The next item of business is a debate on motion S6M-13679, in the name of Kate Forbes, on Scottish Government priorities: growing the economy. I call on the Deputy First Minister, Kate Forbes, to speak to and move the motion.
15:25
When I took up the role of Deputy First Minister and Cabinet Secretary for Economy and Gaelic—six weeks ago, I believe, although the election has distracted us all somewhat—I was asked about my plans and priorities. I said, and I reiterate it today, that the plan is simple: it is to get the economy firing on all cylinders and to use the engine of economic growth to power a better future.
Although the plan is simple, the prize is enormous. Scotland is a country where growth is recognised as a key enabler of social, economic and cultural progress, and where economic success enables us to eradicate the scourge of child poverty, achieve net zero and provide our public services with the investment that they require in order to save, empower and transform lives.
Today, we publish our latest progress report on the national strategy for economic transformation. We remain committed to its vision of “a fairer, greener and wealthier” economy that works for all the people of Scotland. It is a plan to transform our economy through a relentless climb to the top rather than a self-defeating race to the bottom, and through looking outwards to what can be achieved rather than inwards at what we must not lose.
Scotland’s growth needs to be fair, green and sustainable. It should be growth that is defined by a spirit of innovation, in which the traditional bedrocks of our economy—tourism, financial services and food and drink—reinvent themselves for a digital and net zero world. The growth should be founded on the industries of tomorrow, including space, financial technology, life sciences and advanced manufacturing.
The Cabinet Secretary for Health and Social Care and I recently chaired a round table with leaders from the national health service, leading universities and private sector companies that are looking to develop and scale up new products and services in Scotland. They were clear that not only does Scotland have an incredible history of innovation, but it has the people, data, supply chains, enterprise agencies and policy makers that can deliver a future that is every bit as successful as our past.
Kate Forbes is correct to say that, but why did the Scottish Government feel the need to cut the budget for the university and college sector, which is instrumental in providing a lot of research, development and innovation?
Liz Smith is right that the college and university sector is critical; I am about to talk about education and skills. She will recall that our public finances are under extreme strain, that inflation has eroded our ability to spend and that both of those are products of UK Government and Conservative policies. Based on the figures for inflation that were published this morning and a change to the austerity agenda, my hope is that we might be able to continue to invest in all the public services that matter for Scotland.
Will the member take an intervention?
Why not?
At the launch of the Scottish National Party manifesto this morning—which, I believe, the Deputy First Minister attended—I was intrigued to see that the SNP made spending commitments of £93.8 billion, with tax rises of £70 billion proposed. That leaves a spending black hole of £24 billion. How is that hole to be filled?
I will take the opportunity, at this early stage in proceedings, to remind members that the debate is about matters for which Parliament has responsibility. We will not be engaging in a blatant electioneering extravaganza this afternoon—hopefully. [Laughter.]
I am sure, having shared multiple platforms with Mr Fraser in various hustings around the country, that I will shortly have the opportunity to answer his question more substantively.
In this Government, our agenda for economic growth is built very much around our skills and education system. It identifies and encourages talent and taps into everybody’s potential, not just that of the privileged few. It tackles the skills gap in computer science by increasing the availability of specialist teaching and encouraging participation in foundational subjects such as maths and physics. It is a system that prepares people to succeed in a world in which artificial intelligence strikes at the certainties of the established labour market.
It will be growth in which everybody has a stake, with regional economic partnerships that define and deliver the priorities of their communities; with vibrant social enterprises and an entrepreneurial third sector; with a continued commitment to community wealth building and with specific programmes that promote enterprise within Gaelic-speaking communities.
It will be growth that respects, protects and celebrates our environment; that recognises our natural resources as an extraordinary competitive advantage; that ensures a just transition; and which sees public and responsible private investors in Scotland’s natural capital working alongside each other to achieve ambitious climate change and biodiversity goals. Realising that potential is not easy. [Interruption.] Talking of which, Fergus Ewing wants to intervene.
I am most grateful to the Deputy First Minister for giving way.
Does she agree that economic growth is not all about more money and more cash—it is also about process and, in particular, about speeding up processes, whether for salmon farming consents, new forestry plantations, renewables projects or planning developments? Does she agree with me that delay is the hidden destroyer of economic growth in Scotland?
I agree that we need to ensure that Scotland is a great place to do business. I will perhaps come on to that in the limited time that I have available.
For the record, I point out that our vision for the economy is ambitious, but achieving it and realising the potential are not inevitable, nor are they easy. The world is uncertain and unpredictable, but armed with the vision that we first described in the national strategy for economic transformation, I believe that we can and will succeed, provided that we are prepared to make difficult choices and to commit to sustained action over time.
Let me describe some of the choices. We choose to focus on becoming one of the leading start-up economies in Europe. I make no apology for the fact that I am inspired by entrepreneurs. I revel in their optimism and I want to put their spirit at the heart of Scotland’s economic future. We choose to do that because the economic impact of new and scaling firms is colossal. They are 40 per cent more productive than the economy as a whole and they attract investment and create high-paying jobs far beyond the walls of their own enterprises. In doing so, they help to address many of the wider challenges that we face, as a country.
Those enterprises include companies such as Blackford Analysis, which is a vibrant software company in Edinburgh that uses the power of AI to improve patient outcomes, and Intelligent Growth Solutions, which is a rapidly scaling firm that is based in Inverkeithing, and whose approach to precision farming is at the frontier of the push to deliver global food security. They are companies that are growing in Scotland and whose very DNA dispels the myth that growth and wellbeing are contradictory economic principles.
We make that choice from a position of strength. Last year, despite the difficult macroeconomic headwinds, our start-up ecosystem attracted record investment of almost £1 billion, which outperformed all UK regions with the exception of the so-called golden triangle between London, Oxford and Cambridge.
We recently announced investment of £5 million in a new enterprise package and we are well on our way to delivering one of Europe’s finest state-funded systems for creating and scaling high-growth businesses. The £42 million Techscaler network puts the inspiring winds of silicon valley in the sails of Scottish innovation by providing world-class incubation facilities as well as founder education from the best providers in the world.
We are expanding our entrepreneurial talent pool by delivering on the recommendations of Ana Stewart’s “Pathways: A New Approach for Women in Entrepreneurship” review. It is simply unacceptable that start-ups that are founded by women receive only 2 per cent of investment capital, so we are going to tackle that head-on by creating new best-in-class environments in which women can create and scale businesses, financial incentives to seed good ideas and structural reforms to the way in which the public sector invests in scaling companies.
We also choose to put science and technology at the heart of our economic future. We are already a European hub for drug discovery and life sciences and we are home to the UK’s second-largest critical-technologies supercluster, which comprises quantum, photonics, semiconductor and wireless capabilities. It is one of a small number of priority clusters in digital technology, advanced manufacturing, life sciences and the energy transition, which will be supported by a dedicated cluster-building programme. It will be shaped by industry, share knowledge and support cross-cluster collaboration.
Will the member take an intervention?
Do I have time?
There is a bit of time in hand.
I thank the cabinet secretary for giving way. She raised an important issue about the growth and scaling of firms in Scotland. One of the concerns that has often been raised with me is that firms in Scotland grow to a certain level, after which they struggle to access more capital then have to sell to overseas ownership. Is there a strategy in place for the Government to anchor more firms to Scotland for the longer term, so that we can have more FTSE 250 and FTSE 100 companies with headquarters in this country?
Paul Sweeney has put his finger on it when it comes to our ambition for Scottish start-ups. In supporting companies to start up and then scale up, we do not want them to leave. They need a pathway from the moment when they start operating to the moment when they are extremely successful, because we want them to be headquartered in Scotland. That is part of some of the strategies that I have mentioned. I am happy to engage on a cross-party basis to make sure that we get it right.
We want a relentless focus on science and technology, so we have developed plans to recast Scotland’s world-class universities as hotbeds of start-up creation and upscaling through an increased focus on spin-outs and on staff-led and student-led businesses. We are working through our enterprise agencies and the Scottish National Investment Bank with investment of more than £640 million across 34 investments, which has already helped to drive more than £1 billion of third-party co-investment.
Before I come to a conclusion, I want to make it clear that the scale of our ambition cannot be met by Government-backed funds alone. That is why, in line with the recommendations of the First Minister’s investor panel, we have chosen to create a more investment-friendly environment and ecosystem in Scotland by operating at scale, defining clear roles and responsibilities across the public sector, maintaining a professional and systematic approach to investor engagement, and developing a credible and costed pipeline of investment opportunities. The detail of that has already been set out in the terms of the £500 million of investment in offshore renewables, which will leverage private investment in ports and in manufacturing and assembly work.
That work is to go hand-in-hand with our vision for fair work, with the number of accredited real living wage employers increasing from 14 in 2014 to more than 3,700 in 2024, and some 67,000 workers in Scotland having had a pay rise as a result of their employers securing accreditation. Just under 90 per cent of employees who are aged 18 and over in Scotland are now paid at least the real living wage, which is a higher level than in Wales, England and Northern Ireland. Our median gender pay gap for full-time employees has been lower than that in the UK as a whole since 2003. Although there is work to do, our disability employment gap continues to fall, as well.
As I come to a close, I note that our vision is clear, we understand the choices that need to be made and we are absolutely determined to deliver economic growth that transforms lives, transforms communities and transforms this nation. I offer people across the chamber who share that vision and ambition the opportunity to be part of that and to work with me. I hope that we can deliver that shared objective for Scotland’s people.
I move,
That the Parliament recognises that Scotland’s abundant natural resources and hugely talented people mean that there is opportunity to build a strong, successful and inclusive economy that realises the new opportunities from the transition to net zero and the digital revolution; acknowledges that Scotland’s economic potential can be realised through actions to support entrepreneurs, promote science and technology and ensure that the track record of innovation is translated into new businesses and improvements in productivity in all sectors of the economy, and agrees that doing so will build Scotland’s global reputation as a great place to do business, grow exports and secure international and domestic investment.
15:38
As the Deputy First Minister fairly said, she and I, as well as Mr Johnson and others, have been doing the rounds with various debates during the course of the election campaign. Indeed, Mr Arthur, Mr Johnson and I enjoyed bacon rolls this morning at yet another hustings. I feel that this debate might be an extension of those particular engagements. Although I hear the Deputy First Minister’s strictures on not electioneering, perhaps we will return to the question of the black hole that is at the heart of the SNP’s manifesto on a different occasion, if we do not get the chance this afternoon.
I welcome the language that is used in the Government’s motion. Indeed, there was very little in what the Deputy First Minister had to say in her speech that I could disagree with. I find it very encouraging that we now have a Government that is talking positively about growing the economy. Now that the anti-growth Greens have been removed from the Government, it has more liberty to do that than it had previously. That is a welcome change of direction from a Government that now contains Kate Forbes as Deputy First Minister.
Of course, language takes us only so far. What we must see is action that matches the words. It is fair to say that the Government’s track record over the past few years is that, rather than putting a focus on economic growth, it has, I am afraid, put too many barriers in the way of growth.
Who would the member say has been responsible for Scotland outperforming the rest of the UK economically in recent times?
The Deputy First Minister needs to look at the wider picture, because, since 2014, the Scottish economy has grown, on average, at half the rate at which the UK economy has grown. We have a lot of catching up to do, even compared with the sluggish growth that we have seen in the UK economy, which, in line with all other Western economies, has been hit by headwinds including the fallout from the financial crash, the fallout from Covid and, of course, the impact on the cost of living of Putin’s invasion of Ukraine. All economies have faced those pressures. Given that wider view, the Deputy First Minister should not be too optimistic about the performance of the Scottish economy.
On the subject of dismantling barriers, Fergus Ewing made an important intervention on planning, which is a very good example of a barrier that needs to be dismantled. I met the Deputy First Minister’s predecessor as the cabinet secretary with responsibility for the economy, Neil Gray, when he took up his post, and we had a conversation in which he asked me what one thing he could do to help to improve the performance of the economy. I said, in line with what Mr Ewing said, that he should sort out planning.
The issue is not particularly planning law or the planning rules; it is the administration of planning and the fact that everything takes too long. That is perhaps because we do not have enough planners—we are not training enough and we are not recruiting enough. That major barrier to progressing economic growth must be addressed.
Would Murdo Fraser agree that, as far as the development of renewables in the UK is concerned, which both Governments and all parties agree is a huge opportunity, there would be merit in considering the idea of setting up a standing committee, which would be chaired by the UK Government but would involve representation from the devolved Administrations, that would have the specific remit of ensuring that all public bodies that have a role to play—of which there are a plethora—do their work on time? Otherwise, we risk losing opportunity and losing projects to our many competitors, who are not hanging around, as we seem to be.
Mr Ewing makes an important point. I do not like making off-the-cuff responses to ideas that I have not heard before, but I think that he identifies correctly that there is an issue. We see that, for example, with the Berwick Bank renewable project, which involves a large wind farm, in relation to which there have been substantial delays in consenting.
However, it is not just in planning that there have been issues with barriers. The Government has introduced a host of new laws, all of which are actively hampering our ability to grow the economy. The introduction of the regulation of short-term lets has already led to a loss of visitor accommodation and to bed and breakfasts closing down across Scotland in large numbers. B and Bs were, it seems, inadvertently caught up in those rules, even though they were never part of the problem.
The introduction of the visitor levy could take millions of pounds from Scottish residents who want to holiday here and could make Scottish tourism even less competitive than tourism elsewhere.
We had the ruinous deposit return scheme that was hated by business and which now seems to be the subject of a £200 million litigation by Biffa.
We also had the rent cap, and we now have the proposed introduction of rent controls, which is a policy that has already meant that we have lost out on hundreds of millions of pounds of investment in the rental sector and has contributed to a shortage of available properties and a spike in homelessness. I remind members of my entry in the register of members’ interests: I am the owner of a property that is let on a long-term basis. However, many other landlords are selling up, which is creating shortages. All of that is contributing to the housing emergency that the Government accepts that we are in.
An issue that is dear to the Deputy First Minister’s heart is the proposed ban on wood-burning stoves in new-build properties. This Government introduced each of those measures that actively hamper economic growth.
Our amendment talks about taxation. Despite this Government’s protests, it has extensive powers over taxation, with complete control over non-domestic rates and control over non-savings, non-dividend income tax and land and buildings transaction tax. We know that the Scottish Government chose not to pass on the 75 per cent rates relief that is available to retail, hospitality and leisure businesses south of the border in the previous year and this year, thereby putting businesses here at a competitive disadvantage.
We also know—there is ample evidence that this is the case—that the differential rates of income tax and LBTT are having an impact on economic growth. Writing in The Herald a couple of weeks ago, the chief executive of the Glasgow Chamber of Commerce referred to the fact that businesses here have had to start to pay a Scotland weighting—a higher salary to take account of the fact that everybody who earns more than £28,000 a year pays higher tax in Scotland. I have heard that from many other people in business.
I hear what Murdo Fraser says. However, does he congratulate the Scottish Government on the fact that the majority of people in Scotland pay less in income tax than their UK counterparts—even better, that is the majority drawn from the lowest-paid in society—and that, across Scotland, we pay an average of between £400 and £500 less in council tax every year? Is that not a good thing?
The benefit with regard to income tax is a few pennies a week and it makes no substantial difference to people’s household incomes. Anybody who earns more than £28,000 a year is paying more tax and anybody who is on an income of more than £50,000 is paying substantially more.
I will give Mr Brown a real-life example of where the problem hits. When members of the Parliament’s Economy and Fair Work Committee visited Prestwick airport at the end of April, we were told by Ryanair, which has a substantial repair and maintenance facility at the airport, that it is unable to attract qualified aircraft engineers to come to Scotland because of the tax differential. Those individuals are paid £77,000 a year and they tell Ryanair that they will not move to Scotland because of the income tax differential and the higher LBTT when it comes to purchasing a house. That opportunity is lost to Scotland, where Ryanair wants to expand but cannot, and that is the reason that it is giving.
The recent HMRC figures show a loss of high earners, not necessarily involving people moving out of Scotland, but perhaps involving people deciding that they will work fewer hours because it is no longer worth their while to do more. That applies as much in the public sector as it does in the private sector.
It is no wonder that so many organisations have criticised the widening tax differentials for undermining their ability to recruit and retain skilled staff. The Confederation of British Industry, the Scottish Retail Consortium, the British Dental Association, the Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Beer & Pub Association, the Scottish Licensed Trade Association, the Institute of Chartered Accountants of Scotland and the British Medical Association all say that that is making it more difficult for them to recruit and retain skilled or experienced professionals in their sectors.
We want to see greater migration into Scotland to help to grow our economy, but that ambition is being held back by the choices that this Government is making.
Will the member give way on that point?
The member is bringing his remarks to a close.
I apologise for being unable to take the intervention.
Our ambition, which is set out in our amendment, is to keep taxes in Scotland competitive with those in the rest of the UK so that they create an incentive for individuals to move here, in order to help to address skills shortages and grow our economy. Our policy paper “Grasping the thistle”—which I commend to the Deputy First Minister, if she has not already read it—sets out a range of ideas on competitiveness, skills, regulation, infrastructure, innovation and entrepreneurship.
The Government’s change in rhetoric on the economy is welcome, but it will be meaningful only if it is matched by action. This Government should start by addressing the tax differential. That is the point that we make in our amendment, which I am pleased to move.
I move amendment S6M-13679.2, to insert at end:
“; recognises that the best way to grow Scotland’s economy is to attract people to come and work in Scotland and to ensure that economic and fiscal policy is focused on removing the barriers that have hampered business expansion; acknowledges that many businesses, particularly in rural areas, have been let down by the Scottish Government’s anti-growth agenda and the supposed New Deal for Business; believes that the income tax differential between Scotland and the rest of the UK is damaging business and is an obstacle to economic growth; notes that this tax differential has become more pronounced due to the recent introduction of the new 'advanced' tax band; agrees that continually raising taxes over the long term ultimately reduces public revenue and creates disincentives in the economy; further agrees that broadening Scotland’s tax base is essential to improve fiscal sustainability, and 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.”
15:49
I will start by approaching the debate very much in the spirit that the Government is offering—the economy is too important to be discussed only in the narrow frame of partisan jibes, discussion and disagreement. I think that there are broad areas where there probably is disagreement and broad areas that are, frankly, very complicated and require an open approach, a pragmatic discussion and an examination of the different ideas in order to secure the future that we want for everyone.
I very much welcome the Government’s use of the word “growth”. That is where I will begin my remarks, because growth is really important for three key reasons. First, we, on the Labour benches, believe that the best way to eradicate poverty is by increasing access to well-paid, highly productive, high-wage jobs. That is possible only if there is growth. Growth for growth’s sake is not very useful. I know that Ross Greer is not in the chamber, but we were on “Politics Scotland” earlier and he said that gross domestic product is too crude a measure. I agree, but GDP per head is fundamentally important, and it is a measure that I will return to.
The second key reason is demographic change. If we are to organise our economy with a working-age population that is smaller than the post-working-age population, we need growth. We need to get more people doing more productive jobs, and that will not be easy.
Finally, if we are to realise our net zero potential—if we are to have a 21st century energy economy that is based on renewables—we need growth and investment. We need our energy to be produced more efficiently, which will be delivered only if we achieve growth.
I must say that I agree with the principles behind what Mr Johnson has said. Does he agree that, to achieve that growth in renewables, it is essential that we continue to support our oil and gas sector? It has the investment that we need from the private sector and the skills that we must retain if we are to develop the supply chain, achieve success and maintain investor confidence to raise the £1.4 trillion in investment that is required for renewables, only a small fraction of which the Government can afford.
I agree with the broad sentiment. I suspect that there might be some points of disagreement implied, but I will acknowledge two things. First, transition is a necessity. We have 10 per cent of the extractable resource left in the ground, so, whatever we do, we need to transition. Secondly, critically, if we are to realise some of our strategic potential in floating offshore wind and carbon capture and storage, the expertise and engineering that are required will come from the oil and gas sector, because those are the people who know how to do that stuff. I absolutely agree that we cannot have a cliff edge. We need those jobs, skills and assets, so the transition must be a partnership between the Government and the people who have that expertise.
I will make some progress. I have outlined why growth matters, and I go back to the point about eradicating poverty and improving equality. I know that my colleagues Alex Rowley and Foysol Choudhury will continue on how we can expand opportunity and how growth should be used to expand opportunities for all.
In relation to our amendment, if we are to realise those opportunities, we need to understand our headwinds. What are the risks and threats? I fear that, sometimes, when the Government approaches such topics, it wants to circumvent that aspect. We have already had a little bit of that. The Government is very keen to highlight figures or metrics that show where it has succeeded, but it is fairly unwilling to look at either the broader context or the metrics that point in the opposite direction.
That is why I come back to GDP per head. The simple fact is that, in the first decade of this new millennium, the gap in GDP per head between the UK and Scotland shrank from about 10 per cent to about 5 per cent, but, in the subsequent decade, it has increased. Whatever other metrics one wants to use, that is the fundamental one that we must focus on, because that is a loss of opportunity and a loss of earning potential for people. Let us start with that.
We must also recognise that it is a lack of investment that is holding this country back. Again, the headline figures often obscure this, but, up until the previous quarter, we had seven quarters of decline using that same metric across the UK. The reason for that was poor levels of investment. We also need to look at factors such as entrepreneurial activity, because Scotland lacks entrepreneurial activity and company creation.
Most critically, we have unequal growth. The reality is that the vast bulk of growth in Scotland is generated from Scotland’s south-east. The output per hour worked in Edinburgh and the Lothians is 50 per cent higher than it is in other parts of Scotland, such as the west and Tayside. Why is that? I suggest that we look at those issues. What are the structural barriers? Where are the regional economic development strategies that should enable people to link up the opportunities that exist in other parts of Scotland with their potential, skills and talents and the places where they live?
How much more time do I have, Deputy Presiding Officer?
I can be relatively generous.
Relatively. I will understand that as—
You have up to seven minutes.
Up to seven minutes—that is very kind, Deputy Presiding Officer. I do not know what I have done to deserve that, but I will take it.
Critically, we need to have much greater focus and clarity. That is why we have set out three key focuses in our document “Building a business case for Scotland” around brand Scotland, net zero, and technology and financial services. I note that the Deputy First Minister might have highlighted the same three focuses in her recent column in, I think, The Herald. I am very grateful and flattered by that compliment.
We also need to focus on the how, because it is not enough just to have those focuses. I share many of the ambitions, but what needs to change? What elements in our enterprise agencies and policy approaches are holding back those things? We need greater clarity across our enterprise agencies. We often talk about there being a cluttered landscape. Tackling that is not just about reducing their number but about ensuring that they have clear focus and functions and that they are working together.
We need much better focus on how wider policies impact on those things. We have already talked about planning, but other points of regulation and points of contact between the private sector and Government are impeding things. We need a greater ability to carry out regional economic delivery. That goes far beyond what regional economic partnerships seek to deliver. We need a genuine regional approach to government.
I think that my seven minutes is up. Critically, this is about how we improve the life chances of people across Scotland. That is why growth matters. It is about tackling poverty and inequality and increasing people’s life chances.
I move amendment S6M-13679.3, to insert at end:
“; acknowledges that the gap in GDP per capita between Scotland and the rest of the UK has widened since 2007 and that EY’s Scottish spring forecast predicts that Scotland’s growth will continue to lag the UK’s in 2025; notes that Scotland’s early-stage entrepreneurial activity rate of 8.8% is lower than the UK’s rate of 11%; believes that businesses must be successful to build a strong economy and create the jobs that the country needs, and calls on the Scottish Government to work in partnership with business, listening to industry and workers, to deliver economic growth and the revenue needed to improve lives across Scotland.”
I call Maggie Chapman to speak to and move amendment S6M-13679.1. You have a similarly generous four minutes.
15:57
I am pleased to open on behalf of the Scottish Greens. The title of this afternoon’s debate raises two fundamental questions: what do we mean by the economy, and what is it that we want to grow? Historically, and for many politicians and economists currently, the answer to the first question is extractivism, which is an economy that is based on colonial exploitation of people and resources, especially fossil fuels. The answer to the second question has been GDP. Those answers, taken together with the age-old notion that wealth will inevitably—eventually—trickle down, give us the current economic model.
Will the member give way?
I want to make some progress, please.
However, those answers never made very much sense and have only perpetuated a status quo that has cushioned those who are more than comfortable already. Now, in a time of climate chaos and obscene inequality, they make no sense at all. If our economy does not address the climate crisis or the inequality emergency, it is, at best, pointless in practice and simply enables and exacerbates them.
The member just said that it would be bonkers not to do a list of things. Surely, it would be bonkers not to ensure that people had jobs so that they could tackle things such as the deficits and the climate emergency. Without the money, they can do nothing.
I can give you back that time, Ms Chapman.
I did not use those words. If Mr Mountain had listened carefully, he would have heard me say that, if our economy does not address the climate crisis or the inequality crisis, what is the point of it? What is it there to do?
As the Government’s motion recognises, we are in a different world now, and we urgently need to make a just and sustainable transition to an economy that meets its challenges and to forms of growth that recognise the realities. That means fundamental changes of approach, trajectory and objective, not simply substituting renewables for hydrocarbons, for example. We need to look at different answers—the answers that I and other Green activists have been talking about for years.
Central to this thinking is the concept of a wellbeing economy that meets the real and urgent needs of workers and communities, that respects the natural world and those who protect it, and that continues to flourish safely alongside future generations.
The member made an important point about some of the flaws in GDP calculations. One example that she might agree with me on is that new-build housing construction is factored into new GDP figures but renovations and retrofits are not. Is that not a perverse situation in a climate emergency, with massive amounts of housing that badly needs to be refurbished?
There are many perverse realities in our current economy, such as the one that the member highlights. My colleague Lorna Slater will speak later in the debate about how the vision that we want to present can be made real and tangible in order to deal with some of those perversities and create the kind of industrial strategy that Scotland so desperately needs.
Our answer to the second question—what is it that we want to grow?—is key. It is not the sterile statistic of GDP, but our capacity to thrive as a nation, as cities, as towns and villages, as families, as communities and as unique and inspiring human beings. Under the current devolution settlement, our resources are limited. Indeed, our agency is significantly challenged. That is why, as Greens, we argue for an independent Scotland that has the powers and capacities to act as radically, as swiftly and as compassionately as the intersecting crises require.
However, we cannot let those resource and agency limitations distract us from the work that we can do today. If we advocate for independence for a very different kind of state, it is more important than ever to pay attention to what we are doing now and to exactly what kind of future we are investing in. Does it plant seeds of care and creativity as well as of science and technology? Does it support co-operatives and social enterprises as well as ambitious entrepreneurs? Does it measure success by equality and wellbeing as well as by productivity and export? The current model does not do those things. The purpose of modern state capitalism is to socialise the costs and risks of society and the economy while privatising the profits. That does not plant those seeds of care and creativity or generate and sustain equality and wellbeing.
That is where this debate crucially connects with one of the debates that I spoke in last week, on our shared priority to eradicate child poverty. It is by looking at our economy through that clear and focused lens, by asking what impact each of our decisions about investment, policy or practice has on the poorest children and the adults that they will become, and by making their rights real and realised that we will find the direction for the economy that we need.
I move amendment S6M-13679.1, to insert at end:
“; acknowledges the important contribution that community and social enterprises, cooperatives and other not-for-profit structures make to local economies, including local resilience and community wealth building; recognises the need to promote science and technology, but also creative and caring work that sustains Scotland’s society and culture, and agrees that proper investment in the green economy is required to deliver the urgent transformations that are needed to develop an economy that has equality and fairness at its heart.”
We move to the open debate.
16:02
I am pleased to support the motion. Scotland is our business, Scotland is open for business and the SNP is focused on supporting and growing that business.
It is a pity that there is a lack of a realistic plan from either the Tory or Labour benches to enhance our prospects for growth. The Tories have lost the plot, but Labour’s row-back on its green prosperity plan, combined with its adoption of the Tories’ fiscal rules, will be hugely damaging. These are not my words but those of the Institute for Fiscal Studies—here is what it said about Labour’s plans for green investment:
“After paring back the plan substantially ... the proposed additional spending would amount to less than half of the additional investment spending the Office of Budget Responsibility thought would be required”
to be
“consistent with the recommendations of the Climate Change Committee in 2021.”
Would Michelle Thomson like to comment on what David Phillips from the IFS said today after the launch of the SNP’s manifesto about the extent of the big black hole?
Liz Smith knows that we have had many discussions about that. I highlight to her, from the Scottish Fiscal Commission’s report, on fiscal sustainability, the fact that 18 per cent of Scotland’s capital budget is required for us to get to net zero. Why, in the light of that, is she not clamouring for increased fiscal powers for the Scottish Government?
Accumulating capital stock and increasing the supply of a well-educated workforce are also of vital importance for growth. However, today I want to focus on the most important factor in long-term growth, which is technological innovation.
There are lessons to be learned from history. In the first industrial revolution, which was in the 18th century, we saw steam power taking off with the innovations of James Watt. In the second industrial revolution, the rate of technological change accelerated again, leading to electricity, which enabled new technologies. The arrival of transistors in the mid-20th century laid the foundations of the third industrial revolution, marking the beginning of the digital era, with opportunities enabled by the internet of things, the cloud and big data.
Who on earth, then, when we consider the growth enabled by technology, thought it a good idea to remove the UK from the European Union digital single market? Prior to Brexit, the UK digital economy growth rate averaged 24.1 per cent annually but, by June 2022, it had fallen to 0.7 per cent, according to research from Professor Alison Harcourt. However, the Tories and the Labour Party are now Brexiteers, with the Lib Dems wringing their hands after rowing back on their previous opposition.
The power of technology to drive change is spurred by its growth and use. In 2020, the United Workplace network argued that there are currently more than 19,000 million devices connected to the internet, more than 5,000 million mobile users and about 2 zettabytes of traffic per year at the global level. This is the era of big data. I was therefore delighted that, last year, the Scottish Government launched its 10-year innovation strategy, calling for Scotland to drive towards ranking alongside Denmark, Norway and Finland in being recognised as one of the most innovative medium-sized countries in the world.
The challenge that we all face is neatly summed up in Martec’s law, which states that, unlike information technologies, which grow exponentially, organisations grow logarithmically. It follows that, if organisations do not adapt to the pace of change, extinction will be inevitable. That process is what some people call digital Darwinism. If we do not get on board and if organisations in the public and private sectors fail to keep up and to be much better attuned to continuous innovation, they will become part of digital Darwinism, where organisational extinction is just as much on the agenda as organisational progress. That is the major challenge that we face as we rightly pursue economic growth. Scotland is up for that challenge, and I look forward to seeing the continued focus on economic growth that is outlined in the motion today.
I advise members that the time that we had in hand has now pretty much been exhausted, so members will have to stick to their speaking time allocations.
16:07
Before I go into my speech, I remind members that, as declared in my entry in the register of members’ interests, I run two small businesses.
I want to speak about small businesses and the vital role that they play in the growth of Scotland’s economy. Let us consider a small business in the Highlands that employs six people, each on a salary of £30,000 per year. It is impossible, however hard one tries, to measure how that money is eventually spread but, inevitably, employees will spend their wages in local shops, cafes, restaurants and entertainment facilities and on local services. They will keep the transport going, keep the workers driving the buses—if they can find them—and the trains working, and they will ensure local connectivity. They will contribute to local charities and non-profit organisations, perhaps by giving freely of their time, and they will support myriad other businesses.
As well as that reinvestment in the local economy, some of those six employees may have children in primary or secondary schools, thus helping the communities to employ teachers, childcare providers and support staff, which in turn ensures that local children continue to access good local education—so do not close our schools. Those employees will contribute to the employment of doctors, general practitioners, dentists, nurses and pharmacists—so keep local GP practices, pharmacists and hospitals open.
In essence, a small business with six employees creates many more jobs in the local economy than we could even calculate. A small business functions rather like a cog in a much greater network, which certainly employs dozens, if not hundreds, of people across Scotland. If the Scottish Government overlooks or neglects small businesses and local services, there will be collateral implications for the foreseeable future.
There is nothing small about the impact of small businesses across Scotland. In 2020, a staggering 87 per cent of the 180,000 businesses registered in Scotland were defined as micro-enterprises—companies that employ up to nine people. The Government’s own 2020 “Rural enterprise support: evaluation report” stresses that, compared with those in the rest of Scotland, three times as many people in remote rural areas work for small businesses. That means that, when small businesses are left unsupported or local services are cut—which means that those businesses cannot find employees—the economies of rural and island communities are hit the hardest. Indeed, parts of the Highlands and Islands have local economies that are made up purely of small businesses.
Small businesses function as a close-knit community whose members inevitably look after one another and attempt to self-sustain, but they require help. The chair of the Federation of Small Businesses in Scotland recently commented that the First Minister needs to put
“growth and the needs of small businesses at the heart of his agenda.”
The very last thing that employees in those small businesses need are tax increases. That restricts the amount of money that they can spend locally, and they know how to spend it well.
If we do not look after small businesses and their employees, reinvest in local economies and keep local services open during this time, we will perhaps consign Scotland’s rural communities to the further depopulation that we are seeing across the Highlands. That is bad news. We cannot afford to let the Highlands and Islands wither and die by not investing in the very small businesses that keep Scotland going.
16:11
I thank the Deputy Presiding Officer for the opportunity to take part today.
I whole-heartedly support growing the economy. We want our society as a whole to become better off so that quality and well-paid jobs are available to all our citizens, and everyone benefits from an improved standard of living. However, we face a number of challenges in growing the economy, including having a fairly static population.
It is incredibly difficult to grow an economy if the population is not growing. That is exacerbated, as is the case for many countries, by having an ageing population, which means fewer people available to work. We need to address that in the longer term by encouraging families to have more children and, in the shorter term, by allowing more people to migrate here to work. The latter, in turn, has been made more difficult because of the UK’s overly harsh immigration policy.
The Conservative amendment is incredibly ironic, as it calls for more people to come and work here while the Conservative UK Government prevents that from happening.
How can John Mason describe a policy as “harsh” when the levels of net migration into the United Kingdom are now at record levels?
My point—if Mr Fraser would like to listen to my next paragraph—is that we need targeted immigration.
By contrast, Australia has a regional visa system to promote economic growth outside the major metropolitan areas. People have to live, work and study in a designated regional area. Such a system could hugely benefit the economy in Scotland.
We face barriers to growing the economy, several of which are outwith our control. Some have suggested, even today, that increased income tax might also be a barrier to people coming to Scotland. However, we have heard at the Finance and Public Administration Committee that, in most age groups, people are coming to Scotland from the rest of the UK rather than leaving. That will be a mystery to some Conservatives, because they think that more money is the key to everything and that everyone else makes decisions based purely on self-centred financial motives.
I want to let the Conservatives into a little secret. Not everyone lives a life that is dominated purely by personal financial gain. Some people want to come and live in Scotland because we have such a good environment, with cleaner rivers, lochs and seas; others because the NHS is better here and there are shorter waiting times. Just recently, a constituent told me that she had moved from Kent, where she could not get an NHS dentist at all. She came to Glasgow and immediately got an NHS dentist. Others come for our world-class universities and research sector. Some want to live in a fairer society, even if they pay a bit more tax.
Another factor in all that is where the benefits of economic growth are going to. If growth means foreign-owned multinationals making increased profits, that sounds like bad growth. By contrast, if it is social enterprises, co-operatives or employee-owned businesses that are growing and the jobs and profits are likely to stay in Scotland, that is good.
That brings us to the subject of scaling up and why Scottish businesses are often sold by their founders before they have really grown to a significant size. It is not that we want to be overly protective of Scottish ownership, but it seems that businesses in a number of other countries are not sold off as readily as they are here. Common Weal estimates that, in 2021, £36.5 billion was extracted from Scotland, mainly as profits and dividends, while only £26.4 billion flowed in—a net outward flow of £10.1 billion. I am not saying that I am opposed to foreign direct investment—many of the jobs linked to FDI are good, well-paid jobs—but I just point out that there is a downside to so many of our businesses being foreign owned.
Scottish Financial Enterprise has produced a brief manifesto for the next UK Government. I have already mentioned some of its points, such as looking at the immigration system and student visas to attract—
You need to conclude.
—the best talent here, but it emphasises that the UK Government should work more with the Scottish Government. I will finish on the point that, in recent years, the UK Government has seemed to want to give Scotland a kicking, and that has to stop.
16:16
Growing the economy must be the number 1 priority of Government in Scotland and Westminster. Over the past 17 years, both Scotland and the United Kingdom have seen sluggish economic growth. The National Institute of Economic and Social Research estimates that, since the 2008 financial crisis, the UK economy has grown by an average of 1.2 per cent each year, down from an average of 2.3 per cent in prior decades.
In Scotland, we lag behind the rest of the UK in GDP growth, with 2025 forecasts saying that that will remain the same. Make no mistake—economic growth is stagnating, and the working people of Scotland are paying the price of two weak Governments.
Research from the University of Strathclyde shows that early entrepreneurial activity in Scotland is lower than the UK average. To grow a strong economy and build our reputation as a great place to do business, early entrepreneurs must be better supported. In particular, our technology sector, which is suffering from a lack of capital investment, would benefit. Scottish Government grants need to grow businesses in the long term and reward entrepreneurship. Edinburgh has a growing technology sector, and we cannot afford to miss out. It is imperative that the Government works with our tech and digital industries so that we can be best placed to take advantage of new technologies, such as artificial intelligence.
Growth is also being stunted by our skills system. The British Chamber of Commerce’s business barometer report found that 71 per cent of organisations in Scotland were facing skills shortages. The Scottish Government has allowed that to happen by not planning for the sector that is key to Scotland’s success and by failing to provide workers with the right skills. Our skills system is rigid and does not adapt to the needs of businesses and people, which slows growth. However, while economic inactivity has risen to 23.2 per cent, the Scottish Government has cut the budget for skills programmes, which support young people into work, by 36 per cent.
Scottish Labour will work in partnership with businesses to create a flexible, modular skills system, underpinned by digital skills passports, which can adapt to the needs of the economy. UK Labour would set up a national wealth fund, unlocking private investment and creating 69,000 green jobs. The Scottish Government’s focus on economic growth now is welcome, but its record does not reflect those warm words. We are lagging in productivity and employment compared with the rest of the UK. Scotland needs a Government that will put growth first and work with businesses to invest and unlock Scotland’s potential. Scottish Labour is ready for a change.
16:20
I expected to speak a lot about technology today—I am sure that that is no surprise to anyone in the chamber—so I was delighted that Michelle Thomson and the cabinet secretary spoke about how important technology and the fourth industrial revolution are to how we grow Scotland’s economy.
I will make a couple of reflections on oil and gas. Quite rightly, Mr Ewing talked about how we need to use the technology and the advantages of the north-east, and I absolutely agree that moving towards net zero does not mean that we are abandoning the north-east, the oil companies or that technology. Indeed, since 2003, Fervo Energy in Texas has been adapting and converting oil and gas and drilling infrastructure to that which can be used for geothermal energy. That is the way forward and how we can ensure that no one is left behind as we move towards net zero. As Maggie Chapman said, it is imperative that we make such provisions.
I want to talk a little about my technology experience. The fourth industrial revolution is upon us and, in the past year, I have chaired and attended many meetings that have focused on science and tech. There are common threads. Principally, we need sustained investment in, and focus on, innovation in such sectors, and we have to encourage our young people into careers in science, technology, engineering and mathematics.
In my area, I am very lucky to have New College Lanarkshire’s Motherwell campus, which has a smart hub that involves working with local small businesses in particular on the use of fourth and fifth generation robots in food production, manufacturing, warehousing, packaging, welding and repair, including the repair of turbines in the renewables sector. That shows that all work is moving towards the use of robots, AI and other technology, so we have to adapt and embrace those opportunities for Scotland.
Often, we do not recognise the great work that is happening. The cross-party group on science and technology was given a whistle-stop tour of pioneering research in quantum tech and semiconductors. I was delighted that the cabinet secretary mentioned that, because such developments will be transformational and will represent a step change in how we can use AI and the internet of things to look after our environment and healthcare, to communicate and to monitor systems. It is really exciting to see that work being done. We also have expertise in hydrogen, which I do not think has been mentioned so far in the debate.
I want to mention the Scottish games sector, which is part of our cultural economy and is really important to Scotland. We could be doing more in that area. We have talked about economic inward investment, and there is such investment in our games sector in Dundee, but we need more of it. The sector generates more than £2.4 billion for the Finnish economy, and Scotland could be taking more advantage of it, so I would like there to be more work in that area.
Mr Mountain talked about his employees. I am sure that, when they come to work for him in the Highlands, they will be delighted that they can get free prescriptions, a free bus pass, 1,140 hours of funded childcare and advantages from the Scottish child payment and care payments. They will also be included in the Scottish fair work agenda, and their children will get free further and higher education, which will be to their advantage.
16:24
In the brief time that I have, I want to talk about education, skills and the failure of joined-up government, which sits at the heart of many of our current problems in Scotland. I have always believed that Scotland’s greatest asset is its people. If we want a successful, growing and productive economy, we need a highly educated and highly skilled population.
In the past few years, I have met many employers up and down Scotland. It is guaranteed that, when we ask them what the issues are, education and skills will always come up. Many of the people I talk to in Rosyth dockyard across in Fife describe the dockyard as the United Nations, because the reality is that it could not survive and deliver the contracts that it has if it was not actively seeking skilled labour from abroad. As with so many employers in Scotland, it is unable to get the skills and the skilled labour in this country. The SNP has been in power for 17 years. Education and skills are devolved, and there is no excuse for not getting it right.
This morning, I looked at the Educational Institute of Scotland manifesto for the general election, “Stand Up for Quality Education”. Its first priority area is:
“Build the resources and school culture to address distressed, violent and aggressive pupil behaviour”.
That is a major issue. Last year, the Government held three emergency summits to discuss how we address those issues. From the amount of emails that I am getting from parents and teachers, it seems to me that we are not much further forward in fixing that specific issue in our schools. The EIS has highlighted three areas, and violent and aggressive pupil behaviour is one of them.
The second priority is:
“Secure an increase in funding and support for pupils with additional support needs”.
Again, that is not rocket science. There is a complete failure to recognise the need to invest in our schools and get additional support teachers into our classrooms.
The third EIS priority is:
“Achieve a significant reduction in teacher workload”.
We need only to meet and talk to teachers to know that there are real issues there.
The fourth area that I would add is the 2007 SNP manifesto commitment, which was to cut class sizes. Again, there has been a total failure to achieve that.
I will move on from the schools, which, as I say, have major issues that are not being tackled by the SNP Government, to colleges. If we are going to have a successful economy, everyone in the chamber would acknowledge that we have to invest in colleges and we need to fix their massive problems. We have a minister who is responsible for colleges who seems to be posted missing when it comes to addressing the issues. Industrial relations are at an all-time low. We are having strike after strike after strike. The students are being let down and morale in our colleges is at rock bottom, yet we have a Government minister who says, “Nowt to do with me, mate. This is for somebody else to deal with.” Over many years, we have seen the SNP make structural changes in colleges but it has continued to fail.
Education and skills are key to a successful economy. The SNP Government must address the issues that we have, otherwise we will not have a successful economy.
16:28
I have listened to colleagues during the debate and I agree with many of them—not all of them but, hey, in this new consensual world, let us not look for too many miracles at the one time.
It will come as no surprise to anyone that I agree with the premise that the Scottish Government is delivering a strong and resilient economy for Scotland. As others have said, Scotland is outperforming other parts of the United Kingdom. Not only that, but Scotland is currently the top destination for foreign investment outside of London in Europe. In 2023, earnings in Scotland grew faster than in any other part of the UK, including London and the south-east.
However, let us get to the important part of my speech and talk about positive Paisley, because it has been a while since I have had the chance to do that. There have been some key Scottish Government investments in my constituency in recent years. Paisley High Street faces the same challenges that are faced by high streets across the country. I think that it was Edward Mountain who spoke about small businesses and investment and how we can get them to work together.
The challenge that Renfrewshire Council has is that it has two buildings bookending the High Street: one is the historic town hall and the other is Paisley museum and library. The council has managed to get investment of £100 million in the town centre through various routes such as the National Lottery Heritage Fund and the Scottish Government regeneration capital grant fund, as well as a number of other trusts, foundations and private donors.
The museum itself is the biggest cultural project currently in construction in Scotland. It is a £45 million investment, and it is going to generate around 125,000 visitors a year; that is 125,000 people walking up and down the length of Paisley High Street. There are 138 jobs being supported during the construction, and 48 jobs per year will be supported through revenue and visitor spending in the future. In addition, there will be new footfall for the town centre and for the High Street.
As I said, the museum is part of a £100 million investment. That also includes an investment of £7 million in a Paisley learning and cultural hub, which replaces Paisley central library and occupies what was once a retail space in the High Street. The hub is housed in a former high street shop and is spread over four storeys. The new building includes a reception area and a children’s library and storytelling area, with a unique play structure that includes a climbing wall and slide, which has been co-designed with renowned Scottish artist Claire Barclay. The upper floors have an outdoor terrace and community rooms. That is the type of thinking that we need to increase footfall in our high streets and bring increased economic value to our towns.
However, it does not stop there. If that alone was not good enough for the good people of Paisley, it gets even better with the SNP administration in Renfrewshire. There is also the £20 million regeneration of Paisley town hall—a measure that has now transformed the historic town hall into one of the country’s leading entertainment venues. Again, that is about moving into the night-time economy and generating business for the businesses in the local area.
Last year, Paisley town hall was reopened—the Deputy First Minister will be pleased to hear this—in all its glory when it held the Royal National Mòd. That event brought 8,410 visitors to Paisley alone, which was an increase of 12 per cent on the numbers attending the same event in Perth last year.
However, although we can look at the investment that has been made by Renfrewshire Council and the Scottish Government over a few years, we are living in a time when Westminster is cutting those budgets and stopping us from being able to make those investments and help towns like Paisley to move forward. No one will be surprised to hear that I believe—as I always have done—that, if we had the full levers of power, we could pass the economic bills that we need and do what has been done in Paisley in towns and cities across the whole of Scotland. We could ensure that we build the future that we want for our town centres.
We move to closing speeches. I am disappointed to note that one of the members who participated in the debate is not here for closing speeches. I will expect an explanation, and indeed an apology.
16:32
I have listened with interest to the debate, and I hear how heavily members across the chamber are leaning on what Andy Haldane, of the Financial Times, referred to as “the growth fairy” to resolve all our economic problems. As Mr Haldane goes on to say,
“Absent the growth fairy, the other options are considerably more painful.”
There is a conspiracy of silence about what those other options look like. Spoiler: they look like talking honestly about taxation—who pays what and how much?
Again, I am indebted to Mr Haldane for this quote. He said that political parties
“project a fall in public investment as a share of GDP over the next parliament, from a base several percentage points below the UK’s competitors. We can hope private investment fills the gap. But hope is not a growth strategy and private investors might be cautious about rushing in where public investment fears to tread.”
We need our Governments in the UK to recognise that public investment is needed to give confidence to private investment, but what about taking a different approach to our economy? Instead of waiting for the growth fairy to sprinkle us with her bounty, which we can then presumably allow to trickle down to the workers and communities, what about building our new economy for the post-fossil-fuel world from the bottom up? What if we do not treat paying living wages as optional, we do not consider, under any circumstances, removing or restricting benefits that are needed for the basic necessities of life, and we do not consider nature and the environment to be acceptable collateral damage?
We need to ensure that everyone in society benefits when the economy is doing well. That means ensuring that more people have a stake in it. Community ownership, support for social enterprises, co-operatives and other alternative business models give people that stake and ensure that people are at the heart of the economy rather than profit. We must ensure that women participate equally in this new economy. The goal should be women filling 50 per cent of all training, education and employment opportunities, and we should be setting quotas to support that.
Scotland has so much potential for a thriving economy in a post-fossil-fuel world. We have the infrastructure, even if it is a bit crumbly now, and we have a history in heavy engineering. From the port of Dundee to the harbour in Aberdeen and all the way up to Nigg, we are already designing and building the future—wind turbines, tidal turbines, energy storage systems and equipment for green hydrogen generation and distribution. We have the potential for a major reindustrialisation of Scotland, and we can shape a vision for leading the way on designing, building, installing and maintaining the machines that will generate and store the clean energy of the future.
However, that means making a clear change of direction away from oil and gas and committing to and investing in these new industries. Oil and gas production in the North Sea is in decline and must continue to decline. We have this moment of hope to seize the opportunity to focus on the new economy. If we fail to do so, and if we cling to dying industries, other countries will pull ahead, and they will build the wind turbines and the electric and hydrogen-powered vehicles and install the hydrogen infrastructure, the cranes, the ports and the quays, and this moment of opportunity for Scotland will be lost.
16:36
In summing up, I will be deliberately contrarian by both agreeing and disagreeing with people in the same instance. I start with Lorna Slater and Maggie Chapman. I agree with them in one fundamental sense—that growth for growth’s sake is no use at all. If all that we did was grow raw GDP, that would not be delivering anything at all. We need growth for the very reasons that they set out—we need growth because we need to drive investment in green infrastructure, and we need growth because we have an ageing economy.
The only way in which we will deal with that is if we invest in our people and their ability to do the jobs that they seek to do. That requires growth and needs a very hard-nosed approach. That is why GDP per head is the real measure, coupled with a laser-like focus on the Gini coefficient. Those two things go hand in hand. Does that capture everything? No, but they are the best measures that we have of ensuring that we are increasing prosperity and reducing inequality as we do it.
Fundamentally, that is where we agree. We must ensure that we enhance people’s ability to thrive, as Maggie Chapman said. That is the fundamental reason for economic growth. That is why I slightly disagree with John Mason. He is right that it is difficult to grow an economy unless we have migration, but, ultimately, if we are not careful, we mask that fundamental truth about GDP per head.
I agree and disagree with the Deputy First Minister. She is absolutely right about her focus on technology and start-ups, but we need to be careful that that is not the only focus or the only route to supporting entrepreneurial activity. I am very supportive of the scale-up initiatives; indeed, one of the most useful things from the Logan review is the pipeline concept. However, I would like that to be applied more broadly. We absolutely need those start-ups and innovative companies, but we also need the application of that technology and investment in the small businesses that Edward Mountain highlighted. The reality is that such companies are not inherently more productive, but they have access to more investment, and investment drives productivity. The real problem in this country—it is a stubborn problem—is that smaller businesses struggle to find financial investment and therefore do not take up the opportunities of technology or improving the productivity of their people.
I agree with Clare Adamson that there are huge possibilities with AI and robotics. However, unless we focus on investment, we will continue to see large companies and the companies that are engaged in start-up culture benefiting, while we will leave companies of other sizes and scales behind.
I completely agree with the member. My first role, back in 2018, was digital-boost focused. He might recall that I was trying to get more traditional businesses to embrace technology. I hope that he will agree that we have a productivity challenge, which will be answered in part by private investment in processes and skills—that means technology and people, hand in hand.
I completely agree. At the event that we attended this morning, which Murdo Fraser alluded to, I made the point that all the changes that we need to see across our economy and our society will be delivered only if they are done in partnership between the state and the private sector. Private sector investment is required, but there is a role for the state in helping to shape it. If that is not through direct investment, we could look at derisking investment, because often small firms struggle to raise investment, and it is a fundamental driver. If we treat productivity like magic fairy dust—as it was described earlier—we will never deliver it. We need investment in plant machinery and equipment—the things that enable people to do their jobs.
Will the member take an intervention?
I am struggling for time, and I am afraid that I would like to make a bit of progress.
I will alight on a point that George Adam made—I know that he is somewhat staggered by the consensual approach, but I will make a consensual point. He was right to highlight the role of his area—Paisley—because another mistake that we make in Scotland is that we take a top-down approach to the economy, whereas economies are built from the bottom up. Across the UK, the areas that are succeeding at building investment are the metro regions—for example, investment in Manchester has been led by the metropolitan area.
We need to look at the powers that that area has been granted. Manchester is baselining business rates, and the upside of business rates accruing to Greater Manchester Combined Authority is that it is aligning its policies to the area’s growth. As Murdo Fraser pointed out in private earlier, we have the same framework, so we could do the same thing in Scotland.
I highlight the remarks of Alex Rowley and Foysol Choudhury. Ultimately, the economy is built around people. Unless we get our education system right and our skills system right, and unless we have a system that enables people to upskill and reskill as our economy changes and which enables people to take up opportunities, we will leave things behind.
My final point is about the reference to the United Nations at Rosyth—
Will the member take an intervention?
No—Daniel Johnson is about to conclude.
That is a tragedy, because many people in Fife and up and down the east coast struggle to find good work and good wages, which could be right there for them.
You need to conclude, Mr Johnson.
The want of the right schemes, the right opportunities and the right training is what we need to tackle.
16:43
The debate has been interesting and generally positive. I will pick up on something that Michelle Thomson said that I still do not entirely agree with. She has still not answered my question about how she would fill the big black hole in SNP finances. Nonetheless, she referenced the Scottish Fiscal Commission’s 2023 sustainability report. Finance and Public Administration Committee members are unanimous in thinking that it is a pity that we have not had a debate on that specific issue, which the Scottish Government promised several months ago. As a backdrop to all the things that we have discussed today, it would have been helpful to have had that debate, because the report is seminal on the way forward for economic growth.
When she was a back bencher, and at a recent meeting of the Economy and Fair Work Committee, the Deputy First Minister has been clear that the Scottish Government’s priority is to remove the barriers that hamper business expansion and to do much more to encourage the private sector to play a leading role in the pursuit of economic growth. I have to say that that is one of the most encouraging remarks that I have heard from the Scottish Government for a long time. I am sure that the Deputy First Minister will hold to that, because it is essential if we are going to ensure that Scotland has economic growth.
Kate Forbes was also clear that the best way to grow the economy is to attract people to come and work here and she offered the view—rightly so, in my opinion—that the SNP cannot go on increasing tax rates, as has been the case for the past few years, without some detrimental effects on revenue and productivity. That is another message that I warmly welcome from the SNP, because that is definitely what business and industry have been very concerned about. They want to have economic stability; prudent fiscal management; lower taxation or a lower tax burden; closer alignment of Scottish taxation with UK taxation; a well-maintained infrastructure, including in rural areas; fewer barriers to trade; and a strong emphasis on training and skills, of the sort that Alex Rowley was talking about.
Daniel Johnson was quite right, too, because he flagged up that one of the biggest challenges that we face is the extent of economic inactivity—the rates are worryingly high—which means that we are not making the best use of the skills and talents in our labour force. We desperately need the skills of those who are able to work. The policy prospectus should therefore be fully focused on helping people back into the labour force, on preparing them for the future jobs that many people have spoken about in the debate, and on ensuring secure jobs and investment.
There has been a lot of discussion across the chamber about the skills base and about opportunities for young people. How on earth does the Tory and Labour policy adopted by Rishi Sunak and Keir Starmer of not taking the European Commission’s offer of a free-movement arrangement for under-30s help in this situation? We want opportunities for young people here, but we also want our young people to have the opportunity to study and work abroad.
Clare Adamson made a good speech on the technology aspect. I would just point her to Murdo Fraser’s earlier remarks about immigration.
I have said on the record in Parliament several times that we need to look at the whole area of attracting more young people. I gently point out to Clare Adamson that it was the SNP Government that made quite a substantial cut to the economy budget of 8.3 per cent in real terms, which included the enterprise and employability budget, so I do not think that it is fair just to blame Westminster. I also point out that, a few months ago, 9 per cent of the business community felt that the Scottish Government was sympathetic to its concerns, so all these issues are very important.
I will say a little bit about tax. The Deputy Presiding Officer will not allow me to talk from an electioneering point of view, because that would not be right. However, the tax aspect is absolutely critical, because it goes hand in hand with the incentives to develop economic growth, and we cannot have debates on economic growth without mentioning the tax burden. I suspect that Kate Forbes has more in common with me on that than perhaps with some of her colleagues, because I think that the Deputy First Minister understands that recent progressive taxation, as set out by the SNP, has not been satisfactory in terms of people being encouraged to come to highly skilled jobs in Scotland.
Given what Liz Smith has just said, does she agree that there can be no incentive in the idea that personal allowances for tax are to be frozen for the next three years? That amounts to a tax increase, but that is the current plan for both the Labour and Conservative parties. Surely that is not a good thing.
Mr Brown, I think that the issue is much more about the differentials—that is the point that we are discussing. The differentials are a serious disincentive for many people who want to come to Scotland to work in our higher-paid jobs. We have to reflect on that important issue.
I have heard the SNP say on several occasions that that is all offset by free prescriptions or free tuition. The fact is that those things are not actually free—they are not free at all. It is about who pays for them. In the light of what the Scottish Fiscal Commission has said, the debate about universal benefits will have to happen. An increasing number of people in the chamber agree that that debate will have to happen.
I finish by saying that there was nothing in the SNP’s motion that we could disagree with. I welcome the fact that there is a different tone to this kind of debate but, to add to the debate, the tax issue is absolutely critical. That is why I will support the amendment in the name of Murdo Fraser.
I call Tom Arthur to wind up the debate. You have up to nine minutes, minister.
16:50
I thank colleagues across the chamber for their contributions. There has been broad consensus this afternoon. Even in areas in which consensus might not have been immediately apparent, there has nonetheless been a great deal of alignment. I will see whether I can surface some of that in my remarks.
I will take a few contributions in turn, because there is much that merits further consideration.
I welcome the tone of Murdo Fraser and Liz Smith in the debate, and I recognise the point that Mr Fraser made about rhetoric being one thing and actions being another. I know that businesses are watching carefully to see what actions the Government takes. We have very close engagement. Obviously, members will appreciate the limitations that are placed on the Government during the pre-election period, but we want to build on the work that has been done through the new deal for business and the benefits of close collaboration in that process.
Mr Fraser touched on the issue of regulation, which I know is of particular concern to him as well as to a number of sectors. He gave a number of examples. We are working very closely with industry through the work on the regulation improvement advisory group and the regulatory review group, and looking at how we can enhance the business and regulatory impact assessment process, particularly to take into consideration the point about cumulative impact.
I welcome what the minister has to say, but will he say something about the issue of planning, which Mr Ewing and I raised? Being able to remove some of the blockages in the planning system is absolutely crucial to unlocking our economic potential.
Mr Fraser has anticipated the next matter that I am about to turn to.
One thing that Mr Fraser said that I was heartened by—I am sure that he will correct me if I misunderstood him—was that it is not policy or law that is the issue; it is a question of processing and time. That is very important. I am conscious, particularly as a former planning minister, of the significant importance of planning for our economy. Indeed, the regulation of the use of land can sometimes be overlooked as one of the most powerful economic tools that we have under the devolution settlement.
It is important to remember that, in its infancy, the planning system was born out of concerns about public health. From history, we know the consequences of unplanned settlements, such as the squalor that characterised Victorian and early Edwardian towns and cities. We also know the consequences of poor planning decisions. We recognise the good intent of post-war redevelopment but, ultimately, some of the ways in which the housing crisis at the end of the second world war were addressed created more problems than they solved.
Good planning and good policy are important, but I agree that, for certainty and to attract investment, it is of fundamental importance that we have an efficient planning system. We face challenges in that regard. We are all aware of the challenges around the recruitment and retention of planners in local government. That is why the Government has been taking forward work on how we can attract more people into the planning profession. I know that my colleague Ivan McKee, who is the minister responsible for planning, is leading on that. We are also considering ways in which we can use the central resource of Government to support expeditious decision making in the planning system.
The minister has highlighted why the planning system was introduced. There were important reasons for that, but those reasons were very much domestic ones. The reality is that some of the challenges that we now face are international and global pressures, and it is taking us seven, eight or nine years to get planning consent through for large offshore wind projects, whereas, in other countries such as Norway, the process takes two to three years. What did the minister make of Fergus Ewing’s suggestion about how we could ensure that timely decisions are made? What does he think about international benchmarking of such decisions?
In the international competition for investment, it is of fundamental importance that we are able to understand how we compare internationally. On policy, I might be paraphrasing somewhat, but industry commented that national planning framework 4 was one of the most supportive planning regimes for renewables anywhere in Europe. I take the point that policy is one thing, but the capacity for decision making is another.
Taxation—in particular, the tax differential that exists on income tax between Scotland and the rest of the United Kingdom—has been another feature of the debate. I am not going to rehearse the arguments that we have had many times before and which, I am sure, we will have again, but I note that the decisions that we have taken in Scotland mean that we have an additional £1.5 billion of revenue available for public services, which is helping to support investment in our health service and in policies such as the Scottish child payment, which is part of a suite of measures that is helping to keep an estimated 100,000 children out of poverty.
Tackling child poverty—indeed, eradicating child poverty—is, of course, a moral imperative and a target that we have a statutory obligation to meet. However, it also represents an investment in the labour market of the future. We should recognise that the eradication of child poverty is a significant economic investment in our people and in the future of our country.
In his intervention on Daniel Johnson, Fergus Ewing touched on the oil and gas sector. The key issue of a just transition is of fundamental importance to us all. I say that as the constituency MSP for Linwood. I am acutely aware of the consequences of an unjust transition, when deindustrialisation is implemented without a proper plan for what comes next, and of the catastrophic legacy that that can leave. Therefore, it is imperative that, in ensuring that we deliver a just transition, we do so in a way that takes people with us.
Does the minister agree that the facts show that major oil and gas companies and the private equity funds that fund them—companies such as BP, Shell and Equinor—are among the leading investors in the world in hydrogen and in carbon capture, transportation and storage, and that their commitment, investment and skills are simply a sine qua non in making a success of a home-grown energy transition?
Yes, I do. It is imperative that we harness those skills. I think that we are all acutely aware that the capital is not available in the public sector—it is certainly not available in the devolved settlement—to enable that need for capital funding to be met by the taxpayer alone. I encourage any incoming Labour Administration to be more ambitious in its funding, but even if that is the case, we will still require significant amounts of capital investment.
I turn to Maggie Chapman’s contribution, which I thought was incredibly thoughtful and considered. She posed some challenges that have been picked up by other members and argued that, although growth is a necessity, it is not sufficient, and that we must take into account what the purpose of that growth is. What ends are we trying to achieve?
That is very much at the centre of our thinking on economics—the fundamental question of how we ensure that our economy delivers wellbeing for people across Scotland. I am conscious that some critics may wish to characterise wellbeing as a nebulous notion, but it is no more nebulous than the obsessions with utility and rational actors performing with perfect information.
The question of how we innovate in our economic thinking is an international concern at the moment. We need to think about GDP-plus and ensure that, rather than having a model in which we allow the negative externalities to mount up and then address them through redistribution, we seek to address those negative externalities at source by, for example, embedding fair work and sustainability in absolutely everything that we do.
I am conscious that my time is rapidly drawing to a close. I will pick up on one or two final points.
Clare Adamson highlighted the importance of the fourth industrial revolution that we are currently undergoing and, indeed, the vital importance of the gaming sector in Scotland, which we can be rightfully proud of. I remind her that the Scottish Government is collaborating with industry stakeholders to create a national action plan for games.
I again thank members for their contributions this afternoon, and I encourage them to support the Government’s motion.
That concludes the debate on Scottish Government priorities: growing the economy.
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Business Motion