Scottish Economy

Danielle Rowley 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.

[John Lamont]

The hon. Lady is speaking very well about the economic challenges that Scotland faces. Does she agree that those challenges would be turned into complete misery for the people of Scotland if the SNP had its way and ripped Scotland out of the United Kingdom?

[Danielle Rowley]

I thank the hon. Gentleman for his intervention. He will know that I would agree with that.

To focus on the construction industry, the collapse of Crummock is just one of many that we have seen recently, with many job losses, in Scotland. The closure of large employers such as Crummock will have a significant impact on local economies. A number of suppliers and service providers have spoken to me about their worries. A small electrical company and those providing cleaning services have expressed to me concerns about the future of their businesses following Crummock’s closure. Such closures reflect the failure of an economic strategy that is over-reliant on free-market forces, as well as an absence of joined-up Government policy and action, especially in public procurement.

[Ross Thomson (Aberdeen South) (Con)]

You mentioned the lack of free-market forces. Do you agree with your shadow Chancellor when he says that he wants to overthrow capitalism and bring down Britain’s system of free enterprise? That would mean fewer jobs, less money for public services and untold damage to the Scottish economy. Do you agree with his position?

--- Later in debate ---

[Danielle Rowley]

Thank you, Mrs Main. I think that overthrowing capitalism is a matter bigger than this debate. Perhaps we can debate it some other time.

Crummock’s recent accounts noted that the absence of public sector contracts was the biggest risk to the firm’s future. That includes Scottish Government contracts and local authority contracts, which have been declining as local government budgets are slashed. That suggests the need for an investigation into how public institutions can best use the resources available and better support the construction sector and the wider industry in Scotland. It also suggests that the decline in council revenue funding overseen by the Scottish Government, which has fallen in real terms by 9.6% since 2010, is having a severe impact on Scotland’s local economies.

By contrast, Scottish Labour plans to invest in Scotland’s economy. Labour policy would see £70 billion of investment in industry in Scotland. We would create a national investment bank that would see £20 billion of capital structured in Scotland for industrial strategy and investment. That is the scale of investment required to get the sector to where it needs to be. We need to be investing to the tune of billions of pounds, not just the millions of pounds put forward by the SNP.

Closures in the construction industry have further highlighted the vital need to proactively plan for the sustainable development of our industrial base. Rather than simply reacting to market failure, we must plan ahead. As part of that, the Scottish Government need to properly investigate why well-established Scottish construction companies are collapsing.

The focus of that investigation should include any changes to the way in which banks finance companies. We need to look at why it is taking so long for subcontractors to be paid by client companies, which is another huge issue raised with me. The investigation must also look at office-based workers and administration staff who are affected by construction sector closures. The construction industry already displays the largest gender pay gap. Once again, female workers are disproportionately and adversely affected by the collapse of construction companies.

Another area where there is a clear need for a coherent strategy to support our economy is our struggling high streets. We need to mitigate the effects of RBS bank closures and post office closures. The Secretary of State for Scotland needs to work with the Scottish Government to develop an appropriate industrial strategy for Scotland. Both Governments must work with our local councils and properly fund them, so that our local economies can be supported.

[Several hon. Members rose—]