Scottish Economy

Drew Hendry Excerpts

Wednesday 27th June 2018 Westminster Hall

[Luke Graham]

Not just now. According to figures provided by the House of Commons Library, the unemployment rate for my constituency of Ochil and South Perthshire is 0.5% higher than the UK unemployment rate. Meanwhile, the Scottish Fiscal Commission’s predicted growth rate for Scotland is 0.7% in 2018, 0.8% in 2019 and 0.9% thereafter until 2022. In comparison, the Office for Budget Responsibility forecast the UK growth rate to be 1.5% this year, 1.3% next year and to rise thereafter to 1.5% over the same period.

The more observant among us will have noticed that for every single one of those economic statistics, Scotland lags behind the UK in terms of economic performance. However, it is not just in GDP, employment and unemployment rates or forecast growth that that is the case. Scotland’s median weekly earnings are also lower than those of the UK. When it comes to small business confidence, Scotland lags about 23 percentage points behind the UK. Meanwhile, Scotland has higher public sector expenditure per head yet lower public sector revenue per head than the UK. Put simply, Scottish taxpayers are not getting value for money from their public sector.

Under the guidance of the SNP, the Scottish economy has grown at half the UK rate. It has failed to meet its targets to match the UK GDP growth rate and succeeded only in overseeing the slowest growth rate of any country in the EU.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Does the hon. Gentleman agree with his right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy that the responsibility for the growth of all the nations of the UK sits firmly with him?

[Luke Graham]

That is why we are having a debate in this place—because growth is the responsibility of the United Kingdom. The problem is the claims of the SNP Administration that they champion economic growth in Scotland. Scottish Enterprise is devolved. Much of the tourism is devolved. The scream for powers has meant that so many levers have been denied to this place and put into Edinburgh. Although I agree that accountability —[Interruption.] If you want to make an intervention, stand up and make one, madam.

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[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate, and share his disappointment that neither the Secretary of State for Scotland nor any of his team turned out for the debate.

I should like to give some uncommon—

[Stephen Kerr]

Will the hon. Gentleman give way?

[Drew Hendry]

I was just about to give the hon. Gentleman some praise—but carry on.

[Stephen Kerr]

It is a well-known convention in the House that no Secretary of State or Cabinet Minister responds to debates in Westminster Hall, and the point that the hon. Gentleman made was not entirely fair.

[Drew Hendry]

If the hon. Gentleman had been listening to what I said, he would know I said “or any of his team”. [Interruption.]

[Mrs Anne Main (in the Chair)]

Order.

[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—

[Drew Hendry]

I will not give way just now. We are short of time.

Scotland has strong economic fundamentals. We heard nothing about its vast natural resources, the innovation there, or the talent of our people. Scotland has the most inward investment of anywhere in the UK outside London.

[Luke Graham]

Will the hon. Gentleman give way?

[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.]

[Mrs Anne Main (in the Chair)]

Order. The hon. Gentleman’s comments will be heard. Hon. Members will please refrain from barracking.

[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.

[Paul Masterton]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to carry on, because I have only a minute.

The UK Government are paying no real attention to stimulating the oil and gas industry. Fortunately there is now an upturn in oil and gas prices, and we need investment from the UK Government.

I have much more to say, and as we are the third party in Parliament I should have hoped for more time to say it, but unfortunately that is not the case—

[Mrs Anne Main (in the Chair)]

Order. The hon. Gentleman is not under a time limit. I was just indicating that other colleagues wish to speak.

[Drew Hendry]

In that case I will keep going; thank you very much for allowing me to do that.

[Jamie Stone]

I would not want the hon. Gentleman to misunderstand me. I do not decry the efforts being made by Highlands and Islands Enterprise. However, anyone who thinks that despite its best efforts it is more than a poor shadow of what went before, in the Highlands and Islands Development Board, is in dreamland. Surely hon. Members agree with me about that.

[Drew Hendry]

I disagree, and so do many businesses that I interact with in the highlands on a daily basis.

Production efficiency in the oil sector has risen for the fifth consecutive year, reaching 74% in 2017, demonstrating sustained efficiency improvements and maximising the economic recovery. Oil & Gas UK’s “Business Outlook for 2018” shows growth in investment and a further 5% increase in the forecast production for that year. Recent industry announcements about BP’s successful working discoveries in the Capercaillie and Achmelvich wells and Shell’s redevelopment of the Penguins field demonstrate the investment potential that the UK fields still hold. Over the next decade our oil and gas sector can capitalise on the decommissioning market, which is forecast to reach £17 billion; but that is only if the right decisions on investment are made.

[John Lamont]

The hon. Gentleman points out the challenges for the oil and gas sector, but on Monday when the Scottish Affairs Committee was taking evidence on the sector in Aberdeen, we heard people saying they wanted fracking to be expanded in Scotland. Does he support the industry in making that call?

[Drew Hendry]

I certainly do not support fracking. I do not believe that a country as rich in natural resources and renewable energy as we are—and indeed one with the oil and gas industry that we have at the moment—needs to go for fracking. I absolutely support the ban on fracking in Scotland. [Hon. Members: “There is no ban!”] There is a ban in Scotland. As to an effective ban, a court ruled in the past week that that is the case: fracking cannot go ahead in Scotland under the current situation.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Unfortunately I am a bit late to the debate, but I have been paying attention. I am amazed by the efforts of Conservative Members, in relation to thinking of Scotland as a country. They are the people who want to see Scotland as a region. [Interruption.] They should remember that the Norwegians have an oil fund, whereas they have squandered Scotland’s oil.

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[Drew Hendry]

Thank you, Mrs Main.

The other issue I wanted to touch on was the opportunity for carbon capture and storage development in Scotland. There is a measure of co-operation between the UK and Scottish Governments, but there is nowhere near the required level of ambition from the UK Government. The rug was pulled out from under Peterhead, where £1 billion of investment was supposed to be put into the carbon capture and storage operation. At the time, that was judged to be just about enough. Now, the UK Government’s overall investment in carbon capture and storage is set to be about £100 million, which is desperately insufficient for the needs of the carbon capture industry, and nowhere near the amount needed to show the ambition that we should be showing to lead that industry. I will draw my remarks to a close, and I thank you, Mrs Main, for allowing me the extra time.

[Mrs Anne Main (in the Chair)]

The hon. Gentleman was not on a time limit. With the permission of the Front Benchers, I will take four extra minutes from them and place a two-minute time limit on the last two Back-Bench Members, who have been here for the entire debate.

[Douglas Ross (Moray) (Con)]

I will be brief. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing this debate. He started with a tettie point, which was repeated by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). A UK Minister is present to respond on the UK Government’s behalf, and I do not see any problem with that.

The hon. Member for Rutherglen and Hamilton West said that in his speech, he would mention a third way—a Labour way—and I was excited about that, because on Monday night, the small rump of Scottish Labour MPs voted three different ways in the Heathrow debate. Some voted for it, some voted against it, and others joined the Scottish National party in sitting on their hands. In a debate about the future of Scotland’s economy, it is interesting that not a single SNP Member who has spoken or intervened has mentioned their last-minute decision to change their mind about Heathrow on orders from Nicola Sturgeon and to stop the investment into Scotland’s jobs and economy.

[Drew Hendry]

Will the hon. Gentleman give way?

[Douglas Ross]

The hon. Gentleman spoke for 10 minutes; I cannot take an intervention from him.

SNP Members sat on their hands and abstained, despite talking in the debate about all the positive interventions that would come to Scotland as a result of Heathrow’s expansion.

It is good that some SNP MSPs can speak out against their party. My hon. Friends have quoted a report, “Scotland’s Economic Performance”, by a cross-party committee of the Scottish Parliament and supported by SNP MSPs, which says:

“Levels of GDP growth are marginal; productivity is low and wages are stagnant.”