lending and get rid of the toxic assets in our banking sector. What is clear is that the banking sector and the UK economy generally both face unprecedented circumstances. For many Scots, this is the most difficult economic climate for more than a generation, and few could have forecast the severity of this downturn. However, as early as last summer, this Government developed a six-point economic recovery programme to help to reduce the worst effects of the downturn on individuals and businesses in Scotland.

I want to outline the action that we are taking to provide increased support for people who are facing hardship, and I will refer to some of the specific recommendations and considerations of the council.

As the council has recognised, our greatest challenge will be in supporting individuals who face the risk of unemployment, which is why we are enhancing our partnership action for continuing employment initiative. Last week, I announced a range of measures to strengthen PACE, including the dedication of 80 Skills Development Scotland professionals to work alongside staff in Jobcentre Plus in supporting people who are facing redundancy. A national helpline and revamped website will go live next month, and all careers centres across Scotland will be geared up to offer tailored support to individuals. The changes that I announced have been widely welcomed and will underpin further action in the next few weeks. Tomorrow, the Scottish Further and Higher Education Funding Council will prioritise resources so that colleges can align their provision with PACE activity and ensure that it better reflects the increased demand for courses.

The funding council and Skills Development Scotland are working with ConstructionSkills to ensure that apprentices who are made redundant have the opportunity to complete appropriate and relevant training. When apprentices have accumulated Scottish credit and qualifications framework credits through their training, I expect colleges and other training providers to ensure that that is recognised and counts towards an alternative programme.

Photo of John Park John Park Labour

Will the Scottish Government guarantee that apprentices in the construction sector will be able to complete their time?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I want apprentices to complete their courses. We can perhaps work collectively to ensure that apprentices who are made redundant can continue their apprenticeships in future employment. I understand that 160 apprentices have already been found alternative employment.

Issues to do with college funding also arise, as do issues to do with benefits and the UK Government. If apprentices who are made redundant are unable to find alternative employment in which to continue their apprenticeships, we have to ensure that college courses are available and that the apprentices' income does not suffer. I hope that Mr Park will accept that reassurance.

In recommendation 9 of its report, the council suggested that Jobcentre Plus powers should be devolved. Clearly, that is an issue for the longer term, but it is a suggestion with which we agree.

The council praised the partnership approach to employability that underpins initiatives such as PACE. It also recommended that we explore opportunities to work more closely with the UK Government and Jobcentre Plus. People in Scotland expect in these demanding times that public organisations and Governments of whatever political colour will pull together for the common good, which is why I met Tony McNulty, the Minister of State for Employment and Welfare Reform. We agreed that people who are out of work will receive an improved employment and skills service, and he will join me at our PACE summit in February to demonstrate our joint commitment to that. I invite the spokespeople of all parties that are represented in the chamber to attend the summit and to work with the Government to intensify our support for those who are facing up to the prospect of unemployment.

Skills Development Scotland is working with Jobcentre Plus to create a seamless service to minimise the time for which people who are affected by redundancy are out of work. Next month, we will establish one pilot office in each of the six Jobcentre Plus districts in Scotland, where people who are claiming jobseekers allowance—including those who have recently been made redundant—will be offered skills assessments and careers guidance and will be referred on to suitable skills provision.

The council of advisers has asked that we pay particular attention to the vulnerability of young people in the labour market. That is essential, if we are to avoid the creation of a lost generation of young people, such as we witnessed in the 1980s. In November, I launched 16+ learning choices, through which we will provide all our 16 and 17-year-olds with appropriate learning options. That is our alternative to compulsory schooling to the age of 18. Currently, 21 local authorities are implementing 16+ learning choices, and the programme will be rolled out throughout Scotland by the end of next year.

At the same time, we have refined individual learning accounts to provide better support for our 16 and 17-year-olds and to support workplace training. Last week, I announced further changes to ILAs to allow people—working and out of work—to participate in an even wider range of learning. I will continue to adapt our funding mechanisms to ensure that they provide the most effective support for individuals. For example, I am considering how ILA funding can support training for people who are about to be made redundant by helping them to move from being in work to being in new work by retraining, with their employer's agreement, during the 90-day redundancy period.

We also propose to invest £1.7 billion in our universities and colleges through our budget, which will help the sector to meet increased demand over the months and years ahead. The £38 million package of measures that we introduced for part-time higher education study last summer will help more people to improve their skills and job prospects during these tough economic times.

Scotland is unique in the United Kingdom in providing discretionary, grant-based funding for taught postgraduate study. However, until now, that funding has been available only to those who are on full-time courses, although 70 per cent of Scottish taught postgraduate students study part time. Later this year, I will introduce long-term improvements to those funding arrangements. Ahead of those wider changes, I announced last week that we will launch a number of pilot actions that will, for the first time, extend postgraduate funding to part-time students.

The council has recommended that we work closely with employers and has highlighted the importance of skills utilisation. Better use of the skills of Scotland's workforce is essential if we are to achieve sustainable economic growth, which is why the skills utilisation leadership group, which is made up of business and union leaders, is championing, advocating and sharing across sectors best practice in respect of how companies can make better use of the skills of their workforce in order to improve productivity.

During the summer, the Government approved a range of projects totalling around £55 million to assist employability and skills development and to build on the success of our skills interventions to help more people in Scotland to get into, and progress through, the workforce. Skills Development Scotland is currently working with sector skills councils, industry bodies and training providers to develop skills interventions that better meet the needs of individuals and employers in Scotland. We must be flexible about how we achieve an additional 15,000 training places by 2011. Some of those will be apprentices, but I know from my discussions with employers that one size does not fit all, so they want more flexible skills interventions that reflect the particular needs of their sectors.

Photo of Duncan McNeil Duncan McNeil Labour

Does the cabinet secretary agree with Michael Levack of the Scottish Building Federation, who said this morning that

"maintaining our skills base alone will not address the longer term need for a decision on the funding of infrastructure projects. I would like to see the Scottish Futures Trust up and running and investors being brought on board to provide the necessary funds. Until that time ... ministers should make use of available funding models such as PPP"?

Does she agree that we need to bring forward the work, not just maintain the skills?

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The first projects from the Scottish Futures Trust will commence this year. I advise Duncan McNeil that £2 billion of infrastructure construction work is already taking place in schools alone. As he will know, only last week I was in Greenock to see the development of the James Watt College with part of the construction money that has been brought forward from future years. The 2008-09 money will help to keep jobs—indeed, 4,700 jobs will be supported through our bringing forward construction investments as part of our plans. I will come on to that.

Recommendations 2 and 4 of the council's report endorse our approach to key sectors. To achieve our ambition of 50 per cent growth in the tourism sector, we are addressing industry concerns about the relevance of the training provision that is available for the sector. With Scottish Enterprise, we will fund a comprehensive feasibility study to bring to life an ambition of business leaders in the sector to establish an industry-led centre of leadership in hospitality and tourism. We are also providing funding to develop a food and drink skills hub at the University of Abertay Dundee. In addition, we have made funding available to establish a financial services skills gateway to support the strategy for the financial services sector in Scotland.

At the heart of the Government's economic recovery programme is a package of accelerated capital spending. We are bringing forward investment from 2010-11 into 2009-10 and—to address Mr McNeil's question—into 2008-09. Of that money, £13 million is being invested in the college sector, some of which is to be used in 2008-09 for construction work, including the development of the James Watt College. The Government has welcomed the UK Government's pre-budget report announcement, which has enabled us to bring forward up to a further £260 million of capital investment.

The council has recommended that we increase our overall infrastructure spending, and I am pleased to say that, as we made clear in the budget bill, we plan to push ahead with £230 million of accelerated spending across Scotland in the next year. We plan to ensure that local authorities receive £90 million of that funding, much of which will be focused on new and refurbished schools, which will impact on local businesses. In addition, colleges and universities will benefit from £13 million of improvements, as I just said to Mr McNeil. That money will generate work and support 4,700 jobs in total.

Members across the chamber have a duty to work to help those who face immediate difficulties, while ensuring that Scotland emerges from the downturn stronger and more competitive in the global marketplace.

I move,

That the Parliament notes the recommendations made in the First Annual Report of the Scottish Council of Economic Advisers: December 2008 and the Scottish Government's response to those recommendations in the context of its action to help businesses and households, support jobs and investment and ensure Scotland is well positioned to take advantage of any recovery.

Photo of John Park John Park Labour 9:52, 22 January 2009

I welcome the opportunity to participate in this morning's debate. It is fair to say that the initial report from the Council of Economic Advisers in December has divided opinion in Scotland. Stephen Boyd of the Scottish Trades Union Congress—a former colleague of mine who is highly respected—showed a grasp of the English language that I am unable to match when he said of the report:

"As a lesson in the banal the report is peerless. It is difficult to discern any new or innovative thinking in its 60 pages."

The equally highly respected Bill Jamieson of The Scotsman—albeit that he was coming from a different perspective—described the report as

"an outstanding exercise, compelling in its logic, impressive in its scope, cogent in its argument ... Indeed I would say it is one of the best summations for years of the problems we need to tackle in Scotland."

I am sure all members will agree that those are interesting comments.

There is undoubtedly cross-party support for the principle behind the Council of Economic Advisers. However, as always with new initiatives such as this, we must look closely at its operation and what it does. Today is about what the council has recommended and how the Government has responded to that. I am sure that it will not have escaped members' notice that the Scottish Government could not bring itself to disagree completely with any of the recommendations. Where there is disagreement, the phrase that it uses is "accept in part". In fact, the bits that the Government likes seem to be consistent with existing Scottish Government policy, while the bits that it does not like are not. That is a common thread to which I shall return later.

Our amendment highlights the importance of a formal link between the Council of Economic Advisers and the national economic forum. I shall explain to Parliament why we have raised that issue and why we want to formalise the link. The First Minister himself has made it clear on many occasions that he expects a formal link to be established between the council and the national economic forum: indeed, the Scottish Government website highlights specifically the expected relationship between the national economic forum and the Council of Economic Advisers. It states:

"The Forum will allow the Council of Economic Advisers and the Government to draw from the widest pool of opinion. We expect good ideas to flow from the Forum to those directly advising the First Minister and the Government. The Forum will provide the opportunity for issues under consideration by the Council to be discussed more widely, and for solutions to emerge amongst those organisations best placed to deliver."

Perhaps someone forgot to mention the importance of that link to the council's chair, Sir George Mathewson. At the Economy, Energy and Tourism Committee, my colleague, Lewis Macdonald, asked Sir George Mathewson whether the council engages

"with the national economic forum, which has a range of stakeholders and which Government supports?"—[Official Report, Economy, Energy and Tourism Committee, 10 December 2008; c 1374.]

In reply, Mr Mathewson said:

"We do not engage with it, but I know what its role is".

That is a worrying response on the forum, which was developed to represent the wider views of industry to the Council of Economic Advisers. I was an enthusiastic supporter of a national economic forum for a long time before I entered Parliament, but I have genuine concerns about its current size and composition. However, I am happy to leave aside those concerns in this debate because that body is an ideal way to influence Government thinking and opinion, and to build consensus on how best to meet the economic challenges that we face now and that we will face in the future.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

John Park shares our interest in skills and skills utilisation. In the light of his connections with the STUC, he will be pleased to hear that Grahame Smith led one of the sessions on skills provision at the national economic forum. The member is making reasonable points about how a connection can be further developed.

Photo of John Park John Park Labour

I appreciate the cabinet secretary's comments and the invitation to go to the summit on supporting people who face redundancy, which I will certainly take up.

I do not underestimate the difficulties of developing a national economic forum and making its work effective, but if it is to work it needs to have formal arrangements with the Council of Economic Advisers. I hope that the Government will consider that.

I recognise that the Council of Economic Advisers will consider vocational education opportunities later, but I am concerned that it has not already tackled that issue, given how vital skills and training are in assisting people in the current economic circumstances. The cabinet secretary has made a commitment to bring the skills strategy back to Parliament—I hope that that will happen in the near future. All the opposition parties have expressed concern about the lack of clear aims and objectives in the original strategy; we think that it was rushed out. The revised strategy is even more important for our people, businesses and country. I would appreciate the Cabinet Secretary for Education and Lifelong Learning or the Cabinet Secretary for Finance and Sustainable Growth saying when the new document is likely to come before Parliament.

Private sector partnerships with our higher and further education sectors are vital to sustainable development. We must ensure that the resources that we invest in those sectors are directed into areas that are relevant to our future economic needs. The report by the Council of Economic Advisers refers to a number of recommendations on higher education, which my colleague Claire Baker will cover in more detail. I want to highlight the importance of linking academic qualifications with vocational qualifications.

Earlier this week, I had the pleasure of visiting Ineos at Grangemouth, where I saw at first hand the work on apprenticeship training that it has undertaken and how its graduate programme works, and was impressed by what I saw. The company is attracting bright young people. Those people undertake the first two years of an apprenticeship and work towards a level 3 Scottish vocational qualification. During that period, they attend college part time and study for a higher national diploma in their chosen discipline, which enables them to enter the appropriate degree course in the third year. They work with Ineos during the recess periods and know that they have a very good chance of employment at the end of the process. They get vocational, hands-on skills and an appreciation of the environment that they will work in, and they gain valuable academic expertise that will provide them with the skills that will put them among the next generation of leaders in the company and the wider industry. They undertake a university course that is directly relevant to the needs of business and industry, and because they are paid in the first two years and work with the company during holiday periods, they are less likely to finish their studies with increasing debts. Rather, they are more likely to finish their studies with a good chance of employment.

Last week, the First Minister spoke about the 35,000 apprentices who are training in Scotland. He said that that figure compares well with the UK figures. However, in reality, we will take on around 10,500 apprentices in Scotland this year and the figure of 35,000 scans over two to four years, as people train for that length of time. Some 225,000 apprentices will be taken on at the UK level this year, so Scotland's figure does not compare well. We need almost to double the figure if we want to get close to the percentages that we need and so that Scotland does not lag behind the rest of the UK in apprenticeship training.

The report by the Council of Economic Advisers covers energy. I certainly sympathise with the points that the Conservative amendment raises: security of energy supply is one of the top priorities for business in Scotland. I am sure that many members have read the report by the Scottish Council for Development and Industry that was produced at the tail end of last year, which emphasised that new base-load capacity will be needed to keep the lights on after 2020, no matter how well Scotland generates more renewable energy and increases energy efficiency. That will be an issue.

There is wide support for a wider consideration of nuclear energy as part of the mix. The Scottish Government's position is clear: the national planning framework document's assumption is against new nuclear power generation. It states:

"The Scottish Government does not support the construction of new nuclear power stations in Scotland."

The report by the Council of Economic Advisers recommends that the Scottish Government commission a full independent assessment of the various energy options that are open to Scotland. The First Minister has stated that he believes that he will be proved right on nuclear energy, but the issue is not whether he is shown to be right on it; it is whether he is big enough to accept the findings of the independent inquiry and adapt Government policy accordingly.

I had wanted to say something about infrastructure, but I am reaching the end of my time.

I am sure that members will agree that the Council of Economic Advisers must not operate in a vacuum. The wider representative bodies of industry have experience and skills, and we must harness their expertise effectively. That is why I hope that all parties will support our amendment.

I move amendment S3M-3257.2, to insert at end:

"and calls on the Scottish Government to establish a formal link between the Council of Economic Advisers and the National Economic Forum to ensure that the work of the two bodies is coordinated to be of maximum benefit to the Scottish people."

Photo of Derek Brownlee Derek Brownlee Conservative 10:01, 22 January 2009

When the First Minister first announced that there would be a council of economic advisers, he referred to a counterpart body in the United States that advised Governor Schwarzenegger. Perhaps the Council of Economic Advisers has had rather less success in respect of its public profile, but we can fairly say that it has, since its creation, made a positive contribution to the economic debate in Scotland, whether or not we agree with all its recommendations.

The report highlights interesting and, at times, controversial areas across the range of the Scottish Government's powers. It provides real food for thought, particularly in these difficult economic times. Unemployment is at its highest level for 12 years; job losses are mounting; Government borrowing is at record levels; official figures today are likely to confirm that Britain is in recession; and the pound is at a 25-year low against the dollar. Therefore, the scale of the economic challenge is clear, but no Scottish Government of any party could stop the recession in its tracks or reverse it—that requires action by the UK Government.

The Scottish Government can do two things: it can try to mitigate the impact of Labour's recession in the short term where it can, and it can take the right long-term decisions on education and infrastructure to put us in a strong position when we come out of recession. In that context, I note the blizzard of announcements in the cabinet secretary's opening remarks.

The report by the Council of Economic Advisers makes it clear that the scope for fiscal stimulus at UK level has been dramatically narrowed by the borrowing that Labour ran up. That is the consensus of opinion among all economists in the country and in the world, and it represents a significant addition to the debate.

On the basis that education policies have a significant impact on Scotland's economic potential in the medium to long term, it is right that the Cabinet Secretary for Education and Lifelong Learning has spoken in the debate.

Our amendment highlights the recommendation on achieving the emissions target, and calls for

"an independent assessment of the full economic costs and abatement potential of the various energy options ... which are open to Scotland."

The Scottish Government has accepted that.

The First Minister has set out what the Government thinks are the key issues: cost and carbon emissions. However, there is a third critical issue, which John Park mentioned and that is security of supply. The Conservatives do not ask that nuclear power be given special treatment; rather, we ask that it is assessed on a level playing field. Events throughout the world demonstrate that security of energy supply is vital. My colleagues will develop that issue later.

There is a broader point. If the Government is sufficiently confident about its case on nuclear power to allow an independent review, why stop there? This week, the Confederation of British Industry reiterated its demand for the mutualisation of Scottish Water. The Conservatives have long advocated such a policy, and the Liberal Democrats are now also doing so. Mutualisation could save the taxpayer a significant sum—£182 million a year—without affecting investment. We know that Des McNulty has denounced the idea as "a betrayal": only the Labour Party would think that saving the taxpayer £182 million a year was a betrayal.

Photo of Derek Brownlee Derek Brownlee Conservative

I want to make progress.

Why does the Government not instruct a review of the benefits and costs of mutualisation? Earlier this week, we were told that it would not do so because the Treasury would keep any capital receipt, but the Government is not quite right about that. First, there might not be a capital receipt because it would be mutualisation rather than privatisation. Secondly, the Treasury does not in any case automatically retain capital receipts under the current rules. The Scottish National Party could, therefore, argue that the capital receipt should come to Scotland. We are witnessing a historic first: the SNP is passing up an opportunity to pick a fight with Westminster, and on quite a significant issue.

I turn to the other amendments—members know that I am always inclined to give a fair hearing to the constructive suggestions that the Labour Party puts forward. To use John Park's terminology, we "accept in part" the Labour amendment, and we will certainly follow the rest of the debate with interest.

To say that the Lib Dem amendment is somewhat tangential to the matter that we are debating is unfair to tangents. The Elgin bypass is a worthy cause, and the A96 is an important strategic route. However, it is not the role of the Council of Economic Advisers to draw up plans for an Elgin bypass. If it is a matter of relevance for any council, Moray Council would be more appropriate. I am grateful to Alison McInnes, however, for drawing our attention to yet another Lib Dem spending demand, which we missed out of our dossier that outlines the £8.5 billion of additional spending that the Lib Dems have called for since Tavish Scott became leader. I will, of course, ensure that that omission is rectified as soon as possible. I wonder why the Lib Dem amendment highlights the Elgin bypass, rather than the Dumfries, Maybole or Selkirk bypasses. What possible reason could the Lib Dems have for selecting the Elgin bypass for special treatment? I think we all understand the reality of the situation.

The Council of Economic Advisers' report is a helpful contribution to the debate, and I hope that the council will make further contributions in the coming years to improve the quality of economic debate in Scotland. Economic policy is a crucial area of devolved politics, and we have to improve the quality of debate and the actions of every element of government: local government, the devolved Government and the UK Government. If we can improve the economic potential of the country with the help of the Council of Economic Advisers, we will make a significant contribution.

I will finish with a final thought in relation to the Conservative amendment. The Scottish Government would, rather than splitting the country, do better to take a more consensual view on the benefits of splitting the atom.

I move amendment S3M-3257.1, to insert at end:

"and in particular notes the commitment to an independent assessment of the full economic costs and abatement potential of the various energy options, including nuclear power, which are open to Scotland."

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat 10:07, 22 January 2009

Our complaint is not with the Council of Economic Advisers, nor with its advice, but rather with the Government's action—or lack of action—in response to its report.

The purpose of the council is to work with the Government in setting the economic policies for the future. Members might have expected the Minister for Enterprise, Energy and Tourism to lead or to sum up in today's debate, as he has done in previous debates on finance and the economy. When the minister appeared before the Economy, Energy and Tourism Committee, he was asked by the convener whether he could

"give us any information about what advice the Council of Economic Advisers has given the Government?"

The minister replied:

"Sadly, that happens above my pay grade in the Government. I do not sit in on meetings of the Council of Economic Advisers, although I hear about their outcomes. However, I welcome its involvement, as there is absolutely stellar talent in it. The basic fact that it exists, let alone the fact that we receive advice and guidance from it, does Scotland great credit."—[Official Report, Economy, Energy and Tourism Committee, 5 November 2008; c 1244.]

So—the council exists, ipso facto we are better off.

There is a similar rationale for the Scottish Futures Trust: it is costing millions, it is spending nothing and it is delayed and confused—but through the sheer fact alone of its existence, we are better off.

We certainly did not oppose the Council of Economic Advisers. Such independent and qualified advice is always useful for Government—if it is on what the Government is actually doing or planning to do—and it is useful in relation to how it shapes political thought in Scotland. However, as is the case with most things the Government does, there was an underlying political aim: the hope that the council would advance the case for independence. The Government, in its response, seeks at each and every opportunity to make the case for full fiscal autonomy—to have the same powers as countries such as Iceland. The council, however, has never been asked to examine the case for independence.

As the John Lewis slogan states, the First Minister is "never knowingly undersold". Therefore, when he announced the Council of Economic Advisers by saying that it

"represents the most formidable intellectual firepower ever to have tackled Scottish economic underperformance"—[Official Report, 28 June 2007; c 1329.]

expectations were ever so slightly raised.

One might have thought that the Scottish spending review proposals, the Scottish budget, the national conversation, the Scottish economic strategy and the Government's skills strategy would all have been referred to the council for specific advice on the Government's direction of travel in the current session of Parliament, but that did not happen. The national conversation is open to everyone, as the Government repeatedly tells us. However, it is seemingly not open to the economic advisers. The council has not done anything with regard to the Government's response that has moved the debate forward.

The council's membership is hugely impressive, and we are all grateful for the involvement of the "stellar" cast of actors, as they are described. However, it appears that their script has been written for them. As has so often been the case with the Government, the action on the ground finds it difficult to keep pace with the rhetoric.

Infrastructure—in this case, the Elgin bypass—is a good example of the Government's response. It opened schools that it had nothing to do with, and takes credit for them. It has published a 10-year forward transport plan, but with cost variations of up to 40 per cent on the estimated total value. Ministers criticise the plan in their constituencies, after signing it off in the cabinet room.

Another example is the Scottish Futures Trust. In June 2007, the Cabinet Secretary for Education and Lifelong Learning said:

"the futures trust will provide a very attractive option for local authorities and I think that many are waiting with great anticipation to use it."—[Official Report, Education, Lifelong Learning and Culture Committee, 27 June 2007; c 40.]

Many are still waiting with even greater anticipation 19 months later. That wait has caused a disastrous slowdown in the pipeline of projects.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

I reassure the member that there has been no slowdown in funding and support for schools. In fact, 150 schools have been refurbished and opened since May 2007, and another 100 schools will come during the current session of Parliament.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

Those schools were planned and the funding put in place by the previous Administration. The cabinet secretary—

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

No, I will not—if the minister calls me "pathetic" from a sedentary position, I will not give him the courtesy of giving way.

The cabinet secretary failed to persuade Parliament, so perhaps she should attempt to persuade the Scottish Council for Development and Industry. In the SCDI's 10-point plan for construction from the policy paper that it published late last year, recommendation 8 states:

"There is agreement amongst buyers and suppliers that delays and uncertainty over the establishment of the Scottish Futures Trust is holding up investment in infrastructure and damaging construction industry. We need the Scottish Government to clear up uncertainty and get on with the job of renewing our schools, hospitals and transport infrastructure."

The SCDI does not believe what the Government says, so I am not sure why any members of the public should believe it.

There is considerable merit in the advice from the Council of Economic Advisers with regard to skills and the restructuring of Scottish Enterprise. It has called for an industry-based approach, while the Scottish Government has gone for a company-based approach, by removing swathes of support for small businesses throughout Scotland. The new chair of Scottish Enterprise—the body is 40 per cent smaller than its predecessor—is being paid the same £40,000 salary as his predecessor for one and a half days' work. I assure the cabinet secretary that that will stick in the craw of many constituents of mine who will be worried about their jobs in the coming months.

I commend the Government's response on one point, with regard to how projects in infrastructure will be accounted for. The Government's response to recommendation 20 is clear with regard to—

Photo of Alex Fergusson Alex Fergusson None

I am sorry, Mr Purvis—we have to move on. I warned all members that there was no extra time available.

Amendment S3M-3257.3 moved:

"insert at end 'notes the Council of Economic Advisers' recommendation that the Scottish Government "raises the overall level of infrastructure spending within Scotland", and believes that the Elgin bypass should be included in the Scottish Government's transport infrastructure investment plans.'"—[Jeremy Purvis.]

Photo of Keith Brown Keith Brown Scottish National Party 10:13, 22 January 2009

As the cabinet secretary said, the council's report has been received during grave economic times. For that reason, it is timely and welcome. As the Scottish Government is currently bringing forward its economic recovery budget, the report suggests key actions to address the current economic crisis as well as the long-term challenges that we face as a country.

We have had a public debate that, in addition to concentrating on the current economic crisis, has raised questions about how much the Parliament and the Scottish Government can do; the size of the Government's budget; the extent of its powers; and the discretion—as opposed to standing obligations to spend—that it has within the budget.

The report highlights the current extent of our powers and acknowledges, in particular, the absence of borrowing and macroeconomic powers. There is a degree of relative unity among members about the gravity of the situation that we face and the need for action, and recommendation 20, which Jeremy Purvis mentioned, highlights the need to explore alternative borrowing powers outwith the current private finance initiative regime.

If it is true that we must be flexible, dynamic, innovative and bold in responding to any crisis, it is particularly true in the current economic crisis. The Parliament must show flexibility, innovation and boldness, and I suggest that the most effective thing the Parliament can do is unite behind the idea of establishing borrowing powers. I know that there are some disagreements about that among the parties, some of which say that the matter is being considered by the Calman commission, which is not yet ready to report. I understand that point, but in response I make the point that we are in a huge crisis. Given the news that we saw on television last night about further job losses and other economic indicators, it is obvious that we do not have a great deal of time to respond quickly and effectively to the crisis.

I do not think that the other parties have substantial objections to the idea or would rule out borrowing powers in principle. If we consider the other actors who have commented on the economic situation and their views on borrowing powers, it is clear that the matter should not necessarily divide the parties in the Parliament. Reform Scotland and the David Hume Institute have spoken in support of borrowing powers, while the STUC, which John Park mentioned a number of times in his opening speech, could not be clearer in its support for the establishment of borrowing powers for the Parliament. Unison and other trade unions also support the idea.

We should consider the anomalous position in which the Parliament and the Government find themselves in comparison with local authorities, which have been able to borrow for many years. In theory, their borrowing power was increased dramatically with the move to prudential borrowing and, rightly, the only limit on their potential to borrow is what they can properly service through their revenue streams, as long as they act in a prudential way.

The Northern Ireland Assembly can borrow up to between £2 billion and £2.5 billion, and even the Scottish Government, through its projects with Network Rail, can tap into borrowing powers to fund infrastructure projects for the railways. There is no logical reason why the Scottish Parliament, which is perhaps the most powerful of the devolved Parliaments and Assemblies, cannot borrow as well. Our inability to do so fundamentally limits our ability to deal with the current economic crisis.

Many people, including the economic advisers, have highlighted the need to bring forward infrastructure projects. The benefit of doing so is that it produces a long-term return to the country and the economy well into the future. Improvements to the country's infrastructure such as road bridges, rail projects, education projects or communication projects produce long-standing benefits, not least because they improve our economic situation compared with our competitors.

Borrowing powers are crucial at the best of times, but they are even more crucial at present because we need to establish new jobs and new public works. It is also the case that the economic downturn itself presents a great advantage. For example, the Cabinet Secretary for Education and Lifelong Learning recently announced £21 million of funding for a new Forth Valley College in Alloa. That college will be built during a tough time for the construction industry, so we will get it for a good price; the existing college will, I hope, then be sold when the upturn comes, so we will get the best price for it. There are opportunities, but they have to be taken quickly.

Yesterday, I lodged a motion on borrowing powers. I seek all members' support for going to the Westminster Government and asking for borrowing powers outwith any debates about fiscal autonomy, independence or further devolution. Our request would be a response to the current economic crisis, and I do not see any reason why any party in the Parliament should oppose that.

Such a move is a short-term measure that can be done fairly quickly. There are different views about whether it can be done by ministerial order or whether primary legislation is required, but whichever approach we take, we must respond quickly and imaginatively to the current crisis. Other economies throughout the world have developed quick responses, perhaps taking steps that they would not have taken before. The fact that we talk quite glibly these days about the nationalisation of the whole banking system shows how much things have changed.

I end with a plea that we try to achieve some consensus. The public would be grateful if the Parliament could establish borrowing powers that allowed us to take forward infrastructure projects. That would be a bold step towards dealing with the economic crisis.

Photo of Wendy Alexander Wendy Alexander Labour 10:19, 22 January 2009

I begin by quoting one of Scotland's most prominent entrepreneurs and economic commentators, Ian Ritchie. In the January edition of Scottish Business Insider , he wrote:

"the old Scottish economy—which was overwhelmingly dominated by giant financial institutions—has been blown to bits by the great Credit Crunch of 2008 ... Both Scottish & Newcastle and HBOS—with their centuries of proud tradition and business leadership—have gone forever.

The UK Government now owns the Royal Bank of Scotland which, alone, until recently represented well over 50 per cent of the Scottish economy."

He concluded:

"The last time our economy was in such a state was in 1945, at the end of the second World War when huge chunks of our business infrastructure had been literally blown to bits by the Nazis."

That was just last week. On Monday, RBS posted the largest corporate losses in UK history and the Scottish Chambers of Commerce offered its bleakest survey ever, and on Tuesday the share value of the new Lloyds Banking Group slumped by 30 per cent. Yesterday, Scottish unemployment rose sharply to a 10-year high, and this morning Scotland's Parliament debates the Scottish economy for the first time this year.

I have to ask what worried Scots should make of the fact that today, in the midst of the most challenging economic week for decades, the SNP declined the chance for a minister with responsibility for the Scottish economy to open the debate. We face tight credit conditions, small business finance is jeopardised, economic growth is reversed, business activity is down, household incomes are down, retail sales are down, and house prices are down. I mean no harm to Fiona Hyslop, but she has no ministerial responsibility for any of those things.

The economy, the Scottish budget, business and industry, Scottish Enterprise, Highlands and Islands Enterprise, trade and inward investment, corporate development, public services reform, deregulation, European structural funds, energy, tourism, land use, planning, climate change, building standards, transport policy, procurement, e-government and Scottish Water are all the responsibility of John Swinney and his team. Scotland is facing an unprecedented economic storm, but all three ministers with responsibility for the Scottish economy declined to open the debate.

Photo of Wendy Alexander Wendy Alexander Labour

I will give way to the cabinet secretary, who did not want to open the debate.

Photo of John Swinney John Swinney Scottish National Party

Would Wendy Alexander not have preferred me to listen to her great, six-minute oration and give a considered response at the end of the debate, to deal properly with the issues? I will be delighted to do that, and I am glad that she has taken three minutes to say precisely nothing to the Parliament.

Photo of Wendy Alexander Wendy Alexander Labour

I am told—and I will be interested in the cabinet secretary's view on this—that it was only a last-minute switch that shamed him into appearing today, but maybe he will tell us why he misinformed every other party. However, that is a matter for elsewhere.

It was so different in 2007, when John Swinney told us that the Council of Economic Advisers would

"play a significant part in the development of our economic strategy, but Parliament must also be central to the process."—[Official Report, 30 May 2007; c 194.]

These days, he and his ministerial team have to be dragged to the Parliament to account for their actions.

If the SNP thinks that I mean to shame ministers into action, I do, because they can be shamed. For months, I and others have been calling on them to publish the Scottish Government's six-point economic recovery plan in a more substantial form than a mere press release. They finally slipped it out last week. There was no press release, no debate and no leadership by the cabinet secretary, but finally, at the beginning of the Government's response to the annual report of the Council of Economic Advisers, we have the six-point plan.

As the cabinet secretary is now to sum up the debate, I ask him to answer the following questions. Why is there no meaningful discussion of the proposed local income tax from either the Council of Economic Advisers or the Government, given that it is the Scottish Government policy that is of most interest to Scottish business? Why is there no discussion of the neutering of the intermediary technology institutes? Why is there still a planned real-terms reduction in the Scottish tourism budget for this year? Why is the Government abolishing the collection of data on the performance of planning authorities in Scotland? Who will carry out the review of energy options, and when will the terms of reference be made public?

I note that a small minority of the council's recommendations relate to Fiona Hyslop's responsibilities, but the vast majority relate to John Swinney's. We must fear that the SNP is guilty of inaction and irrelevance with regard to the Scottish economy. The intermittent calls for unity by the Cabinet Secretary for Finance and Sustainable Growth—in contrast to the attacks on London that goodness knows there are still plenty of—cannot become a cover for inaction or silence in this Parliament. The country deserves better.

Photo of David McLetchie David McLetchie Conservative 10:25, 22 January 2009

We should welcome the report of the Council of Economic Advisers, which makes 22 recommendations to the Government. However, I have just discovered a hitherto unknown and secret 23 rd recommendation: "John Swinney should speak first in all parliamentary debates". That is the way to get this country out of recession.

I was interested to note in the Government's response its support for the Scottish tourism industry and homecoming 2009. I am in no doubt that homecoming will be a great success, not just because we are celebrating the 250th anniversary of Robert Burns's birth, not just because of the extensive programme of events the length and breadth of Scotland, and not just because of the seductive siren voice of that home-loving man, Shir Sean Connery, but because the third world currency with which Gordon Brown has landed us means that most Scots cannot afford to leave home in 2009. The collapse of sterling on the world's currency markets is the world's judgment on Britain's economic condition and makes Labour's attempts to present the Prime Minister as some kind of world economic saviour as a ludicrous blasphemy. So, for the time being, it is holidays at home for us and we should take this opportunity in adversity to boost our tourism industry for future years when we are not exchange rate prisoners in our own country.

The Conservative amendment focuses on the recommendation that the Government commission an independent assessment of the full economic costs and abatement potential of the various energy options open to Scotland. I am pleased that the Government has accepted that recommendation and, in particular, welcome the First Minister's statement that one of the energy options to be examined in this independent assessment will be nuclear power.

Yesterday, the Local Government and Communities Committee took evidence on the second national planning framework from Stewart Stevenson and the chief planner. As members will be aware, the framework identifies 12 national developments, including a new power station and trans-shipment hub at Hunterston and new non-nuclear base-load capacity at other existing power station sites. If the Government is serious about having an independent assessment of energy options, it must be prepared to admit the possibility of the independent assessor coming to a conclusion on energy policy that differs from the one the Government has reached. Parliament will complete its scrutiny of the national planning framework, and it will come into effect, before we learn the results of the independent assessment, never mind the Government's response to its recommendations.

A Government that has a genuinely open mind on this matter should be prepared to accept a simple modification to the national planning framework and remove the term "non-nuclear" in the reference to base-load capacity. After all, it does no violence to the planning framework to admit the possibility of the independent assessment coming to the conclusion that new nuclear capacity is necessary in Scotland to replace Hunterston and/or Torness when those stations come to the end of their operational lives.

Photo of Patrick Harvie Patrick Harvie Green

Mr McLetchie will be aware that the majority of members in the Parliament won their seat on the back of manifestos that were explicitly opposed to new nuclear capacity. Even if his independent review informs future debate or the development of NPF 3, why should it supersede the democratic mandate of the current Parliament?

Photo of David McLetchie David McLetchie Conservative

After 10 years in the Parliament, my experience is that the majority of members are invariably wrong on a whole range of issues because they do not agree with me. Indeed, the majority of members are well capable of changing their minds—and I hope that, after hearing my rational arguments, they will do so.

One would have thought that, if new non-nuclear base-load capacity qualified as a national development, new nuclear base-load capacity must also do so and that a Government with an open mind would have concluded that my suggested amendment to NPF 2 was appropriate. Sadly, this Government has not reached that conclusion, and Mr Stevenson was emphatic that the Government would not amend its framework in that way.

The only conclusion that I can draw is that the Government is certain of the outcome of the independent assessment. In that case, just who is going to conduct the independent assessment that is going to reach the conclusions of which the Government is so certain? Perhaps the Cabinet Secretary for Finance and Sustainable Growth will inform us of the identity of those wise men and women, because there are any number of wise men and women who have reached the conclusion that we need to rebuild our nuclear capacity if we are to have the remotest prospect of ensuring our energy security and achieving our emissions targets. I need refer only to the influential inquiry into energy issues conducted by the Royal Society of Edinburgh; the advice of the former chief scientific adviser to the UK Government, Sir David Kane; and the views of that great green guru, Professor James Lovelock.

In the face of that intellectual firepower, we await with interest the identity of the assessors and their credentials for judging this most important of issues. In the meantime, the Council of Economic Advisers

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I am afraid that the member's time is up.

Photo of David McLetchie David McLetchie Conservative

—is to be commended for reopening—

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The member should not go on speaking after I have told him to stop.

Photo of Aileen Campbell Aileen Campbell Scottish National Party 10:31, 22 January 2009

One of the Scottish Government's first acts after the May 2007 elections was to establish the Council of Economic Advisers in recognition of the importance of developing and growing Scotland's economy in meeting the Government's other targets, including eliminating poverty, respecting the environment and building the best possible future for our children.

Scotland's Government is not alone in seeking independent advice on how best to develop its economy. For example, the Executive Office of the President of the United States has had a Council of Economic Advisers attached to it since 1947; indeed, in recent days, it has been rebooted with fresh faces and new thinking to take forward the changes in American policy that we have all been hoping for. In 1997, Ireland established a National Competitiveness Council to advise on how to draw together a diverse range of sectors and experience to build the country's economy. Even Gordon Brown has his own—albeit not wholly independent—national economic council, which comes complete with Peter Mandelson.

The Scottish Government has not set up the council to be a talking shop; it is offering the Government real, practical and concrete advice, and the Government is responding positively to its views. The council's report is perhaps even more important in an era of economic uncertainty that is very different from the situation when it was established in May 2007. Unfortunately, we are now hearing regularly of bankruptcies and job losses. In the South of Scotland region that I represent, the haulage industry is just one area that is beginning to feel the pinch—last week, for example, the Eddie Stobart Group announced the closure of its Larkhall depot. This will be a worrying time for all the staff at the site and their families and I am sure that, through PACE, the Scottish Government will do it all it can to help them and the other businesses and industries throughout Scotland that are trying their best to survive.

I am particularly pleased by the commitment in the Government's economic recovery programme to strengthen not only PACE, as Fiona Hyslop made clear in her opening remarks, but links between Skills Development Scotland and Jobcentre Plus

"to minimise the time for which people who are affected by redundancy are out of work".

The Government is right to highlight its recovery programme at the beginning of its response to the council's report, because the strategy will help to ensure that Scotland meets the present economic challenges as best it can and emerges stronger as a result. That is one of the themes of the council's recommendations, and I welcome the fact that the Government has accepted 18 of the 22 recommendations in full and the remaining four in part.

The wide-ranging recommendations join up the different sectors and factors that affect—and are, in turn, affected by—our economy. As a member of the Education, Lifelong Learning and Culture Committee, I was particularly interested in the council's recommendations on education and skills. Perhaps controversially, the report recommends that the Government consider introducing a two-tier approach to the standard four-year honours course. The Government is right to accept the recommendation containing that proposal only in part, because it is important that we respect our higher education institutions' autonomy in this area. Any significant changes to the structure of degree courses in Scotland will need the academic community's full support.

The Scottish Government has also accepted only in part the recommendation that a range of stakeholders, including businesses and students, contribute to the funding of higher education. Access to education based on the ability to learn, not on the ability to pay, has been a long-cherished principle in Scotland, and its having re-established free education with the abolition of the graduate endowment, I can well understand the Government's reluctance to accept that recommendation.

The recommendations that the Government has accepted only in part are a small minority of the overall report, which, on the whole, is ambitious for Scotland's economy and confident about the steps that we can take to face economic difficulties.

It is not surprising that, in its response, the Government accepts all the recommendations regarding growing the powers of the Parliament and the potential difference that greater fiscal autonomy could make to the country. I welcome the growing strength of feeling in Scotland in favour of greater financial powers for the Parliament and the Government. Despite what some members have said, many people now view the fact that the Parliament does not possess the borrowing powers that our local authorities, the Northern Ireland Assembly and Network Rail take for granted as, to use Keith Brown's words, highly anomalous.

Like the Scottish Government, I want Scotland to have all the powers of a normal independent country. Despite all the challenges that it faces, we have not heard that Ireland is seeking to return to the bosom of London to cure its economic woes; nor has Norway declared itself insolvent, despite some people's predictions.

The Government has accepted many other welcome recommendations. I particularly look forward to seeing how the advice on developing the planning system is taken forward. One of the issues that constituents raise with me most regularly is the difficulty that they face getting through the planning process. Any steps that the Government can take to make the process streamlined, transparent, consistent and focused on good-quality outcomes will be warmly welcomed.

The fact that the Government has been able to respond so positively to the report of the Scottish Council of Economic Advisers demonstrates the wider ambition that it has to help Scotland flourish. Nowhere is immune to the global economic downturn but, with a Government that is prepared to listen to the sound advice of its economic advisers, Scotland can prove more resilient than it might do otherwise.

I congratulate the Government on its positive response to the report, and I am confident that future reports will continue to help strengthen and develop Scotland's economy, no matter the global circumstances in which we find ourselves.

Photo of James Kelly James Kelly Labour 10:37, 22 January 2009

I welcome the opportunity to take part in the debate, which comes at a relevant time, given that the economy has dominated the Scottish, UK and world political scenes in recent months. There is no doubt that we find ourselves in a very difficult economic situation, which is illustrated by the 13,000 rise in unemployment figures that was announced yesterday and the recent purchasing managers index survey, which showed record drops in Scottish services activity and manufacturing output.

In reflecting on the economic situation, I recalled that, last May, I was part of a group of MSPs who visited the Royal Bank of Scotland headquarters as part of the Scottish Parliament and Business Exchange. It is really hard to believe that eight months later, RBS posted £20 billion losses and the Government now controls more than 70 per cent of it.

The effects of the economic situation are being seen in communities in our constituencies. A recent report by Experian noted that Rutherglen is likely to be one of the five towns that are worst affected by the recession. Almost at the same time that the report was published, that was shown by the closure of Woolworths on Rutherglen's Main Street. Sadly, the situation has deteriorated this week with Vion's announcement of the proposed loss of 150 jobs in the food processing plant in Cambuslang. That is unfortunate, given that Vion took over Grampian Country Foods only last June. The First Minister had a meeting with Vion—as did Richard Lochhead in October—and he said that he hoped that Vion would change the landscape. It has certainly changed the landscape in Cambuslang by proposing to put workers on the dole, which is not welcome.

I note the Council of Economic Advisers report's contribution to the economic debate, but we are more concerned about the impact of the economic situation on the ground. We do not need an economics doctorate to see the impact in Cambuslang and Rutherglen, given the "for sale" and "to let" signs that are going up in shops in the main streets. We can also see the effects in the faces of the workers at Vion who are facing potential redundancy. Those workers and their families are experiencing a really emotional and difficult time. They are looking for practical actions. They are looking to see what Jim Mather, as Minister for Enterprise, Energy and Tourism, can bring forward and what Richard Lochhead, who has responsibility for food, can do to revitalise the food processing plant. Overall, people are looking for jobs and skills to be prioritised to revitalise their communities and boost our town centres. We have to face those major issues.

The report addresses the major issue of energy, to which the Conservative amendment refers. There are big challenges for the SNP Administration, given its stated aim to bring forward plans to reduce emissions by 80 per cent by 2050. It is one thing to make such a policy commitment, but it is another to deliver it. We are all committed to boosting and encouraging renewables, but the SNP Administration has turned down a number of renewables schemes, and there is still a delay in the Beauly to Denny network. If we are really going to push renewables, the infrastructure must be in place to support that.

The Administration attempts to face both ways on the nuclear question: it is prepared to extend the lifespan of nuclear plants, but, at the same time, it says that it is not in favour of the nuclear option.

Photo of David McLetchie David McLetchie Conservative

On the subject of facing both ways on nuclear power, will the member explain why the Labour Party in this Parliament finds it so difficult to support the energy policy of Her Majesty's Government?

Photo of James Kelly James Kelly Labour

We all want a balanced energy policy that takes energy from all sources and helps to give us stability of supply and strong base-load provision, which will ensure that we keep the lights on. Scottish Labour and UK Labour are committed to that.

The report fails to address some of the bigger issues in how we grow the economy. We need practical action to tackle the big issues and provide solutions for Scotland.

Photo of Alison McInnes Alison McInnes Liberal Democrat 10:43, 22 January 2009

I read with interest the Council of Economic Advisers' recommendation that

"there is a need to raise the overall level of infrastructure spending within Scotland".

A critical element of that is investment in transport infrastructure. Six weeks ago, the long-awaited strategic transport projects review was finally presented to Parliament. It is prefaced with the following:

"A safe, efficient and effective transport system is essential for Scotland and the Scottish economy ... Our economic success depends on good connections between our cities and towns ... Transport Scotland's Strategic Transport Projects Review ... supports the Scottish Government's purpose of promoting sustainable economic growth by planning the next 20 years of transport investment for Scotland's rail and trunk road networks."

Ever since the SNP took office 20 months ago, the STPR has been used as a shield to fend off questions about transport investment. Communities and local authorities have been told over and over by the Government to wait for the outcome of the STPR. So we all waited, waited and then waited a bit more as the Cabinet mulled it over.

Transport Scotland submitted its recommendations to ministers in September last year, which means that ministers had the review before them for two and a half months prior to coming to a decision. On 10 December—only six weeks ago—we were finally told of the Government's priorities for the next 20 years of trunk road investment.

Some of us might think that there are things missing from the STPR, but we are not cabinet secretaries. Unlike Mr Lochhead, we did not get the chance to argue our case for 18 months from within the Cabinet. I heard no dissent from the Cabinet when the STPR decision was reported to Parliament yet, two weeks ago, Mr Lochhead met campaigners to express his disappointment that the Elgin bypass had not been included.

Mr Brownlee asked why my amendment does not mention other bypasses. The answer is obvious: Mr Lochhead's recent actions have brought the Elgin bypass to the fore. As an Opposition MSP, my role is to hold ministers to account. If Mr Brownlee does not think that a lack of credibility is a serious issue, that is a matter for him. The behaviour in which Mr Lochhead has indulged recently not only disappoints his electorate but contributes to many people's disenchantment with politics. He cannot sit in Parliament and support the outcome of the STPR, then go home to his constituency and say that he is disappointed in it. Mind you, he is probably not as disappointed as the people of Elgin are with their MSP.

Richard Lochhead says that he will keep making the case. The case for what—inclusion in the next 20-year plan? When he campaigned for an Elgin bypass at the previous election, was he campaigning only for a bypass in 2032? Why does he think that he can have it both ways? Either he supports the Government's decision to exclude the Elgin bypass from the next 20 years of investment in our trunk roads or he supports his constituents.

Richard Lochhead claims that projects in other parts of Scotland must be looked at first, but that is not how the Government says that its strategic plan works. The SNP's transport minister has made it clear that the plan does not prioritise; it provides a wish list of projects that need to happen in the next 20 years.

Mr Brownlee referred to costs, which was pretty rich, given that the transport investment plan's price range for the 29 projects is £12 billion to £21.3 billion before VAT, which represents a staggering variance of £9 billion.

Photo of Alison McInnes Alison McInnes Liberal Democrat

I will not give way as I want to make my case.

Given the bewilderment in the past couple of weeks, I thought that we should give Richard Lochhead an early opportunity to clear up the confusion and make it clear to his constituents that he means what he says. After all, he campaigned with local people for a bypass for years—I have reminded myself of that by re-reading his press comments and parliamentary contributions, which unequivocally supported a bypass. For example, he said in a parliamentary debate:

"I will address the reasons why we must have the Elgin bypass ... The number 1 priority on which the whole community—the business community, residents and everyone else involved in the debate—agrees is that we must upgrade the transport infrastructure ... It is seen as the make-or-break issue, which is why this debate is so important.

We cannot have an A96 upgrade without ... the Elgin bypass".—[Official Report, 21 September 2006; c 27967-8.]

Tonight, Richard Lochhead has the opportunity to turn those words into action. At 5 o'clock, people in Elgin will know for certain whether he supports the Elgin bypass. He has the chance to vote for it. He can stand up for his previous promises by voting for the bypass to be put into the Government's transport plans, or he can vote against the bypass to keep his ministerial job. He cannot do both.

Photo of Christopher Harvie Christopher Harvie Scottish National Party 10:47, 22 January 2009

I will not dilate on how we got here—I have written enough about the UK's post-industrial economy and its descent into post-rationality.

I will respond to recommendation 8 from the Council of Economic Advisers, which urges the Scottish Government to identify

"the most cost-effective options for reducing energy demand. This should include exploring ways of delivering transformational levels of home insulation."

I am encouraged by the Scottish Government's enthusiasm for a new energy assistance package to ameliorate fuel poverty, improve energy efficiency and emphasise renewable heating systems and insulation measures as a central policy priority. I will expand on insulation measures and plead for cross-party agreement on their precedence.

Earlier this month, the Economy, Energy and Tourism Committee was confronted during its energy inquiry by six middle-aged caucasian gents representing generation and transmission companies, who told us—unsurprisingly—that we require more generation and transmission capacity. I asked what would happen if someone from a Scottish national insulation corporation told us that his outfit could reduce demand by, say, 30 per cent, by a universal mass-production-oriented house insulation campaign—might that prevent expensive generation capacity from being built and save cash for other purposes?

Space heating accounts for 50 per cent of our carbon production, so achieving economies in that area will reduce the requirement for energy provision. A co-ordinating corporation could be established quickly to combat unemployment and advance training while more elaborate generating plants of whatever type were being planned and constructed.

Such an outfit has a Tory precedent in Walter Elliot's Scottish Special Areas Housing Association of 1936, which used new techniques to expand housing in depression-hit special areas, and later became the Scottish Special Housing Association. In the 1930s, housing boosted the economy and a semi cost no more than two times the standard middle-class income—imagine that—but we are now confronted with overpriced and not particularly well-built houses that struggle to reach a European Union energy rating of C.

Construction firms are in a slump, so why not have a compact state agency—it could be called Scottish Insulation—that is empowered to organise series production and supply of the necessary technology to meet demanding deadlines? That has a Liberal precedent in the munitions directorate for Scotland during the first world war, which churned out guns and shells only months after David Lloyd George founded it in May 1915. The proposed agency could offer and organise contracts with private firms and undertake enterprise on its own when necessary.

Crucially, Scottish Insulation would represent the passive housing industry—which conserves energy—to central Government and funding bodies. I notice a gap in such representation today. Plenty of spare labour, material and expertise are going a-begging. Perhaps some finance matadors who are out of a job might do community service and work their passage back into society. Following the precedent of the SSHA in the 1930s and the North of Scotland Hydro-electric Board a decade later, our insulators could—with logos on vans, staff and big propaganda hits—do what environmental and employment lobbies want and earn new-deal-type publicity for renewable Scotland's initiatives.

Such schemes have been standard practice for decades in Scandinavia. The Conservative Government in my former German home of Baden-Württemberg—[Laughter]. That Government was Conservative, Mr McLetchie, and it adopted an SPD plan to install insulation that meant that, even with expensive German energy prices, I paid a third less for my fuel there than I paid in an equivalent flat in Scotland.

Photo of Christopher Harvie Christopher Harvie Scottish National Party

I will continue, as I do not have long for my speech.

There is compelling logic in developing as soon as possible bilateral links with places such as Norway and—yes—Germany, where the economy has the equipment and the capacity to adapt and to train. We should remember that less than 10 per cent of our labour force now works in manufacturing industry and that housing standards in Europe are considerably higher than those in the UK.

Scottish Insulation's presence in the energy scene would at least make conventional power suppliers more responsive to the Scottish Government's energy agenda. If allowed to expand into the present developmental vacuum, it could do much to convert the dearth of housing activity into preparation and training for a wider renewables strategy.

Photo of Hugh Henry Hugh Henry Labour 10:53, 22 January 2009

There is no doubt that, in the current climate, the public want politicians to put aside petty differences, to focus on the problems and to try to work together to produce solutions, provide assurances and give confidence in the uncertain period that we face. It is right that all parties, including mine, put aside some of the shibboleths to which we have become attached, acknowledge that others sometimes have answers to questions that are being posed, and recognise that no one party has all the answers to the problems that we face. To that end, I welcome Fiona Hyslop's offer that other parties are welcome to attend the skills summit. That is but a small first step in the Government's recognising that others should be engaged in finding a way out of the current problems. I congratulate her on that.

I urge the present Administration to recognise that, in a period of uncertainty, the last thing that business and working people across Scotland need is more uncertainty and worry. I suggest that the proposed local income tax would add significant uncertainty to businesses that already face many problems in coping with the impact of the international financial crisis. Many business organisations have already spoken on record about their worries about local income tax.

I understand the politics of what the SNP promised to gain power and of scoring points against others. However, leaving aside the arguments about whether the proposition could work, we should recognise that it would bring great uncertainty, cause tremendous turmoil and not be easy to introduce. If we are genuine about wanting to help Scottish companies—not just big companies but small and medium-sized enterprises—to ride out the problems that they face, we should be big enough to recognise that the threat of a local income tax might be enough to put some of them under or, worse, to deter people from investing in Scotland. Much as the Government aspires to replace the present system for financing local funding, it should recognise that, in the present circumstances, it would be extremely foolish not to pay attention to businesses' worries.

The Council of Economic Advisers raises the issue of planning. I agree that we should work to ensure that planning is improved, decisions are expedited and more attention is paid to sustainability. Often, planners take too long to make decisions, and sometimes those decisions seem perverse. I welcome any measures to encourage investment and speedier decision making at a local level. However, I introduce a note of caution. Often, unfettered development occurs and decisions about where investment and building should take place are made at the expense of the long-term interests of local communities. We should not fetter the right of local councillors and planning officials to consider what is best for their community. Sometimes, they must make hard decisions that involve balancing the needs of companies that want to invest, which want quick decisions, and the needs of the wider community, not just in the short term but in the long term. In my area, I have seen companies come in with all guns blazing and a full fanfare of support for the jobs that they bring, only to close and move away, leaving an empty building that blights the landscape for years to come. We should ca cannie.

Finally, if the Council of Economic Advisers is to have any influence on the Administration, it must address the issue of town centres. If we want to revitalise and protect Scotland, we must do something about our traditional town centres. We need to work across parties on investment in town centres and the decisions that can be made to combat not just out-of-town centres but the recession that is impacting on many small businesses. The last thing that we need is economic blight in town centres, which are both economic drivers for the country and important social providers for the people who live in the areas that they serve. A town centres initiative would be welcome and should be introduced soon.

Photo of Alex Johnstone Alex Johnstone Conservative 10:59, 22 January 2009

To repeat a line that Hugh Henry used just seconds ago, economic blight is the last thing that we need, but economic blight is what we have. Unfortunately, that is the circumstance from which we must move forward.

We need to underpin economic growth for the long term. I understand that certain individuals, including even some members, believe that economic growth is not important compared with other things. I believe that we need to commit to significant levels of carbon or climate change gas reduction over the next few years, but for us to succeed as a Parliament and a country, that must go hand in hand with measures to underpin economic growth. I will not accept any argument that diverges from that position. I am prepared to commit to the idea that we must both maintain economic growth and cut emissions by 80 per cent by 2050, but I am concerned about how that can be realised.

Some of the documents that have been published recently contain one or two statements that help to crystallise the decisions that we need to make in the coming years. I offer a simple quote from the national planning framework 2 document to illustrate the fact that the Government is prepared to consider some fairly worthwhile options. On the generation of electricity, paragraph 150 states:

"Given the variable output of some renewable sources of energy, large baseload power stations will have a role to play in maintaining the stability of electricity supply for some time ahead. While important elements of Scotland's existing baseload generating capacity are scheduled to close over the next 10 years, extensions to the lives of coal-fired and nuclear power stations are possible."

I welcome the fact that the Government acknowledges that nuclear has a role to play in the near future, at least. However, I will address first the issue of coal-fired stations, which I will broaden out to include all fossil-fuelled thermal stations. NPF 2 sets out a clear case for the employment of carbon capture or clean coal technology, but when the Transport, Infrastructure and Climate Change Committee took evidence on the issue, we were interested to discover that a number of non-governmental organisations concerned with environmental matters have a significant lack of faith in the technology's ability to meet the need for Scotland to reduce its carbon dioxide emissions in the near future. Their concern is that the technology is not mature. Even if it could be retrofitted to existing or soon-to-be-built coal-fired power stations, there is a danger that we would leave ourselves with huge storage problems for captured carbon dioxide that could not be disposed of in a long-term or permanent way. Where have we heard that before?

If we genuinely need to provide base-load capacity—as I believe we do—to balance the pursuit of renewables, to which the Parliament is committed, we must be sure about how can do so without emitting carbon. The obvious answer is through nuclear generation. When we talk about power in general terms, we are always reminded that energy efficiency is worth pursuing and that there is a need for much more power than simply electricity. However, some of the policy decisions that we have made in recent years and are about to make mean that, although overall energy consumption could fall, the requirement for electricity will rise, as we travel by electric trains and begin to plug in our cars in the evening to recharge them overnight—that may just happen. We need carbon-free base-load capacity, and we need to use technology that we know works.

Scotland has already had two generations of nuclear power stations. The first generation was dirty, created large volumes of waste and gave us problems that we will be dealing with for many years to come. The second generation was much better—the stations were cleaner, more efficient and more reliable. However, in recent years we have realised that, as they become older, they are subject periodically to unexpected shutdown. That is why the Government should do more than simply commit to using our existing nuclear capacity. We need to commit—now—to the third generation of nuclear power stations in Scotland.

Photo of Alex Johnstone Alex Johnstone Conservative

No, I am sorry.

That might be the final step that we need to take on nuclear generation, because the third generation of power stations will be cleaner, safer and more efficient, and will cut our carbon emissions throughout the period to 2050, the date by which we have committed to reducing our emissions by 80 per cent. The opportunity is too good to miss. If we miss it, it will be all the more difficult to hit the 2050 target.

The Conservatives are committed to such a step. The Labour Party is moving quickly towards the position, as James Kelly's speech suggested—

Photo of Malcolm Chisholm Malcolm Chisholm Labour 11:05, 22 January 2009

I welcome the report of the Council of Economic Advisers. We should be grateful to the economists for giving up their time—although sometimes it would be good to hear about matters on which they disagree as well as matters on which they agree.

There was certainly agreement on productivity, in all its aspects. I am sure that most members agree strongly with the section of the report that deals with productivity, although it is clear that members of the Labour Party have big concerns about skills and training, which I am sure will feature prominently during the next few days, as we approach the climax of the budget process.

When the Cabinet Secretary for Finance and Sustainable Growth winds up the debate, it would be useful if he could reflect on the significant figures on new apprenticeships this year, which John Park mentioned—10,500 in Scotland and 225,000 in England—and tell us when the skills strategy will be brought back to the Parliament.

Infrastructure investment, which features prominently in the report, is always important but is especially important now, as a key ingredient of fiscal stimulus. We have heard much about borrowing powers from members of the Government party, but we have heard nothing about the delays that have undoubtedly occurred as a result of the hiatus between public-private partnerships and the Scottish Futures Trust. I strongly support borrowing powers for the Scottish Parliament and I hope that the Calman commission on Scottish devolution will make recommendations on borrowing and other fiscal powers for the Parliament. However, support for such a position in no way excuses the delays in bringing forward infrastructure projects. When the cabinet secretary winds up the debate, it would be good to hear why not a single project or business plan was approved and not a single contract was signed last year during the eight months from March to October inclusive. I have never had an answer to that question and I would welcome one.

Photo of Keith Brown Keith Brown Scottish National Party

I welcome Malcolm Chisholm's support for additional borrowing powers. Does he accept that there is real urgency about the matter? Does he accept that our moving quickly on the issue would have a great impact?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

We must await the Calman recommendations. I hope that the SNP will swing behind them when they are made.

Planning features prominently in the report. I support what Wendy Alexander said about the need to continue to publish information on local authority performance. We should also get on as quickly as possible with the implementation of planning legislation, which has slipped somewhat. In the section on planning, the council made an interesting comment about financial incentives to local authorities to promote sustainable development. I would be interested to hear the cabinet secretary's comments on that—I am sorry to ask him to respond to so many points—given that in its response to the report, the Scottish Government appeared to be at least open-minded if not positive about tax increment financing. There have been discussions about funding tramline 1B, which would run to Granton, in my constituency, and is crucial for the area's development, through tax increment financing, based on regeneration of the waterfront, and it would be useful to hear the cabinet secretary's comments on that. If he has no time to give his view on the matter during his speech, I would welcome a written response.

The emissions target is crucial in the report and crucial to our policy deliberations. The two massive challenges that we face, above all, are how we get the economy out of recession and how we proceed towards achieving the 80 per cent reduction without compromise or dilution of the target. We must be entirely pragmatic and open-minded about nuclear power and we must clearly separate that issue from the nuclear weapons issue. Members who are as old as I am know that we used to connect the issues decades ago, when there were good reasons to do so. However, they are separate issues and we should strongly support the advisers' recommendation that the Scottish Government commission

"an independent assessment of the full economic costs and abatement potential of the various energy options open to Scotland."

Such an assessment would have to be genuinely independent. Concerns have been expressed that the First Minister might try to have an assessment that was slightly less than independent.

Patrick Harvie will be shocked that I am even open-minded on nuclear power, but if a radical environmentalist such as George Monbiot—there is no more radical environmentalist—can be open-minded without being enthusiastic about the matter, that is good enough for me. I hope that it will be good enough for the Scottish Government, too.

Photo of Patrick Harvie Patrick Harvie Green

I am sure that Malcolm Chisholm would not want accidentally to misrepresent George Monbiot's position. Does he acknowledge that Monbiot has set out criteria on which we should judge energy solutions and has clearly expressed the view that nuclear would fail to meet the criteria?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

I am certain that nuclear is no panacea. There are great dangers in thinking that nuclear is a substitute for everything else.

We welcome the Scottish Government's emphasis on renewables, but reducing demand is also central. I highlight the report's recommendation on better insulation of the housing stock, which is crucial. My final question to the cabinet secretary is this: when will the long-awaited energy efficiency strategy be published?

Photo of Iain Smith Iain Smith Liberal Democrat 11:11, 22 January 2009

We have had a strange debate in a week in which we have heard some of the gravest economic news in living memory in Scotland. Yesterday, the most recent figures showed a 10 per cent rise in unemployment in Scotland and a rising trend. On Monday, that once great banking institution, the Royal Bank of Scotland, was on its knees, with the announcement of record and staggering losses. In effect, the bank has been all but nationalised. On Tuesday, the Scottish Chambers of Commerce published a business survey that showed that business confidence is at an all-time low.

The Government's chief economic adviser, who told the Council of Economic Advisers at its meeting in October that the situation in Scotland was not all gloom, advised the Government in a report in December that the situation was considerably worse. I do not blame the Government for that; it is a fact that the Scottish economy is in a worse situation than anyone expected six months ago, when the recession seemed to be developing more slowly in Scotland than in the rest of the UK. The most recent evidence suggests that in Scotland the recession is deeper and is likely to last longer.

The Scottish public might reasonably have expected the Parliament to have a full debate on the current economic crisis and what the Scottish Parliament and Scottish Government can do about it, rather than debate a report that was published weeks ago, which considers the work of a committee in the year up to last October. No one disputes that the report of the Council of Economic Advisers provides an important and helpful contribution to the debate on the Scottish economy's long-term needs, but we need to deal with the crisis that faces many of our businesses and families now. The long term is important, but, as John Maynard Keynes said, in the long term we are all dead. Most surprising is the Government's apparent lack of engagement with the Council of Economic Advisers on how to tackle the current economic situation. I agree with Derek Brownlee that there is a limit to what the Scottish Government can do, but that does not mean that we should not be trying.

Like Wendy Alexander, I welcome the Government's response to the report, in that the Government has at last published some detail on its Scottish economic recovery programme. It might have been more sensible to have had a full debate on the programme, so that we could consider it in more detail, rather than a debate on a report that makes recommendations for the slightly longer term.

I highlight aspects of the Government's response. We all welcome the proposed acceleration of capital spending, but surely the money that has been wasted on setting up the Scottish Futures Trust would have been better spent on capital projects than on a fantasy scheme.

Aileen Campbell mentioned planning. There is concern about capacity in our local authority planning departments to meet the challenges of the new planning system's implementation. There is broad support in the Parliament for the new planning system but there is a shortage of trained planners in our local authorities. That is likely to get worse as planning applications reduce as a result of the reduction of economic activity. That will mean a reduction in fees going to local authorities, which will put planning departments under even more severe financial pressure. I would be grateful if, in his closing speech, the minister would state what the Government can do to assist local authorities and ensure that they have adequate numbers of trained planners in place to deal with the situation.

The Government has announced that its inability to introduce legislation on time now extends to the proposed public services reform bill, which has been delayed until at least late May. We all know that, when the Government says late May, it probably means June. We need to know what implications the delay has for identifying the scope for removing regulatory burdens throughout the Scottish public sector, which is part of the Government's economic action plan. Perhaps we could also have some information about the implications for our creative industries, as the uncertainty about creative Scotland that has been caused by the Government's incompetence will continue for some time to come.

There is much in the council's report that can be welcomed. There is genuine across-the-board support for the opinion that the Scottish Parliament's capital borrowing powers need to be addressed. Malcolm Chisholm is right to highlight that the way to do that is through the Calman commission. Perhaps the Government will encourage its officials to work with the commission to develop proposals on how we can get capital borrowing powers, rather than blocking them from working with it. That would be a genuine and valuable response to that important issue.

As John Park highlighted, the Government's response to the council's report is to accept its recommendations but then basically say that it is already doing what the council suggests and not provide any information about changes to what it is doing to ensure that the recommendations are implemented. We must ask what the point of the council is if it will not effect change in what the Government does. When I asked George Matthewson what advice the council had given the Government on whether there needs to be a shift in emphasis in the Scottish budget to deal with the current economic crisis, he replied:

"Our consideration of those issues has been limited."—[Official Report, Economy, Energy and Tourism Committee, 10 December 2008; c 1355.]

What is the point of the Council of Economic Advisers if the Government does not ask it for advice on the economy? It does not refer its budget to the council to analyse the impact that it will have on the economy and propose alternative strategies. The minister will advise me if I have got this wrong but, as far as I can see, the Government does not even appear to have sent its economic recovery programme to the council for its—

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I am afraid that the member's time is up.

Photo of Gavin Brown Gavin Brown Conservative 11:17, 22 January 2009

The Scottish Conservatives were positive about the setting up of the Council of Economic Advisers. Anyone who looks at its members' CVs will see quite impressive stuff. As a result, the report contains much that we agree with and commend. I have also had the privilege of hearing evidence from some of the council members to the Economy, Energy and Tourism Committee. Some of the things that Professor John Kay and entrepreneur Jim McColl had to say were impressive.

Jeremy Purvis was right to raise the issue of who writes the script. That is something to monitor but, having heard the advisers speak and having read their CVs, I would be astonished if the Government wanted to write, or was capable of writing, the script for them. They are not paid, of course, so no one can hold them to ransom in any way.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

To some extent, the point that I was making was about what is referred to the council to consider, which has been a theme of members' comments. The council will consider only issues that the Government takes to it; that is one of the problems.

Photo of Gavin Brown Gavin Brown Conservative

That is true to some extent. However, the minutes of the Council of Economic Advisers appear on the face of it to show a discussion about some of the matters that ought to come up. To some extent, the timetable for that would be outlined by the council's chair. It is fair enough to flag the issue up, but I am not sure that it hits the nail on the head.

The debate has been interesting. I thank Professor Christopher Harvie for acknowledging several fabulous achievements of previous Conservative Governments and for going four and a half minutes without once mentioning Germany, although he fell away a bit in his final minute and a half.

Some members may have described Alison McInnes's speech as slightly off piste, but it was possibly the most commendable and far-sighted attempt ever by the Liberal Democrats to keep their deposit in Moray at the next Scottish Parliament election.

I will move on to some more serious aspects of the debate. Iain Smith was first to ask what the Council of Economic Advisers could do in the short term. It has quarterly meetings and has rightly said that it does not intend to be blown off course from considering the long-term Scottish economy, but perhaps there could have been more ad hoc meetings, particularly given some of the serious announcements and drastic days that we have had in Scotland. It may not be possible to get all the advisers together at the same time, but the Scottish Government could have emergency meetings of the council as and when necessary. I ask the minister to respond to that point.

The Government has accepted most of the recommendations—I take John Park's point that some of them were accepted in part—but it would be good to hear from the minister approximately when each will be implemented and some idea of the priorities. It may or may not be possible to implement 22 recommendations at the same time, and it would be good to hear which the Government considers to be priorities.

There are a lot of good ideas in the report. I will pick out one that the CBI has talked about for a long time: the possibility of tax increment financing, which is worth reviewing. We need to hear more on the 10-day payment terms that the Government has proposed. We are interested to find out whether they are being introduced by all public services across the board or only the Government itself. Will they be widened out to help our smaller businesses, for which cash flow is king?

The main point of the Conservative amendment is the energy review. We have pushed for it for some time, the council recommended it and the Government will now undertake it. However, I point out that the Government has taken its time over that. Although the Council of Economic Advisers' annual report came out in December and the Government responded in January, an energy review was discussed in detail at the June meeting, which was described as

"A lively and comprehensive debate".

I would love to have been a fly on the wall for that and to have seen what "lively and comprehensive" meant. The council made a clear recommendation on the need for an energy review then, but seven months passed before the Government agreed to undertake one. We would like to know when exactly the independent review will begin and what details we can have on it. David McLetchie made the point that it is important that the national planning framework not prejudge the review. Therefore, it may be sensible for the Government to remove the term "non-nuclear" from project 9 in the framework. Let us see what the review says before hard and fast decisions are taken.

The Scottish Conservatives are keen for as many initiatives as possible to be implemented to help the Scottish economy in the short term and the medium term. We fought hard for business rate cuts and the council tax freeze. We want town-centre regeneration to happen. That was a Conservative idea for a long time and it appeared—as David Whitton knows—in the Conservative manifesto before the Labour one.

Photo of Claire Baker Claire Baker Labour 11:23, 22 January 2009

Labour welcomes the opportunity for the Parliament to reflect on the work of the Council of Economic Advisers and the Government's response.

When the council was established just over a year ago, we were in different economic circumstances. The challenges that Scotland faces now are different. The Cabinet Secretary for Education and Lifelong Learning rightly focused on tackling redundancy and unemployment. We need to make serious decisions about our economy and ensure that, once we begin to emerge from these challenging times, we have the building blocks on which to capitalise. We must ensure that we have a skilled, flexible population to meet the needs of new industries and that Scotland can compete internationally at the high-skills end of the employment market.

In summing up on behalf of Labour, I will focus on the higher education aspects of the council's report before moving on to the more general debate.

Labour's amendment calls for a formal link between the Council of Economic Advisers and the national economic forum. John Park raised concerns that, so far, the council's relationship with the forum has not been particularly close. Similarly, in its recommendations on universities, the council seems to have been operating in a bit of a vacuum, too far removed from other initiatives such as the joint future thinking task force. However, those are points of detail. I appreciate that the Council of Economic Advisers is offering a strategic direction for the higher education sector to ensure that it plays a full role in contributing to our economy.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The minutes of the Council of Economic Advisers make it clear that the work of the university task force was discussed. Having been present at one of the council's meetings, I know that the council was informed about that work.

Photo of Claire Baker Claire Baker Labour

I appreciate that and I was aware of that from the minutes. My concern is that some of the council's recommendations are not clear in their understanding of how Government, the Scottish Further and Higher Education Funding Council and the universities relate to each other.

Of the three recommendations on higher education that made it into the council's annual report, the first relates to the future scale and balance of the Scottish university system. Scotland should act to expand university places and to increase the number of graduates. Such action is never more important than when going through an economic downturn on the scale of the one that we face. However, in dialogue with Government and business, universities are best placed to determine for themselves the balance that should be struck in those areas. As the Government acknowledges in its response to the report, the Government does not have the power to influence individual course decisions. That makes me ask whether the council was operating too far removed from other initiatives and from experts in the field. The council might have benefited from more engagement on the issue with the sector. However, its call for

"clarity in the strategic direction of universities" is welcome.

The council's second recommendation on HE relates to the degree structure that is offered in Scotland. We must be cautious about restructuring degrees in Scotland. The current four-year degree has served Scotland well and continues to do so. Again, I welcome the Government's response, which highlights the diversity that already exists within the sector. However, we cannot be complacent, so the council is correct to highlight the need for a flexible system that is responsive to a changing student population and that delivers access at all ages and points of life.

The final recommendation on higher education relates to how significant additional resources might be invested in Scotland's universities. The council's analysis of the challenges that the sector faces is entirely accurate. The report states:

"squaring the budgetary circle of higher participation, higher levels and higher quality is very challenging."

The council's view chimes with those in the sector who increasingly believe that it is essential that, in the next comprehensive spending review, universities receive funds that enable them to remain competitive internationally.

We all know that universities face challenges and we need to appreciate that decisions taken elsewhere have an impact on Scotland's HE sector. In a global economic downturn, universities increasingly face the same difficulties as everyone, as well as challenges in recruiting international staff and students. The council does not mince its words on that issue. Its report states:

"higher education is a high-cost area and requires a long-term perspective."

The report also states:

"Scotland will have to be proactive if it wishes to improve its relative position, and to have a strategy to fund the additional cost."

I know that the cabinet secretary appreciates the scale of the challenge; the difficulty is that no one is reassured that we have a strategy to address the funding shortfall that universities will face in the near future.

The council correctly identifies the pressures in the system and its solution, which recognises the responsibility of all stakeholders, is a helpful contribution to the funding debate. However, the principle on which the council bases its proposal needs questioned. The minutes of the meeting that was attended by the Cabinet Secretary for Education and Lifelong Learning state:

"There was general agreement between Council members that there is a sharp contrast in the attitude and level of commitment between those students who are paying for their education and those that are not".

The council provides no evidence to support that conclusion. As the Government states in its response, students already contribute a great deal to their degree, whether in time or money. However, the council raises pertinent issues on how significant additional funding needs to be raised. If the Government wishes to engage on the issue seriously and have a public debate on the issue, consideration should be given to an independent review.

The council makes some helpful suggestions on business involvement. Much more work needs to be done on that, so I will be interested to hear the Government's response to the Scottish funding council's work with Scottish Enterprise to consider proposals for an engagement voucher scheme. I look forward to seeing greater detail on how those proposals are worked up.

Moving away from the HE-specific proposals and on to the wider debate, this morning SNP members seem to have pursued those recommendations in the report that suggest solutions that would require more powers for the Parliament. Perhaps that is not surprising, given that council members are selected by the Government. However, SNP members' contributions have been constructive and have added to the general wider debate.

The Conservative amendment and speeches from Conservative members have focused on the energy debate. I would welcome clarification from the Cabinet Secretary for Finance and Sustainable Growth as to how the Government intends to respond to the independent assessment.

Labour has sympathy with the Liberals' amendment, although the fact that it strays from the central thrust of this morning's debate is unfortunate. However, some speeches from Liberal members were more wide-ranging and raised important concerns about infrastructure investment in Scotland.

Hugh Henry made a constructive speech on the local income tax, which I hope the Government will listen to.

Labour has been consistent in raising concerns about the Scottish Government's response to the economic downturn, so we hope to see further action in the immediate future. However, the 34 recommendations that have been accepted by the Scottish Government—and the five others that have been partially accepted—represent a large amount of work, if they are fulfilled. Given the Government's record to date, with strategy after strategy delayed—I refer to the skills strategy, the strategic transport projects review, the national planning framework and the Scottish Futures Trust—I hope that the council's recommendations do not suffer the same fate. I call on members to support the Labour amendment.

Photo of John Swinney John Swinney Scottish National Party 11:31, 22 January 2009

Wendy Alexander somewhat contradicted the Labour position in the debate. That position, as expressed effectively by Mr Park and Mr Kelly, essentially focused on raising issues—which, to be fair, Labour members have raised consistently for some weeks—about skills, training and apprenticeships. That is why the Government felt it appropriate that Fiona Hyslop, as cabinet secretary with responsibility for those policy areas, should open the debate. In fact, on 12 November I led a debate in Parliament on the economy. On 26 November, I made a statement to Parliament on the pre-budget report. On 3 December, I led and closed a debate on the pre-budget report. On 14 January, I opened and closed the Government's stage 1 debate on the budget bill for 2009-10, during which I made extensive comments on the Government's economic recovery programme and on the economic situation. Far be it from me to say this, but Parliament hears too much from me from time to time—that position will, I know, be widely contested on all sides of the chamber—yet I am also here to close today's debate. Indeed, I thought that I was having an out-of-body experience when I heard that I was not here to close the debate. I hope that that satisfactorily addresses Wendy Alexander's point about the decisions that the Government rightly took on how today's debate should be focused.

A great deal of comment has been made about the role of the Council of Economic Advisers, which has been generally welcomed across the parties. Labour's amendment focuses on the relationship between the national economic forum and the Council of Economic Advisers. Labour puts forward a very reasonable position. The chairman of the Council of Economic Advisers, Sir George Mathewson, has attended the national economic forum. If members have practical suggestions on how we could arrange for the Council of Economic Advisers and the national economic forum to be presented with each other's output and thoughts, the Government will be happy to explore those proposals.

The Council of Economic Advisers has considered the current economic situation. The council receives information from the Government's chief economic adviser at each of its meetings. The Government's response to the council's annual report also provides information on the Government's economic recovery programme, which was fully discussed at last Friday's meeting of the Council of Economic Advisers.

We all accept that we are operating in a situation where the challenge in the economy is much greater than was envisaged 12 months ago. As a consequence, the Government has taken a series of actions in its economic recovery programme that are designed to assist recovery. At the heart of that—as Iain Smith quite fairly said—is the programme of accelerated capital expenditure. I simply point out to Parliament that, if we want that accelerated capital expenditure to go ahead in financial year 2009-10, Parliament will need to endorse the Government's budget next Wednesday. The expenditure can be deployed only if the Government's budget is approved.

Approval of our budget is important to the provision of support for employment. Mr Kelly made fair comment about the situation at Vion, where the Government is providing support to the employees who face the prospect of redundancy, as we do in all such circumstances through the PACE initiative. I welcome the comments that Hugh Henry and John Park made about the Cabinet Secretary for Education and Lifelong Learning's invitation to Opposition spokespeople to attend the PACE summit—which, if my memory serves me right, is in February—to take part in wider discussions. We accept that all shades of opinion in Parliament must be satisfied with the arrangements that we have in place to support people who face redundancy and require retraining—those arrangements must command confidence across the parliamentary spectrum—and I hope that that invitation will be taken up by Opposition members.

I said that skills and training dominated many of the speeches of Labour members. We recognise the importance of investing in skills and training. In its apprenticeship report of January 2008, the UK Government stated that there were 250,000 people in training in England. Over the next three years to 2011, it wants to increase that figure to 400,000. Our target is to have 50,000 people in training by 2011, which represents a significantly greater proportion of the population than the figure for the rest of the UK.

Photo of John Park John Park Labour

In November 2007, John Denham, the Secretary of State for Innovation, Universities and Skills, announced that the UK training and skills target for the period 2008 to 2011 was 7.5 million people. In September 2007, the Cabinet Secretary for Education and Lifelong Learning announced that the target for Scotland was 50,000. I would not say that those were comparable figures.

Photo of John Swinney John Swinney Scottish National Party

Those figures are most definitely not comparable. I think that Iain Gray mentioned the 7.5 million figure last week, which is just preposterous. The figures that I have given are a good indication of the Government's commitment on skills and training. We remain happy to engage on the issue, and I look forward to further discussions with colleagues in the Labour Party about such matters later today.

Hugh Henry advanced the argument for initiatives to support town centres. We all acknowledge that the range of closures that are taking place is serious, as the Conservatives identified. The Government will give the matter serious consideration.

Hugh Henry also mentioned planning. I agreed with almost all of his speech—he will know which bit of it I did not agree with. I fully agree that we must have more efficiency in planning, but that is not an argument for unfettered development. There will be some bad developments that need to be opposed; I just think that they should be opposed efficiently so that the process is not dragged out for a long time. We must encourage efficiency in the planning system. Iain Smith made a number of fair points about the resourcing of planning departments, which are under great strain because of the reduction in planning fees and the effect that that has on local authorities' financial circumstances. The Government engages with our local authority colleagues on such matters.

Like Mr Brownlee, Mr Gavin Brown and Mr Johnstone, Mr McLetchie made a number of comments on that part of the Conservatives' amendment that deals with nuclear power. The energy study, which is being tendered, will be independent. It will be overseen by a sub-group of the Council of Economic Advisers chaired by Professor John Kay, and it will be discussed by the Council of Economic Advisers. Essentially, Mr McLetchie invited the Government to prejudge the outcome of that independent review by changing our approach to the national planning framework. Our position on the NPF is well advertised. [Interruption.] Unbelievably, Mr McLetchie is asking us to prejudge that report.

My final comments are on borrowing powers and fiscal flexibility. Malcolm Chisholm raised the issue of tax increment financing, which I assure him the Government is happy to consider. I am delighted to welcome the growing consensus among members of all parties on borrowing powers. We are coming up against some of the practicalities of the limitations of the Parliament's financial powers, which will become ever more apparent when the international financial reporting standards are introduced in April 2009. The Government is determined to ensure that we take forward that debate. I do not agree with Iain Smith that we must give additional support to the Calman commission, which is financially supported by the UK Government. As Mr Smith knows, I am an opponent of duplication and additional resources—

Photo of John Swinney John Swinney Scottish National Party

I must close in 10 seconds.

It is important that the debate on borrowing powers is articulated. The Government will be vigorous in making that debate, and I am sure that it will persuade even the sceptical Mr Purvis on the front bench.