Scotland’s Economy

– in the Scottish Parliament am ar 13 Mawrth 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Liam McArthur Liam McArthur Democratiaid Rhyddfrydol

The next item of business is a debate on motion S6M-12457, in the name of Daniel Johnson, on growing Scotland’s economy. I invite members who wish to speak in the debate to press their request-to-speak buttons. I advise members that there is, as ever, very little time in hand.

Photo of Daniel Johnson Daniel Johnson Llafur

This debate does not need to be an argument. The Government could choose to be constructive, to look at the issues that we face and to talk in serious terms about the powers that it has around skills, planning and regulation and about the infrastructure on which our economy relies. Alternatively, it could choose to look the other way or, worse, stick its head in the sand. I urge it to do the former, because we need to focus on productivity.

We should be worried, not just about the technical recession that we appear to be in now but, more important, about the seven consecutive quarters of decline of gross domestic product per capita at United Kingdom level. Worse still, the evidence suggests that Scotland is, if anything, underperforming compared with the UK economy rather than being held back by it. That is what appears to be indicated in the recent report by the Confederation of British Industry and the Fraser of Allander Institute, which shows that Scotland lags the UK on 10 of the 13 measures that it sets out.

Photo of Murdo Fraser Murdo Fraser Ceidwadwyr

I share much of Mr Johnson’s analysis of the report by the CBI and the Fraser of Allander Institute on productivity. However, will he clarify Labour’s current stance on income tax differentials? Does Labour believe that income tax in Scotland should be made equivalent to income tax in the rest of the UK, or does it have a different position?

Photo of Daniel Johnson Daniel Johnson Llafur

I thank Murdo Fraser for asking me an easy question. We have to look very carefully at the cost of income tax differentials and the impact that they have. That is not the same as saying that we could move immediately to do something about them, but we need to pay very close attention to them. There are indications and evidence that the income tax differentials are now hurting our ability to attract talent to Scotland.

The second point that I highlight from the CBI and Fraser of Allander Institute report is that the proportion of businesses that are “innovation-active” is 6 per cent lower in Scotland than the UK average. On health, 31 per cent of those who are economically inactive are on long-term sick, compared with just 24 per cent in England.

The report is not an isolated report. The Ernst & Young regional economic growth forecast projects that the growth of gross value added in Scotland, as well as our employment growth, will be slower than that of every other nation and region of the UK.

The Scottish Government, with its significant powers to deliver economic growth, is more concerned with pointing out what it cannot do than with focusing on what it can do. A year on from its so-called “reset” with business, many businesses that I speak to feel that their relationship with Government is stuck, rather than reset. We hear about new strategies time and time again, and goals are discussed, but there is really very little in terms of delivery or implementation.

We are now two years on from the launch of the Scottish Government’s 10-year national strategy for economic transformation, but what has been achieved? Audit Scotland has already highlighted the “gap in political leadership”, with crucial governance structures not even being established. Indeed, Ivan McKee, who was involved with the strategy, said in a recent column that the Government is chasing “Good headlines” at the expense of economic policy implementation. He is right.

We desperately need a plan, a laser-like focus on delivery and a Government approach that seeks to—

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Does Mr Johnson agree that it would be deleterious to the economy in Scotland if Labour further increased the windfall tax from 75 per cent to 78 per cent and, perhaps even more damagingly, removed the reliefs that currently exist? In the short term, there might be slightly more revenue but, in the long term, in the 2030s, there would be nothing at all, because that would just starve future investment.

Photo of Daniel Johnson Daniel Johnson Llafur

I understand the member’s concern, but, in the end, we have a choice: do we seek to tax the profits of energy companies or increase tax on hard-working Scots? I know what I would choose every single time.

In our recently published paper “Building a business case for Scotland”, we set out three principles: working in partnership with business, having a plan so that business and Government understand their respective roles, and using the convening power of Government. The Government must recognise its responsibility to bring parties together proactively. What we see from the Government is a failure to take the issue seriously, use the powers that it has and set the priorities that it needs to set.

For example, there is a serious risk that the Berwick Bank wind farm project, which would potentially give Scotland one of the largest offshore wind farms in the world, will be held back. The site still does not have the Scottish Government consent that it needs, and it needs it by 16 April in order to take part in the contracts for difference allocation round 6, which will happen just next month. The decision has been on ministers’ desks for 15 months. That uncertainty undermines investment and harms supply, so let us have decisions made in a timely manner. We need the Government to understand its responsibility and the role that it plays in economic development.

Similarly, on Grangemouth, we see a lack of proactive steps. The cessation of refining at Scotland’s only refinery, which is a key strategic asset, will cost workers their livelihoods and devastate the local community. The key to that is a hydrocracker. For the sake of a £12 million investment, the site could be profitable enough for it to continue. I ask again: what will it take? Will the Scottish Government pull out the stops? Has it held a meeting to assemble agencies such as the Scottish National Investment Bank and Scottish Enterprise with the owners and other potential investors? Will it use its convening power to see what can be done, and will it pull out all the stops to get that investment, or will it simply talk about economic factors and just transition but do little to deliver that?

Under this Government, it feels as if we are drifting towards a lost decade of low growth, with high taxes and declining public services. We desperately need a Government that is willing to harness the economic potential of Scotland and its people; a Government that is willing not just to set goals but to do the hard yards to deliver the actions to realise those goals. Scotland needs change, and Scottish Labour stands ready to deliver it.

I move,

That the Parliament recognises the crucial role that economic growth plays in delivering strong public services and social change; believes that, despite this, the Scottish Government has failed to use the powers that it has to grow Scotland’s economy and has instead presided over low growth and low productivity; notes the publication of the CBI-Fraser of Allander Institute

Scottish Productivity Index 2024

, which shows that Scotland is lagging behind the rest of the UK on 10 out of 13 productivity indicators; believes that this underperformance has serious implications for living standards and incomes and will place further pressure on Scotland’s struggling public services; calls on the Scottish Government to take a new approach to the economy, working in partnership with business to unleash the true economic potential of Scotland and its people, and notes the publication of the Scottish Labour Party’s

Building a Business Case for Scotland and its proposals to use the soft power of Brand Scotland to increase exports and international investment, to simplify Scotland’s enterprise agency landscape so that it is better aligned to deliver innovation, promote growth and attract investment, to embed technology across the economy and in Scottish public services to support excellence and ensure future generations are tech and business ready, and to develop a clear skills plan with transition pathways into the green economy.

The Deputy Presiding Officer:

I gently remind members who are looking to participate in the debate and who have not already pressed their request-to-speak button to do so now.

I call Màiri McAllan to speak to and move amendment S6M-12457.2.

Photo of Màiri McAllan Màiri McAllan Scottish National Party

I welcome the timing of Daniel Johnson’s debate. In his motion, he suggests that Scotland is somehow lagging behind the rest of the UK. Of course, he does so while the UK is in a recession, technical or otherwise, and when Scotland is not. In doing that, I fear that he has somewhat undermined his own arguments.

In moving the amendment in my name, I want to use the time that I have to set the record straight. I will do so with reference to two key points. The first is that Scotland’s economy performs well in the UK, but the second is that the UK economic model has ultimately failed, and that has been compounded by the pursuit of a disastrous Brexit. Further, while Scotland remains part of that failed system, we will compare poorly with our European comparators.

On current performance, Scotland is the top-performing region outside London and the south-east, with the third-highest wages and gross value added per person in 2021. Since the Scottish National Party came into government in 2007, GDP per person has grown by 10.8 per cent in Scotland, compared with 5.6 per cent at UK level. Also since 2007, productivity has grown at an annual rate of 1 per cent, compared with the UK’s 0.5 per cent. On inward investment, in 2022, we outperformed the UK and the European Union average, with growth of 3.3 per cent in Scotland, compared with 1.4 per cent in the EU, and a 6.4 per cent fall across the UK. This week, a key survey showed that private sector employment in Scotland has grown faster than in any other UK nation. It is important to note all that.

At the same time, more workers earn the real living wage in Scotland than elsewhere in the UK, and a near-record number of workers are in payrolled employment. Likewise, the gender pay gap and child poverty rates are lower compared with those in the UK. All of that demonstrates that Scotland’s economy is one of the best performing in the UK and that the Scottish National Party Government has determinedly pursued fairness alongside economic growth.

Photo of Daniel Johnson Daniel Johnson Llafur

Does the cab inet secretary recognise that we need to look at those figures in the round? The employment and wage growth has come after there was slower growth as we came out of the pandemic. Does she recognise that, on 10 of the 13 measures that are set out in the CBI and Fraser of Allander Institute report, Scotland is behind the rest of the UK?

Photo of Màiri McAllan Màiri McAllan Scottish National Party

I welcome the CBI report and the work that I am able to do with the organisation. We do need to take things in the round, and I want to talk about the context, because what I have set out has been achieved in the face of headwinds that have characterised my whole adult life, as they have for so many people around Scotland. Chief among them are the 15 years of corrosive austerity—which have resulted in the relentless underfunding of our public services and have punished the most vulnerable in our society—and, of course, the hard Brexit that was pursued against the democratic will of Scotland in the middle of a pandemic.

On Brexit, research now shows that the UK economy is 2.5 per cent smaller than it would have been if we had still been in the European Union, and the Office for Budget Responsibility says that it expects the UK’s potential GDP to fall by 4 per cent in the long run because of Brexit. Appallingly, despite the overwhelming evidence that Brexit is damaging our economy and should be reversed, neither the Tories nor Labour support a return to the EU.

Photo of Màiri McAllan Màiri McAllan Scottish National Party

I am afraid that I do not have time.

Over the past few months, we have seen the parties that are vying for Downing Street emulate each another. We have seen that in relation to Brexit, and we have seen it in Labour’s approach to caps. In its view, capping is now appropriate for child benefit, but not for bankers’ bonuses.

I will use the time that I have left to talk about what there is still to do. Daniel Johnson is absolutely right that we cannot be complacent. We are working to deliver our vision for Scotland’s fair, green and growing economy. We are doing that in a number of ways, including through our blueprint for entrepreneurial campuses, investment in our national Techscaler network and the launch of the National Manufacturing Institute Scotland. We are progressing Ana Stewart’s recommendations on support for women in business, we have strengthened conditionality through our fair work first policy, and we are increasing funding for the green investment portfolio by £1 billion. I have had the chance to see that for myself. For example, I recently visited Grangemouth in relation to Piramal Pharma’s £45 million investment in its antibody drug conjugates manufacturing facility, and I welcomed Sumitomo’s £350 million inward investment in Cromarty. These are hugely exciting times, and the Government is seizing the opportunities that are before us.

However, it is well documented that the combination of the flexibility of independence and access to the European market provided the key components for the success of our prosperous Irish neighbours. It is therefore clear that only as an independent country can we truly realise what this Government has long pursued under devolution—namely, the true economic potential of this country, side by side with the health, wellbeing and happiness of all who live here.

I move amendment S6M-12457.2, to leave out from “recognises” to end and insert:

“notes that, since 2007, Scotland’s GDP per capita has grown 10.8% in comparison to the UK’s growth of 5.6%; acknowledges that, over the same time period, productivity has increased at an annual average rate of 1% a year in Scotland compared with the UK’s 0.5% a year; welcomes the approach taken to the economy by the Scottish Government to build a collaborative relationship with business, industry, workers and trades unions and to create jobs through the development of a green industrial strategy; considers that, in Scotland, a near record high number of people are in payrolled employment and a higher proportion of workers earn the real Living Wage than in the other UK nations, while the gender pay gap and child poverty rates are lower also than the UK’s; recognises that the UK economic model has failed to deliver the prosperity to Scotland that is enjoyed by neighbouring countries; further recognises that the Office for Budget Responsibility forecasts that the UK economy will be 4% smaller as a result of Brexit, a Brexit which is supported by three of the four largest parties in the UK Parliament, and agrees that the best way for Scotland to develop a wellbeing economy, and so match the economic success of Scotland’s northern European neighbours, is to become an independent EU member state.”

Photo of Murdo Fraser Murdo Fraser Ceidwadwyr

Before I come to the substance of the debate, I gently remind the cabinet secretary that Ireland’s economic growth was based on slashing taxes in order to attract investment, which is the opposite of what the Scottish Government is doing with its devolved budget.

I welcome this debate on growth, which was well timed by the Labour Party on the very day that we learned that the UK economy grew by 0.2 per cent in January and is climbing out of recession. Despite the international headwinds that are affecting all major western economies, the UK economy has grown faster than any other major European economy since 2010, and it is expected to grow faster than the economies of many of our competitor nations.

Photo of Daniel Johnson Daniel Johnson Llafur

Does Murdo Fraser acknowledge that growth of 0.2 per cent is hardly an economic surge and that, more importantly, if we look at the same GDP figures on a per capita basis, we see that the UK’s performance is well within the bottom third, if not the bottom quarter, of the performances of countries in the Organisation for Economic Co-operation and Development?

Photo of Murdo Fraser Murdo Fraser Ceidwadwyr

Mr Johnson needs to look at what is happening in, for example, Germany, which has been in persistent recession. The UK economy is performing better than many of the benchmarks against which we could judge it.

Growth is important. We need growth in order to provide secure, well-paid jobs and to generate the tax revenues that our public services depend on.

I agree with a lot of Daniel Johnson’s analysis. The CBI-Fraser of Allander Institute Scottish productivity index that he referred to has stark messages about us lagging behind the rest of the UK on a range of measures.

Stephen Leckie, who is the president of the Scottish Chambers of Commerce and has just been elevated to the chair of VisitScotland, which is a very worthy appointment in which I think he will excel, has said:

“Scotland’s economic growth is stuck in a low growth cycle.”

He is correct because, since 2014—over the past decade—Scotland’s growth has, on average, been one half of the rate of the UK. Had it grown at even the UK average over 10 years, we would have had an extra £6 billion to £7 billion in tax revenues to spend on vital public services.

In her amendment and in her speech, the cabinet secretary referred to numbers going back to 2007. She is right: in the period 2007 to 2014, relatively speaking, the Scottish economy grew faster. Why? That was because of the growth in oil and gas. That is the very sector of the economy that the SNP Government wants to see closed down—as, indeed, does the Labour Party. Therefore, we should not take too much comfort from that. The position since 2014 has not been encouraging.

The whole question of the tax differential is mentioned in our amendment, because it is very important to the debate.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Given Murdo Fraser’s remarks about the windfall tax, does he regret the decision by the chancellor to extend the windfall tax to 2029?

Photo of Murdo Fraser Murdo Fraser Ceidwadwyr

Yes, and we have made that very clear, but we still have a better offer to support oil and gas than any other party in the chamber.

Sandy Begbie, the chief executive of Scottish Financial Enterprise, was quoted last month as saying that

“Scotland is becoming a dangerous place to be rich or create wealth.”

When a senior business figure comes out with that warning, we should listen to it.

It would be good to know exactly where Labour stands on that. I heard Mr Johnson’s response to my intervention. He hinted that Labour is moving towards a position of perhaps lowering income tax in Scotland. That would be a serious departure from what we have heard from his Labour colleagues over many years in the chamber. They have persistently called for higher taxes on higher earners to fund public services. If that is a change in Labour’s direction, that is very welcome, but we need to get that clarified.

The new deal for business promised much and was much welcomed by the business sector in Scotland, which is now sadly disappointed, because all that the Scottish Government’s budget delivered was tax hikes, with no passing on of business rates cuts, but cuts to enterprise, trade, employability, skills, colleges and universities. That is why the business community in Scotland is looking for a lot more from the Government.

I commend to the Government our paper “Grasping the Thistle: Our plan for economic growth”. That is covered in my amendment to the motion, which I have pleasure in moving.

I move amendment S6M-12457.1, to leave out from “, and notes” to end and insert:

“; recognises that ill health and long-term economic inactivity within Scotland are barriers to delivering growth, and calls on the Scottish Government to address these issues and deliver greater investment in education to provide long-term economic growth; notes that the income tax differential between Scotland and the rest of the UK is damaging business and is an obstacle to economic growth; further notes that this tax differential will become more pronounced with the introduction of the new “Advanced” tax band in the new financial year; calls on the Scottish Government to take steps to make income tax competitive with the rest of the UK to unleash Scotland’s economic potential, and further calls on the Scottish Government to look to the Scottish Conservative and Unionist Party’s policy paper,

Grasping the Thistle – Our plan for economic growth

, for inspiration on how to grow Scotland’s economy through its proposals for making the delivery of strong, long-term growth the main economic priority of government, creating a joint Scottish economic board to bring together ministers from the Scottish and UK governments, delivering a national workforce plan, building regional clusters of excellence to deliver Scottish exporting success, and supporting key investments to create a culture of innovation and entrepreneurship.”

Photo of Willie Rennie Willie Rennie Democratiaid Rhyddfrydol

There has been a lot of talk about context this afternoon. We should remember that the past 10 years have enveloped this country in chaos, from the independence referendum, which had a direct impact on the business community and our economy, to Brexit, Boris Johnson, the pandemic and the infamous Liz Truss budget. It has been a decade of political uncertainty, and the economy has been undermined.

However, the Scottish policy context is important, too. The Scottish Government’s industrial strategy has been based on spending hundreds of millions of pounds on projects with very little return. Let us take the example of Burntisland Fabrications: £50 million was spent for nothing in return for the Fife and the Western Isles economies. The taxation policy has been incredibly volatile. It has gone from proposed hikes in income tax to enforcing a freeze of the council tax to hikes again in income tax. It is very difficult to read where the Scottish Government is going. It claims progressivity in its approach, but it never gives any indication of when that ends.

On regulation, the legislation has been heavy handed. Sometimes it has been done with good intentions, but it has been heavy handed, overcooked and implemented in a cack-handed fashion. The effect is that the Scottish economy continues to be sluggish, with productivity in a terrible state. The Scottish economy lags behind that of the UK, which, in itself, lags behind the economies of our competitors in the rest of the world.

Photo of Willie Rennie Willie Rennie Democratiaid Rhyddfrydol

No. I am sorry.

Scotland has lagged behind the UK for a long time on business research and development. The Scottish Government has made no difference to business R and D, and GDP growth has been incredibly weak. That feeds through to the public funds that are available for public services.

The country needs change at Westminster but also at Holyrood. It needs an end to the chaos and a focus on practical steps to grow the economy.

There are some real opportunities that we must maximise. After the far-too-large ScotWind leasing round was sold on the cheap, the Scottish Government now has an enormous task to support the creation of the enormous supply chain that is required to exploit the potential and build the expert staffing capacity in Marine Scotland to grant the various permissions that are required.

Currently, it can take up to 10 years to get a wind farm into operation. That is far too long. If there is a bottleneck on licensing and the supply chain is not developed here, the work and the investment could go elsewhere, along with our much-sought-after energy security and our climate change obligations. The stakes are incredibly high.

Our universities are a major source of economic growth, especially through the talent that they produce and the excellent research that they conduct. That research feeds through to spin-outs, licensing, jobs and growth. We can see that in our communities. However, because of the lack of support and investment, Scottish universities are attracting an ever smaller proportion of UK research funding. The funding continues to decline, and the opportunity is slipping away from us. We need to ensure that we invest in our universities to keep that excellence.

We also need to have a stable United Kingdom with Scotland as part of it for the finance sector. We saw during the independence referendum debate how vulnerable that sector was to the threat of independence. We must therefore have an end to the endless production of independence papers, which are causing a huge distraction.

We are short of skilled workers following Brexit. We need to have an immigration policy that works for our economy.

The short-term licensing scheme is overcooked and overdone. The regulation measures need to be smart and fit for purpose.

Finally, we need to have some certainty about taxation. I do not know where the Government is going on taxation. I think that many people are worried about where it is going.

Photo of Willie Rennie Willie Rennie Democratiaid Rhyddfrydol

The progressive argument continues forever. We need certainty in order to get investment in our country.

Photo of Alex Rowley Alex Rowley Llafur

Education and skills are key if we are to have a high-wage and high-skill economy that works for the people of Scotland. Right now, we have a skills gap across much of the Scottish economy, our schools are struggling with increasing pressures, and our colleges are limping along from crisis to crisis, with staff morale reported as being at rock bottom.

A survey report on employers by the Chartered Institute of Personnel and Development in 2022 suggested a negative perception of schools by employers across Scotland. The report stated that some of the most concerning findings were around the gaps in literacy and numeracy in the workplace, which are linked to school education and which are worse in Scotland than in England. The survey also showed that 22 per cent of employers used further education colleges to deliver training and that 52 per cent did not offer any apprenticeships at all.

It is crucial that the Government focus on education and address the issues in our schools and colleges. In January, the Minister for Higher and Further Education; and Minister for Veterans told the chamber:

“There is a long-term issue with industrial relations in the college sector.”

He went on to say that he was

“intrigued by the fact that, although all sides recognise that, we have not yet been able to find a solution.”—[

Official Report

, 18 January 2024; c 4.]

Colleges are key to skilling up the workforce of the future and, indeed, reskilling the workforce of today. It is simply not good enough that the Government stands back and watches as colleges bounce from one crisis to the next. The Government must take the necessary actions to ensure that our colleges can deliver for our economy and the people of Scotland. There should be no more excuses. We need action, and we need it now.

I made the point in a debate last week that my concern is that the Government is so consumed by its singular focus on independence as the only answer to the difficulties that we face in Scotland that our current place in the world is diminished. That is purely because the SNP refuses to believe that we have the ability to build a better country with the powers that we have. A case in point is the speech in January in which the First Minister made the case for an industrial strategy for Scotland after independence. It is ludicrous to suggest that independence is needed to deliver an industrial strategy for Scotland. An industrial strategy can be put in place right now in the UK.

As Our Scottish Future’s paper “From Growth to Good: a ten-year growth plan for Scotland”, which was published in December, states, we believe that we are lacking a more collaborative, simplified and focused joined-up plan from our UK and Scottish Governments. The paper goes on to state:

“On the economy, our diagnosis is clear: we believe government in Scotland is doing too many things on too small a scale in too many unconnected silos. Our prescription is for the Scottish and UK Governments to come together to agree a new industrial strategy for Scotland, backing our key growth sectors and places to drive up productivity and growth for all.”

To be clear, we need the Scottish Government and the UK Government to come together, work together and work with industry and trade unions to develop an industrial strategy for Scotland that will deliver the growth and prosperity that Scotland requires.

Photo of Ivan McKee Ivan McKee Scottish National Party

I apologise in advance, but, with only four minutes for my speech, I probably will not take any interventions.

I confess that I read Labour’s document “Building a business case for Scotland”—I have a copy in front of me—with interest, because I was looking for ideas and we can always learn from others. It runs to about 30 pages, 10 of which are photographs. Many of them are of Anas Sarwar and Keir Starmer staring wistfully into the middle distance. I do not quite know what they are contemplating. To be honest, the document is pretty thin gruel. I will come to some of the specifics as I go through my speech.

First, the document references Scotland’s economic performance. I am always one of the first to highlight areas for improvement, as members across the chamber know. We can always do better but, as the cabinet secretary clearly outlined, we have lower unemployment in Scotland than in the rest of the UK, had faster wage growth in Scotland than in the rest of the UK last year and have the best foreign direct investment performance outside London. Our onshore exports are growing at twice the rate of those in the rest of the UK post-Brexit and we have fewer workers below the real living wage and had higher GDP per capita growth over the past period and higher productivity growth per capita than in the rest of the UK.

We are better than the UK on many economic indicators, but that is a fairly low aspiration. We need to do better with the full powers of independence. That performance did not happen by accident. A coherent set of strategies sits behind it, including the national strategy for economic transformation, the innovation strategy and our digital, FDI, export and other strategies. Of course, we can do better on delivery, but the actions that need to be delivered are clear.

What does Labour’s document say about the specifics? It calls for a simplification of the agency landscape. Labour members might want to have a conversation with Highlands and Islands Enterprise or South of Scotland Enterprise if they have those agencies in their sights. Economic performance in the Highlands and south of Scotland has gone much better than previously as a consequence of those agencies being in place. The document then tops it all by further complicating the landscape in calling for the establishment of a council for economic growth, so it is not even coherent within itself.

The document calls for investment in ports. I do not know whether that is part of Labour’s promised £28 billion commitment to green investment—I am sorry; there is no longer that commitment, so I do not know where the port investment will come from. It also talks about ensuring that Scotland has a voice in the UK immigration system and pushing for EU visa waivers. If Labour was opposed to Brexit in the way that we are, we might get more traction in both those areas.

The document talks about exports and promoting brand Scotland by working with partners including the diaspora. Perhaps Labour has never heard of the GlobalScot programme, which is going from strength to strength, and the export strategy that is driving the export growth, which is faster in Scotland than in the rest of the UK post-Brexit, as I mentioned.

I am interested in getting Labour’s view on Scotland’s international footprint—the Scottish Development International and Scottish Government offices. The Tories are always keen to criticise that, and I would like to get Labour’s perspective in the closing remarks.

The document talks about developing a simple gateway for FDI. We already have that. It is called Scottish Development International and it is delivering on the success of Scotland performing best of all parts of the UK outside of London on foreign direct investment.

On technology, the document talks about supporting the sector to grow, digitising small and medium-sized enterprises and rolling out digitisation in the public sector. All those themes are covered in the Scottish Government’s digitisation strategy, which was developed jointly and powerfully with the Convention of Scottish Local Authorities.

As a result of work that has been done by Scottish Enterprise and the Scottish Government over recent years, the Scottish financial technology cluster is one of the leading fintech clusters anywhere in Europe. Labour’s paper does pay tribute to one Scottish Government strategy—the Logan review, which the Government commissioned from the chief entrepreneur. The document discusses that review’s importance, so I give Labour credit for recognising the value of some Scottish Government work.

Labour’s document throws in a comment about “learning from Silicon Valley”, and I would like to get the Labour Party’s perspective on the visit to silicon valley by the Minister for Small Business, Innovation, Tourism and Trade, Mr Lochhead, to learn from people there, as Labour identified that he should do. All that we heard from Opposition members about that visit was criticism of the minister’s taxi fare, rather than understanding of what we have to learn from others internationally. That was a ridiculous piece of nonsense.

The Presiding Officer:

You must conclude, Mr McKee.

Photo of Ivan McKee Ivan McKee Scottish National Party

I could go on and on, but I will make one brief conclusion. The tourism sector calling for a new tourism strategy will be news to the Scottish Tourism Alliance, which is working very thoroughly to “Scotland Outlook 2030”, Scotland’s national tourism strategy, which was put in place by my good friend, Mr Fergus Ewing.

The Presiding Officer:

Thank you, Mr McKee. You must conclude at that point.

Photo of Brian Whittle Brian Whittle Ceidwadwyr

I have to say that I felt a spark and a growing sense of excitement when I heard that the Labour Party was going to split its time today between health and growing the economy. Finally, I thought, the penny is beginning to drop—Labour is starting to recognise that we need to tackle Scotland’s poor health record if we are going to fully realise Scotland’s economic potential and recognise that our consistently poor and declining health report card is the biggest drag on our economy. But no—that spark was quickly extinguished when I read both Labour’s motions. It seems that Labour is still to make the connection across portfolios about practically tackling the major issues that Scotland faces today.

Waiting times, delayed discharge and poor health outcomes in the preventable space—such as drug and alcohol deaths and addictions, obesity, type 2 diabetes, chronic obstructive pulmonary disease, heart disease, 40 per cent of cancers and so on—have led to a high level of economic inactivity in Scotland’s population. In the previous parliamentary session, the Health and Sport Committee determined that preventable health issues were costing the Scottish economy more than £30 billion, and I suggest that the figure has continued to rise significantly since then. As we see time and again in all portfolios, the problem is that the SNP is capable only of firefighting the problems that it has created, rather than developing long-term solutions.

In 17 years, so much could have been achieved in the preventable space, with the major levers of health and education fully at the Scottish Government’s disposal. However, according to just about every measure, the SNP has managed to create worse outcomes for the Scottish people. I was therefore encouraged last week by the announcement of £3 billion in the chancellor’s budget for health tech and information technology, especially for communication and collaboration. That is one of the most significant interventions that there has been, which will lay the foundation for more efficient health outcomes.

That brings me to education, which is the cornerstone of every portfolio—especially health and the economy. The educational environment can have such a huge implication for long-term health outcomes, which in turn delivers a boost to our economic development—not to mention positively impacting on welfare and justice.

I was with an electrical engineering company on Monday, and its representatives were telling me that the company could not grow at the rate that it should and could because it could not recruit enough apprentices, which is directly related to a lack of career guidance in schools. A salary for a qualified electrical engineer is in the region of £45,000 or upwards. However, as is the case with many of the opportunities that should be available to our students in the green and renewables space, that message and those opportunities are not filtering down to students. Colleges have the skill and the capacity, but it has not been realised that the situation is leading companies to import skills rather than train Scottish students.

In this short debate I have only scratched the surface of what I would like to say. However, if we are in agreement that we need to grow Scotland’s economy and if we are to invest in our public services properly, we have to be prepared to say where we will get that growth from. I would advocate that investing in education is investing in health. I would advocate that investing in education is investing in the welfare and justice systems, and it is a key driver in tackling poverty and inequality.

Finally, for all the reasons that have been stated already, investing in education is investing in our economy. If we tackle education and health, both of which have been completely devolved to the Scottish Government for 17 years, the economy will benefit. That is about cross-portfolio working, which is not the Government’s strong point.

Photo of Colin Smyth Colin Smyth Llafur

If publishing plans, agreeing strategies or setting up advisory councils delivered economic growth, Scotland’s economy would be booming. According to Our Scottish Future, we have had 60 plans on the economy and more than 80 on climate change in the past decade, but Scotland’s economy continues to lag behind the rest of the UK’s on 10 out of 13 productivity indicators, from business investment to research and development spend. For the Scottish Government, it is about being seen to be doing something but not actually doing it. Areas that already have weaker economic indicators, such as rural areas or those that are further from the central belt, often feel the impact of a Government for which strategies have become a substitute for actions.

In areas such as Dumfries and Galloway and the Borders, the outward migration of young people is suffocating growth; there are fewer people with higher skill levels than elsewhere in Scotland; GVA is consistently below the Scottish average; poor digital connectivity is a barrier to new and existing businesses; a lack of affordable housing is limiting the retention of young people and the attraction of new talent; and poor and declining public transport is undermining access to services, jobs and education. The failure to invest in key transport infrastructure such as the A75 and the A77 holds back not just the region’s economy but Scotland’s economy. Low pay is endemic in the region—pay is as much as £100 a week lower than in the rest of Scotland. Limited access to workspace and business support means that we are simply not fulfilling the huge potential and immense economic talent of the south of Scotland.

However, rather than take the action that is needed to revitalise and rejuvenate the region, ministers continue to take decisions that will hold it back. Let us take colleges, which are a key driver of economic growth. In the south of Scotland, there is a limited higher education offer and no stand-alone universities, so further education pathways are crucial. The brutal 13 per cent cut in the Skills Development Scotland contract at Dumfries and Galloway College in this financial year means a reduction in apprenticeship places in key sectors such as construction.

Every week, local businesses that are desperate to recruit and upskill their workforce tell me about their acute labour and skills shortages.

Borders College recently wrote to me, warning of the blow to Borders businesses of the withdrawal of the flexible workforce development fund, which hundreds have used to reskill and upskill their workers. As a result of the cash cut of 4.7 per cent for next year, both of the colleges in the region have told me that they are working through scenarios in which the curriculum offer, the number of courses and the number of students in their colleges will be reduced. That is the economics of the madhouse.

It is not just colleges that are bearing the disproportionate brunt of the cuts. I campaigned for a decade for a south of Scotland enterprise agency. I welcomed the establishment of that agency, and, indeed, I sat on the committee that oversaw the legislation that established it. Ivan McKee talked about its importance, but the staggering 22 per cent planned cut in its budget will mean less support for businesses in the region, when there needs to be more support.

Photo of Ivan McKee Ivan McKee Scottish National Party

I wonder whether Colin Smyth has the same concerns as I have about Labour’s plans to rationalise and simplify the agency landscape, because that can mean only one thing.

Photo of Colin Smyth Colin Smyth Llafur

It cannot mean only one thing—it can mean several things. Most important, it can mean an end to the silo working that often exists in those agencies. We have a raft of agencies and they need to work more closely together to give businesses the one-stop shop that Ivan McKee failed to deliver when he was a minister and that the Government has failed to deliver for 16 years.

In the past 16 years, the Government has failed to use the powers that it has to grow Scotland’s economy, never mind tackling the geographical inequalities cross the country. It has presided over low growth and low productivity. We need change. There is no question but that we need to simplify our enterprise agencies and give businesses that one-stop shop. We need to recognise that our colleges are the key driver of tackling our skills shortages and not continue to cut their funding, particularly when higher education opportunities are limited.

We need to learn from the Government’s shocking past mistakes. In the drive to net zero, we must ensure that the growth in renewables is matched by a growth in jobs in Scottish businesses and Scottish—

The Presiding Officer:

You must conclude, Mr Smyth.

Photo of Colin Smyth Colin Smyth Llafur

—not offshored in a way that the Government offshores the profits.

We need to unleash the true economic potential of Scotland and our people, and that involves every part of Scotland.

Photo of Gordon MacDonald Gordon MacDonald Scottish National Party

I welcome Labour’s acknowledgement of how well the country performs in its report, “Building a business case for Scotland”, which states:

“Scotland has been an internationalist, outward looking nation that has punched well above its weight across the UK and on the world stage.”

That is a recognition of what the SNP has achieved during the past 17 years, despite a financial crash, Brexit and a pandemic.

Thanks to the latest figures from the House of Commons library, we can detail how we have punched well above our weight. Gross domestic product per head, which is a broad measure of economic growth, is higher in Scotland than in Northern Ireland, the north-east of England, the north-west, Yorkshire, the midlands, the east and the south-west of England. Before I forget, in Wales—which is Labour controlled—GDP per head is 17 per cent lower than it is in Scotland. The employment rate in Scotland is higher than the employment rate in Labour-controlled Wales and in Northern Ireland, and it is higher or on a par with the rate in many English regions. Scotland also has the highest median weekly earnings of any UK nation, and they are higher than in the UK. In Labour-controlled Wales, the median weekly earnings for a full-time employee are 10 per cent lower than they are in the UK.

Since Labour’s financial crash of 2008, productivity in Scotland has increased by an average of 1 per cent per year. Not only is that higher than the UK increase of 0.5 per cent per year, but it is higher than the increase in the OECD countries and it is higher than the EU27 average increase.

Analysis from the London School of Economics highlights that productivity is lower in the UK than in France, Germany and America. That gap is due to a lack of investment in capital and skills. On skills, Scotland has the highest percentage of its working-age population with higher education certificates, at 50 per cent, which surpasses the UK figure of 31 per cent.

A report on productivity from the LSE’s programme on innovation and diffusion says that,

“from a growth perspective, cuts to public capital investment in future years are particularly concerning.”

The report goes on to say:

The UK productivity problem can be summed up in three words—investment, investment and investment. Or lack thereof.”

However, the Tory spring budget delivered no additional capital funding for Scotland. Indeed, the block grant for capital is expected to reduce in real terms, with a cumulative loss of more than £1.3 billion by 2027-28.

Scotland is also the only UK nation with a consistent international trade surplus in goods since records began. That is only one example of where Scotland is outperforming the UK and being held back by Westminster.

Electricity exports to the rest of the UK have an estimated value of £4 billion on the wholesale market. Yesterday, the boss of Octopus Energy said that switching to zonal pricing would give Scotland some of the

“cheapest electricity in Europe” and that it

“would help attract businesses to Scotland”.

There is also currently an opportunity to attract high-energy-use companies such as data centres to Scotland, as there is a 10-year moratorium on building them in parts of London. However, electricity policy is reserved and, as a result, we do not benefit from our abundance of electricity generation.

Scotland’s record of attracting foreign direct investment outpaces that of both the UK and Europe for the number of projects and it maintains Scotland’s position as the top-performing area of the UK outside London for the eighth year.

Brexit has made it more difficult to trade with an EU marketplace of almost 450 million people, which we need better access to if we are serious about growing Scotland’s economy. However, Labour, the Tories and the Lib Dems have all declared themselves as Brexiteers, and only independence will give us the opportunity to rejoin the EU.

Photo of Ariane Burgess Ariane Burgess Green

I am pleased to have the opportunity to say a few words in the debate on behalf of the Scottish Greens. It is quite clear to us that, when considering the economy, we need to ask and answer questions about what our economy is actually for. As the Scottish Government’s amendment highlights, on conventional measures of economic success, Scotland is doing pretty well compared with the rest of the UK. However, the amendment also acknowledges that Brexit has done untold damage not only to our economy but to the people—the workers and human beings who create value in the economy—that our economy is supposed to support.

The Scottish Greens want our economy to serve all of society and to create a context in which all of us can reach our potential. Such an economy must be based on care, creativity and co-operation, not just driven by the quest for profit. We all know that GDP is a very poor, blunt measure of quality of life. It masks the inequalities we see across Scotland and, indeed, across the UK: inequality of employment, education and income, and unequal access to basic necessities such as housing, health and social care.

Those inequalities are caused by uneven development, unequal economic activity and unequal access to the economy. That is why the Scottish Greens have long championed a radical transformation of our economy. We need to create a genuine wellbeing economy—not just the buzz phrase that it is in danger of becoming. Such an economy would be built on sustainable development and social equity, supporting long-term liveability for people and planet. We know that we cannot have healthy, happy communities in polluted and devastated environments. Our economy must prioritise sustaining and regenerating our natural resources, reducing emissions and protecting our life support systems. It should support regenerative agriculture and food production that enhances our natural world. It must make circularity and fair resource use the default, and it should promote green infrastructure, including public spaces and liveable neighbourhoods.

We cannot have social equity when our economy relies on the unequal distribution of wealth. To change that, we need to make our economy inclusive and democratic. We must take predistributive as well as redistributive approaches. We must decentralise decision making; promote employee ownership through social enterprises, co-operatives and other employee-owned business models; empower communities and broaden community benefit; and make ethical, socially and environmentally responsible practices the norm.

Scotland can be a leader in such an economy—an economy that recognises global challenges and supports co-operation across national boundaries. I trust that the green industrial strategy will be a useful tool to help us along the path. We should consider more than just energy as part of our green economy. Caring and creative jobs, for example, are often very well aligned to green, wellbeing economy objectives. However, it is essential that we have a strategy and that we do not leave economic transformation to the whims of the market or Westminster.

In closing, I want to address one final issue. Scottish Labour has stated that the Scottish Parliament has been too focused on social policy over economic policy. That is a bit rich coming from the party of devolution, which designed this institution without including powers over many of the economic levers that we would wish to have. However, that statement also points to a fundamental problem. Instead of seeing economic and social policy as separate entities, we must realise that economic, social and environmental justice are all inextricably linked, and that is why we must transform our economy.

Photo of Jamie Halcro Johnston Jamie Halcro Johnston Ceidwadwyr

I am pleased to be able to speak in today’s debate. A strong, growing economy is vital for jobs, for sustainable communities and for successful, well-funded public services. I doubt that anyone here, bar perhaps the anti-growth Greens, would disagree with that.

Others have spoken about the importance of economic growth more generally. I will focus on my region, the Highlands and Islands, and, more widely, on rural communities. One of the key areas identified in the Scottish Conservatives’ “Grasping the Thistle” policy paper is infrastructure—or, as is too often the case, lack of infrastructure. Parts of my region still suffer from extremely slow, limited or entirely non-existent broadband coverage. That clearly presents real challenges for those who are looking to start or grow businesses in those areas and for those who want to freelance or just work remotely. Also, despite the endless promises of improvement, the transport infrastructure of the region is extremely limited. The A9 remains undualled, and now the A96 will not be dualled. Other major routes across the region are either in need of serious improvement or riddled with potholes.

Our ferries fleet is getting older and increasingly unreliable, and the SNP’s failure to act not only impacts on those islands and their businesses and economies but risks the very future of some. However, it is not just our islands that are impacted. Over the summer, I visited Ardnamurchan and spoke with local businesses and residents who were impacted by the disruption of the ferry service across the Corran Narrows. One boat was out of service entirely, and the other—its nearly 50-year-old back-up—was either providing a limited service or was broken down. They were angry and frustrated because visitor footfall was down at a vital time of year and they see administrations in Edinburgh and Inverness offering no real hope of a resolution any time soon. Some of the people I spoke to were concerned about people, local families and local businesses moving out of the area entirely.

If we want vibrant communities and successful, growing local economies, we need people to live in those areas. Depopulation remains a real challenge in my region, and it has been far from helped by the running down and centralising of so many local services. On Saturday, I will be in Fort William to join local people who are campaigning for a new Belford hospital. The hospital is urgently needed, and local people have been waiting for it for almost 20 years, but it is now on pause because of the Scottish Government’s latest budget.

Scottish ministers do not seem that interested in the Highlands and Islands or in rural Scotland. The latest SNP-Green budget saw tens of millions of pounds of spending cuts to our rural affairs and islands budgets and included serious cuts to the budgets of Highlands and Islands Enterprise and South of Scotland Enterprise. Ministers have left councils with full responsibility for funding Business Gateway when local authorities are already cutting back on services because of years of squeezed funding from Edinburgh. How can the Scottish Government claim to be serious about boosting economic growth when it cuts millions of pounds in funding from the enterprise bodies that have been tasked with supporting businesses in large parts of rural Scotland, which should be some of the key drivers of economic growth?

Of course, the SNP is not really interested in debating economic growth. As its amendment makes clear, it is just another chance to pump some hot air into its deflating independence cause. It claims, as it always does, that independence is the answer to Scotland’s woes—woes that come after 17 years of SNP economic mismanagement. The SNP will not admit how much leaving the UK would cost Scotland, how much putting up a border between us and our largest trading partner would cost Scotland or how much the uncertainty that has been caused by its confused position on currency would cost Scotland, and it will not address any of the many other questions that, despite having had decades to address, it has failed to come up with even remotely credible answers to.

The SNP’s economic record has left Scotland as a high-tax, low-growth economy with crumbling public services. Just as the party has no answers on independence, the SNP offers no real hope to Scotland on economic growth. No wonder many nationalists are jumping ship from the tired, failed party of division.

Photo of Keith Brown Keith Brown Scottish National Party

It is worth noting that Goldman Sachs’s latest report indicates that the UK’s GDP per head currently stands at only 4 per cent above its 2016 figure, compared to 8 per cent for the eurozone and 15 per cent for the US. That proves what everyone who is living in Scotland knows, which is that the UK is the stagnation nation of the developed world.

I will address some of the points that have been made. On tax, it is worth pointing out that the Tories will not acknowledge that the majority of people in Scotland pay less tax than their counterparts in the rest of the UK do. The Tories object to that—I think because those who pay less tax are the lower paid—and the Tories like to turn that on its head, as we see in their proposals. On economic mismanagement, we have the highest ever debt of £2.65 trillion under the Tories—

Photo of Keith Brown Keith Brown Scottish National Party

No, I will not. I have only four minutes.

We have the highest tax burden since the second world war—that is what the Tories have done. Apart from being back into recession once again, and apart from having the massive debt that I have just mentioned, we also have the highest tax burden. That is what the Tories do—tax and economic failure.

I am astounded by the brass neck of the Labour Party in trying to put the blame on the Scottish Government, not least when it knows full well—if not from the Scottish Government, then from its friends in the Labour-run Welsh Government—that many of these things are determined by what happens at Westminster. Welsh First Minister Mark Drakeford said:

“We are in this position because of ... the mis-management of the economy and public finances by successive UK governments over the last 13 years and because of unfunded commitments made by the UK Government”.

He knows what Labour cannot admit in the Scottish Parliament, which is that it is because of the policies of the UK Government, including on immigration and on Brexit—which Labour also now supports—and its failure to properly fund public services, that the UK Government is largely responsible for the state of the economy. Labour cannot admit to that. For that reason, we cannot take Labour’s debate seriously. It is not a serious attempt to discuss Scotland’s economy; it is superficial and spurious. There are no ideas and there is no willingness to acknowledge the wider context of the economic situation in which we find ourselves.

Willie Rennie spoke about the independence referendum as being a brake on investment. He perhaps forgets the Ernst & Young report that year that indicated that we had a sparkling year—one of the best years ever for foreign direct investment in Scotland, which is on the record. I do not know why he did not want to acknowledge that and, in fact, tried to turn it on its head by saying that there was less foreign investment.

If we do not have powers over corporation tax, business regulation, immigration or trade, or the vast majority of welfare and tax powers, how can we, or any of the devolved Governments, be in any way responsible for the systemic issues that plague the UK economy?

Indeed, I would argue that devolution was designed to keep it that way. For example, when the Scottish Government opts to differentiate income tax, HM Revenue and Customs is still responsible for collecting that tax, and all taxes that are set in Scotland, and the block grant is then reduced. It is no wonder that that is the case, because if Scotland was to be fully, or even marginally, financially independent, even if it was within the UK, the UK Government, the Labour Party and the Tory party would know that the game was up, and the union would be over before you could say the word “recession”.

There were five periods—five quarters—of recession under the previous Labour Government, but we have not heard that mentioned today. We cannot forget the immortal words of the last Chief Secretary to the Treasury under Gordon Brown—I know that Labour members enjoy this, so I will repeat it. He said that, under Labour, after 13 years in government, “there is no money” left—

The Presiding Officer:

Let us hear Mr Brown.

Photo of Keith Brown Keith Brown Scottish National Party

Labour started the banking crisis, and it is going back to that. It wants to lift the bankers’ bonus cap. It does not want to lift the two-child cap or the rape clause—it wants to look after the bankers and give them ever more money—[



The Presiding Officer:

Mr Johnson.

Photo of Keith Brown Keith Brown Scottish National Party

We know how Labour treats Scotland, given the way in which it treated the McCrone report in the mid-1970s. Hide Scotland’s wealth from Scotland—that is the way to do it.

Labour now proposes to take more of Scotland’s wealth to fund nuclear developments in England. The Labour Party is no friend to Scotland or to the Scottish economy; it has proved that time and again. It has lied to, and failed, Scotland, not least—as I said—by saying that “there is no money” left.

Let us not go back to that. If we want to see the management of a regional economy under the Labour Party, we can look at Birmingham City Council, which has a 20-odd per cent increase in council tax and hundreds of redundancies. That is what Labour mismanagement does. We should have had a serious debate today, but we are not going to get that from the Labour Party. The serious option for the Scottish economy is independence, to give us the full powers that we require.

The Presiding Officer:

We move to the winding-up speeches.

Photo of Elizabeth Smith Elizabeth Smith Ceidwadwyr

I thank the Labour Party for bringing the debate to the chamber, because it is extremely important. The measure of GDP may be incomplete, but it matters hugely because of the other benefits that it brings, such as increased tax revenues and economic confidence, to name just two. As Jamie Halcro Johnston rightly said, it is essential for delivering better public services, raising the standard of living and delivering more secure jobs and investment, and it is the prerequisite to addressing our social ills and improving the wellbeing of the whole country.

It goes without saying that the biggest challenge that we currently face is the extent of economic inactivity. The rates of economic inactivity are worryingly high, which means that we are not making the best use of the skills and talents in our workforce. Willie Rennie was absolutely right when he referenced our universities, and Colin Smyth and Alex Rowley were absolutely right when they mentioned our colleges. Those are essential to ensuring that we have the skills and people who are able to work. Our best policy prospectus is to focus on helping those people back into the workforce and preparing them for future jobs, and on secure jobs and investment.

That is why the Scottish Conservatives were so critical of the SNP’s recent budget, which cut the economy portfolio by 8.3 per cent in real terms, including cuts to enterprise, employability, tourism, the Scottish National Investment Bank and several other aspects of policy that are essential to jobs and investment.

Murdo Fraser referred to what Sandy Begbie said. That is why Scottish Conservatives were so vociferous in their opposition to the recent budget, and it is probably why only 9 per cent of Scottish businesses think that the Scottish Government is sympathetic to their concerns. We heard some of that this morning from one or two members who were at the Scottish Tourism Alliance conference in Aberdeen.

I come to the debate about tax, which is obviously a very big part of the debate about economic growth. I fully acknowledge that the overall tax burden in the UK has grown, and is too high, but it is even worse in Scotland, where the differential is widening and disincentives are increasing. Some in the SNP even acknowledge that fact.

It is vitally important that there is a specific focus on making work pay, and on work becoming more attractive. That is why Jeremy Hunt chose a change to national insurance instead of income tax: because the OBR predicted that that could help 200,000 people back into work. We should be concentrating on that.

On the question that Murdo Fraser was talking about in debate with Daniel Johnson, I gently remind Labour that, although it wants to make itself into the party of growth and lower taxes, it was the Labour Party that voted for the rates resolution in 2023 that ensured that the SNP imposed further tax hikes. Just six months ago, the Labour Party also voted against a Conservative amendment that called on the Scottish Government to deliver a package of growth policies, including a competitive tax regime, less burdensome regulation and investment in innovation, entrepreneurship and infrastructure. I am not quite sure what was going on there.

I will finish on another issue. As well as taxation, another key debate around economic growth is about meaningful public sector reform, which will deliver the future savings that we so desperately need. I come back to Jeremy Hunt’s budget. Brian Whittle mentioned that one of the considerably underreported parts of that was the £3 billion investment in the NHS to reform artificial intelligence data use and streamline IT. We should take that seriously, and the Scottish Government should ensure that we have similar policies.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I welcome the debate. It is important for the Scottish Parliament to debate the future of Scotland’s economy regularly.

We are at a pivotal moment in economic history. The decisions that we take in the next few years will affect future generations and the future success of our economy. The Scottish Government is taking action to ensure that Scotland’s economy reaches its full potential, despite the clear difficulties that have resulted from the UK Government’s handling of the economy and the aftermath of Brexit.

Earlier this week, the First Minister made a speech in London—

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I apologise; I have only four minutes. The First Minister quoted Professor Diane Coyle of the University of Cambridge, who recently wrote:

“Investment in productive assets has been lower in the UK than in any of the other G7 countries since at least 1990.”

The First Minister went on to say that

“the UK displays a remarkable and persistent level of geographic inequality, with an unhealthy and unstable reliance on this great city of London.”

He was, of course, speaking in London.

We are doing this against the backdrop of a broken UK model and Brexit. It is astonishing to have a debate on the future of the Scottish economy when the Labour Party motion and the Conservative Party amendment do not mention Brexit. Like Ivan McKee, I have had insomnia recently, so I have also read “Building a business case for Scotland”—the Labour Party’s recent document—and its introduction by the Labour leader also does not mention Brexit at all, despite the fact that the OBR forecasts that the UK economy will be 4 per cent smaller as a result of Brexit.

When I speak to exporters, they talk about Brexit. When I speak to small businesses, they talk about Brexit. When I speak to our high-growth sectors in Scotland, they talk about Brexit. When I speak to our universities and research institutions, they talk about Brexit. There is, however, not a word on it from Labour or the Conservative Party, although it is crucial to Scotland’s economic future.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I apologise, but I have about one and a half minutes left. I always take interventions, but not when I have only four minutes. I apologise.

Against that backdrop, Scotland is still the top-performing region outside London and the south-east, with the third-highest wages and GVA per person in 2021. Since we came to office in 2007, Scotland’s GDP per capita has grown faster than the UK’s, and productivity, which the debate focuses on, has grown at an annual average rate of 1 per cent a year in Scotland, compared with the UK’s 0.5 per cent a year. On inward investment, we are outperforming the UK and the EU average. This week, a key survey showed that private sector employment in Scotland last month grew faster than in any other UK nation or region.

We are investing in productivity in this country through the National Manufacturing Institute Scotland, the national robotarium, the Michelin Scotland Innovation Parc, the innovation centres, the medicines manufacturing innovation centre, the Fraunhofer centre for applied photonics, the Aberdeen biohub, the Net Zero Technology Centre and, of course, the city and region growth deals. We are investing not just Scottish money and public investment from Scotland, but money from other sources as well. That has been mostly just in the past few years. We are investing more than £100 million to improve productivity in Scotland.

That does not even take us into the debate about the role of AI. The whole world is debating increasing productivity by reducing workforces in all our countries, as well as the role that AI will play in ensuring that we can be more productive and work fewer hours, and the role of automation in relation to that. That is one reason why our high-growth sectors in Scotland are doing extremely well just now.

We can look at industrial biotechnology, life sciences, fintech or our critical technology supercluster—which is quantum photonics, semiconductors and wireless. We can look at space and games, as well as other sectors, such as whisky, the wider food and drink sector and, of course, the energy transition. We will see very good growth rates in many of those sectors in Scotland, because we are supporting them.

There was an excellent article in

The Herald today by Ian McConnell, who said that there was cheering news on Scotland’s economy, but that

“some do not like it”.

We realise that the Labour Party and the Conservatives do not like it, but good things are happening in the Scottish economy at the moment, and we have to continue to support that.

I urge Parliament to back the Scottish Government’s amendment.

The Presiding Officer:

I call Rhoda Grant to wind up the debate.

Photo of Rhoda Grant Rhoda Grant Llafur

In order to have world-class public services, we need to pay for them. If we grow our economy, we can increase our tax take by having more people employed in good-quality, well-paid jobs. The more people we have working and earning, the more we have to spend on the services that they require. That is why the phrase “It’s the economy, stupid” gained such traction: if the economy is doing well, public services and people are doing well. Unfortunately, as Daniel Johnson pointed out, our economy is not doing well and neither are our services or our people.

Brian Whittle was right to tie health back to the economy, because we know that, in areas of deprivation and areas where there is low pay, people have a life expectancy of 25 years less than the figure in other areas. That is why the need for economic growth is, if anything, more pressing in those areas, in order to bring equality to those communities.

We need a focus on regional development. Jamie Halcro Johnston talked about the Highlands and Islands and about our road, rail and ferry infrastructure—or, indeed, the lack of it. Infrastructure and connectivity are so important to every region, as they allow them to thrive. When Highlands and Islands Enterprise was empowered and funded, it made such a difference; now, like the South of Scotland Enterprise, which Colin Smyth talked about, it is facing funding cuts.

We need to stop the fragmentation of the enterprise establishment, because businesses now do not know where they are going. We need enterprise establishments with a local focus but a knowledge of what is going on elsewhere to work together so that a business never pitches up at an enterprise agency and is turned away.

Colin Smyth also pointed out that the more rural and further from the centre of power businesses are, the worse they fare. We need to empower our local enterprise agencies. Jamie Halcro Johnston, too, pointed to the regional responses that were required, because our not empowering people locally causes depopulation.

Many speakers, including Alex Rowley and Colin Smyth, talked about education, training and colleges, which are essential to economic growth. Colleges need to be in tune with their local communities, to know what is required for the local economy. That is important not only for young people but for upskilling and reskilling, as changes happen to the workforce.

Councillor Sandy Keith wrote to Jenny Gilruth to highlight the impact that a 25 per cent cut in staffing in UHI Moray would have on vital parts of Moray’s local economy. That is happening everywhere, but Sandy Keith pointed out, with some irony, that the college was an “integral” part of the Moray growth deal board. A cut of a quarter in an establishment that is integral to a regional growth deal seems crazy to me.

Alex Rowley highlighted the importance of schools’ attainment, and Colin Smyth referred to the cuts in Skills Development Scotland, which are incredibly worrying.

Daniel Johnson pointed out that the Grangemouth oil refinery is Scotland’s only oil refinery and is therefore of strategic importance. We need both of our Governments—the SNP and the Tories—to get round the table to protect the crucial jobs, skills and infrastructure at Grangemouth. Both the Scottish and UK Governments have faced criticism from site workers, who feel that they are being failed and that their livelihoods are at stake. We need the workers and the skills, and we need the infrastructure of the oil and gas industry to play its part, so that we can have a just transition to net zero.

By abandoning that workforce, we are not creating a just transition—we are leaving the workforce behind. The Scottish Labour Party would not do that. We would create great British energy, which would be headquartered in Scotland and would deliver 5,000 jobs and a clean energy system by 2030. If we use a GB energy company to empower our local communities, we would not have the squandered opportunities that we see with ScotWind. We would have local generation, which has brought huge benefits to areas such as Point and Sandwick, in the Western Isles.

Economic growth plays a crucial role in delivering strong public services and social change. Despite that, the Scottish Government has failed to use the powers that it has to grow the Scottish economy, which is in low growth and low productivity currently. We need a Scottish Government that takes a new approach to the economy, working in partnership with business, to unleash the true economic potential of Scotland and its people.

The Presiding Officer:

That concludes the debate on growing Scotland’s economy.