Scottish Economy

Luke Graham Excerpts

Wednesday 27th June 2018 Westminster Hall

[Luke Graham (Ochil and South Perthshire) (Con)]

It is a pleasure to serve under your direction, Mrs Main. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing this important debate on a matter that is close to my and many of my colleagues’ hearts.

I will begin by looking at some of the statistical indicators for Scotland’s current economic performance, starting with GDP. Scotland’s GDP was 1.7% in 2015; it plummeted to 0.2% in 2016 and rose marginally, to 0.4%, in 2017. In comparison, UK GDP was 2.3% in 2015, 1.9% in 2016 and 1.8% in 2017. The employment rate in Scotland in the first three months of 2018 was 75.2%, compared with a UK rate of 75.6%. The unemployment rate in Scotland was 4.3%, slightly higher than the UK rate of 4.2%, over the same period.

[Neil Gray]

Will the hon. Gentleman give way?

[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.

[Deidre Brock]

I will.

[Luke Graham]

Come on then.

[Deidre Brock]

I am just going to repeat what I said before: the setting of VAT rates, national insurance, fuel duties, capital gains tax are not devolved to the Scottish Parliament and therefore can have no impact on the economic powers that the hon. Gentleman is talking about.

[Luke Graham]

The hon. Lady repeats the point, and it is as weak as it was the first time.

The Scottish economy is not forecast to grow by more than 1% at any stage over the next five years. As a result, the Scottish economy will be more than £18 billion smaller by 2022. It is not helped one iota by any devolved power, whereas in this place we have been trying to help the Scottish economy.

[Stephen Kerr]

Does my hon. Friend agree with the conclusion of the Economy, Jobs and Fair Work Committee of the Scottish Parliament, which includes, I think, four or five SNP Members? It states:

“If we are to reverse this trend then the Scottish Government must use all of the levers at its disposal to bring a sharper focus on growing the economy, and ensuring that growth is inclusive.”

That is something they are failing to do currently.

[Luke Graham]

I thank my hon. Friend for his intervention; I could not agree more. One point on which I do agree with the hon. Member for Rutherglen and Hamilton West is that Scotland has two levels of government—one in Edinburgh and one in Westminster—and they should work together productively to try to improve Scotland’s economic performance, which lags behind that of the UK. As a Member who has just negotiated a city deal for his region, I can say honestly, hand on heart, that the two levels of government are not working well together. The relationship is dysfunctional; it does not work. Powers are being hoarded in Edinburgh and not given down to the local authorities, as they should be.

Productivity is lower than it was in 2010 and the gap between Scottish and UK productivity is wider than it was in 2009. Scotland has the lowest rate of business growth in the UK and is forced to pay the highest business rates in Europe. In addition, the SNP broke a major manifesto promise and raised tax on more than 1 million Scots earning over £26,000, ensuring that Scotland’s wealth creators have less of their wealth to create more through further investment.

We talk about powers a lot in this place; the issue dominates a lot of our debate, but let us be clear. The only power given back was that to vary income tax by 1p, and it was given back to Westminster by the SNP, having originally been devolved under the Scotland Act 1998. The Conservatives do not give away powers; the SNP does. [Interruption.] Between 2010 and 2016, Scotland’s economic growth rate was 1.7%, compared with—[Interruption.]

[Mrs Anne Main (in the Chair)]

Order. The hon. Member for Edinburgh North and Leith (Deidre Brock) must control herself. She is not down to speak, but she can speak if she wishes to rise. Will she please limit her remarks to either interventions or a speech, instead of barracking?

[Luke Graham]

Scotland’s economic growth rate was 1.7%, compared with 1.9% for the UK, and that was even before Brexit, showing that Scotland’s economy consistently performs worse than that of the United Kingdom.

Last year the SNP Administration set up the Scottish growth scheme—a £500 million fund designed

“to help businesses thrive and grow”.

They have spent only £25 million of that fund. Similarly, they have failed to spend a single penny of the £36 million digital growth fund since it was announced in March 2017. Meanwhile, last Thursday, the Cabinet Secretary for Finance and the Constitution, Derek Mackay, announced that there was a £453 million underspend by the SNP Administration in the last financial year. It is the fourth year in a row that the SNP Administration have underspent their budget. In total, it is more than £1.2 billion that they have chosen to deprive the Scottish economy of since 2014. That is unacceptable.

Meanwhile, my local councils in Clackmannanshire and Perth and Kinross are forced to increase council tax and cut services for our local residents. That means cuts to music tuition, public transport and the upkeep of our paths and roads. It is unacceptable and it cannot go on.

This is not about Brexit. It is about the deliberately dysfunctional devolution overseen by the Scottish National party. The SNP is failing our constituents through its woeful mismanagement of the Scottish economy and its refusal to invest the money that we already have and the money that comes from this place, which should be going directly to our constituents. If they do not want to use the levers of administration to improve the Scottish economy, perhaps it is time to stand aside for the Conservative and Unionist Opposition, who certainly will.

--- Later in debate ---

[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.