Industrial Strategy

– in the Scottish Parliament on 22nd February 2017.

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Photo of Linda Fabiani Linda Fabiani Scottish National Party

The next item of business is a members’ business debate on motion S5M-02976, in the name of Colin Beattie, on an industrial strategy for a more prosperous, fairer Britain. The debate will be concluded without any question being put.

Motion debated,

That the Parliament notes the publication of the report,

Industrial Strategy for a more prosperous, fairer Britain

, in August 2016 by the Industrial Communities Alliance; considers that the strategy is a significant step forward in providing a context for debate that acknowledges the demise of Scotland’s industrial base where whole sectors, including coal, steel, textiles, shipbuilding and heavy engineering, have disappeared entirely or have been reduced to a shadow of their former selves; regrets the impact on communities in Midlothian and across Scotland, which it considers have been left behind and now often have to get by on low-paid work in call centres or warehousing, or on benefits as a main source to top up income; considers that a revival of British industry would be especially beneficial to the economies of the Midlands, the north of England, Wales and Scotland; believes that the adoption of an effective industrial strategy would enhance competitiveness and help deliver a high-wage, high-employment economy, and notes the views that the industrial strategy document, with its focus on the economy, manufacturing, trade, procurement, finance, business support, skills, infrastructure, energy costs and research and development, would benefit from a Scottish dimension, with the aim of finding a consensus on how to best address what it considers are significant issues within communities and agreeing on a progressive and sustainable way forward.

Photo of Colin Beattie Colin Beattie Scottish National Party

I thank all the members of the Scottish Parliament who have supported the motion, and particularly Richard Leonard, who was actively involved in its drafting. In the public gallery, we have a number of members of the Industrial Communities Alliance and the cross-party group on industrial communities. For those who are unaware, the ICA is the all-party association of local authorities in the industrial areas of England, Scotland and Wales, and it plays a highly active role in the cross-party group on industrial communities, which I convene.

I hope that, by now, all MSPs have had a chance to read the Industrial Communities Alliance’s publication “Industrial Strategy for a more prosperous, fairer Britain”. I am sure that those who have will join me in congratulating the ICA on what is clearly a substantial document that seeks to highlight the present diminished state of industry in Britain and that proposes the steps that should be taken to drastically improve that state of affairs.

As a quick overview of “Industrial Strategy”, the argument is made in the opening pages that Britain’s economy is fundamentally unbalanced, with far too much reliance on our financial sector and far too little on our industrial base. Manufacturing output has still not recovered to the levels that were seen before the financial crisis of 2008. Some of the statistics that are referred to are, frankly, astonishing. For example, around half the value of all United Kingdom exports comes from manufacturing, yet only 10 per cent of the workforce is employed in that field.

The benefits of an active and functioning manufacturing industry are straightforward. A high-wage and high-employment economy can be created; export growth can help to provide much-needed financial input; and we could see the crucial revitalisation of many of our industrial communities that have seen tremendous depression over the past few decades. For example, I think of my constituency of Midlothian North and Musselburgh, which has suffered with the decline of the coal industry. As the ICA points out, coal is still in use throughout the British isles, yet our last colliery closed in December 2015.

The ICA sets out its vision of what we can do to remedy the situation in a series of headline points, which I would like to briefly highlight. On the economy, the strategy states:

“Provide an economic context in which industry can prosper”.

That can be done through mechanisms such as a low exchange rate, low interest rates and business taxation that encourages investment while ensuring that companies pay their fair share.

On manufacturing, the strategy states:

“Hold the line here: Britain should not abandon any more sectors of manufacturing production”.

We need to encourage the reshoring of production from abroad to ensure that industries such as steel and coal are not allowed to degenerate any further.

On trade, it states:

“Welcome free trade—but only on the basis of fair competition”.

We have seen the devastating effects of China’s surplus steel being sold at subsidised prices. We must have a sensible approach to dealing with such markets, and that includes those countries that do not adhere to environmental obligations or basic workers’ rights.

On procurement, it states:

“Use public procurement as a tool to support ... industry”.

Public sector procurement is one obvious instance where authorities can set an example on engaging with local workers and supply chains.

On finance, it states:

“Make sure the banks provide long-term finance to industry”.

The 2012 introduction of the funding lending scheme may have helped to kick-start the economy, but banks used the vast majority of the money to increase mortgage lending. We must incentivise banks to invest in industry through any future such initiatives.

On business support, it states:

“Exploit the scope to provide aid to industry”.

Under current European Union rules, we can provide financial support for training, research and development, environmental compliance and, most important of all, regional aid that can be targeted at our less prosperous economies.

On skills, it states:

“Target resources at the high-level technical skills that industry needs”.

There is clearly a skills shortage in the manufacturing industries that needs to be filled, whether through apprenticeship schemes or steps like the training levy on large employers that will be introduced this April.

I will not go into the other aspects that the ICA has highlighted, but basically, those are the conclusions that it has reached in its “Industrial Strategy”, following its examination of the UK’s industrial environment. It would be difficult to disagree with any of them.

From a Scottish perspective, the document has been discussed at meetings of the cross-party group on industrial communities, and the conclusion was reached that a Scottish dimension is much needed. I encourage the ICA to continue its engagement with the cross-party group in meetings to come, and I look forward to helping to develop this work with the ICA and group members.

Of course, the ICA and the cross-party group have recently worked together on related topics, such as EU funding in a Brexit context. Whatever one’s thoughts on Brexit, there is no doubt that we are going through a period of great uncertainty, and I am sure that there was much relief when, following research by ICA members, the Scottish Government confirmed that EU funding for current Scottish projects would be in place until 2020.

Much of that funding has been directed at our post-industrial areas. Given that we do not yet know what the situation will be post-Brexit, I see it as a key role of the cross-party group to ensure that the Scottish and UK Governments are kept aware of the risks to such communities if that funding falters.

As I have mentioned, my constituency is one such post-industrial community and therefore might fall prey to any loss of EU funding. However, steps are being taken to improve the circumstances of my constituents through, for example, the Edinburgh and south-east Scotland city deal, which sees the six local authorities in the region working collectively to bid to the UK and Scottish Governments for £1 billion of funding, with the potential for £3.2 billion of private sector investment if the bid proves successful. That funding would be targeted at infrastructure, skills and innovation, with the end result of improving our economic performance to allow repayment of the initial Government funds. Our region would benefit from greater autonomy, with public services being delivered more effectively and greater opportunities to tackle inequality and poverty.

The statistics for the region clearly display why such an initiative could prove a tremendous success. Its population of 1.3 million people represents 24 per cent of Scotland’s total and contributes more than £33 billion of gross value added to our economy, which equates to around 30 per cent of Scotland’s output. If the city deal’s funding bid is successful, we will have the opportunity to make local, flexible decisions that can reignite and improve the region’s industrial areas. It could be argued that the deal is not perfect and that there are some financial flaws in the plan, but overall it is very much a step in the right direction.

In addition, the cross-party group has a role to play in bringing together relevant stakeholders to provide input on a wide range of interests, and our meetings and discussions can contribute to the debate on how we move forward. The Scottish Government has proven very responsive to the group’s correspondence, and I thank it for that. It is evident that, when it comes to something as important as an industrial strategy, we need to be sure that those in power are listening to experts and, in that respect, the ICA can perhaps help to join up the thinking between the Scottish and UK Governments. I look forward to being an active member of the cross-party group in the work that it will do in the months and years to come.

We are now past the stage of examining the effect of the decline of industry. We now need new ideas and strategies, such as the city deals, to change the situation. We need to look to the future and, in that respect, I warmly welcome the publication of the ICA’s “Industrial Strategy”.

Photo of Dean Lockhart Dean Lockhart Conservative

I congratulate Colin Beattie on securing this important debate. The motion under debate raises the fundamental question of the future role of industry and manufacturing in the Scottish and UK economies. The ICA report is a welcome and important contribution to the debate on how we promote manufacturing in post-industrial communities across Scotland and the UK, and I congratulate the alliance on producing it.

The term “industrial strategy” can mean many different things. During the 1970s, it became synonymous with the failures of nationalised industries, poorly targeted investment and stalled economic growth. However, there has been—quite rightly—something of a renaissance in thinking about industrial strategies, and in a global context such strategies have been successfully deployed by Governments in countries as varied as Germany, South Korea and Singapore.

At the core of the Industrial Communities Alliance report is the ambition to see a revival in industrial activity in the economies of the midlands, the north, Scotland and Wales. It argues that an effective industrial strategy can enhance competitiveness and help to deliver a high-wage and high-employment economy. I agree with those objectives. Indeed, many of those goals are also encapsulated in the UK Government’s industrial strategy green paper, which was published last month.

Photo of Neil Findlay Neil Findlay Labour

The member mentioned Scotland, Wales and other areas of the UK—former coalfield areas and the like. Perhaps he will reflect on his party’s catastrophic lack of an industrial policy during the 1980s. That decimated the industries and it is why we need an industrial strategy now.

Photo of Dean Lockhart Dean Lockhart Conservative

Obviously, the 1970s preceded the 1980s, and it was during the Labour Government of the 1970s that the UK economy had to be bailed out by the International Monetary Fund. However, let us not go over past history.

Many of the goals in the UK Government’s green paper are consistent with the recommendations of the ICA. The UK Government’s paper sets out a number of issues, including in particular the need to increase technical skills within our workforce and the need for higher levels of innovation in the economy, and those have also—quite rightly—been highlighted in the ICA paper.

In relation to a skilled workforce, we need to train our workforce better for high-end manufacturing jobs and to ensure that vocational and skills training are better aligned to industry and business demand. Scotland and the UK are fortunate to be home to many of the world’s top universities and they already provide world-leading research and development work, but the same level of investment has not been made in technical and vocational training opportunities. Consequently, in Scotland, we have a shortage of technical skills, with Scotland ranking in the third quartile of Organisation for Economic Co-operation and Development countries for the proportion of people with technical qualifications.

With the decline of manufacturing, the old system of apprenticeships also declined. That is a particular issue in Scotland, where we still have only half the number of apprenticeships per head of population compared with the rest of the UK. We agree with the ICA report that the UK Government’s apprenticeship scheme has been a step in the right direction in this area. We have also urged the Scottish Government to put in place 10,000 additional apprenticeship starts every year by the end of the current session of Parliament. We believe that that is the right policy to increase our skill set and, in turn, prepare the economy for a high-growth and high-wage outturn.

Let me turn briefly to innovation. For an advanced economy, higher levels of investment in innovation correlate with faster growth and income levels, both within different regions of the UK and internationally. Research and development leads to the creation of new products and services, more effective processes and higher productivity. In Scotland, the innovation centre programme is a welcome step in the right direction as it brings together industry and universities to address the innovation needs of industries across eight different sectors in Scotland. However, more needs to be done, and that is why we welcome the measures that are set out in the ICA paper and the UK Government paper that look to boost productivity and innovation across the UK.

I highlight the success that the UK has had in the car and aerospace manufacturing sectors, with the UK being the second largest car producer in Europe and a global leader in aerospace. That demonstrates that the UK can, with the right approach and the right policies in place, compete globally in key industrial sectors. In order that we can replicate that success in other sectors, I urge the Scottish Government to engage constructively with the joint ministerial committee that the UK Government proposes in its green paper so that, together, we can develop an industrial strategy to address the issues that the motion sets forth.

I thank Colin Beattie again for bringing this important debate to the chamber.

Photo of Angus MacDonald Angus MacDonald Scottish National Party

I thank my colleague Colin Beattie for bringing this important issue to the chamber for debate, and I welcome the report by the ICA.

O ver the decades, we have come to realise that we are only ever one large business closure away from a local crisis.

As steel plants, coal mines and car plants closed in the 1970s and 1980s, it felt as if Scotland’s manufacturing industry was in free-fall and communities that were reliant on the work that was provided by those giants felt a degree of dismay. The effects and the impact can still be felt today.

My constituency of Falkirk East is home to some of Scotland’s most important sites. The petrochemical manufacturing and refinery sites of Ineos and Petroineos in Grangemouth lie cheek by jowl with the British Petroleum site at Kinneil Kerse en route to Bo’ness. It is not difficult to recognise Grangemouth’s importance to the Scottish and UK economy with plants such as Syngenta, CalaChem and Fujifilm based there too, and with the container port being Scotland’s largest and the only port in the UK to export more than it imports.

The report, “Industrial Strategy for a more prosperous, fairer Britain”, which was compiled and published by the ICA, appears to point to an overreliance on the services sector by the UK economy, which is a fair comment. That the UK is one of the major financial hubs in the world can only be welcomed, but if the economy is based on one sector and we fail to diversify into other areas such as manufacturing, we will sleepwalk into another catastrophic economic downturn, the likes of which will, without doubt, be worse than in 2008.

We should look to the recent past to prepare for the challenges of the future. Sixteen years ago, job losses from the petrochemical plant in Grangemouth were looming and it was recognised that something had to be done to diversify the local economy to protect the area from certain financial disaster. Falkirk Council was led by the Scottish National Party at the time, and my friend and colleague Councillor David Alexander was the council leader. Alongside Scottish Enterprise Forth Valley and the then BP operation in Grangemouth, he launched the Falkirk action plan in 2002, which consisted of four public meetings to find out what the people of Falkirk district wanted for their area.

From the action plan, which gathered a range of views from across the district, the my future’s in Falkirk initiative was created—a series of 24 targeted programmes that were designed to tackle the economic situation head on. My future’s in Falkirk laid the foundations for the Helix park and the world-famous Kelpies and bolstered the district’s tourism industry—it continues to grow by 5 per cent each year—helping to secure the Falkirk area’s reputation as the place to visit and the place to invest.

A key element of the my future’s in Falkirk initiative was that each programme was built with maximum flexibility in order to overcome changes in the economic and market conditions. For example, Grangemouth’s industrial capacity was expanded from a sole manufacturing site to include research and development facilities to create sustainability.

Many of the programmes were ambitious. At the time, some might have said that elements of the initiative were extremely risky, but it was well worth taking the chance and thinking outside the box, and the SNP-led council was prepared to do that—nothing ventured, nothing gained.

We even brought the Royal National Mod to Falkirk. They said that that would never be achievable, yet the Mod came home to Falkirk in 2008. I say “came home” because the concept of the Mod originated from the annual cattle trysts in Falkirk in the 18th and 19th centuries, when Gaelic-speaking cattle drovers met and sang Gaelic songs together, creating a festival of Gaelic culture that had never before been seen in lowland Scotland. In 2008, the Mod brought with it millions of pounds that substantially boosted the local economy and the local culture.

The statistics show that, from 2005 until autumn 2008, Falkirk district’s unemployment rate was below the average rate in Scotland, whereas it was above the national average rate from 2001 until 2005. Equally, employment in the area had been in decline from 2001 until the advent of the my future’s in Falkirk initiative, yet employment rose in the area from 2003 until 2007. Although the global economic downturn from 2008 onwards had an impact across Scotland, the UK and beyond, the effects were not as hard hitting in Falkirk, due to that foresight in 2002. In fact, the then Minister for Communities, former MSP Wendy Alexander, hailed my future’s in Falkirk as the best regeneration scheme that she had ever seen.

All that would not have been possible without further key elements of partnership and the belief that the programmes were possible. Working together to overcome the challenges worked in Falkirk district and catapulted the area to become recognised as the most enterprising place in Scotland in 2010.

Much of the ethos and belief that were central to the success of the my future’s in Falkirk initiative—and of invest Falkirk—can be transferred to other communities around the country, and I encourage members to take note of the examples in Falkirk to help to drive the necessary change in their areas.

Photo of Richard Leonard Richard Leonard Labour

I thank Colin Beattie for lodging the motion in the Parliament, and I thank Steve Fothergill and his team at the Industrial Communities Alliance for putting together their credible, radical and compelling strategy for reindustrialisation and a rebalancing of the economy.

Steve Fothergill is a modest man, so let me say that down the years he has published groundbreaking research. Not least, he has uncovered the real rate of chronic long-term unemployment in our former industrial cities, towns and villages—the very communities that the alliance so effectively represents. I ask the cabinet secretary to go back and look at that research into the real rate of unemployment, so that instead of telling us every month how resilient the Scottish labour market is, when the Scottish claimant count and unemployment rate are announced, he asks what his Government can do to address the long-term, deep-seated but hidden unemployment that still scars many of the communities that we represent in the cross-party group on industrial communities.

If we add to the claimant and unemployment count, as we should do, the people who are listed as economically inactive but who want to work, we find that today’s real unemployment rate in Scotland is nearer to 9 or 10 per cent than it is to the 5 per cent that official figures would have us believe. Indeed, if we add those people who are working part time but could work full time, and those who are in temporary work but want permanent work, the rate is even higher.

As Steve Fothergill and his fellow researchers have shown, time after time, the profound inequalities in the real rate of unemployment—the unequal burden of unemployment between the best and worst parts of Scotland—are far greater than the official figures would lead us to believe. For example, in 2014 the team calculated that the real unemployment rate in the former coalfield communities of Fife, Ayrshire and—the area that I represent—Lanarkshire was more than 15 per cent, compared with an average real rate of just 11 per cent. If ever there was a case for a new industrial strategy, it is made by those statistics and the human stories that lie behind them.

Datasets that the Scottish Parliament information centre obtained for me recently show that in 1979, the year when Margaret Thatcher came to power, more than 600,000 people worked in manufacturing in Scotland. Today the figure is around 200,000, which is 8.6 per cent of the workforce. That is precisely why the report that we are considering argues that our economy is fundamentally unbalanced. We also know from the SPICe dataset that productivity in Scotland is below the UK average; that expenditure on R and D by businesses in Scotland is almost half the UK average; and that industrial investment in the private sector in Scotland lags behind that in the UK.

That is why it is right that Colin Beattie calls, in his motion, for “a Scottish dimension”. We need a strategy for industry in Scotland that is long term, not short term, and which includes long-term support for investment and innovation. We need a strategy that addresses the problem of Scotland having become too much of a branch-plant economy. We need a strategy that embraces democratic economic planning, so that the opportunities that are created by, for example, the Scottish Government’s goal to tackle climate change bring jobs to our local communities.

The strategy must also advance democracy and equality in the economy, so that the proper role of trade unions as representatives of workers in the economy is recognised, and so that women, who are all too often shut out of the corridors of economic power, are finally let in.

I warmly welcome the Industrial Communities Alliance’s report, which makes an important contribution to the debate. I hope that it helps the Parliament and the Government to consider how we can use the powers that we have to expand the horizons of working people in this country, and thereby bring hope back to the industrial communities that we are sent here to serve.

Photo of Kate Forbes Kate Forbes Scottish National Party

I see my role in the Parliament as being to make a small contribution to making the Highlands a place in which to live, work and do business, something to which the ICA report, which members have eloquently praised, also contributes. We have seen quite a lot of investment and economic activity in the Highlands in recent months, which shows that the Highlands are becoming exactly such a place. It is fantastic news for those of us who call the Highlands home.

Yesterday alone, in the constituency of Skye, Lochaber and Badenoch, planning was approved for 50 new houses on the Black Isle and an £80 million fish food processing plant on Skye that will create 55 new jobs. That is off the back of a fantastic development, over the past few months, which has given a great boost to industry in the Highlands—the sale of the Lochaber smelter. Lochaber has long been famed as the home of the Lochaber smelter, which is based in Kinlochleven and Fort William—in fact, Kinlochleven was almost named Aluminiumville. What has been great about the past six months is that demonstration that investment in industry in the Highlands is not just history but is starting to pick up.

The report talks about the drive and determination that are required to bring about a sustainable revival of industry. I stand here as an MSP who has seen that begin to happen in Lochaber and the west Highlands—an area that sees industry not just in terms of jobs and the income that is generated from those jobs but in terms of the impact on communities, which is something that the report identifies.

The Lochaber aluminium smelter in my constituency epitomises what we are trying to achieve across the country. It shows that we can keep industrial jobs as well as contribute to local communities, education and the environment. The decision to safeguard 150 jobs in Fort William and to create potentially hundreds more jobs will have a brilliant knock-on effect on housing, which is a serious issue; on transport, which is an issue that has been raised with me a number of times; and on education. West Highland College UHI, which is part of the University of the Highlands and Islands, has been doing great things over the past few years, and there is now a need for expertise and training in Fort William so that people can be sourced for the new jobs. That means that West Highland College UHI will have a great opportunity to expand its courses and not only encourage more people to stay in the west Highlands to study but attract more people in and make Fort William a place of excellence and expertise in training for industrial jobs and opportunities.

In the west Highlands, we are seeing the beginning of a new chapter. When the decision was made, I wrote that I thought that the recent takeover would rewrite the future of Fort William and Lochaber, and it has restored community pride to the area. If we replicate across Scotland the commitment that we have seen locally to an effective and sustainable industrial strategy, we can rewrite the industrial future of Scotland and seek the restoration of that community spirit and pride that was once characteristic of industrial towns and cities the length and breadth of the nation.

Photo of Liam Kerr Liam Kerr Conservative

I, too, congratulate Colin Beattie on securing the debate. As he said, it is timely and extremely pertinent to the circumstances in which we as a nation find ourselves. As we look towards a Britain outside the European Union, we need to plan for the future and work to build a country in which future generations will have the chance to do better than their parents and grandparents.

That is why we, too, warmly welcome the publication by the Industrial Communities Alliance of “Industrial Strategy for a more prosperous, fairer Britain”.

The report says:

“It is wrong to think of ‘industry’ as something from the past.”

We agree. The report says:

“An effective industrial strategy can enhance competitiveness and help deliver a high-wage, high-employment economy.”

We agree. The report says:

“A revival in British industry would be especially beneficial to the economies of the Midlands, North, Scotland and Wales.”

We unequivocally agree. The report is a significant step forward, and the context of the debate has been set.

I was pleased that, in January, the Prime Minister launched the UK’s modern industrial strategy as a critical part of the British Government’s plan for post-Brexit Britain. It aims to deliver a stronger economy and a fairer society, in which wealth and opportunity are spread across every community in our United Kingdom and not concentrated in London and the south-east.

The strategy will help young people to develop the skills that they need to deliver the high-wage, high-employment economy of the future. They are the same young people, doing the same jobs as the Industrial Communities Alliance calls for, in the same areas as the alliance represents.

The UK Government tackles directly the call by the alliance to develop

“Regulatory regimes that ensure the protection of workers, consumers and the environment but do not hinder investment and growth”.

The strategy heralds a new approach. It is not about

“stepping back and leaving business to get on with the job, but stepping up to a new, active role that backs business and ensures more people in all corners of the country share in the benefits of its success.”

It is hard to see many areas in which the UK Government and the Industrial Communities Alliance differ in their aims for the future of British industry. Indeed, the strategy acknowledges the report’s call for improvements in research and development in this country and its claim that we too often fall down on the transfer of knowledge and innovation from the laboratory to the shop floor. Although British excellence in key technologies, research disciplines and institutions gives a competitive advantage, we must maintain, strengthen and invest in our research and development programmes and institutions.

I think that the alliance must be pleased with the new strategy as outlined by the Government. In fact, just by having a strategy, the Government has met one of the alliance’s main demands.

Mr Beattie’s motion is a good one. I note that it suggests that the Industrial Communities Alliance

“would benefit from a Scottish dimension”.

I also note that the report is on the situation in the UK as a whole, just as the Government’s industrial strategy is a plan for the UK as a whole. The Industrial Communities Alliance is made up of local councils from across the country, including 15 from Scotland. I argue that that gives its report a Scottish dimension, although I accept Richard Leonard’s salient points.

I welcome the Industrial Communities Alliance’s report and find much to agree with in Colin Beattie’s motion. The document provides a context for debate and I agree that

“the adoption of an effective industrial strategy would enhance competitiveness and help deliver a high-wage, high-employment economy”.

I am therefore pleased that the UK Government has produced a modern industrial strategy for the UK. That strategy and the alliance’s document are both plans for the future with explicit objectives to improve living standards and economic growth by increasing productivity and driving growth across the country. That is no small task and will take years of hard work. I look forward to the Parliament, the Scottish Government, the UK Government, the Industrial Communities Alliance and stakeholders across the country working together to turn that vision into reality.

Photo of Neil Findlay Neil Findlay Labour

I, too, congratulate Colin Beattie on securing the debate. I also congratulate the alliance on the publication of its document, which is an excellent piece of work that identifies the key imbalance in the country’s economy. It shows only too clearly how an overreliance on services in the financial sector and the repeated undermining of the manufacturing sector have left us with far too many low-paid, insecure jobs, particularly in former industrial and coalfield areas, such as parts of Midlothian and West Lothian in my region, as well as Lanarkshire, Fife, Ayrshire and similar areas across the UK.

A combination of the fallout from the global financial crisis and a European Union and International Monetary Fund response that saw austerity sweep continents as a key tool of economic policy, along with a shrinking of industrial capacity and the deskilling of large sections of our communities, has gone a long way to create the conditions that we see across Europe and the US, where people in former industrial communities seek answers in the simplistic solutions of economic nationalism.

In this country, coal, electronics, paper, oil, food and textiles companies have all gone to the wall. The main response has been the offer to send in the partnership action for continuing employment team to help people to find new jobs and write CVs. As good as that help is, it is not an industrial strategy. We need to create jobs and prevent job losses; we need to stop people becoming unemployed. We need an active industrial strategy. As the report says, that must involve a much more co-ordinated approach through procurement, investment, planning, skills, research and development, Government investment, financing infrastructure and more.

Although many questions about Brexit need to be answered, there are—if we take them—opportunities, too. The right to provide state aid to industries and sectors must be a priority in the negotiations. Having the right to determine our own procurement policy, to deliver apprenticeships and skills, to end bogus self-employment, to end zero-hours contracts and to pay decent wages must be policy objectives. They are just some examples of areas in which Governments of all colours—and I mean all colours—have hidden behind EU procurement or state-aid rules to avoid making progressive decisions.

We need to support the transition to a greener economy in which technology supports us all to live more fulfilling lives, and having an active industrial policy is part of that. One of Scotland’s greatest missed opportunities has been in wind energy. We should have had turbines that were financed, built, owned and operated in this country. Communities and public bodies could have developed all of that in a truly sustainable way. Instead, the kit has been built abroad and many of our wind farms are owned by foreign multinationals, venture capital firms or wealthy individuals, with the result that the profits float off with every turn of the turbine to boardrooms in places such as Paris, Bonn and Amsterdam. If ever there was an absence of planning and industrial policy, that is it. We could make similar comments about the new Forth crossing.

Time does not allow me to go into the many other economic aspects of the report; I hope that we will be able to do that some other time. I hope that we do not repeat the mistakes of the past, such as those that were made under Mr Lockhart’s party’s rule in the 1980s. We must learn from the report and use it to put pressure on the Scottish and UK Governments to deliver full employment. For me, that should be the key economic policy of any Government.

Photo of Keith Brown Keith Brown Scottish National Party

I thank Colin Beattie for lodging his motion and highlighting the importance of industry to the Scottish economy. I also thank him for his work with the cross-party group on industrial communities, which I have met on a number of occasions and some of whose members are in the gallery.

The Scottish Government has a clear approach to industrial policy, which includes the overarching framework of our economic strategy, as well as the reforms and actions in our manufacturing action plan, which help to support our ambitions for a sustainable and inclusive economy.

Presiding Officer, you and I are probably among the few members present who remember when members’ business debates were consensual debates. In the past, that was the nature of them, but we have obviously moved well beyond that. In particular, the speeches of Dean Lockhart and Richard Leonard were like two cheeks of the same, rather sour face, given their sniping at the Scottish Government.

However, it is worth saying that, as Richard Leonard said, the Scottish Government’s approach is in marked contrast to the approach of successive UK Governments. For decades, whether in the 1970s, the 1980s, the 1990s or subsequently, the UK Government has been content to sit back while industrial output and employment have fallen. Several members have mentioned the primary steel industry, which employed 320,000 people in 1971. By 2015, that had dropped to 21,000. That means that nearly a third of a million jobs have gone in just over 40 years, and that loss has been concentrated in a small number of communities. As recently as September 2015, the closure of the Redcar steel plant resulted in the loss of 1,700 jobs. The UK Government did nothing to prevent that.

I do not disagree with Richard Leonard’s point about underemployment. We have acknowledged that at every opportunity. It would not make sense for the number of people who are economically inactive—those figures are produced—to be added to the claimant count, but I agree that they are an important factor.

However, it would be good to have a bit of balance. At around 4.9 per cent, the current unemployment rate is still too high, but it should be recognised that it is substantially below the figures that we had in the 1970s, the 1980s, the 1990s and many subsequent years. The Conservatives very often make the point that it is substantially above the UK level, but it is, in fact, almost identical to the UK level.

Richard Leonard said that Scottish productivity levels are substantially below those of the UK. Within the past week, we have seen them almost match—they are within less than 1 per cent—for the first time. We inherited from the Government that Richard Leonard supported in 2007 a differential of around 6 or 7 per cent, and that has now been virtually closed.

Photo of Richard Leonard Richard Leonard Labour

The cabinet secretary has made the point before about record low levels of unemployment, so I checked. The level of recorded unemployment in 2005 and 2006 was exactly the same as it is now. We can go back to the mid-1970s, before deindustrialisation escalated into the 1980s, and see that the figures were comparable to those of today. Therefore we are not living in times of record low unemployment; in fact, if we go back before the 1970s, the unemployment levels were substantially lower than those that are being recorded at the moment.

The Deputy Presiding Officer:

I will give the cabinet secretary some extra time because of that long intervention.

Photo of Keith Brown Keith Brown Scottish National Party

Thank you, Presiding Officer.

I never referred to record employment levels—I did not make that point. Employment levels previously might have been mentioned, but I recognise that the current unemployment levels are not record ones. I also recognise the figures from 2005 that Richard Leonard mentioned, but he missed out the late 1970s, the 1980s, the 1990s and many subsequent years. He picked out one or two years. We should look at the other years and see the levels of unemployment that previous Governments were content to see.

When we were about to suffer the industrial closure of the Tata Steel plants at Dalzell and Clydebridge, the First Minister, as has been mentioned, immediately established a task force partnership involving central and local government, local politicians of all hues, trade unions and industry to do whatever could be done to save the plants and look after the men and women whose jobs depended on those plants staying open. When the possibility of a deal emerged—that took a great deal of work—we did not leave it to market forces to determine the outcome; we intervened and acted as honest broker to ensure that the deal went ahead as quickly as possible.

As Kate Forbes mentioned, when Rio Tinto Alcan announced its intention to sell off the aluminium smelter in Fort William, we acted. We did not stand back, as previous Governments had done. We helped to provide the guarantees that were necessary for a new owner to step forward—a new owner with plans not just to save the smelter but to expand manufacturing and bring in much-needed and highly skilled manufacturing jobs.

I could also, of course, mention the work that we did with Ferguson Marine to ensure that shipbuilding stayed on that part of the Clyde.

Despite all that, there are, of course, clouds on the horizon. A hard Brexit threatens Scotland’s current position in the European single market and hence affects Scotland’s national interests.

I was almost ready to agree with Neil Findlay’s characterisation of the effect of deindustrialisation in the United States and the extent to which that led people to find wrong answers. However, it was like listening to a UK Independence Party member or hard Brexiteer starting to talk in derogatory terms about economic nationalism. I just could not really understand the connection. He did not make the connection between those two particular outlooks: hard Brexit, which he supports, and economic nationalism. A hard Brexit would, of course, damage jobs and living standards deeply and permanently.

Photo of Neil Findlay Neil Findlay Labour

I do not know where the cabinet secretary is getting the idea from that I support a hard Brexit. I have never said that. What I am saying is that we should not pretend that everything that comes with Brexit is a negative. If we have the right mindset and a decent negotiation for the conditions of Brexit, we can do things that would positively be an advantage to a proactive industrial policy. To deny that is to live in cloud-cuckoo-land.

Photo of Keith Brown Keith Brown Scottish National Party

Once again, we have some common ground. Neil Findlay is right to say that there are points in looking at the opportunities. Whatever the scenario, we have to look at the opportunities as well as the threats, but the idea of condemning economic nationalism in the United States and supporting Brexit just does not make sense to me.

Under a hard Brexit, Scottish gross domestic product could be about £11 billion a year lower by 2030, and resources for public spending could be up to £3.7 billion a year lower.

Photo of Keith Brown Keith Brown Scottish National Party

Again, I ask the permission of the Presiding Officer.

The Deputy Presiding Officer:

You can take an intervention, cabinet secretary. I am rather enjoying this.

Photo of Dean Lockhart Dean Lockhart Conservative

As are we.

The cabinet secretary seems to be blaming Brexit for all the economic woes. C an I remind him that the underperformance of the Scottish economy dates back 10 years to when this Government took control, and that, for every year bar two, the Scottish economy has underperformed that of the rest of the UK? The UK right now is the fastest-growing economy in the G7, with over 2 per cent growth. In Scotland, economic growth under the

SNP is 0.7 per cent. How does that have anything to do with Brexit?

The Deputy Presiding Officer:

I think that that has to be the last intervention, cabinet secretary.

Photo of Keith Brown Keith Brown Scottish National Party

Once again, the reason why I discount much of the commentary that I get from Dean Lockhart in relation to the economic situation in Scotland is because—

Photo of Keith Brown Keith Brown Scottish National Party

—well, apart from the fact that he is a Tory—he continues to deny that there are two active Governments in the Scottish economy. Look at the report that we are considering tonight—look at the specific recommendations that it makes for what could make an effective industrial policy: low exchange rates, low interest rates, a measured approach to deficit reduction, regulatory regimes for the protection of workers and business taxation. Those are all powers that are held by the UK Government but which he denies have any impact on economic performance in Scotland. Whether it is in terms of unemployment or growth, the UK Government is complicit, yet it never acknowledges or accepts that responsibility. That is why I do not think that we can take seriously the points that Dean Lockhart has been making.

Photo of Keith Brown Keith Brown Scottish National Party

The UK Prime Minister has suggested that the way to avoid the threats of a hard Brexit is to turn back the clock to a low-tax, low-regulation economy with the associated loss of the workers’ rights, environmental and social protections and public services that we fought so hard for, even though we cannot hope to compete with—[



The Deputy Presiding Officer:

Sorry, cabinet secretary. Mr Tomkins, you did not take part in the debate or press your button, so please do not sit in the back row yelling.

Photo of Keith Brown Keith Brown Scottish National Party

Thank you, Presiding Officer, for that timely intervention. We cannot hope to—and would not want to—compete with the low-wage, low-value industries in some other parts of the world.

I agree with the many members in the chamber who made the point that we have to rekindle the spirit of innovation of James Watt, Thomas Telford and James Clark Maxwell. To do that, we need innovation, the finance to follow through on that innovation and a skilled workforce. We have to adapt our industries to evolve and to innovate. New products and new processes will drive up the value of our industrial output. That is why we have the manufacturing action plan for Scotland, with its comprehensive proposals for action. That is why we created the innovation centre programme which, to be fair, Dean Lockhart mentioned positively in his speech. That is why we are actively progressing plans for a national manufacturing institute for Scotland.

Finance is crucial, as the report makes clear. We also have to create the environment for our innovators, entrepreneurs and small and medium-sized enterprises to flourish. Our SME holding fund, which utilises European funding—which, of course, will no longer be available after Brexit—provides micro-credit finance up to £25,000, loans up to £100,000 and equity investment up to £2 million. We have also established and are bringing forward the £500 million Scottish growth scheme to provide investment guarantees and loans of up to £5 million.

A skilled workforce, as mentioned by some members, is also crucial. We continue to invest in a successful modern apprenticeship programme, which is on track to achieve our target of 26,000 new starts in 2016-17 and 30,000 starts by the last year of this parliamentary session.

In closing, I once again thank Colin Beattie for lodging the motion and giving us the opportunity to have a lively debate and to highlight the work that we are doing in Scotland to adapt our industries to the challenges that lie ahead.

Meeting closed at 17:53.