Taking Scotland Forward: Economy

Part of the debate – in the Scottish Parliament on 31st May 2016.

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Photo of Richard Leonard Richard Leonard Labour

Thank you for the chance to speak in this debate, Presiding Officer. We have heard some very impressive first speeches in it.

I am proud to address members as the Scottish Labour Party’s spokesperson on the economy. I also speak as someone who has enjoyed the singular privilege of representing working people in the Scottish economy for the past 20 years as a union organiser and for five years before that as an economist at the Scottish Trades Union Congress. I learned and worked alongside great figures such as the late Campbell Christie and the late Bill Speirs, who were two of the political architects of the Scottish Parliament.

Last week’s Ernst & Young report on foreign direct investment in Scotland certainly generated some impressive headlines, but it also merits words of caution. For a start, the inward investment projects that are highlighted in it are predominantly call centres, not headquarter functions. They generate sales and marketing suites, not manufacturing jobs. Even in the report, the authors call on the Scottish Government to be “more ambitious on manufacturing”. I will return to that theme.

I wonder how many of those new jobs are trade union jobs. We know that, in the past, there has been some resistance to trade unionisation in the foreign direct investment sector. I hope that the Scottish Government will be more ambitious on trade unionisation with those employers, too, as well as on manufacturing.

I strike a third note of caution. According to the Scottish Government’s figures, by 2015 the share of our total economic base that was owned by interests based overseas had risen to more than a third—or 34.2 per cent to be precise. Because an increasing proportion of that—our economic base, firms and capital assets—is owned overseas, we can have a high gross domestic product, but a much lower national income once profits, dividends and capital gains are repatriated abroad and deducted from the total amount.

For a wider perspective on international investment flows, I recommend that the cabinet secretary reads the latest United Nations world investment report. That report shows that while it is true that in 2014 the UK attracted $1.62 trillion-worth of inward investment stock, the value of outward stock stayed at $1.5 trillion.