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John Grady (Glasgow East) (Lab)
I beg to move,
That this House has considered Scotland’s economy.
It is obvious that Scotland has the greatest of economic potential. It has some of the best universities in the world; a brilliant energy sector, with the skills and ingenuity to be at the forefront of the energy transition across the world; and the businesses of the future, such as the gaming industry in Dundee. People across the world love our country. Brand Scotland is a brilliant brand, and people across the world buy our products and, in the modern economy, our innovation and know-how. Most importantly, we value hard work, education and enterprise immensely, and I see that every day across my constituency of Glasgow East. In Scotland, we have always been, and will always be, aspirational. We also have the perfect raw materials for a modern economy. Despite that, Scotland’s economy has barely grown over the last 17 years and Scotland’s public finances are in a catastrophic state, with emergency in-year budget cuts imposed for the third year in a row.
Education is the foundation of a thriving economy. Scotland’s education system was the envy of the world, but that is not the case now. Our universities face significant deficits. Universities Scotland and other experts have made that clear, with real-terms resources to teach each Scottish student cut by 19%, the lowest investment in teaching across the UK and underfunding of research activity by £328 million each year.
It gets worse. The SNP Government have failed to act on the recommendations from the Withers skills review. That recommended a series of critical changes to skills training in Scotland to make our economy fit for the future and our people able to get the work of the future. When it comes to giving people the skills to get good work, delivery of real training speaks much louder than talking and endless consultation.
As for schools, the respected PISA—programme for international student assessment—reviews compare Scotland’s standards with those elsewhere in the world, and they show that Scotland’s educational attainment is falling. The SNP’s response—like a bad premier league footballer—is to blame PISA. With declining educational attainment, you might invest more in teachers—I should declare a minor interest here, because my children go to state schools in Glasgow—but that is not the case in Glasgow. The SNP council has cut 172 teaching posts from our schools this year, with the support of the Greens, due to its mismanagement of the city’s finances and the Scottish Government’s decisions to starve local authorities of much-needed resources.
That has real-world economic consequences. At least a quarter of businesses in Scotland report skills shortages and a lack of qualified candidates for roles. That means less well-paid jobs and less economic growth in Scotland, and it puts Scotland at a real disadvantage against other countries.
The last Labour Government acted on Scotland’s green energy potential. The amount of onshore wind capacity increased sevenfold, and our Government launched support for offshore wind, which was a brilliant success. I was excited to work on some of Scotland’s first offshore wind projects. Brian Wilson, the then Labour Minister and Scottish Labour MP, who put so much of this in place, left a brilliant legacy. That shows the positive power of a Labour Government and Scottish Labour MPs fighting for Scotland year in, year out and day in, day out. The last Labour Government left Scotland and Great Britain with a thriving renewable energy supply chain and industry—the ideal foundations for the road to net zero.
The Conservatives’ response, I regret to say, was stop-start support for renewables and a ban on onshore wind across England. They held one support auction that attracted no bids for offshore wind. It is negligence like that that means that people cannot afford to pay their bills, because wind and solar are now the cheapest forms of power. No one in their right mind would turn down cheap, low-cost, fixed-price energy over 15 years, but the Conservative Government seem to have done exactly that. Small wonder that our supply chain in Scotland is in turmoil.
Supply chain investors do not actually ask for much—just a fair bet, a reasonable measure of predictability, and a reasonable basis on which to conclude that there will be customers to serve over a reasonable period so that they can recoup their investment. The Conservatives failed to provide even that—the so-called party of business.
However, it is not all about the Conservatives. The Scottish planning system is slow and cumbersome. The principal legislation for large wind farms and electricity transmission projects remains sections 36 and 37 of the Electricity Act 1989. Wind farm developers have for many years complained about delays to consent for their projects. Consent for wind farms and transmission projects in Scotland is the responsibility of the Scottish Government. Delays put at risk the next wave of projects that are critical to economic growth and good jobs in Scotland and to getting energy bills down. All of this results in lost jobs and damage to supply chains. All of this means that people in Scotland are paying much more for their energy. And all of this puts Scottish business at a real disadvantage, because energy is a material part of their costs, and those costs are higher than they should be.
Turning to public finances, in September the SNP was forced to fill a £1 billion black hole in Scotland’s public finances within the year—this is not part of planned year-on-year budgeting. They did so in two ways. First, they spent much of the remaining ScotWind receipts, which are not recurring income, but one-off, windfall income that was meant to be dedicated to the energy transition, which is absolutely critical for places such as Grangemouth and Aberdeen. They also made £500 million of cuts, slashing NHS funding and raiding the transport budget, when our transport system is already incredibly unreliable. That is the result of short-term, quick-fix solutions to balance the books, with no long-term plan, no public sector pay strategy and no vision for our economy. After 17 years in power, the SNP has failed to grasp the concept of proper budgeting and long-term thinking. I would not recommend marriage with the SNP: for the honeymoon, you would be offered the Orient Express, but you would not even get the National Express—you would be hitchhiking on the M8 in the rain.
When faced with brutal budget cuts, surely the Scottish Government would make sure that they had spent the money they had, but that does not seem to be their approach. The SNP has failed to spend at least £250 million of European structural funding and may have to hand back up to £373 million of unspent funding. Let us pause for a minute. The UK was a net contributor to EU funds. This is money that Scottish businesses and workers paid into Brussels. We then got some of that back to spend in Scotland, and the SNP is sending it back again. Now, I love Europe and I am pro-European, but even I would venture to say that this is taking love for our fellow Europeans a little too far.
Since the SNP came to power in 2007, it has wasted more than £5 billion of taxpayers’ money on pet projects, failed industrial interventions, incompetence, costly agency spend in the NHS, overspend on infrastructure projects and, of course, the two famous ferries that do not sail. Scots also face much higher taxes compared with the rest of the UK. If I have understood it correctly— I must say I find it difficult to follow—the SNP’s position seems to be that the oil and gas giants who have made billions of pounds of windfall profits due to elevated oil and gas prices should pay less tax, but someone working in Midlothian on £29,000 a year should pay more tax than their counterpart in Northumberland.
The SNP seeks to blame others, including our very new Government. However, culpability for the state of the public finances sits with the SNP. Hon. Members should not take my word for it. The Scottish Government have been persistently and consistently warned that their approach to public finances is simply not sustainable. The gap in public finances has long been predicted by a wide range of organisations and fiscal experts, including the Institute for Fiscal Studies and the Scottish Fiscal Commission—an institute in Scotland similar to the Office for Budget Responsibility, although I am glad to say that Liz Truss did not get anywhere near it. The Scottish Fiscal Commission said of the Scottish budget that
“much of the pressure comes from the Scottish Government’s own decisions.”
The Auditor General has warned that the SNP’s short-term approach to budgets is not addressing unsustainable public finances in Scotland. We can have no confidence that the Scottish Government are able to address these problems. As Audit Scotland said in 2023:
“Historically there has been an implementation gap between public sector reform ambitions and the ability of the Scottish Government to deliver change”.
Translated into more normal language, that means that the Scottish Government keep saying they will do stuff, but they never get round to doing it.
The terrible state of public finances and higher income taxes in Scotland do not concern only working people: 82% of Scottish business leaders are concerned about Scotland’s tax divergence from the rest of the UK. Why? Because it makes it harder to recruit talented people to come and live in Scotland. I would venture to say that that is what we are desperate to do: have more people living, earning and contributing in Scotland.
There are wider problems.
Stephen Gethins (Arbroath and Broughty Ferry) (SNP)
The figures on migration show the opposite, and the hon. Member will join me in recognising that we welcome people from all over the world to come to Scotland. Will he also join me in recognising something that is a good for Scotland’s economy? Before the Brexit referendum, the Conservatives promised a Scottish visa—something that business and the higher education sector are crying out for. For the recent election, Labour figures promised a Scottish visa. I know that the hon. Member is not in the Government, but is that something he agrees with, along with his Scottish Labour colleagues?
John Grady
Scottish Labour and the Labour party are in favour of bringing talented people into Scotland, and the Scottish Government are welcome to work with us as we seek to ensure that that takes place. As I understand it, the Home Secretary is determined to ensure that it does, and I also understand that the Migration Advisory Committee is looking at the issue carefully. There is no doubt that we want to ensure that talented people can come and work in Scotland; the question is how to do it, and we are seeking to work with the Scottish Government productively on that.
One of the biggest challenges in the Scottish economy is productivity. One key way to get economic growth is to ensure that everyone can make more in the same time. The CBI-Fraser of Allander Scottish productivity index shows that Scotland is lagging behind the rest of the UK on 10 out of 13 productivity indicators, including business investment and business research and development spend. It is worth saying that business investment is simply not enough in the UK as it is, which is why our Government are so focused on increasing business investment and business research and development spend.
I regret to say that the problem comes down in significant part to the Scottish Government. In February 2024, Audit Scotland concluded:
“The Scottish Government’s 10-year economic strategy currently lacks collective political leadership and clear targets.”
That mismanagement has a terrible effect on Scotland’s public services. If Scotland’s economy had grown at the same sclerotic pace as the rest of the UK’s economy, it would be £8.5 billion larger. That would mean that there was more to invest in public services. As the Scottish Fiscal Commission’s work shows, Scotland would have £624 million more in tax revenues each year if we matched the UK’s abysmal performance under the Conservatives. Scotland desperately needs a Government who are pro-worker, pro-growth and pro-business, and that is what we will offer the Scottish people in 2026.
This crisis is due to the mess that the Tories and the SNP have made of our economy. Scotland’s independent Auditor General has warned that the SNP’s approach to public finances is unsustainable. Our public services face cuts because of the SNP’s buy now, pay later policies, and we have lost out on good industrial jobs, as they have gone overseas.
John Grady
I will make some progress, because I have another 26 pages to go.
The Scottish Government absolutely refuse to take responsibility for the catastrophic state of the Scottish economy and public finances. There is always some other factor, person or force majeure event to blame. I venture to say that the Scottish Government have an abundance of two things at the moment: brass necks and Teflon desks. There is no great mystery about who is responsible for the state of the Scottish economy: the SNP has been in power in Scotland for 17 years and, until July, the Conservatives had run this country for 14 years. The First Minister, the right hon. John Swinney, has been one of the central guiding minds and directing intellects behind those 17 years of incompetence; he was Finance Secretary for more than half of the SNP’s term in office and Cabinet Secretary for Education and Skills for five years.
Labour will take the steps needed to fix the Scottish economy. We are determined to bring outside investment into Scotland, which has been the focus of our international investment summit this week. We are developing a strong industrial strategy. Our new Employment Rights Bill will make work pay and protect the majority of Scotland’s business against competition from unscrupulous businesses that do not treat their employees fairly. An example of that is exploitative zero-hours contracts, which we will banish from Scotland.
GB Energy, headquartered in Aberdeen, one of Scotland’s amazing cities, will spearhead billions of pounds of investment in our energy system, including floating offshore wind, which is a brilliant opportunity for the north-east of Scotland, and hydrogen. We will work tirelessly to help our businesses export and to support our tourism sector. For the last 17 years, the Scottish Government have been selling Scotland to the Scots, but we know that Scotland is brilliant; we have to sell Scotland to the world, and that is what we will do. An early example of that is a deal with Brazil for the recognition of Scotch whisky worth up to £25 million.
I spent more than 27 years working as a lawyer with Scottish businesses before I came to this place, and I have never wavered in my belief that Scotland has the greatest economic potential. I have never wavered in my belief that Scotland’s economy can grow and deliver good jobs and the money needed to deliver the public services that Scotland deserves. That is Scottish Labour’s belief too. A growing economy gives people well-paid jobs and optimism about the future, and we are determined to deliver that. A growing economy delivers better public services, and Scotland’s public services must be improved. We are determined to rebuild our public services after years of neglect and mismanagement.
Next year is Glasgow’s 850th birthday. I am ferociously proud of Glasgow and of Scotland—including Aberdeen, where my mother came from and where I have spent so much time both on family matters and working. With investment and stable government, we can deliver the change that Scotland needs. We have got rid of one of the Governments failing Scotland; we need to get rid of the other. It is time for change in Scotland. It is time to deliver economic growth and better public services to Scotland.
Several hon. Members rose—
Peter Dowd (in the Chair)
Order. I remind Members that they should bob if they wish to be called in the debate. We have an hour and a half in total, and the Government and Opposition spokespeople will have 10 minutes each. Regrettably, given that at least 14 people have indicated that they wish to speak, the time limit on Back-Bench speeches will be two and a half minutes. I am afraid that I will be pretty strict about that in order to give everybody the opportunity to speak. Finally, I ask Members to bear in mind that if there are too many interventions, which should be brief, that limit may be reduced.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate. People may ask why I have chosen to speak on this matter, but the phrase “a rising tide lifts all ships” applies to the links between the economy of Northern Ireland and that of our Gaelic cousins across the sea in Scotland.
Let me first put on the record my sympathies to the family of Alex Salmond. This is the first Scottish debate we have had since his passing, although we expressed our condolences in the Chamber yesterday. My thoughts and prayers are with his family at this time.
The links between Northern Ireland and Scotland are not simply cultural, although those links are displayed by the numerous Scots bands at the 12 July celebrations and in our shared love of pipe band championships, our shared love of poetry and our shared language, with our Ulster Scots. It is not simply that my Scots brethren and sisters in this House will know what I mean when I call someone sleekit or a gern—by the way, just for the record, there is nobody here who is sleekit or a gern.
We are awaiting an Ofgem decision on whether Northern Ireland electricity can be sourced from Scotland. The scheme would involve building two converter stations—one in Northern Ireland and one in Scotland—and a cable of about 80 miles, depending on the final route, linking the two. That would be a physical manifestation of the trade that takes place between the two nations, Northern Ireland and Scotland, on a daily basis.
One of my staff members is allergic to a number of antibiotics. After the birth of her second child, she needed a particular antibiotic and was told there were none in Northern Ireland. A phone call from the local pharmacy, Andersons in Newtownards, to a small pharmacy in Scotland meant that she had a prescription in the morning, and by the afternoon the antibiotic was with her. The links and the pathways are there, and so too is the friendship.
This can be seen in the fight for our fishing fleet, which Members in this Chamber who long for Scottish independence and I—someone who fought for the Union—came together to win for the Scottish and Northern Ireland fishing fleets. Those are battles that we will continue to fight and win. My hon. Friend the Member for East Londonderry (Mr Gregory Campbell) recently highlighted during oral questions the need to strengthen the economic trade between Northern Ireland and Scotland, and that is certainly something that would help us all.
In conclusion, I support my Scottish brethren and sisters in their quest to secure more—more fishing rights, more manufacturing rights, and more investment in renewable energy and all the potential that is not fully realised in Scotland. I do so not to underline a theory that Scotland can stand alone, but because we are stronger when we stand together, and because the ties that bind are enhanced when we work as one body for the benefit of all in this United Kingdom of Great Britain and Northern Ireland.
Frank McNally (Coatbridge and Bellshill) (Lab)
I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate. After 14 years of economic mismanagement, my constituents deserve to see their wages go further, their public services performing better and their local communities thriving. For those aspirations to be met, we need good-quality, well-paid jobs that provide the security people need to plan for their futures and to have the economic confidence to spend in their local areas—to purchase in their local shops, and to support local cafés, restaurants and pubs, such as the Yard House in Coatbridge, which I had the privilege of visiting recently. So many of those establishments are facing real challenges.
In my community, I want to see the creation of jobs, investment in the skills that people need, and support for people who are seeking to develop those skills or to start their own businesses. I am pleased to see the work of our Labour Government. So much good work has already begun towards building a stronger, fairer economy in Scotland, which will provide the foundations to create those jobs: the Employment Rights Bill, which is set to ban exploitative zero-hours contracts, end fire and rehire and fundamentally tackle the scourge of low pay; the creation of the national wealth fund and GB Energy; and the significant event yesterday, which will deliver £63 billion of investment. I am keen to see what that means in reality for people across Coatbridge and Bellshill.
However, critical to that is improving Scotland’s economic circumstances and working to reset the relationship between Scotland’s two Governments. We must not underestimate the scale of the challenge we face. Labour market statistics published in July make for sobering reading, with unemployment rates and inactivity rates above those in the rest of the UK. Those figures show that rebuilding our economy and, more importantly, our communities, household finances and public services will not be easy or achieved overnight. That will require a level of analysis, investment and co-operation between the two Governments, which, sadly, we all know has been absent for far too long.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Glasgow East (John Grady) on a very thoughtful speech. I want to make three brief points.
When the North sea oil came, the then Labour Government saw to it that oil fabrication yards were established in different parts of Scotland, two of which in the highlands, at Kishorn and Nigg, I worked in. They were important because they helped halt and reverse highland depopulation—the curse of the highlands and islands for far too long. Welding and fabrication skills were relocated from Glasgow and the Clyde, and other parts of the UK, to those yards, and some of the greatest structures still working in the North sea today were built there, including the Ninian Central and Magnus platforms.
We have the skills there today, but they are ageing skills. The hon. Member rightly talked about the potential of renewables in the North sea, but virtually none of the nacelles and blades are made in this country. We have the fabrication and welding skills, so we should utilise them, as was done in the 1970s. If we do not do that, we are missing a trick.
My right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) is rightly an avid exponent of the potential for space launch from Shetland. I, too, am a keen exponent of the potential of Sutherland in that regard. Orbex, which is based in Morayshire, currently employs 150 and hopes to have perhaps 500 by 2030. There is enormous potential, but the UK Government must match the level of funding coming from Germany and France for the space industry. That is a challenge for the Government, and I am sure they will do their best to meet it.
Lastly, so many of our skilled female workforce are unable to deploy their skills to the full to the betterment of Scotland’s economy because the care that they need for their children is simply not there. They cannot leave their homes to go out and make money for the family and serve Scotland in the best way they can. If we can get that right, we can realise the potential of our female workers; again, we would be very foolish not to.
Thank you, Mr Dowd—I believe I have kept within the allotted time.
Graeme Downie (Dunfermline and Dollar) (Lab)
It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate.
Back in the mists of time, in 2007, a new economic strategy for Scotland was announced by a new kid on the block, a certain Mr John Swinney, a member of a Government that would rely on Conservative votes for its survival. Let us see how it went.
In 2007 John Swinney promised a “wealthier and fairer” Scotland that would
“enable businesses…to increase their wealth.”
As has already been said, Scotland’s economy has performed far behind what we would have expected and hoped. Just this week we saw the latest NatWest regional tracker published, analysing economic activity across the UK, with Scotland languishing in eighth place out of the measured regions—not a good start.
John Swinney said Scotland would be “smarter”, yet in 2017, when he was Education Secretary, the Scottish Government admitted that young adults
“are more likely to experience low paid, precarious work, and cycling between this and unemployment”.
Just this week the Scottish Funding Council said that the
“reform of the post-school…landscape has not yet been implemented”.
So much for smarter and better opportunities.
It was said that Scotland would be “healthier”. As a former board member of NHS Fife, I could waste an entire speech explaining exactly how that has not been the case: £1.7 billion of NHS funding on agency staff, £1.3 billion on delayed discharge, and a chaotic, overreaching attempt to design a national care service. That makes it three down so far for the First Minister’s 2007 plan.
It was said that Scotland would be “safer and stronger”, but we have had the shambolic implementation of Police Scotland and lower police numbers since 2008. The First Minister also said that Scotland would be “greener”. Is there any consolation at the end? Well, I guess we could give him partial credit here. The Scottish Government did become greener, albeit for only a short time, when a calamitous coalition with the Green party saw climate change targets abandoned and a disastrous attempt to implement an ill-considered and ultimately abandoned deposit return scheme. Before SNP colleagues begin drafting their press releases about more powers, I point them to the foreword to the 2007 document, which said that the strategy could be achieved
“with the levers that we have”.
Scotland deserves better, and that is what this Labour Government—who have been in power for only a little over 100 days, rather than the 17 years of the SNP—are already attempting to deliver. We have established a national wealth fund, launched the largest increase in workers’ rights, launched GB Energy, announced a record-breaking £1.5 billion of funding for clean energy, and issued an industrial strategy focused on growth sectors where we know Scotland can and should perform better in the future. That is what we should be aiming for.
Kirsty Blackman (Aberdeen North) (SNP)
I appreciate your taking the time to chair this debate so excellently, Mr Dowd. I congratulate the hon. Member for Glasgow East (John Grady) on his speech. I am glad and relieved to hear that he is not proposing to marry me. I am married already, but I appreciate that he considered it, however briefly.
The hon. Gentleman mentioned Aberdeen as one of Scotland’s great cities; Aberdeen is the greatest city. I am literally here to say that. It is the greatest city not just in Scotland, but in the entire world. If anybody would like to spend time in Scotland, I thoroughly recommend Aberdeen. Thankfully, it is where Labour have chosen to put GB Energy. That makes a huge amount of sense, because we have been at the forefront of energy generation and subsea technology for so many years. The level of skills and expertise in and around Aberdeen is unparalleled.
We are, however, at a tipping point. There is a see-saw, where we need to see growth in jobs in renewable energy. I appreciate the comments and commitments that the Government are making, but if the change is to happen, we cannot lose the skills we have in oil and gas, because those people will go abroad to use their skills. We need to have that see-saw effect. We cannot pull oil and gas down in advance of putting renewables up. I have spoken incredibly passionately and regularly on climate change and the need to meet our targets, but the UK Government must consider the gap there will be in the middle if they choose to take action too quickly without ramping up jobs in renewables.
I am pleased to hear the commitment to a Scottish visa. I am really excited that we will have our own immigration system that works for the needs of the people of Scotland, rather than the populism of how the UK Government think that things should be for people in the south of England.
Several hon. Members rose—
Peter Dowd (in the Chair)
I remind hon. Members that they need to bob. The people on my list are different from those who are bobbing, so if you do not bob, you will not get called. I appreciate that I am tending to sound like a headteacher today.
Dr Scott Arthur (Edinburgh South West) (Lab)
It is a pleasure to serve under you, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing the time for this debate, and thank him for touching on the university sector in his opening remarks. Scotland’s universities, which are among the very best on the planet, are more than just institutions of higher learning; they are vital engines driving our economy. From groundbreaking research fuelling innovation to nurturing the next generation of talent, universities play a pivotal role in shaping Scotland’s future. Anyone who doubts that only has to look at the support that Heriot-Watt University’s National Robotarium, in my constituency, gives businesses. That is just one example of how knowledge and expertise generated within our universities attracts investments, creates jobs and fosters economic growth.
I am proud that people living in Scotland have access to free university education, but I am ashamed that our universities are not fully funded to deliver that. Universities receive direct funding for each student via the Scottish Government, but that is currently around £2,000 less than universities in England get. The gap is only widening. If we are serious about growing Scotland’s economy, underfunding Scotland’s universities must end.
I am proud that our universities attract the best minds from around the world, both staff and students. This year, however, the number of visas issued to students coming from overseas to the UK overall dropped by 16% due to Conservative immigration policy. That is a failure, and is really concerning given the current state of the sector in both Scotland and England. It also only damages the multicultural vibrancy that should be at the heart of any university experience, such as the one that my son Ben gets at the University of Edinburgh.
In conclusion, Scotland’s universities are not just assets but essential catalysts for economic growth. By investing in education and research, we are investing in our nation’s future. That is why our universities must be nurtured and cherished, and their success should never be taken for granted.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
The hon. Gentleman makes an important point about Scotland’s universities and the role that they play, particularly regarding investment in our universities. So does he agree that it was a mistake by the UK Labour Government to reverse investment in the supercomputer in Edinburgh?
Dr Arthur
It was a mistake for the previous Conservative Government to commit to that project without allocating funding to it. My good colleague, the Secretary of State for Scotland, is working day in, day out to secure that funding.
If we are serious about growing Scotland’s economy, we must ensure that our universities have the funding they need, and that the voice of the UK’s universities is heard when it comes to setting immigration policy.
Gregor Poynton (Livingston) (Lab)
It is a pleasure to speak in this important debate on Scotland’s economy. Scotland once led the world in economic and industrial development. Alongside other parts of the UK, Scotland was the home of the global industrial revolution. However, Scotland’s economic present is not, I am afraid, as glorious as its past.
The economic legacy of both the SNP and Conservative Governments has been dismal. We now face a stalled economy that no longer works for working people. Wages are flatlining, there are fewer opportunities, businesses have been ignored and our global competitiveness is in decline. Both the SNP and Tory Governments have delivered little but chaos and uncertainty. Scotland’s economy has not been well served in recent years.
I am here to say, however, that Scotland’s economy can be better and can work for working people. We have incredible strengths: we are home to some of the best businesses in the world, to a talented and skilled workforce, and to leading universities at the forefront of human knowledge. We have huge potential in our natural resources as well, especially in a world where inclement weather can be seen as an economic asset.
In West Lothian, we have a fantastic set of businesses and an incredibly skilled workforce, including multi- nationals, indigenous scale-ups and early-stage start-ups. The modern West Lothian economy has been built on a diverse range of sectors: life sciences, engineering, construction, food and drink, distribution, aerospace, retail, software development and renewables. In the Livingston constituency, we are the long-term home for many of the world’s greatest companies, including Sky, Mitsubishi, Glenmorangie, Valneva and many more.
I thank the Secretary of State for Scotland, the ministerial teams, and the teams at the Department for Energy Security and Net Zero and the Department for Business and Trade for their support around the potential job losses at Mitsubishi Electric. I also thank Tom Arthur, the Scottish Government Minister for Employment and Investment, for his swift action to support the workforce there. They are skilled workers who are facing redundancy as a result of short-term economic pressures.
The decisions that lie ahead of us to grow Scotland’s economy will not always be easy, but taking the right choices to grow our economy and drive investment will create good jobs and new opportunities in every part of the country. That is the country we wish to build together.
Richard Baker (Glenrothes and Mid Fife) (Lab)
I thank my hon. Friend the Member for Glasgow East (John Grady) for securing this important debate on Scotland’s economy at such an important time. Scotland has a rich heritage in industry, commerce and innovation—a legacy on which we must build and be far more ambitious for our future.
Ten days ago I visited the InchDairnie distillery in my constituency, which is an exemplar of that approach to economic growth. The team at the distillery are leading innovation in one of our oldest but still most significant industries, developing new whiskies with grains sourced entirely locally, and they are a living-wage employer. They are investing in the future as well, by installing a new boiler system for the distillation process that is hydrogen-ready.
It is very appropriate that InchDairnie has taken that foresighted approach to its energy use when, in Buckhaven in my constituency, SGN is investing in a pilot programme for domestic hydrogen use in 300 homes in the community. That virtuous cycle continues with the hydrogen boilers used in those homes that were let by Bosch, which is a major employer in Glenrothes. The importance of those and many other renewable businesses in my constituency shows how vital the decision has been by this UK Government to deliver a step change in our ambition for Scotland and the UK to be a green energy powerhouse. That is why this Government’s decision to establish GB Energy, headquartered in Scotland in the wonderful city of Aberdeen and backed by £8 billion of investment from the windfall profits of oil and gas giants, is such a vital initiative for Scotland and for my constituency. This morning we have heard no alternative proposal to invest billions of pounds in that vital industry for the future.
To conclude, I very much agree with the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on the importance of our fabrication yards for the future of this industry. The Methil yard in my constituency that is currently going to be sold, with that process taking place under Harland and Wolff, has a fantastic role to play in the future of our renewables sector. The contribution of the 200 steelworker apprentices at that yard will be vital if we are to achieve that crucial ambition for Scotland and the UK to be a leader in green energy for the future.
Joani Reid (East Kilbride and Strathaven) (Lab)
I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this debate. I take the opportunity to highlight one of Scotland’s economic successes, which is now unfortunately a huge economic challenge—the town of East Kilbride. It was Scotland’s first new town and I would argue its most successful, but it was a success as a result of an interventionist industrial strategy. It brought together incentives and investment from the local development corporation and central Government, which resulted in inward investment and technological manufacturing that led to the Motorola plan, the Rolls-Royce plan and many more. A strategic approach by Government to locate and disperse several service jobs means that His Majesty’s Revenue and Customs and the Foreign, Commonwealth and Development Office remain in the town today.
The town was a product of strategic thinking, planning and active intervention, and it was a place of hope and aspiration where families could find not just homes but communities, jobs and opportunities. However, the contrast between what it was and what it is now is stark. Although it is still one of our most successful new towns, East Kilbride is not what it once was. It used to have almost full employment, but after the manufacturers pulled out of the town, and the industries that replaced them—such as services and retail—faced some huge challenges as a result of the financial crisis, the town has failed to keep up with the pace of change. Also, the previous Westminster Government and the Holyrood Government have utterly failed in supporting the town. The town feels neglected and let down by two Governments, and the lack of any serious investment industrial strategy has left communities like mine in East Kilbride behind.
There is of course now hope with the new Government’s focus on growth and investment, as well as the creation of GB Energy. East Kilbride can use its space and its skills that were formerly used to deliver companies such as Rolls-Royce and Motorola. With a Government serious about driving investment, boosting our economy and creating jobs, towns such as mine in East Kilbride can be rebuilt and renewed. That is the focus of what this Government are trying to do. The work of post-war Governments who transformed our public realm can once again take place. It is a testament to the mission-led Government, who have a long-term strategic vision to rebuild Britain with an industrial and economic policy that puts working people, fairness and growth at its core.
Tracy Gilbert (Edinburgh North and Leith) (Lab)
I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate. Ahead of the general election, Prosper Scotland summed up the hurdles that the Government face, in addition to the challenges of decarbonisation and an ageing population, as well as even greater technological challenges, when it said:
“What is also evident is that our economy has struggled for the decade and a half since the financial crisis in 2007-08, a weakness that ill-prepared our society for when recent crises came.”
It is fair to say that that is a damning indictment of the Tories’ and SNP’s handling of the economy.
However, I believe that the best days lie ahead for Edinburgh North and Leith and for Scotland. We have the natural assets and the key ingredients to deliver economic growth. On the green economy and the sprint to clean power, Scotland already generates significant amounts of clean power, and if the Scottish Government give consent to Berwick Bank, we could boast the largest offshore wind farm in the world within a few years. We need to secure manufacturing and supply chain jobs to support the energy transition in Scotland, at sites such as the port of Leith in my constituency.
To deliver Brand Scotland, we need to rip through the border and sell Scotland not just to ourselves, but to the rest of the world. We have salmon, shortbread, Tunnock’s teacakes, Irn-Bru, Lind & Lime gin and Johnnie Walker—a distillery that not only sells whisky to the world, but welcomes more than 1 million visitors a year to its whisky experience in my constituency. We need to market those brands to every corner of the globe.
Edinburgh is the largest tech hub but, with the scale of innovation, we are creating more tech jobs than ever that cannot be filled. That leads me nicely to the key ask of this debate: for both of Scotland’s Governments to work together. With the devolution settlement, it is not possible for the UK Government alone to deliver economic growth for Scotland. That means celebrating achievements together, but also tackling the blockers—a bureaucratic planning system, a skills shortage and women struggling to enter the workplace, to name but a few.
Finally, for workers across Scotland, a fair day’s work must mean a fair day’s pay. I am delighted that the Labour Government brought forward the new deal for workers within their first 100 days, and I look forward to the biggest increase in workers’ rights for a generation becoming a reality for workers across Edinburgh North and Leith and Scotland in the coming years.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate.
I welcome the opportunity to speak about Scotland’s economy, not least because of the huge breadth of businesses in the towns and villages across my constituency, which is situated in the heart of the central belt with road and rail links to Glasgow, Edinburgh and beyond. From small independent businesses to large multinationals, spanning manufacturing, construction, hospitality, engineering, telecommunications, biosciences and retail, they all play a vital role in contributing to our local economy and supporting local jobs. Film and TV production makes an increasingly important contribution to the economy, with the filming of “Outlander” at Blackness castle and in the Bathgate hills showcasing the beautiful and versatile backdrops that the area has to offer. More recently, Bathgate welcomed Colin Firth for the filming of “Lockerbie”.
However, there are significant challenges that threaten to undermine our economic growth and prosperity, with the Scottish Government underfunding the vital investment needed in infrastructure projects and cutting initiatives to get more people on to public transport, with a £23.7 million in-year cut to the travel budget. Although my constituency is home to many fast-growing towns and villages, investment and infrastructure are not keeping pace with development, and nowhere is that more starkly seen than Winchburgh, which continues to await a new train station that would not only support a shift to sustainable travel and ease motorway congestion into Edinburgh, but unlock further economic growth, supporting local businesses and improving links to employment opportunities.
Another significant challenge facing communities is the swingeing cuts to council budgets. West Lothian council has had to find savings of £10 million per year for the last 16 years, while Falkirk council has the second-largest budget gap in mainland Scotland as a proportion of revenue spend. This is a story of two councils—one Labour-led and one SNP-led—both facing devastating cuts that will impact people and services across my constituency.
Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)
I thank my hon. Friend the Member for Glasgow East (John Grady) for requesting this debate. He was right to call for this debate because for far too long Governments in the UK and in Scotland have failed to work together, failed to create opportunity and failed to put Scotland’s economy and people’s wellbeing before party politics.
Regions such as Ayrshire power the country’s economy through their vast coalfield site, but former coalfield sites right across the country have been left behind. If they were all to be combined, former coalfield sites in the UK would amount to the most deprived region in the country. Because of its unique history and landscape, Ayrshire has growth potential. We need to support the area by unlocking opportunities through more investment in skills infrastructure.
With Scotland at the heart of the UK Labour Government, our nation will lead the clean energy revolution. Ministers are already resetting relationships with the Scottish Government and working closely to ensure that these benefits are felt by Scots and people right across the UK. Scotland is a powerhouse of the clean energy mission, and GB Energy will drive forward investments in home-grown energy production and provide benefits to bill payers. In Ayrshire, we are keen to capture the spill-over effect from GB Energy’s being based in Scotland. GB Energy is about creating opportunity for clean economic growth, and I will work hard to ensure those opportunities also reach my constituency.
With the Government’s objective of doubling onshore wind energy by 2030, Ayr, Carrick and Cumnock hosts the largest wind farm currently under construction in the UK. The wind farm has embraced the community benefit model and will pump tens of millions into community projects over its lifetime. Growth in the clean energy economy is one aspect of the change that we need to deliver in our constituencies, but I agree with many of the points made about what this Government have already achieved in their first 100 days in office.
Susan Murray (Mid Dunbartonshire) (LD)
I thank you for chairing this debate, Mr Dowd, and I thank the hon. Member for Glasgow East (John Grady) for bringing this important topic to Westminster Hall. I thank all colleagues for their contributions—we are definitely stronger together. Building on the talent and experience in Aberdeen, by developing new industries with the support of the best universities in the world, can only help us to secure investment for the future, using Scottish talent and supporting areas of our economy such as the hospitality industry.
Scottish Government figures show that 338,000 small and medium-sized enterprises operate in Scotland. Those SMEs have created an estimated 1.2 million jobs, or 56% of private sector employment, and 42% of private sector turnover as of March 2023. Despite their economic contributions, small businesses are in decline in Scotland. Both the SNP Scottish Government and the previous Conservative UK Government have implemented policies that have resulted in high energy costs and a challenging economic environment, preventing SMEs from thriving.
The previous Conservative Government mishandled the economy and jeopardised public finances, which halted economic growth and increased the cost of our debt. Their bungled Brexit deal has harmed the economy and increased costs for businesses, with 38% of SMEs reporting that the UK’s exit from the EU has been a major obstacle to their success. Further compounding these challenges, the SNP cut more than £23 million from net zero and energy spending, breaking its promises and reducing crucial investment in renewable energy infrastructure. That decision directly impacted opportunities to lower energy costs for businesses, despite the fact that 72% of SMEs identify energy expenses as a significant obstacle to their success.
In my Mid Dunbartonshire constituency, some small businesses are facing electricity standing charges of £16 a day. The Scottish Chambers of Commerce quarterly economic indicator for Q3 2024 highlights anxieties about taxation in Labour’s autumn Budget. Pressures on cash flow and profit margins are already limiting growth and squeezing profits for businesses. Scotland, which hosts some of the largest wind farms in Europe, not only faces high energy costs for consumers, but fails to produce even a single wind turbine blade domestically. That fact is tied to the mismanagement of public contracts, including handing over £50 million to a firm that immediately collapsed, leaving no solution or recovery plan in place. Such setbacks not only undermine progress on renewable energy in Scotland, but limit the potential benefits for local businesses and communities.
Business and consumer confidence in Scotland is falling, but as a Liberal Democrat I am optimistic for Scotland’s future. The Liberal Democrats are committed to investing in innovation and skills to boost economic growth and create good jobs. We want to invest in community health services and fix the crisis in social care to get more people back into work. We want to ensure stability, certainty and confidence in public finance, while reducing the national debt as a share of GDP and maintaining essential investments such as those into our green transition. Finally, we are dedicated to repairing our fractured relationship with the European Union, restoring the benefits it once gave to Scottish businesses as well as to individuals.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
It is a pleasure to serve under your chairmanship, Mr Dowd. I am grateful to the hon. Member for Glasgow East (John Grady) for bringing forward this important debate on the state of Scotland’s economy. As he highlighted, there can be no doubt that Scotland’s economy has suffered from 17 years of SNP rule. It is impossible for me to mention all the many contributors to this morning’s debate, but I want to mention a few.
First, the hon. Member for Dunfermline and Dollar (Graeme Downie) rightly highlighted the multiple failures of the SNP over the last 17 years, not just in relation to economic policy, but in other areas too. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) talked about the importance of skills, particularly in rural areas such as his, and the same applies in my own area in the Scottish borders. Another challenge we face in the borders is access to childcare, which prevents young women from going back to work.
Jamie Stone
Does the hon. Gentleman accept my point that these skills are ageing? We still have them but, if we do not pass them on, they could vanish and it will be much harder to train a new generation of welders and fabricators.
John Lamont
I totally agree. We need to invest in the skills we have; otherwise they will be lost, particularly for more traditional industries. If the skills are lost there, they might never return.
I do not often agree with the hon. Member for Aberdeen North (Kirsty Blackman), but she highlighted an important point about the gap that is emerging, with skills in the oil and gas sector potentially being lost if the renewable sector does not accelerate more quickly. Those in the sector up in the north-east, in Aberdeen, highlighted that point repeatedly during my time as a Minister. They were concerned that there was such a stigma attached to the oil and gas sector now that new people were not moving into that area and would not then be able to move over to the renewable sector when that opportunity arose.
Graeme Downie
Does the hon. Gentleman agree that the failure of both the SNP and Conservative Governments to plan for the site at Longannet, which closed in 2016 and now lies empty, is a missed opportunity? Does he agree that all Governments in the future should be looking to work together on that, to bring thousands of jobs back to that area of west Fife?
John Lamont
I will push back slightly on the narrative that, up until the election of the new Government, the Scottish Government and the UK Government had not been working together on the project that the hon. Gentleman mentions, or on other areas. The reality is—as, again, I know from my own experience as a UK Government Minister—that there were huge amounts of co-operation between the Scottish Government and the UK Government latterly. Yes, we did not agree on the question of independence, but it is a myth to say that just because there is a new Prime Minister, a new Labour Government, all of a sudden there is a reset. I know the UK officials behind the scenes were working incredibly hard with officials in the Scottish Government to achieve the best for all of our communities; for all of us who represent Scottish constituencies. The project he highlights is an example where both Governments should be, and have been, working together to try to achieve positive outcomes.
The last Member I want to mention is the hon. Member for Edinburgh South West (Dr Arthur). I have to say I was very disappointed that he refused to oppose the new Labour Government’s decision to scrap the supercomputer project for Edinburgh University. I know it was going to be a huge boost to the university. I know that even in my own area, again in the borders, there were a number of people directly employed with that project and they were mightily disappointed when the new Government decided to rip up that deal.
John Lamont
I will make some progress, if I may, as I have taken a number of interventions.
Our workers and businesses have been poorly served by a nationalist Government who have too often been distracted from the day job and who have too often overlooked and sometimes even ignored what small businesses have said.
Let me outline how stark the situation has become. A recent survey by the Fraser of Allander Institute at the University of Strathclyde highlighted two key points. First, just 9% of Scottish firms agree that the Scottish Government understand the business environment in Scotland. Secondly, just 8% of businesses agree that the Scottish Government engage effectively with their sector. Those statistics should have been a wake-up call for the SNP to reset its relationship with the business community. It has been promising that reset for years, but it simply has not happened and the consequences are now becoming clear.
Compared with 10 years ago, the Scottish economy has also grown more slowly than the United Kingdom’s economy overall. GDP in Scotland is 8.4% larger in quarter 2 of 2024 compared with in quarter 2 of 2014, whereas UK GDP is 14.3% higher. Although the nationalists may try to claim an excuse by citing different population-based figures, the Fraser of Allander Institute have already dismantled that, too. Its most recent economic commentary found that,
“even when the differential population growth in the UK and Scotland is accounted for…growth in Scotland per person over the last 10 years has been 6% for the UK, compared to 4.3% for Scotland”.
It is crystal clear that ever since the independence referendum, Scotland has suffered from an SNP slowdown. The SNP’s damaging business policies and harmful decision to bring the Greens, who do not even believe in economic growth, into government has cost our country dearly. Scotland’s economy is crying out for something different, but it is not happening at the moment. Labour and the SNP offer only more of the same old ideas. John Swinney and Anas Sarwar favour most of the same policies. They both want higher taxes on workers. They both expect businesses to pick up the bill for a bigger state. They have the same socialist ideology that has failed Scotland for decades.
The left-wing parties in the Scottish Parliament have become disconnected from the lives of normal people. They spend too much time on divisive policies and fringe obsessions like gender reform and they do not spend enough time, energy, and resources on driving Scotland’s economy forward. Scottish Conservatives are proudly standing up against that left-wing consensus of the political establishment in Scotland. Scotland’s workers, businesses and indeed our entire economy need a different approach. They need a new way forward.
Tracy Gilbert
Does the hon. Gentleman agree with me that the new deal for working people would lift hundreds and thousands of families out of poverty, and that can only be good for Scotland?
John Lamont
I am grateful for that intervention. I did not quite catch the first point, but the previous Government had a proud record of improving the lives of people across the length and breadth of Scotland by lifting people and families—and children in particular—out of poverty. That is a record the previous Government are rightly proud of.
I wait to hear what the new Government are going to do, and what the Budget will contain. I know from businesses, many communities and residents that there is a great fear of higher tax and more money going out of people’s pockets, which will do nothing to deal with poverty in many communities the length and breadth of Scotland.
The Scottish Conservatives are determined to deliver the stronger economic growth our country desperately needs. Under our new leader, Russell Findlay, the Scottish Conservatives will put forward a positive vision for the future of our country that champions the values of mainstream Scotland—opportunity, aspiration and decency. We will present positive new policies to fire up Scotland’s economic growth, create opportunities for workers and businesses, and reward aspiration with lower taxation.
Martin McCluskey (Inverclyde and Renfrewshire West) (Lab)
It is a pleasure, Mr Dowd, to serve under your chairmanship and speak on behalf of the Government for the first time. I begin by congratulating my hon. Friend the Member for Glasgow East (John Grady) on securing this debate on Scotland’s economy and congratulating all hon. Members on their contributions.
We have heard a lot about the positives and the potential of Scotland’s economy, such as the strength of Brand Scotland and our thriving biosciences sector; we have even heard from my hon. Friend the Member for Bathgate and Linlithgow (Kirsteen Sullivan) about our thriving film and TV sector. I am sure the crowds here today are just as great as that which turned out to welcome Colin Firth to Bathgate. However, we have also heard about the problems in the Scottish economy, and it is no secret that—along with the UK economy as a whole—it is underperforming. This has been identified by many Members, including my hon. Friend the Member for Livingston (Gregor Poynton) and the hon. Member for Mid Dunbartonshire (Susan Murray).
Fourteen years of mismanagement by the previous Government has resulted in persistently low levels of investment, poor productivity growth and rising inequality. That has led to this Government facing the worst economic inheritance since the second world war—a £22 billion black hole in the public finances. The Treasury reserves were spent three times over in three months, which is absolutely astonishing, and financial commitments were made by the previous Government that they knew they could not keep. That inheritance means tough decisions for the Government, but it is better to be honest and up front with people about the choices that we face. That is why my right hon. Friend the Chancellor will set out in her budget how we will fix the foundations of our economy so that we can tackle poverty, rebuild our public services and begin a decade of national renewal.
The economic inheritance we face is not just fiscal. It is also structural. My right hon. and learned Friend the Prime Minister and my right hon. Friend the Chancellor have made clear that the No. 1 priority of this Government is growth. To achieve that, the foundations of Scotland’s industrial economy need to change significantly. That is why we published our industrial strategy Green Paper yesterday. We heard from my hon. Friend the Member for East Kilbride and Strathaven (Joani Reid) about the importance of industrial strategy, and how it is not just dry, but something that really makes an impact on people’s lives.
Jim Shannon
I wish the hon. Member well, and hope that things go according to his plans and all our plans. In my contribution, I mentioned the interconnector between Scotland and Northern Ireland as a potential way to reduce energy and help us to grow together economically. I know he may not be able to respond to that point now, but perhaps he could come back to me at a later date. If so, I thank him.
Martin McCluskey
I thank the hon Member for his intervention, and for the points he made about the importance of working together—not just between the UK and Scottish Governments, but across these islands. I will ensure that officials write to him on that point.
Our industrial strategy calls time on short-term economic policy making, and establishes a UK industrial council on a statutory footing, to provide expert advice and long-term thinking.
Dr Jeevun Sandher (Loughborough) (Lab)
Can my hon. Friend confirm that his industrial strategy—and indeed GB Energy and our clean energy revolution—are not merely theoretical? They are working practically in the United States, the fastest growing economy in the G7, and are creating jobs in those former industrial areas. Indeed, this Labour Government will help to bring that about in Scotland, creating good jobs in those areas that need it most.
Martin McCluskey
I welcome that comment from my hon. Friend, and also congratulate him on his election to the Treasury Committee, where I am sure he will make a great contribution. He has set out exactly what the plans the Government have set out will do for Scotland, and the aspirations and ambition of those plans for our country.
Returning to the UK industrial strategy council, this body will work with specialist sectoral taskforces, and bring together the expertise of businesses, academics, and trade unions to help drive economic growth in all parts of our country. That will allow us to build on Scotland’s strengths and huge potential in key sectors, including advanced manufacturing, life sciences, financial services, clean energy, defence, and creative industries—all areas where Scotland is already beginning to thrive. Together with the establishment of GB Energy in Aberdeen, which the hon. Member for Aberdeen North (Kirsty Blackman) highlighted in her speech, and the creation of a national wealth fund, we will bring investment, jobs, and growth to Scotland.
Graeme Downie
Does the Minister agree that a key area for investment from the national wealth fund should be Scotland’s port infrastructure in order to ensure we are making the best economic use of our coastline, such as at places like Rosyth in my constituency?
Martin McCluskey
Ports are essential to the future of our country, and coming from a constituency with an important and thriving port, I absolutely agree with my hon. Friend.
We are taking tough decisions, but change is under way and investment is now flowing into the country. Just yesterday, as many hon. Members have mentioned, the international investment summit brought the chief executives of hundreds of the world’s biggest companies to the United Kingdom. They announced £63 billion of investment and 38,000 jobs for the UK. The companies included Scottish Power and its parent company Iberdrola, which doubled their investment in the UK from £12 billion to £24 billion, and Greenvolt, which announced a £2.5 billion investment in Scotland. That will benefit the whole country.
Jamie Stone
I congratulate the Minister on his appointment; I am sure he will do a very good job indeed. I may be a Liberal Democrat, but I recognise that one of the greatest achievements for the highlands of the 1960s Labour Government was the establishment of the Highlands and Islands development board, which did a great deal to reverse depopulation. Today, under the auspices of the Scottish Government, Highlands and Islands Enterprise—its successor body—is a shadow of its ancestor. I wonder whether the Minister would agree to talk to the Scotland Secretary to see how, working with the Scottish Government, we can revitalise HIE.
Martin McCluskey
I understand the importance of the Highlands and Islands development board. My partner’s grandfather arrived in Scotland only because he was the chief engineer in the Cruachan power station. That part of my family is here because of the work of the Highlands and Islands development board, so I make the commitment to the hon. Member to speak to the Secretary of State about those issues.
Delivering significant change to Scotland’s economy means working in partnership across areas of policy, not just industrial policy and employment rights but planning, housing, skills and access to health services. Many of these areas are devolved, and we are committed to resetting the relationship between the UK and Scottish Governments. That does not mean that we will never disagree, but where we have shared goals, we should be able to work together. The Secretary of State for Scotland has already begun working with the Energy Secretary, Gillian Martin, and Deputy First Minister Kate Forbes on a range of issues since coming to office.
One of those issues, which was mentioned by both my hon. Friends the Members for Glasgow East and for Edinburgh South West (Dr Arthur), was universities. I would agree with them that universities are a jewel in the crown of the Scottish economy. They drive innovation, create jobs and new businesses and deliver world-leading research and education. I know that the universities sector will be crucial to the future of the Scottish economy.
John Cooper (Dumfries and Galloway) (Con)
I have learned a lot today about this great new relationship, and I wish the hon. Gentleman all the best with that, but the universities sector is a very difficult area. In Scotland a cap has effectively been placed on the number of Scottish pupils able to leave school and go to university, while foreign students are incentivised. The universities sector in Scotland has a fine past, but does it have a great future?
Martin McCluskey
I would say that it does have a great future. I am not dismissing the fact that there are issues within the Scottish universities sector, which many of my hon. Friends laid out during the debate, but there is huge potential for the future of the sector and it is for not only the Scottish Government but the UK Government to make sure that it is realised. In terms of our relationship and working together, what we saw from the previous Government was a stand-off, and I do not think that works to the benefit of the people of Scotland. What the majority of Scots want to see are their two Governments working together to deliver better results.
Frank McNally
I welcome the Minister to his place. We have been talking about universities, but there is also a significant challenge in Scotland with the decimation of further education, particularly colleges. This is creating real challenges for people who are looking to upskill and reskill, and we must ensure that the people who are best placed to secure the jobs of the future are able to do so. Does the Minister agree that much more needs to be done by the Scottish Government to ensure that further education in Scotland gets the support that it deserves?
Martin McCluskey
I agree. I know from experience in my own constituency with James Watt college in Greenock—now part of West College Scotland—that there have been issues with investment in colleges. That largely impacts on opportunities for working-class young people, and for people who perhaps did not get the results that they wanted at school and need a second chance. The college sector always provided that for people, but at the moment it is struggling to do so in many places across Scotland.
Gregor Poynton
My hon. Friend talked the importance of the university sector to Scotland, and that is clear. I have two points on that. First, yesterday’s industrial strategy is welcome. This is about how we support scale-ups and start-ups coming out of our Scottish universities. There are already great examples in my constituency of Livingston, but also across Scotland. However, more work needs to be done to help them and to ensure that the great thinking that is going on in universities can come to be more commercial.
Secondly, I have been told by many people that there is not the same access to finance, and oftentimes these companies are either bought up or have to look to move to America. The work that the UK Government are doing to create a stable environment and to involve the City of London, as part of the UK, to try to unlock some of the £3 trillion in pension funds to invest in these scale-ups is incredibly important. It is important not just that we start them in Scotland, but that we can grow them to a significant scale.
Martin McCluskey
I thank my hon. Friend for welcoming the launch of the industrial strategy yesterday. It is important that we ensure that any opportunities from the university sector are spread right across the country, and that is what my right hon. Friend the Chancellor of the Exchequer is trying to do with the national wealth fund. Our university sector in Scotland is also trying to make sure that the opportunities from universities and those start-ups are pushed out beyond universities’ borders. My hon. Friend’s point about access to finance is important. The Government are trying to provide a stable economic environment, which we did not have under the previous Government. That gives investors confidence, as we saw yesterday when we doubled the amount that was invested in the UK at the global conference last year. That is testament to the confidence that business now has in the UK because of our stable political environment.
Douglas McAllister (West Dunbartonshire) (Lab)
Does my hon. Friend agree that the recently released Scottish Government industry statistics reveal worrying trends in Scotland’s food and drink sector, with output in the food and drink sector falling, employment falling and businesses failing? Those figures are absolutely scandalous. Both the SNP and the Tory Government failed to support Scotland’s world-class food and drink industry adequately. In my constituency of West Dunbartonshire, the whisky industry is a significant employer, so will food and drink be a key growth industry identified in our Government’s blueprint for growth, thereby maximising Brand Scotland and job opportunities in West Dunbartonshire?
Martin McCluskey
The food and drink sector will play a crucial role in the future of the Scottish economy. I am referring not just to the whisky sector, which my hon. Friend has mentioned and which I know he plays a key role in championing through the Scotch whisky all-party parliamentary group, but to other sectors, such as our great salmon sector. There are a lot of other opportunities in food, drink and tourism whereby the Scottish economy can thrive in years to come.
One area of Scotland’s economy on which the Governments have worked closely together in recent months has been the response to the commercial decision of Petroineos to end oil refining at Grangemouth. The oil refining operation has played an important role in Grangemouth’s economy for more than 100 years. However, as a clear sign of how we can work together for the Scottish people, the UK and Scottish Governments have announced a joint £100 million package to help to secure Grangemouth’s industrial future and protect its skilled workforce. Scotland has a proud industrial past, as we have heard from many hon. Members this morning, and, as part of the transition to net zero, it will have a bright industrial future, and one that will guarantee jobs and wealth for families for generations to come.
Kirsty Blackman
In relation to that transition, while the hon. Gentleman is in the mood for making commitments, will he commit to speaking to the Chancellor about the Scottish carbon capture cluster and the fact that it is looking for an outward show of confidence from the Government? I am not asking him to push for money today, but positivity about progressing the Scottish cluster for carbon capture would be incredibly helpful for the industry.
Martin McCluskey
We saw last week the Government’s commitment to carbon capture and storage. I am happy to take those points away and ensure that they are communicated to the Secretary of State for Scotland and the Chancellor.
The Government’s focus on growth is in the service of our mission to tackle poverty, remove barriers to opportunity and put the country back in the service of working people. It is appalling that under the previous Government, child poverty in the UK went up by 700,000 since 2010. Today, more than one in five Scots and one in four children are trapped in poverty, trying to get by on less than they need.
The child poverty taskforce, which this Government have established, is developing a strategy to reduce child poverty that will be published in the spring of next year. The previous UK Labour Government oversaw huge falls in poverty levels across the UK. It is what Labour Governments do—it is in our DNA—and we will do it again.
The vital work of the taskforce comes alongside the Government’s commitment to make work pay. Last week, we published the Employment Rights Bill, the biggest upgrade of workers’ rights in a generation. I welcome the comments from a number of hon. Members, including my hon. Friends the Members for Coatbridge and Bellshill (Frank McNally) and for Edinburgh North and Leith (Tracy Gilbert), supporting this agenda and how it will impact on their constituents.
This Government are calling time on unfair employment practices by ending exploitative zero hours contracts, introducing day-one employment rights and establishing a new fair work agency to enforce workers’ rights. That is all part of our plan to deliver economic growth for workers, businesses and local communities, right across the UK. As we have heard from others this morning, this Labour Government are pro-worker and pro-business, so these reforms will not just help Scottish workers but boost Scottish businesses of all sizes. We are going to tackle head-on the low pay, poor working conditions and job insecurity that have been holding our country back. Our plan will grow our economy, tackle in-work poverty and raise living standards for all.
We recognise that rebuilding our public services and economy will require investment, and the Chancellor has been clear that there will be no return to austerity. I want to emphasise that point: she has said numerous times that there will be no return to austerity. Although funding decisions and details will be presented at the upcoming Budget, the UK Government are committed to retaining the Barnett formula and funding arrangements agreed with the Scottish Government in the fiscal framework.
The framework provides the Scottish Government with greater certainty and flexibility to manage devolved public services, as well as higher per person spending. That does not remove the need for both Governments to take tough decisions to look after the public finances and stabilise the Scottish economy.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
One of the challenges we have had in the Scottish economy in recent years is a gap between rhetoric and reality. For example, in the creative sector, which is based heavily in my constituency, the Scottish Government produced 10 strategies in nine months. That means that the creative industries just serve as a backdrop for photo opportunities for Scottish Government Ministers, who do not engage with the deep challenges and opportunities that the sector faces. Does my hon. Friend agree that the Government are finally making the correct response, which is to be honest with the public about the financial challenges that we face, and then to deal with the foundational difficulties in order to grow from there?
Martin McCluskey
I thank my hon. Friend for that intervention. Since he arrived here in July, he has been a significant champion of the creative industries and the arts. The example he gave of 10 strategies in nine months illustrates the kind of short-term uncertainty that has reduced investment in our economy. People did not get the certainty they required during the previous Conservative and SNP Holyrood Governments.
It is clear that Scotland’s economy faces challenges, but it is also brimming with potential. We are up to tackling those challenges and unleashing that potential. In our first 100 days, we have made significant progress in resetting the relationship with the Scottish Government. We have listened to the views of businesses and communities across the country, and we have set out a clear path to create the change that we were elected to deliver.
John Grady
Thank you, Mr Dowd, and I thank every Member for their wonderful contributions to the discussion. The hon. Member for Strangford (Jim Shannon) mentioned the interconnector between Scotland and Northern Ireland; I worked on the first interconnector between Scotland and Northern Ireland as a baby lawyer. It was a great passion of Mo Mowlam. The Labour party has always backed great infrastructure projects that deliver growth for all in our family of nations. The interconnector delivered a secure supply of energy to Northern Ireland and a great outlet for Northern Irish renewables. This time around, the Labour party is absolutely committed to resolving the blockers on electricity transmission development, so that we can get energy projects up and running quicker. We need clean energy supplying British people and businesses with lower-cost energy.
Inflation is the enemy of small businesses. The hon. Member for Mid Dunbartonshire (Susan Murray) was quite right to focus on small businesses, which are a real motor for growth for a modern economy. We all recall the terrible 40 or 50 days of a Liz Truss and Kwasi Kwarteng Government, which brought immense damage not just to small businesses in Scotland, but to social landlords trying to plan their investments, facing unpredictable interest rates and out-of-control inflation.
My hon. Friend the Member for East Kilbride and Strathaven (Joani Reid) focused rightly on the implications of poor economic policy and fiscal management for our wonderful towns and cities in Scotland. The mismanagement of the economy has terrible implications for people trying to educate their children and get treated, with more than 40% of certain operations—such as hip operations—in Scotland carried out privately because the NHS does not have capacity. Economic growth is critical.
My hon. Friend the Member for Livingston (Gregor Poynton) mentioned the importance of Governments working together when we face industrial challenges. I applaud the Secretary of State’s work in trying to create a productive, closer working relationship with the Scottish Government. We will always put country above party. My hon. Friend the Member for Edinburgh North and Leith (Tracy Gilbert), representing a wonderful part of the world, mentioned employment rights. We are focused on giving people a fair employment.
The hon. Member for Aberdeen North (Kirsty Blackman) mentioned how wonderful Aberdeen is. It is a wonderful city, as my mother used to tell me every day of the week. We take the energy transition very seriously, which is one of the reasons why we are so disappointed that the SNP are spending the one-off ScotWind receipt not on energy transition, but on plugging a black hole created by their economic mismanagement. I close my remarks by thanking you, Mr Dowd, for your wonderful chairing of the debate.
Question put and agreed to.
Resolved,
That this House has considered Scotland’s economy.