Trade and Investment in Scotland

David Mundell Excerpts

Tuesday 24th June 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I know from your frequent appearances at Scottish questions that you take a keen interest in Scotland. I congratulate the hon. Member for Glasgow North East (Mr Bain) on securing the debate, on an important subject. The Government’s policy on trade and investment is a key building block of our growth strategy, and that holds as true for Scotland as it does for the whole UK. I noted the hon. Gentleman’s comments on access to finance and will convey them to my colleagues in the Department for Business, Innovation and Skills and the Treasury. I share his concerns about what a yes vote would mean for our membership of the EU and will touch on that later.

When it comes to international trade and investment, as part of the United Kingdom Scottish businesses currently enjoy the best of both worlds—the local expertise of the Scottish Government’s trade and investment agency Scottish Development International, plus the international reach and reputation of the UK and UK Trade & Investment. In Scotland, UKTI works closely with Scottish Development International, which delivers trade services on the ground to local Scottish businesses and organisations. Scottish companies have access to both UKTI services and those provided by SDI. As part of our commitment to ensure that that close working relationship continues to deliver the best for Scottish exporters, in autumn 2012 the then Secretary of State for Scotland asked Brian Wilson, the former Scotland Office Minister, to conduct an independent review of support for Scottish exporting. His report was published last month.

The Wilson report identified many of the positives for business that come from Scotland’s being part of the UK, including the value that Scottish businesses place on the work of SDI and UKTI as a whole. The report suggests, however, that all agencies offering support to exporters need to work together better to deliver a seamless service to businesses, if they are to maximise success. The Government will study the recommendations to help us consider how best to do that. That is part of the UK Government’s continuous work to get the best from the services that they provide to business.

Of course, within the UK we currently benefit from a fully integrated open market. As the Wilson report says,

“it is critical to Scotland’s exporters—including those who currently sell to the rest of the United Kingdom—that their interests, such as having a fully integrated regulatory system and being border-free, are at the forefront of that debate.”

The UK Government have this week delivered to every household in Scotland a booklet entitled, “What staying in the United Kingdom means for Scotland”. There are sections headed, “By staying in the United Kingdom, Scotland’s public services are more affordable” and “By staying in the United Kingdom, your money is safe and goes further.” In the section entitled, “By staying in the United Kingdom, Scotland has a strong voice in the world”, we summarise something highlighted in the Wilson report:

“Companies based in Scotland have access to UKTI’s network of more than 1,200 staff”—

in 169 offices—

“in over 100 overseas markets working to support UK businesses. This is part of the UK’s wider diplomatic and consular network of over 220 locations, which also is able to help UK businesses, including those from Scotland”.

The Scottish Government propose a much smaller network, a third of the size that the UK currently has. That would be a major decrease in the presence and impact overseas that Scotland exerts as part of the UK. Yet they suggest that independence will be good for Scotland’s voice in the world. In their passion for independence, SNP leaders will say anything to make it sound easy, but as I am sure the Scottish people know, if it sounds too good to be true, it usually turns out to be so.

Last year, UKTI helped almost 2,000 firms in Scotland to export. Let us take one example. Exports are vital to the success of Scotland’s impressive food and drink sector, which the hon. Gentleman rightly highlighted. Cutting overseas support on this great scale would be a backward step for that industry. Together we can sell our products and services to the world more effectively against international competition. UKTI also works closely with UK Export Finance, which makes doing business overseas both more accessible and safer for Scottish firms by offering trade finance and insurance in case an overseas partner defaults. The Scottish Government have no plans to match that service, despite the fact that it can help to reduce the risk for Scottish firms as they do business overseas by spreading the risk across the broad shoulders of the United Kingdom.

On inward investment, UKTI promotes the whole of the UK overseas to potential foreign investors. That is another example of Scotland getting the best of both worlds, because, in addition, the Scottish Government and SDI promote the individual benefits of Scotland. UKTI helped to land three quarters of the inward investment projects that generated 13,500 jobs in Scotland last year. Our GREAT campaign has contributed to that, promoting businesses, tourism and education in Scotland, Wales, England and Northern Ireland. We are looking to make that work even more successful by making the most of the international focus that will be on the hon. Gentleman’s city for the Commonwealth games this summer.

The UK Government are working both with the Scottish Government on a joint international business conference to be held during the games period and through the British business house, to be based in Glasgow city chambers. As the hon. Gentleman knows, that is a very impressive venue, and we are most grateful to the leader and members of Glasgow city council for their support of that venture. UKTI will be using those events to promote and support British businesses, both in Scotland and across the whole UK.

Looking at trade policy more widely, in the spirit of Adam Smith, we can use our influence to push for free trade in the wider world. I noted carefully the hon. Gentleman’s comments about the WTO. I did not know about the minimum period that it had taken a new member to enter that organisation and I am very glad that he got that on the record, because, as he knows, those of us taking part in debates in Scotland about separation are often told that everything will happen seamlessly and automatically. To have a tangible example is most helpful.

The UK is using its global reach to lower market barriers and promote Scottish produce overseas. Whisky is a prime example. The UK is working to open markets and reduce tariffs on Scotch all around the world. Last year, we worked with the whisky industry to bring down barriers in 12 countries. As the chief executive of the Scotch Whisky Association said in its annual review,

“we rely on effective support from government in our overseas markets...The Scottish Government White Paper envisages a network of 70 to 90 overseas missions, but we export to around 200 markets. A diplomatic network with the necessary geographic footprint, expertise, and influence...will continue to be essential.”

As the hon. Gentleman said, a particular concern of the Scotch whisky industry is the status of the agreements currently in place, particularly with countries such as India and China. What would the status of those agreements be in the hiatus period between Scottish independence and Scotland’s full membership of the EU, or would they have to be negotiated from scratch? That is of significant concern to the industry and, as with so many aspects of the independence debate, no answers are forthcoming from those who propose separation.

An independent Scottish state would face tough choices about its international priorities. It would be a lengthy, expensive process for Scotland to set up its own diplomatic, consular, trade and other international services— a support structure the UK already has in place—to work for its businesses and nationals all over the world. The argument is not whether Scotland could do so in due course; no doubt it could. The argument at the heart of our referendum campaign is whether it would be better for Scotland to do so or to continue to work in the effective way provided by the UK’s diplomatic, consular and trading arrangements.

The most recent economic analysis shows that Scotland’s economic recovery as part of the UK is going strong. The Fraser of Allander Institute notes that the Scottish economy has been growing for seven consecutive quarters and that the growth rate rose at 1.6% throughout 2013, while the Scottish ITEM Club has revised its forecast for Scottish economic growth upwards by 0.7 percentage points and now expects the Scottish economy to grow by 2.4% this year.

As the hon. Gentleman will know, in the past the Scottish Government have placed a lot of weight on exporting to China and on the views of the Chinese Government. Recently, however, they do not seem to be so much in agreement with the Chinese Government, perhaps because the Chinese Premier, when asked about the referendum on his visit to the United Kingdom, said that he wanted a “united United Kingdom”. I think that that sums it up well. He is the latest in an ever-growing list of world leaders who have made it clear how much rests on the referendum.

We want the best for Scotland. The Government and the people of England, Wales and Northern Ireland believe that Scotland is better off in the UK and that the UK is better off with Scotland in it. We do not need to go through a painful separation. As a United Kingdom, we have the best of both worlds, working together to help international trade and investment in Scotland to thrive. For many of the reasons that the hon. Gentleman has set out in this important debate, we wish and need to remain together. That is why, for reasons of international trade as well as a host of others, I will be urging my fellow Scots to say “No thanks” on 18 September.

Question put and agreed to.