Scottish Economy

Christine Jardine Excerpts

Wednesday 27th June 2018 Westminster Hall

[Danielle Rowley (Midlothian) (Lab)]

It is a pleasure to serve under your chairship, Mrs Main, for what I believe is the first time. I congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Ged Killen) on securing this very important debate.

A key component missing from the plan for the future of Scotland’s economy is an appropriate and robust industrial strategy, on which I will focus my remarks. Neither the UK Government nor the Scottish Government have a coherent strategy for industry in Scotland. As a result, Scotland’s economy is declining. Economic growth has slowed to well below its historical average. It was 0.2% during the first quarter of 2018, according to figures released today. Real wages are lower today than they were in 2010, and closures continue.

One of the areas where the lack of an industrial strategy is clearest is the construction sector. Crummock, a construction firm in my constituency of Midlothian, recently collapsed and its closure led to the direct loss of almost 300 jobs.

[Christine Jardine (Edinburgh West) (LD)]

Does the hon. Lady share my concern that the industrial strategy that Scotland requires needs a strong, well-functioning and delivering education system? Over the past decade, Scotland’s education system has been undermined to the extent that one in five children now leave school functionally illiterate.

[Danielle Rowley]

I thank the hon. Lady for her intervention. I absolutely agree that education is a fundamental part of growing industry in Scotland.

The collapse of Crummock in my constituency is just the latest example of the deep problems surrounding the financial health and stability of the Scottish construction industry.

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[Christine Jardine]

Does my hon. Friend share my disappointment, in that although the highlands has successes, they could have been so much stronger had the Highlands and Islands Enterprise agency not been so undermined since 2007 by a Scottish national Government in Holyrood determined to centralise everything, including enterprise, and to tie HIE’s hands behind its back ?

[Jamie Stone]

My hon. Friend makes a valid point. Let us not forget that the Highlands and Islands Development Board, as it then was, was introduced by Harold Wilson’s Labour Government because, as was said at the time, the highlands were on the conscience of the rest of Scotland. Anything that undermines enterprise today worries me greatly. Highlands and Islands Enterprise did some research some years ago looking at the word “highland” and what it means. It is synonymous with an unspoilt environment with a particularly special culture. In marketing terms, the word “highland” is a strong tool to use.

I turn to slightly more problematic areas. When I was growing up in the highlands, pretty much all my generation left the area to find employment. They went to England, or abroad. Some went to Canada. My father used to say to me, “When you leave school, you will go away to find work.” Then Nigg came to Easter Ross and provided vital jobs. Some years earlier, Dounreay came to Caithness and offered the same, and the historical depopulation of the highlands, whereby our brightest and best left, was halted and reversed. I brought up my family in Easter Ross. They went to school there, and that might not have happened if I had not had employment at Nigg.

How do we replace that employment? Hopefully, the price of oil will recover, and Global may yet get the contracts we crave. In the case of Dounreay, we have to work out—for not only the local economy but the Scottish economy—how we replace those jobs with high-quality jobs that build on the skills that we have in Caithness and parts of Sutherland. That is a challenge for the Government. It can be done, but it will require a leap of faith at both Scottish and UK level to say, “Yes, we will put a nuclear reactor at Dounreay,” or “Yes, we will approve putting in a big oil platform construction yard at Nigg.” That is what I am looking for on that front.

We had a debate on upland farming yesterday. We need to add value to the farm product. Again, that is linked into the image of the highlands. Upland farming in any other part of Scotland has a clean environmental image that is crucial to marketing, so thought needs to be given to that.

Our towns’ and cities’ infrastructure has been mentioned. Let us not kid ourselves: we have a crisis in many of our town centres, which are dying before our very eyes. Once thriving high streets have far too many charity shops and similar. The issue of bank closures was touched on by the hon. Member for Midlothian (Danielle Rowley). That has in no way helped what has been happening in our Scottish towns. I have made this plea before, but for the good of the economy, we should have some sort of one-stop shop, in which the Scottish clearing banks combine to provide a human face offering services at a counter. At the end of the day, a hole in the wall cannot provide the advice that people need.

The challenge for Government is to modernise banking. I have written several times to the Chancellor of the Exchequer to ask whether a scheme could be introduced to stop the rot in our town centres. In the widest context of the Scottish economy, if our communities and town centres die, it not only shows rot in the economy, but damages our social infrastructure and our cohesion. With the best will and the best of intentions, we can head off those challenges, but we must all work together to deal with them.

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[Drew Hendry]

It is such a shame: I was going to offer some unusual, uncommon praise for the hon. Member for Stirling (Stephen Kerr), with whom I commonly duel across the Chamber, where we fervently disagree. However, his speech today was unusually positive. It may have been slightly off track, as he admitted, but judging by its tone he was at least looking for some opportunity.

I would also almost make an honourable exception of the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone). Until he took an intervention, which unfortunately did not point out that Highlands and Islands Enterprise still operates exactly as it did in the past, or mention the new south of Scotland enterprise agency to go with it, he was talking about Scotland’s strengths. Otherwise, what a desperate collection of speeches talking Scotland down—

[Christine Jardine]

rose—

[Jamie Stone]

rose—

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[Drew Hendry]

I am going to make some progress.

That inward investment is happening in the face of Tory austerity, during which time the Scottish Government have focused on building an economy of the future—taking measures to unlock innovation and drive productivity. As we have heard today, productivity is the key, but what we have not heard today is how UK productivity has flatlined for the past decade. As economists will agree, productivity is not everything, but it is almost everything, to an economy.

The hon. Member for Ochil and South Perthshire (Luke Graham) talked about the city deals, but not about how, for example, when one of those deals was put together in Inverness, the Scottish Government put in £135 million and the UK Government—in a so-called partnership—put in only £52 million.

[Christine Jardine]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am not going to give way. I am going to make some progress; there is limited time in the debate.

The hon. Member for Ochil and South Perthshire also talked about the Scottish Government having a surplus this year. The Scottish Government work with a fixed budget; they cannot overrun on that. Other Members have mentioned Governments working together, but the present Tory Government cannot even work with the other parties in the Scottish Parliament on Brexit, so how can they be trusted to work with the Scottish Government? The other falsehood—I am sorry, I will take back that word. The other erroneous suggestion made was that Scotland is under a high-tax agenda. That was to forget conveniently that 70% of people in Scotland now pay less tax than they did last year.

The biggest threat to Scotland’s economy comes from the Tory Government’s reckless—[Interruption.]

[Drew Hendry]

Thank you, Mrs Main.

The biggest threat to Scotland’s economy comes from the Tory Government’s reckless obsession with a hard Brexit. That is not being challenged by the Labour Front Benchers. We have no protection from it. The Scottish Government have put forward, in “Scotland’s Place in Europe”, an option to enable Scotland to avoid the worst effects and stay in the single market and customs union. Incidentally, this week the EU chief negotiator Guy Verhofstadt said that that would be entirely acceptable. Scotland is likely to be hammered by a hard Brexit.

[Christine Jardine]

On that point—

[Drew Hendry]

No, I am going to make progress. The Fraser of Allander Institute estimates that 80,000 jobs are at risk.

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[Alison Thewliss]

Coming from the party that regularly likes to run down experts and their views, that is a bit rich. What is a shambles is the situation I see for my constituents week in, week out. Their lives are made an absolute misery by the Home Office. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) has been to Canada and has spoken about how a differentiated immigration policy can work in practice. There is no reason why Scotland cannot do that.

[Christine Jardine]

Will the hon. Lady give way?

[Alison Thewliss]

No, I am conscious of time, and I am running out of it. It is estimated that each additional EU migrant working in Scotland pays £10,400 in tax towards our NHS and other public services. The Fraser of Allander Institute at the University of Strathclyde used advanced modelling techniques to estimate the impact of reduced migration after Brexit on Scotland’s economy. In its Brexit scenario, aggregate GDP is 9% lower by 2065, all other things held constant.

If there is one thing that is certain for Scotland after Brexit, it is that all other things will not be held constant. It is estimated by the Scottish Government that leaving the single market—a position backed by both the Conservatives and Labour—will reduce output by 8.5% by 2030, which is equivalent to a loss of £2,300 a year for each person in Scotland. Of course, the UK Government do not agree with the figure, having conducted their own analysis of the impact of Brexit on Scotland’s economy. Their analysis presents an even worse scenario, with output reduced by 9% over the next 15 years.

We are at a crucial point in determining the future of our economy. We have to take into account that we are having Brexit as a result of an internal debate within the Conservative party that got out of hand. Only one party has a clear and meaningful vision for the future of Scotland’s economy: the SNP. We have looked at the issue. We have the Sustainable Growth Commission, a suite of recommendations and a robust plan for the type of Scotland we would like to see. The report calls for more investment to grow Scotland’s economy by increasing population, participation and productivity. Some of that can be done now, but some of it cannot. We require cross-party support for some of the things we want to see, whether that is devolving some of those powers to Scotland to let us get on with the job, or whether it is independence, where we could have the full suite of powers without having one hand tied behind our back. Through that, we could make changes for the benefit of all our population, not just the Tories and their cronies.