Scotland’s Economy

Martin McCluskey Excerpts

Tuesday 15th October 2024 Westminster Hall

[Martin McCluskey (Inverclyde and Renfrewshire West) (Lab)]

It is a pleasure, Mr Dowd, to serve under your chairmanship and speak on behalf of the Government for the first time. I begin by congratulating my hon. Friend the Member for Glasgow East (John Grady) on securing this debate on Scotland’s economy and congratulating all hon. Members on their contributions.

We have heard a lot about the positives and the potential of Scotland’s economy, such as the strength of Brand Scotland and our thriving biosciences sector; we have even heard from my hon. Friend the Member for Bathgate and Linlithgow (Kirsteen Sullivan) about our thriving film and TV sector. I am sure the crowds here today are just as great as that which turned out to welcome Colin Firth to Bathgate. However, we have also heard about the problems in the Scottish economy, and it is no secret that—along with the UK economy as a whole—it is underperforming. This has been identified by many Members, including my hon. Friend the Member for Livingston (Gregor Poynton) and the hon. Member for Mid Dunbartonshire (Susan Murray).

Fourteen years of mismanagement by the previous Government has resulted in persistently low levels of investment, poor productivity growth and rising inequality. That has led to this Government facing the worst economic inheritance since the second world war—a £22 billion black hole in the public finances. The Treasury reserves were spent three times over in three months, which is absolutely astonishing, and financial commitments were made by the previous Government that they knew they could not keep. That inheritance means tough decisions for the Government, but it is better to be honest and up front with people about the choices that we face. That is why my right hon. Friend the Chancellor will set out in her budget how we will fix the foundations of our economy so that we can tackle poverty, rebuild our public services and begin a decade of national renewal.

The economic inheritance we face is not just fiscal. It is also structural. My right hon. and learned Friend the Prime Minister and my right hon. Friend the Chancellor have made clear that the No. 1 priority of this Government is growth. To achieve that, the foundations of Scotland’s industrial economy need to change significantly. That is why we published our industrial strategy Green Paper yesterday. We heard from my hon. Friend the Member for East Kilbride and Strathaven (Joani Reid) about the importance of industrial strategy, and how it is not just dry, but something that really makes an impact on people’s lives.

[Jim Shannon]

I wish the hon. Member well, and hope that things go according to his plans and all our plans. In my contribution, I mentioned the interconnector between Scotland and Northern Ireland as a potential way to reduce energy and help us to grow together economically. I know he may not be able to respond to that point now, but perhaps he could come back to me at a later date. If so, I thank him.

[Martin McCluskey]

I thank the hon Member for his intervention, and for the points he made about the importance of working together—not just between the UK and Scottish Governments, but across these islands. I will ensure that officials write to him on that point.

Our industrial strategy calls time on short-term economic policy making, and establishes a UK industrial council on a statutory footing, to provide expert advice and long-term thinking.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Can my hon. Friend confirm that his industrial strategy—and indeed GB Energy and our clean energy revolution—are not merely theoretical? They are working practically in the United States, the fastest growing economy in the G7, and are creating jobs in those former industrial areas. Indeed, this Labour Government will help to bring that about in Scotland, creating good jobs in those areas that need it most.

[Martin McCluskey]

I welcome that comment from my hon. Friend, and also congratulate him on his election to the Treasury Committee, where I am sure he will make a great contribution. He has set out exactly what the plans the Government have set out will do for Scotland, and the aspirations and ambition of those plans for our country.

Returning to the UK industrial strategy council, this body will work with specialist sectoral taskforces, and bring together the expertise of businesses, academics, and trade unions to help drive economic growth in all parts of our country. That will allow us to build on Scotland’s strengths and huge potential in key sectors, including advanced manufacturing, life sciences, financial services, clean energy, defence, and creative industries—all areas where Scotland is already beginning to thrive. Together with the establishment of GB Energy in Aberdeen, which the hon. Member for Aberdeen North (Kirsty Blackman) highlighted in her speech, and the creation of a national wealth fund, we will bring investment, jobs, and growth to Scotland.

[Graeme Downie]

Does the Minister agree that a key area for investment from the national wealth fund should be Scotland’s port infrastructure in order to ensure we are making the best economic use of our coastline, such as at places like Rosyth in my constituency?

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[Martin McCluskey]

Ports are essential to the future of our country, and coming from a constituency with an important and thriving port, I absolutely agree with my hon. Friend.

We are taking tough decisions, but change is under way and investment is now flowing into the country. Just yesterday, as many hon. Members have mentioned, the international investment summit brought the chief executives of hundreds of the world’s biggest companies to the United Kingdom. They announced £63 billion of investment and 38,000 jobs for the UK. The companies included Scottish Power and its parent company Iberdrola, which doubled their investment in the UK from £12 billion to £24 billion, and Greenvolt, which announced a £2.5 billion investment in Scotland. That will benefit the whole country.

[Jamie Stone]

I congratulate the Minister on his appointment; I am sure he will do a very good job indeed. I may be a Liberal Democrat, but I recognise that one of the greatest achievements for the highlands of the 1960s Labour Government was the establishment of the Highlands and Islands development board, which did a great deal to reverse depopulation. Today, under the auspices of the Scottish Government, Highlands and Islands Enterprise—its successor body—is a shadow of its ancestor. I wonder whether the Minister would agree to talk to the Scotland Secretary to see how, working with the Scottish Government, we can revitalise HIE.

[Martin McCluskey]

I understand the importance of the Highlands and Islands development board. My partner’s grandfather arrived in Scotland only because he was the chief engineer in the Cruachan power station. That part of my family is here because of the work of the Highlands and Islands development board, so I make the commitment to the hon. Member to speak to the Secretary of State about those issues.

Delivering significant change to Scotland’s economy means working in partnership across areas of policy, not just industrial policy and employment rights but planning, housing, skills and access to health services. Many of these areas are devolved, and we are committed to resetting the relationship between the UK and Scottish Governments. That does not mean that we will never disagree, but where we have shared goals, we should be able to work together. The Secretary of State for Scotland has already begun working with the Energy Secretary, Gillian Martin, and Deputy First Minister Kate Forbes on a range of issues since coming to office.

One of those issues, which was mentioned by both my hon. Friends the Members for Glasgow East and for Edinburgh South West (Dr Arthur), was universities. I would agree with them that universities are a jewel in the crown of the Scottish economy. They drive innovation, create jobs and new businesses and deliver world-leading research and education. I know that the universities sector will be crucial to the future of the Scottish economy.

[John Cooper (Dumfries and Galloway) (Con)]

I have learned a lot today about this great new relationship, and I wish the hon. Gentleman all the best with that, but the universities sector is a very difficult area. In Scotland a cap has effectively been placed on the number of Scottish pupils able to leave school and go to university, while foreign students are incentivised. The universities sector in Scotland has a fine past, but does it have a great future?

[Martin McCluskey]

I would say that it does have a great future. I am not dismissing the fact that there are issues within the Scottish universities sector, which many of my hon. Friends laid out during the debate, but there is huge potential for the future of the sector and it is for not only the Scottish Government but the UK Government to make sure that it is realised. In terms of our relationship and working together, what we saw from the previous Government was a stand-off, and I do not think that works to the benefit of the people of Scotland. What the majority of Scots want to see are their two Governments working together to deliver better results.

[Frank McNally]

I welcome the Minister to his place. We have been talking about universities, but there is also a significant challenge in Scotland with the decimation of further education, particularly colleges. This is creating real challenges for people who are looking to upskill and reskill, and we must ensure that the people who are best placed to secure the jobs of the future are able to do so. Does the Minister agree that much more needs to be done by the Scottish Government to ensure that further education in Scotland gets the support that it deserves?

[Martin McCluskey]

I agree. I know from experience in my own constituency with James Watt college in Greenock—now part of West College Scotland—that there have been issues with investment in colleges. That largely impacts on opportunities for working-class young people, and for people who perhaps did not get the results that they wanted at school and need a second chance. The college sector always provided that for people, but at the moment it is struggling to do so in many places across Scotland.

[Gregor Poynton]

My hon. Friend talked the importance of the university sector to Scotland, and that is clear. I have two points on that. First, yesterday’s industrial strategy is welcome. This is about how we support scale-ups and start-ups coming out of our Scottish universities. There are already great examples in my constituency of Livingston, but also across Scotland. However, more work needs to be done to help them and to ensure that the great thinking that is going on in universities can come to be more commercial.

Secondly, I have been told by many people that there is not the same access to finance, and oftentimes these companies are either bought up or have to look to move to America. The work that the UK Government are doing to create a stable environment and to involve the City of London, as part of the UK, to try to unlock some of the £3 trillion in pension funds to invest in these scale-ups is incredibly important. It is important not just that we start them in Scotland, but that we can grow them to a significant scale.

[Martin McCluskey]

I thank my hon. Friend for welcoming the launch of the industrial strategy yesterday. It is important that we ensure that any opportunities from the university sector are spread right across the country, and that is what my right hon. Friend the Chancellor of the Exchequer is trying to do with the national wealth fund. Our university sector in Scotland is also trying to make sure that the opportunities from universities and those start-ups are pushed out beyond universities’ borders. My hon. Friend’s point about access to finance is important. The Government are trying to provide a stable economic environment, which we did not have under the previous Government. That gives investors confidence, as we saw yesterday when we doubled the amount that was invested in the UK at the global conference last year. That is testament to the confidence that business now has in the UK because of our stable political environment.

[Douglas McAllister (West Dunbartonshire) (Lab)]

Does my hon. Friend agree that the recently released Scottish Government industry statistics reveal worrying trends in Scotland’s food and drink sector, with output in the food and drink sector falling, employment falling and businesses failing? Those figures are absolutely scandalous. Both the SNP and the Tory Government failed to support Scotland’s world-class food and drink industry adequately. In my constituency of West Dunbartonshire, the whisky industry is a significant employer, so will food and drink be a key growth industry identified in our Government’s blueprint for growth, thereby maximising Brand Scotland and job opportunities in West Dunbartonshire?

[Martin McCluskey]

The food and drink sector will play a crucial role in the future of the Scottish economy. I am referring not just to the whisky sector, which my hon. Friend has mentioned and which I know he plays a key role in championing through the Scotch whisky all-party parliamentary group, but to other sectors, such as our great salmon sector. There are a lot of other opportunities in food, drink and tourism whereby the Scottish economy can thrive in years to come.

One area of Scotland’s economy on which the Governments have worked closely together in recent months has been the response to the commercial decision of Petroineos to end oil refining at Grangemouth. The oil refining operation has played an important role in Grangemouth’s economy for more than 100 years. However, as a clear sign of how we can work together for the Scottish people, the UK and Scottish Governments have announced a joint £100 million package to help to secure Grangemouth’s industrial future and protect its skilled workforce. Scotland has a proud industrial past, as we have heard from many hon. Members this morning, and, as part of the transition to net zero, it will have a bright industrial future, and one that will guarantee jobs and wealth for families for generations to come.

[Kirsty Blackman]

In relation to that transition, while the hon. Gentleman is in the mood for making commitments, will he commit to speaking to the Chancellor about the Scottish carbon capture cluster and the fact that it is looking for an outward show of confidence from the Government? I am not asking him to push for money today, but positivity about progressing the Scottish cluster for carbon capture would be incredibly helpful for the industry.

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[Martin McCluskey]

We saw last week the Government’s commitment to carbon capture and storage. I am happy to take those points away and ensure that they are communicated to the Secretary of State for Scotland and the Chancellor.

The Government’s focus on growth is in the service of our mission to tackle poverty, remove barriers to opportunity and put the country back in the service of working people. It is appalling that under the previous Government, child poverty in the UK went up by 700,000 since 2010. Today, more than one in five Scots and one in four children are trapped in poverty, trying to get by on less than they need.

The child poverty taskforce, which this Government have established, is developing a strategy to reduce child poverty that will be published in the spring of next year. The previous UK Labour Government oversaw huge falls in poverty levels across the UK. It is what Labour Governments do—it is in our DNA—and we will do it again.

The vital work of the taskforce comes alongside the Government’s commitment to make work pay. Last week, we published the Employment Rights Bill, the biggest upgrade of workers’ rights in a generation. I welcome the comments from a number of hon. Members, including my hon. Friends the Members for Coatbridge and Bellshill (Frank McNally) and for Edinburgh North and Leith (Tracy Gilbert), supporting this agenda and how it will impact on their constituents.

This Government are calling time on unfair employment practices by ending exploitative zero hours contracts, introducing day-one employment rights and establishing a new fair work agency to enforce workers’ rights. That is all part of our plan to deliver economic growth for workers, businesses and local communities, right across the UK. As we have heard from others this morning, this Labour Government are pro-worker and pro-business, so these reforms will not just help Scottish workers but boost Scottish businesses of all sizes. We are going to tackle head-on the low pay, poor working conditions and job insecurity that have been holding our country back. Our plan will grow our economy, tackle in-work poverty and raise living standards for all.

We recognise that rebuilding our public services and economy will require investment, and the Chancellor has been clear that there will be no return to austerity. I want to emphasise that point: she has said numerous times that there will be no return to austerity. Although funding decisions and details will be presented at the upcoming Budget, the UK Government are committed to retaining the Barnett formula and funding arrangements agreed with the Scottish Government in the fiscal framework.

The framework provides the Scottish Government with greater certainty and flexibility to manage devolved public services, as well as higher per person spending. That does not remove the need for both Governments to take tough decisions to look after the public finances and stabilise the Scottish economy.

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

One of the challenges we have had in the Scottish economy in recent years is a gap between rhetoric and reality. For example, in the creative sector, which is based heavily in my constituency, the Scottish Government produced 10 strategies in nine months. That means that the creative industries just serve as a backdrop for photo opportunities for Scottish Government Ministers, who do not engage with the deep challenges and opportunities that the sector faces. Does my hon. Friend agree that the Government are finally making the correct response, which is to be honest with the public about the financial challenges that we face, and then to deal with the foundational difficulties in order to grow from there?

[Martin McCluskey]

I thank my hon. Friend for that intervention. Since he arrived here in July, he has been a significant champion of the creative industries and the arts. The example he gave of 10 strategies in nine months illustrates the kind of short-term uncertainty that has reduced investment in our economy. People did not get the certainty they required during the previous Conservative and SNP Holyrood Governments.

It is clear that Scotland’s economy faces challenges, but it is also brimming with potential. We are up to tackling those challenges and unleashing that potential. In our first 100 days, we have made significant progress in resetting the relationship with the Scottish Government. We have listened to the views of businesses and communities across the country, and we have set out a clear path to create the change that we were elected to deliver.

[Peter Dowd (in the Chair)]

I call John Grady to wind up.