The Government’s Productivity Plan

Debate between Michelle Thomson and Roger Mullin

Tuesday 28th February 2017 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I congratulate the hon. Member for Hartlepool (Mr Wright) and his Committee on their sterling work in this area. I was particularly intrigued by his opening remarks about the nature of these estimates debates and their weakness. I was reminded of my experience when I was faced with the House for the first time after being elected back in May 2015. I walked around and found all these peculiar signs, such as for the Vote Office, where the one thing we cannot do is vote. The one thing we are unable to do in estimates debates is scrutinise the estimates properly. That certainly needs to be addressed in the longer run.

I was also taken by what the hon. Member for Warwick and Leamington (Chris White) said about the importance of innovation for productivity. It reminded me of an old teacher of mine, Professor Tom Burns, who, in 1960, wrote a book along with Graham Stalker called “The Management of Innovation”. How many years ago is that? It is a long, long time ago—57 years. The lessons of back then, when Professor Burns was talking about the growth of Marconi in Scotland, are just as relevant today in respect of what is involved in innovation. He argued that two main types of skills or knowledge needed to be deployed, and therefore developed in society. The first was the ability to have what he called “analytical skills”, which we might relate to STEM subjects and other quantitative skills. We need the ability to analyse problems and weaknesses, be it in technology, social fields or whatever, but that is not enough—we all know that we can analyse problems. Everyone in this House might agree what the level of unemployment is, but we would have different recipes to deal with it. So as well as having analytical skills, he said society had to be good at developing creative skills. That might be through “simple creative thinking”, as we could call it today, but I believe he was thinking more widely about how we bring decision-making and judgment skills to enhance the capacity to meet new types of challenges.

The other thing that Professor Burns mentioned drew on what happened in Scotland in the 18th century, at the time of the Enlightenment, and the ideas produced there. His argument was that not only did we have some uniquely brilliant individuals but, for the first time, we had the effective networking of people and of ideas. We were not building false barriers between people, be it by subject or geography. We should reflect on that today as people too often get stuck in professional silos, with ideas not being shared and networked enough. The possibilities therefore do not come to fruition in the way that they might.

The final thing that Professor Burns said in this book of 57 years ago was that we needed circumstances in which people valued and encouraged the “application of novelty”—in other words, experimentation. We all know that if that is done well, it will inevitably lead to a failure rate, so risk taking, as we would call it today, has to be part of the recipe. One thing that Governments of all hues are very bad at doing is putting in place policies that recognise that although we are going to generate some things that might fail, that is worth it, because we will generate other things that are a great success.

[Michelle Thomson (Edinburgh West) (Ind)]

My hon. Friend is making an excellent speech. I concur with what he is suggesting about entrepreneurs—our wealth creators—being given both the framework to succeed and the framework to fail. Does he agree that this is about looking at not just our innovation structures, but at more systemic issues such as banking? When a small business does fail, it is often hauled over the coals and loses absolutely everything, so we fundamentally need to change some of the ways in which we do business in this country.

[Roger Mullin]

I quite agree with my hon. Friend. Today I asked a question of the Chancellor of the Exchequer, which once again attracted the typical non-answer. I asked whether, given what has happened to businesses over the past few years, with things such as the RBS “dash for cash” and the like, there was not a case for having banks accept their duty of care towards the business community, and small and medium-sized enterprises. We need to look more widely at how we create a context that will really support innovation and risk taking.

--- Later in debate ---

[Michelle Thomson]

I absolutely agree with my hon. Friend. Part of the problem could be solved by devolving those powers to Scotland so that we can protect our own higher education sector.

We have also heard this month from the chief executive of Innovate Finance, Lawrence Wintermeyer, who told the BBC that

“Brexit has had a chilling impact on investment.”

Investment is vital to industrial strategy and productivity. Wintermeyer backed up his statement with figures that show venture capital investment in FinTech firms, which is vital for my city of Edinburgh, has dropped in the UK from £970 million in 2015 to £632 million in 2016. In objective 12 of the productivity plan, the Government used Innovate Finance’s investment figures as a measure of success.

Finally, the productivity plan wanted to

“help deliver a Europe that is more dynamic and outward focused...by accelerating the integration of the single market, completing trade agreements, and improving the quality of regulation.”

[Roger Mullin]

That is a good idea.

[Michelle Thomson]

Yes, indeed. It was a sensible aim at the time and it is one that Scotland still supports. I hope that the Prime Minister takes serious note of the Scottish Government’s proposals to keep Scotland in the EU. She could then come back to us having had substantive discussions of what is contained in the paper. Obviously, we would formulate a considered response, but Scotland regards the proposals as vital. We are committed and dedicated to growing our economy, creating wealth, and increasing our productivity, but we cannot do it on our own and we need help. We are ambitious and we want Scotland to grow, and we say to the Government: do not hold us back.

Green Investment Bank

Debate between Michelle Thomson and Roger Mullin

Wednesday 25th January 2017 Westminster Hall

[Michelle Thomson (Edinburgh West) (Ind)]

I beg to move,

That this House has considered the sale of the Green Investment Bank.

It is a pleasure to serve under your chairmanship, Mr Owen; I have not done so previously. I have sought the debate as an independent MP—independent as to party and mind—in the light of considerable concerns raised about the proposed sale of the Green Investment Bank. I must signal my thanks to Macquarie and to the Minister for recent meetings. I look forward to another meeting with the Green Investment Bank tomorrow, and then another with the Business, Energy and Industrial Strategy Committee in the near future. Thanks are also due to the Environmental Audit Committee for the report of December 2015; to the hon. Member for Brighton, Pavilion (Caroline Lucas), who tabled an urgent question; and to members of the quality press, such as Aimee Donnellan, for ensuring that the matter gets the scrutiny it deserves.

The Green Investment Bank is one of our success stories and has supported 30 green energy infrastructure projects up to the end of 2015-16. Profits were up to £9.9 million in the last year, and the bank committed £770 million to transactions during the 12 months of 2015-16, taking the total capital committed to £2.6 billion. The imperative of a green agenda remains, and our resolve must be increased in the light of President Trump’s threat to step back from previous Paris climate change commitments. Our ambition associated with a green agenda is high, particularly within the Scottish Government, but can the Minister confirm that Macquarie is the preferred bidder, or will he continue with the ridiculous pretence that he cannot mention its name?

Why sell, and why now? I want to make it clear that given my business background I understand why privatisation can be attractive to a business in terms of access to capital and to provide certainty as to future funding. I can also see why being released from state aid rules may be perceived as a benefit. On the other hand, I was struck when a Tory Member commented to me, while the right hon. Member for Tatton (Mr Osborne) was Chancellor of the Exchequer, “If it isn’t screwed down, sell it.” I am also struck by the fact that the Green Investment Bank does not expect to need to borrow until 2018-19. The report of the Environmental Audit Committee quotes evidence from E3G that

“the Government has failed to make a compelling case explaining the rationale behind, or consequences of its decision to sell a majority share of the GIB”.

So why now?

I would like the Minister to confirm whether any financial rewards will be given to the board, executive or senior team on a successful sale of the GIB. Will the chair, Lord Smith of Kelvin, remain in his post after the sale and, if so, for how long? The model of packaging up elements of a business for sale to release capital is well understood—I regard the use of the term “asset stripping” as somewhat emotive in this case—but the real point is that the UK taxpayer has provided the funds to bring it to where it is today, but it will not be the UK taxpayer who gets the return on investment.

It is clear from other privatisations that the UK taxpayer did not receive the value they should have done; I therefore question whether that can happen with the Green Investment Bank. The New Economics Foundation in its report “We Own It” notes concerns about future profits versus short-term cash in the continued great British sell-off, whether it is a question of losses incurred as a result of the Royal Mail privatisation or Eurostar. Can the Minister confirm whether full value will be obtained for the UK taxpayer on the sale?

I move on to some more specific considerations. The headquarters is currently located in Edinburgh, but it is not just the location of the brass plaque that marks the HQ—it is the functions of governance, legal services, risk and compliance, comms, finance and business development that really determine where that crucial control lies. The jobs associated with those functions tend to be higher quality. I will be monitoring closely to see whether jobs will be maintained and also whether the number will grow and their quality is maintained. Will the Minister confirm what guarantees he has obtained that the HQ will remain in Edinburgh? What assessment has he made of any proposed new structure and any potential impact on the quality of jobs and functions retained in Edinburgh?

State aid rules—the so-called additionality considerations —disallow projects that could be funded under conventional routes. That means that the projects funded tend to carry more risk but, if successful, more reward. I am concerned about the risk appetite of the bank after sale. A business that focuses purely on the bottom line will tend to gravitate towards more vanilla projects, which are easier to package and sell for financial churn but are a loss to the sort of research and innovation that, we are told, the UK Government want to ensure more of with their new industrial strategy Green Paper. The Minister notes in answers to written questions that the market failure that the inception of the GIB sought to address has now been corrected, but market failure in all areas will not be addressed if encouraging innovation is not at the heart of what the GIB does.

Scale is also a consideration. Will a privatised GIB support smaller projects, such as the specially designed loan to finance a switch to low-energy street lighting in Glasgow? Will Macquarie back that type of small-scale investment? It is only £6.3 million, but will save more than 18,000 tonnes of greenhouse gas emissions over the next 18 years.

What considerations have the UK Government given to an altered risk appetite after sale? Have the UK Government made any assessment of the potential impact?

I would like to consider the issue of protecting the green purpose of the bank. Responding to criticism, and acknowledging that criticism, the UK Government have put in place a so-called golden share with a worthy and notable set of trustees. In theory, that should give us a level of comfort, in that the trustees must agree to any change of purpose as defined by the five green purposes—but the very purposes themselves carry risk. They are extraordinarily high-level; the question has already been asked whether fracking—yes, fracking—could be carried out while still ostensibly meeting the green purpose tests.

I would now like to briefly consider UK control. The GIB has already undertaken a number of its transactions via private equity-type funds.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Notwithstanding some of the excellent work that the GIB has undertaken, is the hon. Lady concerned, as I am, about the use and involvement of limited liability partnerships? They are currently the subject of a review and have been involved in criminality in many parts of the world. It is not only the GIB—there are some instances where it is alleged that Macquarie has been involved in projects that have used them.

[Michelle Thomson]

I am happy to support my hon. Friend on that point. I also note the valuable work he is doing around Scottish limited partnerships. I hope he has great success in that.

The limited liability partnerships used to date by the GIB may indeed be UK-domiciled and registered for tax purposes, but the point is—we cannot forget this—that if the underlying funds or owners are controlled offshore, the UK taxpayer loses the benefit of that tax take. What level of UK control and benefit will there be after sale? What will be UK-based in the wider supply chain? To what extent will the project management and/or technical experience be based in and benefit the UK?

Preventing and Combating Violence Against Women and Domestic Violence (Ratification of Convention) Bill

Debate between Michelle Thomson and Roger Mullin

2nd reading: House of Commons
Friday 16th December 2016 Commons Chamber

[Michelle Thomson (Edinburgh West) (Ind)]

I aim to be fairly brief today. I commend and thank my hon. Friend the Member for Banff and Buchan (Dr Whiteford) for bringing the Bill forward. She spoke most eloquently.

I want briefly to reference the speech I made last week and to give some thanks, first, to the Speaker’s Office and, you, Madam Deputy Speaker, for being very supportive of me, and to my friend and colleague, the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), who has been a great support to me.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I am undeserving of any praise, but I want to say that the hon. Lady inspired my wife, three days ago, to talk for the first time of her sexual abuse at the age of only six years. It is a great tribute to the hon. Lady that she has done so much for so many people. [Applause.]

[Michelle Thomson]

I thank the hon. Gentleman very much for that. But, of course, I made my position very clear: it was not about this individual here; it was about women more widely, and indeed men, who have also been affected by sexual or physical violence. I spent most of last weekend personally answering the literally hundreds of emails I got, and it was truly humbling, because people, for the first time, were writing their own stories and sharing their own stories. One phrase jumped out at me. Somebody said that they recognised that “black burden that shadows a survivor’s back.” We need to keep that at the forefront of our minds at all times.

That is why we have debates about this issue—about legislation and so on. It is about our driving need for change and leadership, and I commend the hon. Member for Salisbury (John Glen) for offering his perspective on that. It is leadership and the driving need for change that we must keep at the forefront of our minds all the time.

I again challenge the Minister that while warm words about a spirit of intent are incredibly welcome, we are looking for hard, specific dates by which something will be done, because we need to send a message that resonates with the wider world that these things are unacceptable. Our culture, in many areas of the UK, is completely unacceptable. If there is one thing I learned last weekend from reading all these emails, it was the extent to which these stories go unheard.

Again, I say thank you to everybody who has supported me—I wanted to put that officially on the record. Finally, I thank all those agencies that—day in, day out, week in, week out, month in, month out—give their support to people who are in the most difficult circumstances.

BHS

Debate between Michelle Thomson and Roger Mullin

Thursday 20th October 2016 Commons Chamber

[Michelle Thomson (Edinburgh West) (Ind)]

I would like to begin my contribution to this important debate by joining others in thanking the Chairs of the combined Select Committees and pointing out that any suggestion that their report was not a robust, detailed, evidence-led inquiry can be rebutted. It ran for months and had many sessions; the session with Sir Philip Green alone lasted for six hours.

I support the view that, from its initial purchase, Sir Philip saw the dash for cash from the business as the Green family’s primary purpose. Even in the early days, there was limited evidence of a successful retailer improving turnover or market share. I am sure other Members will continue to highlight the various ways that money was redeployed to the Green family, often away from the clutches of the UK taxman, such as by the payment of dividends and the treatment of various assets. I have no doubt that they were all entirely legal, but were they irreproachable?

We have heard much already about the nature of corporate governance. Our report describes it as having a variety of roles, including balancing

“the interests of…many different stakeholders”.

We have also heard reference to the UK corporate governance code. It states that

“one of the key roles for the board includes establishing the culture, values and ethics of the company.”

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I thank my hon. Friend and all the members of both Committees. I had the pleasure of sitting in and listening to quite a lot of the interrogation and I thought it was first-class.

Despite the problems we have heard about, such as those to do with corporate architecture and regulation, does my hon. Friend agree that Adam Smith was right when he said we cannot divorce business practice from human behaviour, and that the problem here is that the human behaviour of Philip Green has undermined corporate governance and any positive culture?

[Michelle Thomson]

I thank my hon. Friend for that intervention. The code goes on to say in the sentence I was quoting:

“The directors should lead by example and ensure that good standards of behaviour permeate throughout all levels of the organisation.”

The code applies only to listed companies with a premium listing of equity shares, but that does not absolve a private owner from any responsibility. Time and again opportunities were missed to address the growing pension deficit and it cannot simply be argued that the deficit was a result of the global financial crisis and increased longevity. Sir Philip had accountability for addressing the deficit and could have chosen to do so on a number of occasions, as other schemes managed to do.

The QCs’ report cites many examples of the Green family’s legal rights as the majority shareholder, but says very little about the responsibilities to pensioners and employees that that brings. I am sorry, but Sir Philip cannot have it all his own way. It was a lack of judgment that allowed the pensions situation to continue, and a lack of judgment that progressed a sale to a wholly unsuitable third party.

The non-executive chairman was at pains to point out that the code does not apply to private companies, and the QCs’ report notes that the chair of the board has merely the same duties as the other directors. Legally that is true, but might I inquire as to what exactly the remuneration of £125,000 as chair of the board was for? I support the suggestion of the governing body for governance, the ICSA, which suggests reforming the code to include private companies. We have heard a number of calls for that today.

In terms of the general culture of organisations, there is always a key risk if a level of power is concentrated in just a few key individuals, there is weak leadership which chooses to surround itself with people who are reluctant to disagree for fear of falling out of favour, and there are cultural failings within the organisation that are common knowledge but remain unchallenged. We all have a duty to speak out in these cases, because by remaining silent we become complicit in the contract of the bully and the bullied.

In the case of BHS, the final decision on sale was made without the non-exec chair asking about the credentials of the purchasing company, why it was believed to be the best outcome for the employees and pensioners, or whether the third party had a credible turnaround plan—and, incredibly, they were not invited to the ratification meeting. There was only one non-exec director at the meeting: the son-in-law of Sir Philip Green, whose stated brief was to represent the interests of Lady Green.

I challenged some board members to name a time—any time—when they successfully challenged Sir Philip Green. Their response was muted. I could literally count the seconds ticking by as each respondent looked for an example.

Our report notes that

“absolute power, in business as in politics, is a dangerous thing”.

It was certainly absolute power that enabled Sir Philip and the Green family to run BHS as their personal fiefdom, to exclude independent directors from key decisions and to bully weak senior managers, and this contributed to the ultimate failure of BHS and to its ultimate failure in its duty of care to the pensioners and employees.

I shall finish by making a brief comment about the amendment. This UK legislature is already struggling to demonstrate its relevance to many people. It must be able to give a voice to people on the important issues of the day. The saga of BHS is being played out in the media, and not only recently. We have seen the success story, the “loadsamoney” parties, the knighthood, the record-breaking dividends, the decline and the eventual sale of the business. People watching at home have, with every justification, asked, “How can this be? How can an owner of a company act with such impunity in the matter of 11,000 jobs and 20,000 pensions?” Hindsight is a wonderful thing, and who among us does not recognise circumstances in which we would do things differently? I am sure Sir Philip Green regrets the circumstances now, but we are talking about a knight of the realm, and that position must surely require a higher bar of ethical behaviour.

Finance Bill

Debate between Michelle Thomson and Roger Mullin

Tuesday 8th September 2015 Commons Chamber

[Roger Mullin]

In relation to business investment, it would be normal practice to undertake considerable consultations. If big changes are proposed to the taxation affecting businesses, there would normally be a process of easing those changes in, to allow the businesses time to do the appropriate planning. There is no possibility of businesses in the renewables sector being able suddenly to change their financial plans for the next five or 10 years following the ridiculously fast introduction of this measure by the Government.

[Michelle Thomson]

It is anti-business and anti-innovation.

[Roger Mullin]

It is also anti-consumer and anti-environmental. The Government have managed to accomplish a whole series of negatives in one simple move, and it will give me the greatest of pleasure to vote against this proposal.

Finance Bill

Debate between Michelle Thomson and Roger Mullin

Tuesday 21st July 2015 Commons Chamber

[Roger Mullin]

My apologies, Madam Deputy Speaker.

Our amendment starts by stating:

“That this House declines to give a Second Reading to the Finance Bill because it fails to address the real economic needs of the country”.

As I sat through the Budget speech last week—in growing incredulity, it must be said—my greatest concerns were threefold: first, the crude and brutal attacks on protections for the most vulnerable in our society; secondly, the failure to address adequately the challenge of productivity in our economy—despite the remarks of the Minister at the Dispatch Box today, I will try to demonstrate why the Bill fails to address those requirements; and, thirdly, the impact on regional and national economies, not least in Scotland.

On receiving a copy of the Finance Bill and its associated papers, my concerns have not abated. Indeed, through reading the detail in the Bill, further concerns have come to light, and it is therefore my intention—and that of my colleagues—to table a series of detailed amendments in Committee.

Yesterday’s debate on the Welfare Bill exposed many of the negative effects that Government policy will have on the poor, the disabled, the vulnerable, the young, and in-work families. The Finance Bill adds another burden on hard-pressed families who will face a rise in national insurance premiums as a result of the increase in insurance premium tax.

[Michelle Thomson (Edinburgh West) (SNP)]

Does my hon. Friend agree with concerns expressed by the British Insurance Brokers Association, which stated that the rise in IPT is actually a tax on protection and will affect behaviour by limiting people from taking on that protection? It also states that that will affect young people disproportionately, and it is regressive in that it disproportionately affects families in lower socio- economic groups.

[Roger Mullin]

I agree entirely with my hon. Friend, and it must be a concern that the measure will lead many families not to take out necessary insurance, with those that do placing themselves in further hardship.

Those negative effects on the poor are matched by giveaway proposals for the rich. The extent of the commitment given to the rich is perhaps best evidenced by the fact that the Government devote no fewer than 13 pages of the Finance Bill to inheritance tax, ensuring that many loopholes are possible for the benefit of those with high-value homes. There is even a proposal to increase the allowance each year, based on the consumer price index, and to round that up to the nearest £1,000 in case the poor dears find it hard to cope.

The fact that the Government find it so essential to make changes that benefit holders of great wealth in our society, at the same time as they cut support for the most vulnerable, says much about the moral choices that they make. There is also a wider economic cost to such choices. The combination of sucking demand out of local economies by penalising the poorest in our society, combined with the largesse bestowed on the wealthy —who will no doubt find ways of spending or saving that do not benefit local economies—makes the simple point that the Government care more about rewarding their friends than about fixing the economy.

Let me move on to the Government approach to very high earners, who for years have found ways of avoiding and evading tax. I admit that I liked some of the Chancellor’s rhetoric during his Budget speech about closing tax loopholes and ensuring a fairer return from those with high earnings—often, people who earn more than £1 million per year—but looking at the detail in the Bill, it is clear that there is still a considerable distance to travel. For example, much more needs doing to close the so-called Mayfair loophole. It cannot be right that private equity fund managers will be able to continue paying capital gains tax at only 28% on so-called carried interest, rather than income tax at 45%. It is probably not unreasonable to estimate that more than £300 million extra revenue could be gained by tightening the rules in that area alone, and that would enable at least some mitigation of the worst excesses of the Government’s welfare proposals.

The Chancellor is undoubtedly highly skilled politically in his presentation—indeed, in that regard he may have been taking lessons from my predecessor in Kirkcaldy and Cowdenbeath. As always, however, the devil is very much in the detail, and the detail leaves too many loopholes.

Let me now address measures that are necessary to tackle some of the areas contributing to weaknesses in productivity—a matter that the Minister addressed.

Budget Resolutions and Economic Situation

Debate between Michelle Thomson and Roger Mullin

Tuesday 14th July 2015 Commons Chamber

[Michelle Thomson (Edinburgh West) (SNP)]

I beg to move an amendment, after “importation”, insert

“other than in relation to Police Scotland and the Scottish Fire and Rescue Service”.

The amendment stands in the name of my hon. Friend the Member for Dundee East (Stewart Hosie).

On this final day of the Budget debate, we have heard a great deal about debt and deficit, the Budget itself, and the recently released productivity plan. All the Scottish National party Members have listened with sadness to the planned cuts, which strike fear into our hearts and those of our constituents. I have found myself reflecting a great deal on it—both the conflict of moral principles and the economic madness I believe is contained therein. Called out by the Institute for Fiscal Studies, this Budget is described as having

“benefit cuts at the centre”;

and as a “tax-raising budget”, the IFS gives the stark warning that,

“unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average”,

and that ultimately it is a “regressive” budget.

We are supposed to believe that the smart economic choice is for the UK to eliminate any deficit, pay down all debt, and run—and then sustain—a surplus. We are fed the yarn that an economy must be in surplus; that the gain is worthy of the pain. Despite the concerns of Robert Chote of the Office for Budget Responsibility, who described the plan—somewhat euphemistically—as “ambitious”, and the concerns of 77 leading economic academics, the Chancellor has ploughed on regardless. Now, I know that a degree in history—or, for that matter, one in music—does not equip one with an instinctive understanding of cause and effect, supply and demand or even so-called Micawber economics for that matter, but history does teach us about previous economic choices, and that ability to look back provides real accuracy. We know how the Chancellor’s previous predictions failed to meet actuality, and we know that the much vaunted current growth has taken place only over the past few years.

A number of issues concern me today, one of which is levels of personal debt. The OBR predicts household debt going above the levels of 2008 and reaching an incredible 173% of GDP by 2019. That household debt figure excludes mortgages but is based on unsecured lending such as credit cards and store cards and, with increasing frequency, payday loans. Fundamentally, it contributes to a very real risk of a repeated debt crisis as a direct result of the cuts. We have seen a consumption-led crisis before, yet here it is planned again. I quote the Chancellor, who said:

“This growth is driven by stronger private consumption”.—[Official Report, 8 July 2015; Vol. 598, c. 322.]

There is a small mention in the productivity plan about championing enterprise by stimulating finance for small and medium-sized enterprises—but what and how specifically? Simply privatising RBS with the mantra “private equals good” is frankly not good enough. A lack of access to liquidity remains the biggest single issue for small business, while at the other end of the spectrum large businesses stockpile their cash. It has been asked before but is worth reiterating: where is the support for the challenger banks? The cut in corporation tax has been trailed as encouragement for businesses to invest, but there is no clear link or evidence to suggest that will happen. I would have thought that I would have been intervened on by now to ask what within the Budget I agree with, and I confirm that, although I am disappointed with the cut in the annual investment allowance from £500,000 to £200,000, it is better than what was proposed, which was taking it down to £25,000.

The continued focus on financial services, in which I must declare a previous interest, without rebalancing to improve our exports or manufacturing is a worry, particularly where we continue with the models we have adopted. The New Economics Foundation has expressed the view that the

“United Kingdom has the least resilient financial system among leading industrial (G7) nations. It is unusually large and homogenous, highly interconnected . . . highly complex and highly reliant on funding from the wholesale financial markets”.

I recommend to all Members that they read the foundation’s recent report; its concerns concur with those of many other economists.

The SNP is urging action so that we can end the unfair anomaly whereby Scottish police and fire and rescue services alone are liable for payment of VAT. The proposed change to the Budget resolutions would enable us to introduce the necessary changes to the Finance Bill. Were this unfair and discriminatory situation to be corrected, we could free up an additional £23 million of resource for the Scottish Police Authority and £10 million for the Scottish Fire and Rescue Service—money which, I trust, all hon. Members would agree could provide welcome funds to support the fantastic work that our emergency services do.

Our calls for an end to this anomaly have gained cross-party support in the Scottish Parliament, and I am disappointed that the Government have so far refused to address the disparity in their treatment of emergency services north and south of the border. I hope that Members will take the opportunity today to take action and put this situation right.

We all agree that this is about choices, and the choice is how we grow the economy. This must fundamentally be by investment. Despite the productivity plan and various Ministers suggesting an increase in capital expenditure, a comparison between the Red Book of July and that of March 2015 shows total capital spend going down through the lifetime of this Parliament. If the Chancellor is unwilling to invest in the UK economy, give us the powers in Scotland and we will get on with the job.

When talk turns to economic and productivity comparisons, we hear a lot about the G7, the group of the world’s largest western economies, with which the UK likes to compare itself.

[Roger Mullin]

On productivity in the economy, my hon. Friend may be aware that since 2008 and until about 2014, it is fair to say that in terms of productivity per capita the UK has effectively been flatlining, while many other countries, including smaller countries such as Ireland, have seen their productivity rise significantly. There is much to learn from others, is there not?

[Michelle Thomson]

I thank my hon. Friend for his intervention, and I thank the House of Commons Library for some excellent work on GDP per capita and GDP per hours worked, including in relation to Ireland. I shall come on to that.

Where the UK stands in relation to Germany, France, Italy, the USA, Canada and so on provides some useful benchmarks for relative economic performance. The fact that the UK lags behind its peers on so many key indicators is another, all too sad, story. Last out of the recession, lowest productivity, and lowest GDP per capita growth rates—a record that does not tally with the UK Government’s “back in business” narrative.

Although the G7 provides a useful comparison for the UK, its relevance to Scotland is less apparent. We do not aspire to be one of the largest economies in the world, to strut faded imperial grandeur on the world stage or to maintain the pretence of exerting some kind of global influence, 100 years after the height of the British empire. Our ambitions are different—more modest, some would say; more enlightened, others would call it. In business there is a saying, “Turnover is vanity, profit is sanity.” To be big is not always to be beautiful. Scotland seeks fairness and prosperity for those who live there.

Productivity

Debate between Michelle Thomson and Roger Mullin

Wednesday 17th June 2015 Commons Chamber

[Michelle Thomson]

I thank the hon. Gentleman for his comment, but I would point out that that we did not make the steel in Scotland and that it was a decision of the Scottish Government, not the Scottish Executive.

I was about to highlight some key areas that the Scottish Government’s economic strategy promotes. They include internationalisation, which helps firms to compete in international markets, to increase exports, to make Scotland a preferred location for inward investment and—most importantly from my business perspective—to promote Scotland as the brand of “We are outward looking, we are ambitious and we are open for business”. The plan also promotes investment in our infrastructure, transport, technology and digital connectivity.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does my hon. Friend agree that one key component of our productivity strategy has to be building on that essential power of the production of knowledge and that universities throughout the UK, including our world-class universities in Scotland, are key in that regard? It is vital that we protect, and indeed enhance, research funding through the universities.

[Michelle Thomson]

I thank my hon. Friend for his comments. I absolutely agree with them, and I am going to cover that issue further in my remarks.

We must equip our people, who live in and give to Scotland, with the skills— supporting them with free university education—the health, the ambition and the engagement to contribute to making Scotland a great place.

I mentioned manufacturing, and the SNP supports measures to boost the sector, including targeted research and development tax credits and support provided through the Scottish business development bank. However, the lack of access to business funding remains the biggest critical factor affecting small business, which is the lifeblood of our economy. I still await any evidence of that being recognised and acted on by the Government.

The plan promotes innovation, creating a culture of ambition and drive where we reward the risk-taking entrepreneurs—those who drive real change and live by creative and adaptive thinking. Our plan also supports our excellent universities in commercialising the work they do. Finally, it promotes inclusivity, in the form of building a labour market that can contribute equitably, by promoting fair work and sustainable jobs and by taking positive steps to ensure that families can contribute and lead the way in supported childcare. With further devolution of employment law and the minimum wage, the Scottish Parliament could boost pay and standards, and raise employee satisfaction still further. We want to see more sustainable and high-quality employment opportunities, with a partnership approach to employment conditions. We have also proposed a £2 rise in the minimum wage to £8.70 by 2020 and have actively promoted the living wage.

The Scottish Government are doing what they can with the devolved powers they currently have. Given Scotland’s impressive relative performance since 2007, they have been successful. The truth is that the UK operates a failed and outdated business model, one that delivers for the few but not for the many. With its focus on the City of London and its neglect of key manufacturing and other high value added sectors, it has failed to deliver for the people of Scotland, as well as for many across many other parts of the UK.