Scottish Economy

HC Deb 08 February 1990 vol 166 cc1025-68 4.16 pm

Mr. Donald Dewar (Glasgow, Garscadden)

I beg to move,

That this House condemns the failure of the Government's economic policy in Scotland which has resulted in relative economic decline, unacceptable levels of unemployment and inadequate industrial investment, has involved a perverse determination to reduce regional incentives, and has neither protected vital areas of Scottish industry and commerce from the effects of high interest rates, nor properly prepared for the testing challenge that will come with the Single European Market in 1992.

Mr. Speaker

I must announce to the House that I have selected the amendment in the name of the Prime Minister.

Mr. Dewar

The debate has been called for by the Labour party to reflect the widespread concern and anxiety about the state and performance of the Scottish economy. I make that point because I understand from almost every member of the Scottish press to whom I have spoken today that they have been enthusiastically briefed by the Scottish Tory Whip to the effect that the Secretary of State is hellbent on a debate about local government finance. I hope that he will think better of that. The vital issues of investment, jobs and the country's economic performance are the subjects of today's debate.

The Secretary of State ought also to think of the workers who have been involved over the last two or three months in redundancies or threatened redundancies; many of them have been in contact with hon. Members. I am thinking of what has arisen in Philips of Bishopbriggs, Weir pumps, Lowndes Queensway plc, House of Fraser administration offices, Peterhead Engineering and Redpath Dorman Long. In almost every area there has been bad news as high interest rates bite. We owe it to those people and to their communities to take a serious look at our economic performance.

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

If the hon. Gentleman believes that the economy is in crisis and that this is a major debate, can he explain why only 10 of the 49 Scottish Labour Members are in the House?

Mr. Dewar

There are several places where hon. Members may be legitimately, as the right hon. and learned Gentleman knows. Of course, he is very strongly supported by two Scottish Conservatives. I have no doubt that that was a good point in the right hon. and learned Gentleman's new smart-Alick role with which he has been entertaining the Scottish public, but I do not think it does much for the seriousness of the debate.

If, at some future date, the right hon. and learned Gentleman wishes to have a debate about the poll tax, the division, bitterness and injustice that it has brought in its wake, and how to replace it with a sensible and solid scheme, I should be delighted to have one, and would look forward to it and to coming well out of it.

Economic forecasting is always a subjective art. There is a traditional flurry of reports on a quarterly basis. In recent months I have had some amusement from seeing, within a few brief weeks, the Fraser of Allander Institute being attacked with vim and vigour by the Minister and then, almost immediately afterwards, being clutched to him as a shield and buckler because another document happened to suit his brief at that time.

I accept that, because such forecasting is subjective, one can usually find something to give comfort in almost any of the reports. The one on which I wish to concentrate today comes from a good pedigree and a longer perspective. The report was produced by the industry and enterprise development directorate of the Scottish Development Agency in November 1989. It is an authoritative substantial description and analysis of our economic performance. It was not written with any wish to embarrass the Government. It is written with a degree of objectivity which makes it of particular interest to the House.

The report flatly contradicts many of the Minister's assumptions about the health of the economy about which we have heard so much in recent months. I shall summarise its main message: While aggregate output has increased, the Scottish economy has experienced a prolonged period of relative decline. There is no evidence that this has been reversed during the 1980s. Indeed, it is not fully participating in the UK's economic recovery and its relative position has further deteriorated during the 1980s. For example, over the period 1983–88, UK output rose by 21 per cent. and employment by 8 per cent.; the equivalent figures for Scotland are 15 per cent. and minus 0.1 per cent. UK growth is heavily concentrated in Southern England. As job opportunities have appeared in the South, so net out-migration from Scotland has increased reaching over 20,000 in 1988. The report goes on to comment on the disappointing position of Scotland in a number of the league tables on unemployment and productivity with which we are so familiar. It comments on the fact that the average household income is 86 per cent. of the UK average.

The following amazing sentence, underlined in my copy, states: Scotland remains locked into the process of relative economic decline compared to the United Kingdom and the rest of Europe. I shall give another quote, from near the end of the paper, which also summarises its theme: The paper demonstrates the long-term relative decline of the Scottish economy. It has been unable to generate sufficient new output in employment to match the available labour supply. Consequently, Scotland has experienced high net out-migration, population decline and high unemployment. The contribution of indigenously based industry has been particularly disappointing. There is no evidence that Scotland has or is about to break out of this process of relative decline. That is put in restrained terms that are sober but contain an unmistakable message: we face major difficulties, there are worrying long-term trends and the Government's policy has failed on a series of vital objectives and issues.

The Opposition believe that there has to be a partnership between Government, industry and the community. The Government cannot stand back, take a hands-off attitude and leave it to the market. To the credit of the Secretary of State, I believe that he is a reluctant convert to that attitude. However, these days he is surrounded by zealots and has succumbed. In the key parts of the report, the case for concern and for the prosecution is substantial.

Mr. Rifkind

Is the hon. Gentleman aware that the substance of the report, which is by an official within the SDA, was reported in, I think, the Glasgow Herald on 12 December last year? It was riot endorsed by the SDA board, precisely because it disagreed with many of its views. Is he aware that the period of economic decline to which he referred started, according to the report, in 1955, not 1979?

Mr. Dewar

I welcome the fact that the right hon. and learned Gentleman agrees that this is a genuine document that represents research done in the Scottish Development Agency. As the Secretary of State knows, the SDA is an organisation which he and his Ministers often laud as an important part of the Government's machinery. Its expertise is something on which they often rely. I am delighted to know that this represents the position of officials in the SDA, at whom I do not sneer. Naturally, it looks at long-term trends. I do not disguise that; indeed, that is one of its virtues. I said that it had wider perspectives, which gives it a certain objectivity and authority, and I hope that the Minister recognises that.

The investment figures for Scotland are not good enough. I quote from that document again, and I assume that the Secretary of State, who may have disagreements about the interpretation placed on the facts, will not quarrel with the facts themselves: Despite the recovery since the early 1980s, manufacturing output remains below the 1973 peak. Output has risen dramatically in electronics and instrument engineering, but few other sectors have yet surpassed their 1973 production levels. Some, including metal manufacturing and mechanical engineering, have shown little sign of recovery. That is a different interpretation of the facts and figures than we normally get from Ministers and it is cause for concern.

I was told in a written answer on 31 January that gross domestic fixed capital formation was running, in cash terms, in 1985 at £861 million; in 1986 at £788 million; and in 1987 at £738 million. For reasons that are not clear to me, I was told that it was impossible to apply the inflator and produce the figures in constant prices. But even in cash terms, they are alarming enough.

We have the extraordinary situation that regional preferential assistance to industry in Scotland—I am now dealing in constant, 1988–89, prices—has more than halved since 1978–79, when it was £349 million. In 1988–89 it was £151.2 million. It is sad to note that, according to the public expenditure White Paper, the intention is that that decline should continue.

My hon. Friends and I do not see the point of asking industry to do more with less. The problems will mount because in Europe we shall have difficulties, with the new arrangements for objective 1 areas—none of which are in Scotland—creaming off about 80 per cent. of the structural funds. That puts a premium on Government effort, and that effort has not been forthcoming. From the way in which regional incentives have been ruthlessly dismantled, the Government's policy amounts to a dereliction of duty.

The impact of all that, as hon. Members in all parts of the House know—even some who are comparative strangers to Scottish economic debates—results in our having an unemployment rate which remains persistently 50 per cent. above the British average.

Another index about which Ministers often talk is wages. The rates for full-time male employees on adult rates, taking weekly wages in Scotland as a percentage of those in the south-east of England, reveal a stark picture. In 1984—I take that base year because I am advised by the Library that before then there was a difference in the basis of compilation, so in fairness 1984 is the best starting point—the Scottish wage was 90.2 per cent. of that in the south-east. In 1989 it was 80.4 per cent., a drop of about 10 per cent.

Compared with Britain as a whole, the Scottish rate was 99.9 per cent. in 1984—almost certainly due to the impact of oil wages, but at least satisfactory in that it was almost at the British average—but by 1989 it had tumbled to 93.2 per cent. Net migration is also a constant source of worry to all who have the interests of the Scottish economy at heart.

Mr. Robert Hayward (Kingswood)

The hon. Gentleman seems to have left the question of investment without referring to inward investment. In particular, he did not refer to a written answer that he received on 1 February from the Department of Trade and Industry which, in a table, showed under inward investment in 1979 in Scotland new and safeguarded jobs totalling 2,757. I presume that he made no reference to the figures given in that answer because they did not fit his case, for by 1988 the figure of new and safeguarded jobs had reached 7,370.

Mr. Dewar

I am flattered and delighted that the hon. Gentleman reads my parliamentary questions with such interest. If I were not a man of trusting faith, I could almost have imagined that someone had drawn it to his attention. In case that is so, I draw to his attention the excellent debates in the Standing Committee on the Enterprise and New Towns Bill, when we dealt with that issue at some length. Perhaps he would like to read also the report of the National Audit Office, which strongly criticised the presentation of the figures by the Scottish Office. He might then have a more rounded, balanced view of those matters than one can obtain from reading a slip of paper from the Whips' Office.

I was about to refer to net migration. The Scottish Development Agency report stated: It is widely expected that in Scotland manufacturing employment will continue to decline, private services will grow more slowly than the UK average and that the economy will underperform UK growth rates. Based on past relative performance within a UK annual growth rate of 2–3 per cent., Scotland would not generate sufficient employment to bring any substantial fall in unemployment. Nevertheless"— this is the good news, I suppose— unemployment would fall to somewhere near 7.5 per cent."— now the bad news— due to continuing out-migration to Southern England. It is a mark of concern that the Registrar General's projections—which I admit are raw statistics—for the population of Scotland in the year 2027, which is not far away, is about 500,000 lower than at present. I accept that many things will distort that projection, but there is no doubt that we are in danger of paying a high price for our failure to hold our own population and to attract the type of industry that gives us a base for future prosperity.

Mr. Rifkind

We are all concerned about migration, but is the hon. Gentleman unaware that in 1988–89, the last financial year, net migration from Scotland was the lowest of any year since 1975? If the hon. Gentleman wishes to comment on migration, should not he refer to that fact as well?

Mr. Dewar

I am perfectly prepared to accept that correction from the Secretary of State for that one year, if he will accept the general picture that I have recorded. We are in a serious position, and the long-term trend is still of the type that I have described.

The Minister of State, Scottish Office (Mr. Ian Lang)

Perhaps the hon. Gentleman would also draw to the attention of the House the fact that, during the two periods of Labour Government in the 1960s and the 1970s, net migration—not just to the remainder of the United Kingdom but overseas—totalled 150,000.

Mr. Dewar

The Minister makes an extremely valid point. The problem has been running for a long time. I object to the fact that we are constantly told by Ministers that we have nothing to worry about and that the corner has been turned. There is a complacency that borders on folly about the way that Ministers deal with those matters. We are right to point to the results of Government policy and high interest rates. Yesterday, the National Farmers Union of Scotland was worrying about investment in its industry—a different but nevertheless important industry, but it could be almost any sector of the Scottish economic scene.

There is also the problem of geography. That is not a fatal impediment to success in these days of high technology, but it must be overcome with Government help for the infrastructure of the country. We hear a great deal of the challenge of 1992. I sometimes think back to the days when we were campaigning—and I was campaigning for the yes vote—in the referendum on the Common Market. We talked about the challenge and the opportunities. However, what has happened is that the United Kingdom is now running a balance of trade deficit with the other members of the EEC of about £14,000 million. Clearly, if we are to put that right after 1992, we shall have to take a tumble to ourselves.

There has been reference to a report produced by the university of Louvain for the European Commission. It is of particular interest to Scots because one area that it studied was the Strathclyde region. It makes depressing reading. It talks about technological backwardness, of training not in touch with technical developments and of the dangers of areas such as Strathclyde being marginalised. From the report it was obvious that Britain and Spain were at one end of the scale while France, Germany and Belgium were at the other. That is a great worry for people such as myself, and I hope for Ministers also.

The SDA report spoke of the shake-up that may come and the fact that we have already had an enormous loss of control over industry and commerce in Scotland. It said: The corporate base and therefore growth capacity has been continuously eroded by the external acquisition of Scottish companies. Between 1983 and 1986"— part of the time when the Conservative Government were in power— 321 Scottish companies were taken over by non-Scottish companies. They tended to include the faster growing and better performing companies. In total these companies accounted for about 7 per cent. of the Scottish GDP. On the basis of those statistics, we have a real problem.

Nothing that we heard from the Minister in Committee leads us to expect that our problems will be solved by the restructuring and emergence of Scottish Enterprise, particularly a Scottish Enterprise working, apparently, a standstill budget.

Under-investment in transport is particularly highlighted in the Louvain university report, and there are the problems of the Channel tunnel. There are obvious worries and no guarantees of the kind of investment that will give us the links we need if we are to get into the European markets efficiently and effectively. If we do not, the long-term trends to which I have been referring will be very worrying indeed

I put it no higher than to say that I sometimes think we are a little complacent about our export record. The SDA report says: The real value of manufacturing exports remains below the 1978 peak, and outwith whisky and office machinery/data processing equipment Scottish industry remains less export orientated than the UK as a whole. We tend to sit back on the basis of some rather superficial figures and to think that all is for the best in the best of all possible worlds.

In particular, will the Minister turn his attention when he replies to the anxiety about the steel industry? That is not just of symbolic importance; it is part of Britain's core manufacturing industry. Our fear is that the Government have not so much abandoned responsibility—that might be unfair—as that they abandoned their ability to influence events when they privatised the industry.

I do not doubt for a moment that the Secretary of State is concerned—he has good cause for concern—but it is not so clear that he speaks for his colleagues. There was a now well-known and rather notorious exchange during questions to the Department of Trade and Industry the other day when the Secretary of State made it clear that he believed that the only test that should properly be applied is the commercial interests of British Steel. I hope that the Secretary of State for Scotland will take this opportunity of dissociating himself from that narrow view. We cannot have a Government who assume the role of a curious, even if anxious, spectator to what is happening to such an important industry.

As we know, there are pressure points in the strip mill at Ravenscraig, the plate mill at Dalziel, tubes at Clydesdale and at Imperial. This would be a good opportunity for the Government to give us a progress report. There is a strong case for the industry. The market in steel will recover and we need that capacity.

My opinion may not be persuasive on that and on a number of other issues, but let me draw the Secretary of State's attention to the autumn report of Cambridge Econometrics which refers to a net output stagnation in the steel industry during 1990, but suggests that output growth will be strong in 1991 as export markets revive. The long-term forecast talks about output growing steadily.

There is a good deal of evidence that the United Kingdom, and perhaps even Europe, will need the capacity in the Scottish steel industry in the period that lies ahead. It will be a tragedy if the narrow commercial and perhaps short-term interests of British Steel were the only test to be considered in deciding its fate.

We remain convinced that there is a need for investment, particularly in the mill at Clydesdale. Great efforts have been made to find new markets and it would be a scandal if we were to go out of tubes, and the North sea were to be supplied not only from outside Scotland but from outside the United Kingdom.

There are many rumours about a French connection. We should like to know whether the Government are monitoring the situation. Are they involved? Are they pressing for investment, not only in the mill but in the more immediate modest package that has been urged by the plant which would give it a competitive edge and boost morale? Has it been made clear to British Steel that regional incentives would be available for such investment?

The point—I do not want to go into too long a passage when my hon. Friend the Member for Motherwell, South (Dr. Bray) is here—also applies at Ravenscraig, where a proposal for automatic roll change gear and other relatively modest but very important and competitive investments is on the table, and the best that we can get out of British Steel is that it may be considered; this has not been said in as positive a tone as we should like. I very much hope that the Secretary of State is pressing hard for that investment and that he will make that clear during the debate.

We recognise the importance of the guarantee on steelmaking until 1994 at Ravenscraig, but it would be of little comfort if this were a bridging operation for the convenience of British Steel, leading nowhere. At Dalziel, too, there are concerns. We hear reports of the possibility of a one plate mill strategy, that decisions may well be imminent on that, and that it may be a case not so much of "if" as of "where". We are anxious that the Scottish Office should have a positive input into the argument.

Much manufacturing industry has changed or contracted. We make no bones about it. We accept that it was bound to happen. It is true to say, however, that we in Scotland have borne an unfair share of the burden. Perhaps I can take as a statistical basis for that assertion the view expressed in the Scottish Development Agency report: While Scotland's manufacturing output was still below its 1975 level in 1987, elsewhere in Europe over this period output had risen substantially (e.g., Germany—28 per cent., Italy—31 per cent., France—15 per cent.). With higher output the relative fall in manufacturing employment was much less than in Scotland. That, again, is a mark of our failure. We should not just write off that comparative gap as something about which we can do nothing and say that we must just watch and wait. New industries are important. I do not want to talk just about the steel industry and the old, traditional sector. Electronics has a future, but, again, it is a future bedevilled by lack of investment, research and development, product innovation and long-term economic development. Those points are forcefully put in the SDA report; it concludes its discussion of electronics by saying: the indigenous Scottish industry remains small and embryonic". The report is damaging because it undermines many of the Government's assumptions and supports the doubts and worries that are expressed, sometimes to derision or almost to the suggestion from Conservative Members that such doubts are unpatriotic or panic-stricken. It reinforces our fear that complacency has got out of hand and that we are not facing up to the problems that lie ahead.

Scotland has a great deal to offer, but even in the service sector, where there has been growth, it has tended to be slower than in other parts of the country. The SDA report says: It is in consumer orientated services—reflecting Scotland's falling population—that underperformance is most apparent. While Scotland has been losing jobs in distribution during the 1980s, employment has continued to grow rapidly in the UK. Perhaps more surprising is the performance of tourist related employment, which now accounts for some 130,000 jobs. In contrast to a 33 per cent. growth (1983–1987) in Great Britain, Scotland's growth is only some 12 per cent.; the difference has been most obvious during the 1980s when the Scottish industry contributed few additional jobs". That cannot be a reason for satisfaction; it must be a cause for worry and for an anxious re-examination of what the Government have been doing.

I found the report a deeply depressing and worrying document. The Secretary of State for Scotland has tried to pass it off as the work of an official. The SDA is an official body with expertise, playing a very important part in the economic planning of the Government, as we have always understood it. The Secretary of State tries to brush it off by saying that some of it has already been published. If it has, it was presumably not all that unimportant or meant merely to moulder in a drawer. It seems to me a thoughtful, thought-provoking and, from the Government's point of view, damaging document.

Scotland has a great deal to offer, and I agree that there are major opportunities, but those opportunities must be taken. We cannot afford a neutral Government who simply hold the ring. That has increasingly been the Government's role, and the Secretary of State must take much of the blame for it. There has been a lack of commitment, imagination and basic will. If it is not put right, the long-term trends and the habit of decline will be entrenched, to our cost. The battle for tomorrow must always be fought today. There is precious little sign that the Government are prepared to accept that responsibility. That is why we tabled the motion and will vote for it.

4.44 pm

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: congratulates the Government on the success of their economic policies in Scotland which have resulted in higher living standards, greatly reduced unemployment, a substantial increase in the workforce in employment, and record levels of manufacturing productivity and output; have promoted the competitiveness of Scottish industry and its readiness to meet the challenge of the Single European Market; have encouraged the growth of investment, of enterprise and small businesses, and have provided a basis for sustained growth and development across the economy as a whole; and notes that unemployment is now falling faster in Scotland than in the United Kingdom as a whole. I ought in all politeness to begin by welcoming the hon. Member for Glasgow, Garscadden (Mr. Dewar) back to the House of Commons after his dramatic flight to Glasgow yesterday for a press conference to try to save the tattered remnants of the roof tax. I assure him that I do not intend to speak on that subject today, and I am delighted that he is anxious to defend his proposals at the first opportunity; I am sure that that is something that we can easily accommodate.

There is one respect in which what the hon. Gentleman said yesterday is relevant to our debate today and to the Scottish economy. I understand that the hon. Gentleman gave various reasons why the Labour party has decided that a local income tax would be highly undesirable in the interests of the Scottish economy, and I hope that it will not embarrass the hon. Gentleman if I say that I agree with his analysis and conclusions.

I must add that if the hon. Gentleman believes, as I do, that the consequence of a local income tax would be to add some several pence, perhaps up to 10p, to the standard rate of income tax in Scotland, and that it would be undesirable for the people of Scotland to face a level of income tax higher than elsewhere in the United Kingdom, we can only express some puzzlement as to why the hon. Gentleman's party has failed to reach a similar conclusion about the consequence of giving a Scottish assembly power to alter the rate of income tax.

As we have identified before, it is the implications for the Scottish economy of a higher rate of income tax in Scotland than elsewhere in the United Kingdom which is one of the prime arguments as to why those proposals would damage Scottish jobs, Scottish employment and Scottish industry. It is therefore appropriate that the hon. Gentleman and his colleagues should at least try to be consistent.

Mr. James Wallace (Orkney and Shetland)

The Secretary of State referred to fiscal powers that many of us would like to see vested in a Scottish parliament. Does he agree that if, in the forthcoming Budget, the Chancellor thought it improper for the United Kingdom as a whole, because of overheating in the south-east, not to reduce corporation tax on small businesses, for example, but felt that it might be an important and useful measure for small businesses in Scotland, he would effectively not be allowed to do so? If we had a Scottish parliament with fiscal powers, such a tax-cutting measure could be undertaken.

Mr. Rifkind

To listen to the hon. Gentleman, one would not think that he was a member of a party that wishes to see fiscal integration in the European Community. His party's whole wish is to see a harmonisation of taxes throughout the Community. It is therefore a slightly curious way of bringing that about to wish to see fiscal disintegration in one part of the Community. Perhaps the hon. Gentleman should try to reconcile that curious anomaly in his position.

I should like to pay a compliment to Opposition Members, which the hon. Member for Garscadden did not pay, by responding to the terms of the motion. I always think that, where possible, we should allow these debates to concentrate on the motion on the Order paper. I am sure that the hon. Gentleman, at least in principle, does not disagree with that observation.

As I read through the motion, I saw several allegations made against the Government, to which it is appropriate for me to seek to respond. The first is that we are responsible for what the motion refers to as "relative economic decline" in Scotland. The word "relative" is important: "relative economic decline" is Labourspeak for "actual economic growth", and that is precisely what Scotland is experiencing and has experienced for some time.

It is important that that point be fully registered. It is something that the House should already be aware of, that over the past year Scotland has enjoyed the highest output, including manufacturing output, that it has ever known in its economic history. I recall, as I am sure the House will, that two or three years ago—

Mr. Thomas Graham (Renfrew, West and Inverclyde)

rose—

Mr. Rifkind

Perhaps the hon. Gentleman will allow me to continue for a moment.

I recall the Government and the House constantly being told by Opposition Members and by various learned commentators that Scotland was experiencing de-industrialisation and that the whole of Scotland, as an industrial economy, was disappearing like snow off a dyke. Yet we find that in the past 12 months manufacturing output not only has been maintained, but has been the highest in our economic history. That does not refer to the service sector only; it includes the manufacturing sector.

Mr. Tam Dalyell (Linlithgow)

This is a point that affects a great many of my constituents. On manufacturing output, can the Scottish Office look very carefully—that is all I ask—at the operation now of Mr. Kerry Packer and his associates, after two, if not three, Australian takeovers, of the north British Steel foundry in Bathgate, coupled with the Atlas Steel foundry in Armadale? I know that those are important sectors of any economy. I know that there are problems. I think that the Scottish Office has tried to be helpful. Could this have the attention of both the right hon. and learned Gentleman and his Minister of State? It is a very complex matter.

Mr. Rifkind

I am happy to give the hon. Gentleman the assurance that we shall certainly look at the point that he raises.

Not only is Scotland experiencing the highest manufacturing output of its economic history, but output there is now growing faster than that of the United Kingdom as a whole. For example, in 1988–89, the last year for which we have figures available, the level of growth of industrial production in the United Kingdom was 2.2 per cent. In Scotland it was 4.5 per cent. Faced with those figures and the present record manufacturing output, the reference in the Opposition motion to "relative economic decline" shows a disregard for the facts that is not to the credit of the hon. Member for Garscadden.

Mr. Jim Sillars (Glasgow, Govan)

Is the right hon. and learned Gentleman suggesting that we are suffering from overheating of the Scottish economy? If this has been such an economic miracle, why are we still losing young skilled people, who have to go south to find jobs?

Mr. Rifkind

I do not know whether the hon. Gentleman was in the House a few moments ago when I intervened during the speech of the hon. Member for Garscadden. The question of migration was raised at that time and I was able to inform the House that the net migration figures last year were the lowest of any year since 1975. That is something which I am sure the hon. Gentleman will welcome as much as I do. I am not saying that we do not have economic problems in Scotland, or that the economy in Scotland is overheated. I am saying that the Scottish economy at present is growing faster than that of the United Kingdom as a whole, and not to recognise that is to do a disservice to Scotland's interests.

Mr. Gavin Strang (Edinburgh, East)

As the Secretary of State knows very well, Scotland's largest manufacturing employer is Ferranti. I put it to him, as the Minister with responsibility for the Scottish economy, that we welcome the support that the Government have given to the GEC acquisition of Ferranti Defence Systems in Edinburgh, but to achieve the benefits of that we need to win the radar contract, which will be achieved only if that acquisition is not referred to the Monopolies and Mergers Commission.

I know that the right hon. and learned Gentleman cannot anticipate the decision of the Secretary of State for Trade and Industry, but, if the acquisition is referred to the MMC, it will jeopardise not only the radar contract but the whole European fighter aircraft project, which involves thousands of jobs. Will he take that on board and ensure that the Secretary of State for Trade and Industry fully takes account of Scottish economic interests in this matter?

Mr. Rifkind

I note what the hon. Gentleman says; I am sure that he will acknowledge that recent developments regarding Ferranti have been beneficial to the interests of the thousands of members of its work force in Edinburgh. I shall be happy to give the hon. Gentleman the support he seeks if he will support the maintenance of proper levels of defence expenditure, as without that, Ferranti would have a pretty grim future.

Mr. Bill Walker (Tayside, North)

Will my right hon. and learned Friend remind the Opposition that the EFA programme depends vitally on a pledge from this Government and any future Government, and that we should be interested to know what Labour's view is on that?

Mr. Rifkind

My hon. Friend is absolutely correct in saying that it works both ways, as I am sure the hon. Member for Edinburgh, East (Mr. Strang) will recognise.

Dr. Jeremy Bray (Motherwell, South)

There has already been a reference to the importance of Ravenscraig, which must account for about 5 per cent. of Scottish manufacturing output. Is the right hon. and learned Gentleman aware that the cuts in output of steel in Scotland, which have not taken place in Wales, must have reduced manufacturing output in Scotland by at least 1 per cent.?

Mr. Rifkind

This is becoming more like Question Time and less like a debate than I had originally intended. Obviously, we have expressed our concern about recent decisions in that respect. It is encouraging that, since Christmas, Ravenscraig has resumed its output of steel products. I know that the hon. Gentleman will welcome that.

The charge of "relative economic decline" is difficult for the Opposition to sustain, certainly when one looks at developments in the Scottish economy over the past year.

The next charge is of "unacceptable levels of unemployment" and I must ask the hon. Member for Garscadden what he means by that. If he means that unemployment is too high, I agree; that would be true of any time in the past 30 years. There has never been a time when hon. Members on either side of the House have been complacent about the levels of unemployment.

However, if the hon. Gentleman is trying to discern the current trend of the problem of unemployment, he should at least acknowledge that over the past year unemployment in Scotland has fallen by no less than 50,000, which is the largest fall since records began in 1948. Not only has unemployment fallen by 50,000 in one year, but the rate at which unemployment is falling in Scotland has, over the past few months, been significantly higher than in other parts of the United Kingdom.

If the hon. Gentleman looks at those matters not from the perspective of unemployment but from the perspective of total employment in Scotland, the situation is equally encouraging. Employment in Scotland increased by no less than 100,000 in 1987, the latest year for which we have figures, and that included the manufacturing sector. That is something of which the hon. Gentleman should be aware. The total number of people in employment is the highest that it has been for 10 years.

Mr. Dewar

Why, if the record is so good, has the gap in average earnings to which I referred opened as it has? If the right hon. and learned Gentleman goes back two or three years, he will see that in the league table of unemployment we were in the middle. We are now, on the British mainland, the second highest, behind only the north. It seems to me that our record has been deteriorating quite clearly against the record in other parts of Great Britain over the past two or three years.

Mr. Rifkind

I do not accept that there is any such trend to which the hon. Gentleman is entitled to refer. He will know that, when we pointed out that Scotland had very high levels of earnings a few years ago, he immediately dismissed that as somehow irrelevant to his argument. Now that there has been a relative change in respect of certain areas of England, he immediately says that this is decisive and conclusive. The hon. Gentleman must make up his mind about the importance that he attaches to these matters.

Several Hon. Members

rose—

Mr. Rifkind

The House will forgive me; this is a short debate and I have already given way a considerable number of times.

The next charge made against the Government is on the alleged inadequate levels of industrial investment and the alleged reduction in regional incentives. I happily concede that we should all like to see higher levels of industrial investment. That has been a problem in the United Kingdom as a whole probably for the past 100 years, never mind the past 10 or 30 years. But it is important also to recognise that the level of industrial investment in Scotland matches very well the United Kingdom level as a whole. While we would all wish to see it increased substantially, that is something that is ultimately within the control of industry itself.

On regional incentives, I accept that we have quite deliberately and consciously abolished the regional development grant. We did so with considerable support from the Scottish Council (Development and Industry) because it acknowledged in its study of the matter that automatic grants of that sort did little to encourage investment and that it was far more sensible to concentrate investment and support on companies that would not otherwise wish to invest in Scotland. That is, I believe, a much more logical and sensible basis.

We are accused in the motion of not having prepared properly for 1992. That is pretty rich from a party that opposed our membership of the European Community until very recently, although I exempt the hon. Member for Garscadden from that charge. However, he cannot allow his own party to be exempt from it, because it was passionately hostile to our membership of the Community until the British electorate persuaded it otherwise.

As the single most important preparation that we can make for 1992 is to improve our training and business support in Scotland, it is pretty ironic that the Labour party, alone in Scotland, is opposing Scottish Enterprise, and that it cannot even call on the support of the Scottish TUC or Scottish local authorities in its lonely, isolated opposition to the measure. It is pretty rich for Labour to say that we are not preparing for 1992. It is widely recognised by the Confederation of British Industry, by the STUC, by Scottish local authorities and by the whole Scottish economic community that Scottish Enterprise offers an exciting new opportunity, as does its counterpart in the Highlands and Islands. If the Opposition are concerned about those matters, they should tackle their own failure to support this important change.

Mr. Dennis Canavan (Falkirk, West)

rose—

Mr. Rifkind

I shall not give way at the moment, but perhaps later on.

On the charge that we have failed to protect Scotland from high interest rates, the hon. Member for Garscadden clearly has not examined recent trends in the Scottish economy. Several recent reports and studies acknowledged that Scotland was faring much better than any other part of the United Kingdom with regard to high interest rates.

Mr. Dewar

Not true.

Mr. Rifkind

I shall respond to that allegation. The forecast of growth for the United Kingdom for 1990 is 1.25 per cent. The report by Cambridge Econometrics to which the hon. Gentleman referred projects that growth in Scotland will be not 1.2 per cent., but 1.6 per cent. Fraser of Allander is projecting growth of 1.9 per cent. and is even more optimistic, and Business Strategies, in its recent reports, said that Scotland can expect to be second only to East Anglia in economic growth levels in the early 1990s.

The studies of the CBI in Scotland present a more optimistic picture than that painted by the CBI in the United Kingdom as a whole. In its surveys, the Scottish CBI shows that output in Scotland is growing faster than in the United Kingdom as a whole. Manufacturers are less pessimistic, exports are increasing faster and employment is growing, although it fell elsewhere in the United Kingdom in the last quarter of 1989.

Those are the views of outside spokesmen, including the Fraser of Allander Institute, which is a body that has never been hesitant to criticise the Government in the past when it thought it appropriate.

Mr. Dewar

As a corrective to those remarks, does the Minister remember the National Westminster bank report of 20 December 1989, which said: After a brief interlude next year, when Scotland will suffer less from a slowdown than the more prosperous parts of the United Kingdom, Scotland will again grow more slowly than the UK as a whole for the following five years."? I shall also quote the chairman of the CBI's economic committee in Scotland, Mr. Wrigglesworth, who said in October—so this is two or three months old—that: The outlook has deteriorated since summer, with orders and employment falling and output at a standstill.

Mr. Rifkind

The hon. Gentleman can easily see from the overall economic situation that Scotland is coping far better than the United Kingdom as a whole at present.

For example, let us consider the construction industry in Scotland—73 per cent. of those who responded to the survey by the Scottish Building Employers Federation say that they are expecting increased orders in the next year. That is the highest response of that kind in the United Kingdom.

We know that the Scottish economy has been less affected by high interest rates, it is more export-oriented and the oil industry in Scotland is booming at present, with an increase in employment of no less than 11 per cent. over the past year. We should warmly welcome that.

Mr. Alex Salmond (Banff and Buchan)

The Secretary of State was telling the House—and it was received with some incredulity—that the Scottish construction industry is undergoing a boom. I am looking at the index of industrial production, from which the Secretary of State quoted a few moments ago. It says that, since 1985, the Scotish construction industry has grown by 2.5 per cent., and in the same period the construction industry in the United Kingdom as a whole has grown by 23.5 per cent. Where is the boom?

Mr. Rifkind

The whole point that I am making, if the hon. Gentleman would be good enough to listen, is that in the past couple of years Scotland has overtaken the United Kingdom position, which has fallen back. The Building Employers Confederation's recent survey shows that 73 per cent. of Scottish firms expect an increase in their work load in the coming year. In no other part of the United Kingdom do firms expect anything like that. I should have thought that the hon. Gentleman would welcome that.

The hon. Gentleman is right in that, between 1985 and a year or so ago, the balance was the other way round. I have not sought to suggest otherwise, but in the past couple of years the situation has been reversed.

Several Hon. Members

rose—

Mr. Rifkind

I shall continue because many hon. Members want to take part in the debate.

Finally, I wish to refer to non-domestic rates, which are of equal importance to the Scottish economy and to the prospects of Scottish industry and employment. Opposition Members will be as anxious as I am to ensure that that important area of taxation, which has a material effect on commerce and industry in Scotland, should be properly protected. The hon. Member for Garscadden acknowledged that fact.

The Government have shown their commitment to achieve a level playing field—a harmonisation of business rates—and have taken early steps to move in that direction. For example, one of our first measures in the past few years was the indexation of non-domestic rates. That has already been of substantial benefit to Scottish industry and commerce. It has been estimated that, if we had not indexed non-domestic rates to the rate of inflation, Scottish industry and commerce would have paid £50 million more in business rates during the past few years. That support would disappear immediately if the Labour party's proposal came into effect.

I have been examining the Labour party's proposals, and they are revealing and interesting. The document published last week on non-domestic rates is rather coy. It says only that Labour's provisional plans were laid out in its consultation document published in 1989. I thought that I had better refer to the original holy writ on the subject, so I turned to that document, which says that Labour would abolish the restrictions limiting increases to the retail price index. Businesses should shoulder a fair burden of the cost of local services. I have no doubt that Opposition Members are proud of that proposal, but they should be under no illusion about what its consequences would be. If that had been Government policy in the past couple of years, businesses would already have paid £50 million more than they have paid, or are due to pay in the forthcoming year. That is the first consequence, and it would be damaging to the Scottish economy and to employment in Scotland.

But it is even more serious than that, because we know that local authorities—[Interruption.] No, let me continue. Local authorities have just been fixing the community charge, and we know that, if there had not been indexation, judging by the experience of previous years, the business rate would go up next year by the same amount as the community charge. For example, in Strathclyde, which covers half of Scotland, the increase in business rate would not have been limited to the rate of inflation, but would have been 12 per cent. In Stirling, the district business rate would be going up by 18 per cent., and in Edinburgh by 24 per cent.

I do not wish to debate who is responsible for that increase at the moment.[Laughter.] No, I am happy to do so on another occasion, and Opposition Members will not distract me from the point that I am making.

If this was a matter for local authority discretion, no matter whose fault it was, local authorities would be increasing the business rate for commerce and industry in Strathclyde by 12 per cent., and in Edinburgh by 24 per cent. Opposition Members should realise that that would be a consequence of the policies that they wish to pursue.

Mr. Robert Hughes (Aberdeen, North)

Will the Secretary of State give way?

Mr. Rifkind

I shall give way in a few moments.

The position is far worse than I have so far described. Not only is the Labour party opposed to the indexation of business rates, but the inevitable consequence of what I understand to be Labour's policy is that there would be no prospect, either now or in the future, of the harmonisation of business rates north and south of the border. That is an even more serious point. As the House knows, harmonisation has been welcomed by virtually everyone in Scotland and there has been widespread recognition that the Scottish economy and Scottish industry have suffered for years because of the high business rates there compared to rates in England and Wales. For the purpose of today's discussion, let us not argue as to whose fault that was.

Business rates have been far higher in Scotland than in England and Wales, and everyone, apart from the Labour party, seems to agree that that should end as quickly as possible. But to achieve that, two things must happen; there must be a harmonisation of valuation law and a common rates poundage. If local authorities are left to decide those matters, quite properly they will use their discretion in different ways. and on the experience of the past 40 years, business rates in Scotland will remain significantly higher than those in the rest of the United Kingdom.

In the very first year we have reduced the gap by £80 million. That £80 million, together with the £50 million by which industry has benefited from indexation, means that already our policy has saved industry and commerce in Scotland—that means the Scottish economy and Scottish jobs—no less than £130 million. All that would be wiped away if it became a matter of local authority discretion.

It is literally impossible to have a common business rate and local council discretion. If the Labour party chooses the latter, it will consciously damage the Scottish economy and Scottish employment. The situation goes from bad to worse. The Labour party document seems to acknowledge that differential rates burdens could be damaging to some sectors of industry. The document states that it will need to ensure that any proposals do not put Scottish small businesses at a serious disadvantage in comparison to small businesses elsewhere in the country. That sounds splendid, but why is it necessary to protect only small businesses from different and heavier rate burdens, but not big businesses or industry? Why protect small businesses, but give no protection to Ravenscraig, Yarrow, IBM or Ferranti?

I ask the hon. Member for Edinburgh, East why his party is guaranteeing or seeking to suggest that it would protect small businesses from differential rates burdens caused by giving local authorities discretion, but would offer no protection to the larger industries that employ most people. Has the hon. Member for Garscadden thought it out? Is it a conscious policy or is it simply a mess?

I suspect that it is a mess. I cannot conceive that the Labour party consciously wishes to put Ravenscraig, of all places, in a position where its rates burden would he consciously and deliberately higher than that of the steel industry elsewhere in the United Kingdom. As Opposition Members know, the steel industry in Scotland, along with every other industry there, has paid higher rates burdens than any industry in England and Wales. The Government's policy will eliminate that over a period. According to the document, the Opposition's policy would offer no such protection.

I have to ask the hon. Member for Garscadden—I shall happily give way to him—whether he and his party believe in and support the objectives of harmonising the rates burden of Scottish industry compared with industry south of the border. If he does, does he accept that that cannot be achieved without a common rates poundage? If he does not accept that, can he explain how giving local authorities discretion to determine the level of non-domestic rates is compatible with achieving a level playing field for Scottish industry compared with the rest of the United Kingdom?

Mr. Dewar

Obviously, I shall read with some care what the Secretary of State has said, but there are several ways in which we can help Scottish industry. Industrial derating was the simplest and best known way of doing that. I certainly do not accept that what he is doing, which is preserving the differences by conserving the present system, does what he has claimed.

The Secretary of State is indulging in sleight of hand. If he is assuming that the industrial rate will go up by the same extent as the poll tax, he forgets that that will produce a great deal more income that will bring both down towards a medium position. That is one example. I shall not say that the right hon. and learned Gentleman is cheating, as that would be an offensive thing to say and I would not wish to be offensive, but in a fabric of words, he is misrepresenting the position. We do not wish to place an unreasonable burden on Scottish industry, and we have no intention of doing so.

Mr. Rifkind

The hon. Gentleman has shown himself totally confused. I notice that he did not answer the question. The question was quite simple: does he believe in harmonisation—that means identical business rates for industry north and south of the border? If he does, how can he reconcile that with giving local authorities discretion as to the level of business rates? The hon. Gentleman knows that we have had industrial derating for years, and that has not produced a level playing field; that is not the answer. If the hon. Gentleman would like to clarify that, I shall happily give way to him again.

Mr. Dewar

I do not think that local authority discretion is necessarily the disaster that the right hon. and learned Gentleman is suggesting. In the past, local authority discretion has been a forced discretion, largely because cuts in central Government support meant that the system was bearing a burden for which it was never designed. If we consider who must bear the responsibility for that, I would not suggest the Secretary of State alone—I presume that his colleagues in the Treasury and his predecessors would take some responsibility. The right hon. and learned Gentleman talks about a mess and confusion and unreasonable burdens, but he should look at the record over the years of the Government whom he supports, in terms of the rate support grant, the revenue support grant and, of course, the poll tax.

Mr. Rifkind

The House and Scotland will note that the hon. Gentleman has not thought this one out. He is obviously embarrassed. He knows that in principle he is in favour of harmonisation. He knows that that is in Scotland's interests, but he obviously did not realise until today that that was incompatible with the policy that he is putting forward.

From the party that brought us the roof tax, we now have the jobs tax. The perpetuation of a heavier rates burden on Scottish industry and commerce would be damaging to heavy industry, to Ravenscraig, to Yarrow and to every business, big or small, wherever it may be in Scotland. If this debate is about the interests of the Scottish economy, I do not accuse the hon. Gentleman and his hon. Friends of deliberately wishing to do down the Scottish economy; I accuse them of a much more serious offence—of total and utter confusion and incompetence.

Hon. Members

Is that it?

5.17 pm

Mr. John McAllion (Dundee, East)

It is little wonder that my hon. Friends are asking the Secretary of State for Scotland, "Is that it?" Rarely have I seen a less competent performance by the right hon. and learned Gentleman. He showed complete and callous indifference to the state of the Scottish economy, and instead tried to turn the debate into an attack on Labour's policy on local government finance, purely to try to push the Tory party's chances in the forthcoming regional council elections in May.

The Secretary of State said that the House and Scotland would note what my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said. The people of Scotland will judge my hon. Friend's contribution to debates over the past 10 years, and that of the Secretary of State, when they go to the polls in the next general election. I have every confidence that they will give resounding support to the Labour party, and that the policies that it has espoused for many years will be put into practice when Labour wins the next general election and forms a Government for the United Kingdom and sets up a Scottish Parliament.

The Secretary of State referred to the document that the Labour party produced on local government. He referred to the phrase that stated that the Labour party will look to business to shoulder a fair share of local government taxation. The Secretary of State seemed to imply that it is terrible to envisage that business should carry a fair share of the burden. That implies that the Government's policy is that poll tax payers should carry an unfair share of the burden. If business does not carry its fair share, the burden will be put on the poll tax payers. If that is the official Government policy on which the Tories will fight the next regional council elections, and the next general election, I look forward to that contest, as I am confident of its outcome.

At the end of last year, the Standing Commission on the Scottish Economy produced its final report. I feel it is necessary to remind the Secretary of State that throughout the three years in which the standing commission studied the Scottish economy, it was studiously ignored by Ministers, as was its final report. Ministers may argue that it is another cross-party political body, but it is nothing of the sort; if it was, the Scottish National party would have walked out by now.

The Secretary of State must recognise that the standing commission is composed of distinguished Scottish academics, industrialists and economists. Its final report was based on 30 different reports from Scottish analyists, and it took in a wealth of evidence from overseas. The conclusion of its report is that we require Scottish solutions to Scottish problems.

In the preface to the report, the chairman of the standing commission, Professor Sir Kenneth Alexander, said: Some of the policy proposals are so specifically Scottish in their purpose that we consider it unlikely that they would be legislated by a Westminster Parliament. This leads us to conclude that the adoption of such policy initiatives requires a more decentralised political and administrative structure with a Parliament in Scotland having key economic and social powers. That is not a party political conclusion but the conclusion of industrialists and business men. They have determined that Scotland's economic problems will be solved only by a Scottish Parliament with key economic powers.

It is imperative that the Secretary of State begins to take that message on board, because if he does not he will fail to understand the real problems that are facing the Scottish economy. He must accept that we have a pan-United Kingdom institution in charge of the Scottish economy—the Westminster Parliament. I shall not argue whether, by definition, that is good or bad. In control of that Westminster Parliament is a party whose power base is almost exclusively in the midlands and south of England. It will secure its control of Parliament as long as it retains its power base in the south. It does not require the voters of Wales, Scotland or the north to return it to office. As long as the voters of the midlands and south of England vote for it, it will retain control of this country.

The Conservative party is interested only in ensuring that everything is done to secure the economic interests of the south of England. It does not care whether that is bad for Wales, Scotland or the north, because it does not need voters in those areas to return it to office.

Mr. Bill Walker

Does the hon. Gentleman realise that the description that he is giving rather fits the Labour party's position in Scotland, where it represents only one seat north of the Tay?

Mr. Robert Hughes

What about Aberdeen?

Mr. McAllion

As my hon. Friend points out, Aberdeen is north of the Tay. Sometimes, Dundee is also considered to be north of the Tay.

Mr. Bill Walker

rose—

Mr. McAllion

If that is to he the quality of the hon. Gentleman's interventions, I will not give way again. The hon. Gentleman has convinced me that it is unwise to give way to him.

Mr. John McFall (Dumbarton)

Was the intervention made by the hon. Member for Tayside, North (Mr. Walker) deliberate disinformation in the guise of his position as Scottish Defence Minister, or was it complete ignorance on his part?

Mr. McAllion

As my hon. Friend knows, it was complete ignorance.

The solution to the economy overheating in the south is to apply high interest rates not only in the south but in Scotland, Wales and the north, regardless of whether the economies of those areas need it. The mass unemployment, slow growth and under-utilisation of capacity in Scotland represent a complete negation and condemnation of the Government policy.

Mr. Hayward

Will the hon. Gentleman give way?

Mr. McAllion

I shall not give way because the hon. Gentleman is an English Member.

Mr. Tim Devlin (Stockton, South)

On a point of order, Mr. Deputy Speaker. The hon. Member for Dundee, East (Mr. McAllion) said that he will not give way to my hon. Friend the Member for Kingswood (Mr. Hayward) because he is an English Member. Will you remind Scottish Members that all hon. Members are eligible to take part in debates on all parts of the United Kingdom? Many of us have much interest in the welfare of Scotland.

Mr. Deputy Speaker (Mr. Harold Walker)

The hon. Member who has the Floor decides to whom he will give way.

Mr. McAllion

I would have been more impressed by that point of order if the hon. Member for Stockton, South (Mr. Devlin) had been present throughout the debate.

Mr. Hayward

rose—

Mr. McAllion

I will not give way to the hon. Gentleman; this is a short debate.

May I draw the Secretary of State's attention to the research carried out for the standing commission by Alastair Lonie and David Power at Dundee university, and the evidence given by Professor David Vines and David Bell of Glasgow? They concluded that the policy of high interest rates had disproportionately disadvantaged Scotland and had taken £630 million from the local economy—more than the annual budget for the Scottish Development Agency and regional assistance in Scotland.

The Government have deliberately taken £630 million from an economy which is suffering from unemployment and under-utilisation of capacity and tried to pass that off as a serious economic policy that will benefit the people of Scotland.

It is not so much that the Government have the wrong diagnosis for Scotland as that they have no diagnosis and do not care whether they have such a diagnosis because they do not need the voters of Scotland in order to be re-elected.

Mr. Hayward

rose—

Mr. McAllion

I have only a short time available, so I will not give way to the hon. Gentleman.

We know that the Secretary of State has abolished regional development grants in favour of selective assistance, which he says will more effectively target Government money where it is required. That was considered in some detail by the standing commission. It carried out a survey of regional financial assistance in Scotland between 1981 and 1988. It concluded that fewer firms are being helped now than in 1981.

The standing commission then considered the take-up of selective assistance, but what it found was very different from the picture that the Government paint. Taking into account the new and revised offers made by the Government, it found that in 1988–89 only £49.4 million had been provided in selective assistance to firms in Scotland—£9 million less than the previous year, and £17 million less than in 1984–85. The Scottish economy is desperately in need of state support and investment, yet it is being starved of both by the Government.

The standing commission concluded that, although that policy helped to reduce the Exchequer's outlay£and no doubt the public sector borrowing requirement£it was proving a real cost to the Scottish economy and was effectively negating the Government's policy of regional assistance.

There is evidence of that everywhere in Scotland. The headline in the Glasgow Herald of last November said, "Docklands aid dwarfs Scotland's". Alf Young, its economic correspondent, wrote of the most dramatic demonstration of regional policy in reverse yet mounted by the Thatcher Government and the massive spending by the Government on London docklands. Docklands boasts an enterprise zone on the Isle of Dogs. Quite why an enterprise zone was necessary to move the City of London a few miles down the river has always been beyond me. The article says that the Government are increasing assistance for the docklands development from £228 million to £332 million in 1990–91. Between 1989 and 1992, the Government will make a staggering investment of £813 million in the docklands development.

In addition, the extension of the Jubilee line to Canary wharf will cost £1,000 million, £600 million of which will be direct state subsidy. When I raised with Ministers and ScotRail the electrification of the line north of Edinburgh. I was told that it was too expensive at £100 million, yet £1,000 million is being spent on a short extension of the Underground to docklands. However, they cannot afford to electrify the north-east railway line north of Edinburgh, which is a disgrace.

If one compares the budgets for the Scottish Development Agency and for the new Scottish Enterprise, on present trends and over the same period to which I referred when I spoke about the docklands, one sees that no more than £330 million will be allocated to Scotland.

How does that compare with the £1,000 million for the Underground development and with the £813 million for the London docklands development? Inevitably, the people who pay the price for those problems—

Mr. Devlin

Will the hon. Gentleman give way?

Mr. McAllion

I will not give way to the hon. Gentleman, who was not here at the beginning of the debate.

The people who pay the price for the Government's policies are those whom the Opposition represent and who live in Scotland, in the north of England and in Wales. The Secretary of State referred to the tremendous falls in unemployment. In my constituency, the figures of the Secretary of State suggested that 4,791 people were out of work last November. He would no doubt argue that that represents tremendous progress compared to the figures in 1982, but it represents progress only if one is taken in by the Government's own fiddled figures for unemployment.

Since 1982, there have been no fewer than 30 changes in the way in which the Government count the unemployed. Only one increased the number of unemployed; the other 29 reduced the number of those who were officially counted as unemployed. That was done in many ways. The Government based the figures, for example, on the claimant count rather than on those who were out of work and seeking work. They also discounted unemployed school leavers and denied income support to 16 and 17-year-olds. Those were all ways of bringing down the unemployment figure without bringing down unemployment.

Mr. Lang

The Organisation for Economic Cooperation and Development labour force survey assesses unemployment in the United Kingdom as being lower than the figures that we assess from our own unemployment benefit count. Is not the hon. Gentleman's case therefore nonsense?

Mr. McAllion

My case is not nonsense. The figures have been made available to me by the Unemployment Unit, which examines the Government's fiddled statistics carefully. It provided figures that show a different picture. Instead of there being 4,791 unemployed in Dundee, East, there are 7,011 unemployed in that constituency. In other words, 2,200 unemployed people have disappeared from the statistics not because they found work and so were no longer unemployed, but because they were removed by the Government's administrative diktat. They are still there and still unemployed, but they have become invisible to those in the Department of Employment who count the unemployed.

Dundee, East now has a real unemployment level of 17.5 per cent. more than 10 years after the Government took responsibility for the Scottish economy. Of 633 constituencies, only 48 have higher unemployment and almost all are in Scotland, in the north of England and in Wales.

Mr. Hayward

rose—

Mr. McAllion

None of those constituencies is in the south-east, yet the hon. Members who represent constituencies there get up on their hind legs and boast about unemployment being defeated once and for all. They should tell that to the people in Scotland, in Wales and in the north of England.

Mr. Hayward

rose—

Mr. McAllion

The hon. Gentleman will have the chance to make his own speech later.

What is worse is that, among the unemployed in Dundee, East, almost one in three have been out of work for at least a year. Does the Secretary of State wish to boast about such a record at the Dispatch Box? I hope not. I am conscious of the time and I may have spoken for too long already. [HON. MEMBERS: "Hear, hear."] I am pleased that the Minister says, "Hear, hear." I am obviously having some effect.

Other hon. Members have referred to moving away from the old smokestack industries into new sectors, such as electronics, which is a central theme of the Government's defence of its handling of the Scottish economy. They always boast about the work of Locate in Scotland in attracting inward investment to Scotland. That argument is beginning to wear thin with the Opposition.

The Government must understand that we live in a world where competition for inward investment is becoming ever fiercer. In four inward investment cases, Scotland has lost out. The Mitsubishi Electrics £180 million semiconductor plant did not go to Scotland, but to West Germany. The Fujitsu £400 million microchip plant went to the north-east of England and Texas Instruments, with 1,000 jobs, went to Italy. The Intel Corporation from California, with up to 2,400 jobs, went to the Republic of Ireland.

Increasingly, that will become the pattern. We shall be competing not only with the countries and areas that I have mentioned, but with eastern Europe. I heard on the radio this morning that workers in factories in East Berlin, for example, earn the equivalent of £25 a week. With such low-wage economies, where will international capital go to build its new semiconductor plants and its factories? It will go to eastern Europe, not to countries such as Scotland, England and Wales.

Mr. Lang

Will the hon. Gentleman remind the House why the Ford Motor Company did not come to Dundee?

Mr. McAllion

That is easy. Ford did not come to Dundee because Ford can play one country off against another. The hon. Gentleman should remind himself of the real issue. Ford claimed that it refused to come to Dundee because it could not obtain a single-union agreement there. What happened? Ford went to Spain. It did not obtain a single-union agreement there, but a multi-union agreement. It went to Spain because the Spanish Government provided more incentives.

Does the Minister remember Wang in Stirling and Caterpillar in Uddingston? Those were multinational companies which came here, picked the flesh off the bones of the Scottish economy and then took off when it suited them. Increasingly, that will be the pattern, as the Minister must realise. He cannot base his whole strategy on attracting inward investment. That is not realistic nowadays.

If we are to move forward, we must have a strategy that focuses on the local people and on the local area, with indigenous enterprise. That strategy was developed first in Scotland by the Labour administration in Tayside region in 1986. We went to the people with the policy of establishing an enterprise board which would give assistance, soft loans and grants to small and medium-sized companies in Tayside to encourage them to grow.

That was a successful policy, but it was fought tooth and nail first by central Government, because to them it smacked too much of the Greater London council from which the idea was borrowed, and then by the local Tories, who thought that it involved interference in the free market. Now it has been heralded as a great success. The Minister of State, Scottish Office came up to Dundee to help launch the Tayside enterprise board and to try to claim some credit for it, although his party had fought it tooth and nail all along.

If we are to have the policies that will boost local industry and the local economy, they will come only from control being decentralised from Westminster. They will come only from a powerful Scottish parliament with key economic powers and key powers over the infrastructure. There is no future for Scotland otherwise. That is the conclusion of the standing commission report and, increasingly, of people across the country. It should be the conclusion of the debate, although unfortunately it will not be, because this debate has no effect on the Scottish economy or on Government policy. The Secretary of State is not Scotland's man in the Cabinet, but the Cabinet's man in Scotland and there is a wealth of difference in that distinction.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. Unless speeches are much briefer, I am afraid that a number of hon. Members will be disappointed.

5.37 pm

Mr. Bill Walker (Tayside, North)

The hon. Member for Dundee, East (Mr. McAllion) does not, of course, like to be reminded about Ford, so I shall remind him of something else. I shall remind him of the time when Dundee was competing for the headquarters of an international oil company. When the decision was about to be made, Dundee district council told its employees to go out on strike in support of what was obviously a politically motivated activity. That did nothing to persuade the oil company that Dundee was the place to establish its headquarters. With such leadership, companies will not come. I shall return to the problems of Dundee later, because my constituency is adjacent to Dundee.

Mr. John Maxton (Glasgow, Cathcart)

Will the hon. Gentleman give way?

Mr. Walker

I have only just started my speech, but very well.

Mr. Maxton

I hoped that the hon. Gentleman would correct the misinformation that he gave the House earlier. Will he point out to the House that the Labour party has five seats north of the Tay, whereas the Tories have two and a half?

Mr. Walker

I hope that the hon. Gentleman understands where north is in Scottish geography. If he said that the Labour party had four seats including those in Dundee and Aberdeen—and I imagine that he is also including the Western Isles—he would not be right about what was pure north. I should not expect him to understand that. I draw the hon. Gentleman's attention to the fact that in the Highlands, the Labour party is not considered to be the party that understands its problems—[HON. MEMBERS: "The Tories aren't."] The Labour party claims that it speaks for all the people of Scotland. I have never claimed to speak for all the people of Scotland. I speak for the people of north Tayside.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) said that the Conservatives were going to make this a debate about the roof tax. We are not. I find it interesting that the Labour party wishes to have a tax for Scotland which is different from that for England and Wales. I imagine that on this occasion Scotland is to be Labour's guinea pig. As I understand its proposals, councils will set their own levels of expenditure and the level of roof tax. Once again, under Labour, the elderly will pay a tax based on the size and present-day value of their home, regardless of the price that they paid for it.

The Labour party proposes to introduce computerised revaluations. What a lovely way to revalue. Labour would return Scotland to the evils of the old rating system and of revaluations. The uniform business rate will vanish and, once more, Scotland's shopkeepers and business men will find that department stores in Sauchiehall street pay more in local authority tax than similar stores in Regent street in London. There would be no harmonisation under Labour, and we know why. As my right hon. and learned Friend the Secretary of State said, there would be a 24 per cent-plus increase in the business rate this year. Of course, the £130 million saving made under our policy last year and this year would not be made under Labour's policies.

I welcome my right hon. and learned Friend's statement today on flood and storm damage in my constituency and other Scottish constituencies. That statement will be welcomed by all who have suffered in the flooding. That is true of my constituency where there has been extensive flooding.

The output of Scottish manufacturing industry in the second quarter of 1989 reached record levels. The Opposition do not like to be told that. Industry surpassed the previous peak recorded in the second quarter of 1974. Output was 3.8 per cent. up on the previous quarter. In 1988, manufacturing output in Scotland grew by about 8 per cent. At the same time, seasonally adjusted unemployment stood at 8.5 per cent. in December last year—the lowest since 1980.

Self-employment has increased by 50 per cent. since 1981. Between June 1981 and June 1988, self-employment rose by 66,000. When one compares that with the three decades to 1981—in which there was no change—one can see what a remarkable change has taken place in Scotland.

The October Confederation of British Industry survey confirmed the August Scottish chambers of commerce's business survey which showed that export markets, on which we depend so vitally, remain healthy. The 1989 annual survey of the top 200 Scottish firms carried out by Scottish Business Insider shows that turnover rose by 25 per cent. on the year before. That is a massive increase. Profits were up by 14 per cent. Both turnover and profits are up, yet all that we hear from Opposition Members is doom and gloom.

Some 132 of the top 200 companies are Scottish-owned. So much for the nonsense about Scotland's industry being owned and run by other people. All those facts show that the growth in the Scottish economy in 1988 was the strongest since 1973.

The growth in Scottish manufacturing productivity since 1979 has been faster than any of the major industrial economies. Between 1 January 1980 and 1 January 1989, the number of companies registered in Scotland rose by just under 20,000 or more than one half. The most recent survey by the Fraser of Allander Institute forecast that the growth of the Scottish economy is set to outstrip that of the United Kingdom over the next five years.

It is interesting to note the dramatic change in the places to which Scottish firms export. For example, 23 per cent. of our exports in 1973 were to north America. Today only 17 per cent. of our exports are to north America, so there has been a reduction. Let us see what has happened within the EEC. In 1973, 23 per cent. of our exports were to the EEC. That has now jumped to a massive 53 per cent. We are exporting much more to Europe. The benefits of the European market are beginning to be felt, and not before time, particularly when one considers some of the non-tariff barriers that kept our exports out for so long. Strangely enough, the biggest single export earner is the manufacture of office and data processing machinery.

I make no apology for mentioning the whisky industry. As a teetotaller, I am proud of what the Scotch whisky industry does for Scotland. It provides £1 billion-worth of exports, or 20 per cent. of our manufacturing exports. That is important for Scotland and we must continue to remind those who do not realise its value to Scotland that the Government's sensible tax regime over recent years has done much to help the Scotch whisky industry.

We also must not forget British Aerospace, Rolls-Royce and Ferranti. Aviation and avionics are the industries of tomorrow, among which we must include electronics. IBM, Motorola, Digital Equipment, NEC, National Semiconductor, Hewlett-Packard, Honeywell, NCR and Unisys are all the industries of today and tomorrow. They produce 16 per cent. of Scotland's gross domestic product and employ 12 per cent. of the work force. The output of the industry last year was three and a half times higher than in mid-1979. That shows what the Government's policies have done to make Scottish industry more competitive.

In 1989, the oil industry recorded the second highest level of drilling activity ever, with 328 offshore wells started. So much for the doom and gloom that we heard about the oil industry running down and out.

The service sector provides 68 per cent. of Scotland's employment, with over 1.3 million jobs. There was an overall increase of 112,000 in service sector employment from 1979 to December 1988. The service sector also helps Scotland's economic growth. The financial services and business services sector, with 179,000 jobs—50,000 more than in 1979—also contributes massively to Scotland's well-being.

Some £100 billion of funds is managed from Scotland. That is over 10 per cent. of the United Kingdom unit trust market and 20 per cent. of the life assurance market. The industry depends on doing business outside Scotland, as does the Scotch whisky industry and all the other companies that I listed. So much for the narrow nationalist attitudes of those who say that we should do things only in Scotland.

Tourism is another important industry in Scotland. It must be discouraging for visitors to Scotland to see messages written on stone telling them to go home. Yet that is what one gets from the Socialist nationalists. Tourism had a turnover of £1,594 million in 1988. The number of overseas tourists was up by 27 per cent. on 1984. Scotland's penetration of the north American market is higher than that of the United Kingdom as a whole. Again, Scotland is performing well. I make no apology for speaking about tourism. It is the largest employer in north Tayside.

I welcome the introduction of Scottish Enterprise. Recently in Brechin we had the launch of the north Angus initiative. The Labour administration of Tayside regional council was noticeable by its absence at that launch. It seems that the hon. Member for Dundee, East thinks that such great initiatives are fine in Dundee but not much good in Brechin, Kirriemuir or Forfar. The district councillor, the convener of industry—a gentleman known by the name of Forsyth of that ilk, who is an SNP councillor—made an attack on the regional council when he launched the initiative. He did so because of the council's absence. It is interesting that, since then, Councillor Sheana Welsh has publicly criticised me for agreeing with Forsyth. That Forsyth is the SNP district councillor, not my hon. Friend the Member for Stirling (Mr. Forsyth).

But what else can we expect when as Councillor Flora Isles said when she resigned from the SNP: We have different policies in different parts of the country and different policies or no policies to meet changing circumstances"? Indeed, that is why she resigned from the Scottish National party. Councillor Sheana Welsh, running true to SNP form, has a different policy and makes different public utterances from her industry convener—the famous Forsyth. Perhaps she was embarrassed by the "Absent Andrew", her husband, the hon. Member for Angus, East (Mr. Welsh), who, like the Labour party, failed to attend the north Angus launch. Perhaps his failure to attend brought about yet another division in the SNP.

In connection with regional grants, I commend Don Brothers, who recently opened a large factory in my constituency despite the fact that no grants are available and he was given no assistance under any funny schemes run by the Labour administration in Tayside. I understand that Don Brothers gave up grants amounting to about £500,000, which he could have had if he had gone to Dundee, which he was asked to do. He declined to do that and stayed in Forfar because its work force and environment are so much better and more conducive to productivity and to exports than those in Dundee.

That is an example of why regional aid had, properly, to be changed. That is why I welcome the changes that the Government are making. I advise Ministers that the economic successes of our policies in Scotland are there for anyone who wants to see them. They can be seen in our supermarkets, stores and shops and in the bustle in the high streets—[Interruption]—even in Dundee. Opposition Members should go to Taybridge station and watch the people going on holiday and doing things that were not available to them 10 or 20 years ago. They are able to do those things now because of our economic success. Because they have more money in their pockets, people can enjoy more things today.

The quality of life in Scotland is superior to that in any other part of the United Kingdom and that, linked to our economic success, makes it the best part of the United Kingdom in which to live and the best place in the world to be part of.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. I remind the House of my earlier appeal for brief speeches.

5.52 pm

Mr. James Wallace (Orkney and Shetland)

I shall do my utmost to follow your advice, Mr. Deputy Speaker, and to be brief.

The debate has gone up or down according to one's expectations. One need only read the Order Paper, the substantive motion and amendment in the name of the Prime Minister to note the diametrically opposed views on the Scottish economy. Indeed, I wonder whether they referred to the same thing. We have, of course, had selective statistics to support either case, especially from the hon. Member for Tayside, North (Mr. Walker). However, I agree with the hon. Gentleman in two particulars. He was the first hon. Member to refer to tourism, which is an important and growing industry in the rural areas of Scotland, and he referred to the whisky industry which, as in his constituency, is important in mine.

The hon. Member for Tayside, North referred to the Scottish chambers' "Business Survey". It is important to note that its most recent survey is its most pessimistic since its surveys began in 1984. That pessimism has been echoed in the "Industrial Trends Survey" of the Confederation of British Industry, which shows that manufacturing optimism is at its lowest for seven years.

Hon. Members of all parties have accepted that in recent years the Scottish economy has been going through a period of fundamental change as the old smoke stack industries have declined and we have looked to the development of new industries. As electronics has been around for some time, I am not sure whether we can still classify it as a new industry, but it has a potential for growth. Reference has also been made to the oil and gas industry and to the financial services sector. As the older industries decline, it is important that we do not forget the economic consequences. If the Scottish steel industry were to decline even further, it would have severe implications for the rail network in Scotland and knock-on effects on the electricity industry. Such factors cannot be overlooked.

There are other warning signs because much of the growth in jobs in recent years has been in the service sector, and, as last week's report "Economic Outlook" from the Royal Bank of Scotland suggested, the current downturn will squeeze the service sector, especially the retail sector, more than the last recession in the early part of the 1980s. Therefore, the outlook in that sector is not encouraging.

The hon. Member for Kingswood (Mr. Hayward) referred to Locate in Scotland. None of my hon. Friends would criticise or object to jobs coming to Scotland as a result of foreign companies investing here. However, we should be concerned to ensure that we do not become dependent solely on jobs which, in many respects, are production jobs and that we try to create as many jobs as possible that are high-quality, high-tech jobs. We should ensure that we are designers as well as putters-together, if I may put it that way.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to a report that the Secretary of State attributed to an official of the Scottish Development Agency. It contained the sombre warning that the contribution of indigenously based industries is particularly disappointing. The loss of Scottish ownership of Scottish enterprises has already been mentioned. It has been estimated that fewer than 100 clearly definable Scottish companies are now listed on the stock exchange. Between 1983 and 1986, 321 Scottish companies were taken over by outside companies. Some of the names are well known, including Anderson of Strathclyde, Collins, Clydesdale bank, Bells and Distillers.

While that has been happening and Scotland has been losing some of its big companies, as Alf Young pointed out in a recent article in the Glasgow Herald, things on not too happy a note have been stirring at a lower level in the economy. He wrote: If many of the biggest trees in the Scottish corporate forest fell to the chainsaws wielded by Guinness, Vantona Viyella, BP, Charter Consolidated and many others over the past 10 years, the paucity of seedling companies springing up from the forest floor to take their place simply compounds the problem. That is a cause for concern.

If one takes the number of new small businesses that are being set up, by reference to net VAT registrations, one sees that the growth in Scotland has been significantly below that in the United Kingdom as a whole. The article then states that a number of our smaller and medium-sized companies have been selling out, although they may not have made the headlines as much as the bigger companies, and that fewer of those smaller and medium-sized companies then grow into big companies. Consequently, there will be fewer opportunities in Scotland for our graduates to take jobs in promotable posts and fewer opportunities for our managers to reach the top in commercial enterprise.

As has been said, there has been emigration over many years, but the quality as well as the quantity of that emigration causes concern. Many of our best people and our graduates are going south. The introduction of the student loans scheme may affect the number of graduates in Scotland because of our four-year courses. If Scottish graduates have that debt around their necks as they leave university, how many of them will be attractive propositions to banks if they then wish to set up a small business on their own? I believe that for many years to come we shall reap an adverse whirlwind from the student loans plan.

Enterprise in Scotland needs encouraging. In the White Paper that foreshadowed the Employment Bill, the Government identified the importance of training. They have admitted that the private sector has never been a good trainer in Scotland, yet they are passing responsibility for training to the private sector. If that is to happen, it is important that it works, and that it works well.

I took some encouragement from the reply that the hon. Member for Galloway and Upper Nithsdale (Mr. Lang) gave me at Scottish Question Time last week, when he seemed to suggest that there would be scope for the local enterprise companies to develop training over and above the national training schemes of employment training and the youth training scheme. Perhaps he will say more about that when he replies to the debate and state whether more money will be available for training or whether the only money that is being made available for training with the LECs will be the money that is available for funding ET and YTS.

In addition, there is a need for venture capital. There has been a lack of venture capital going into Scottish companies, particularly for start-up. One often finds a willingness to lend £1 million or £100,000, but in some cases what is needed is £10,000. In fact, 80 per cent. of applications to the Highlands and Islands Development Board are for grants up to £15,000. Such grants have been very important to people, particularly in the highlands and islands, starting small businesses. As the board's last annual report shows, the cost per job, in grant-equivalent terms, has been just over £6,000.

That seems to me to be money very well spent. Government Members and their kin in the City often criticise Scotland for having, in some ways, developed a dependency culture, but without the HIDB and the SDA our economic position would be far worse. The £22 million that the HIDB spent on grant assistance in 1988 produced £69 million from private sources. That seems to me a very good form of pump priming, and I hope that that valuable work will continue as we move over to the new system.

In addition to venture capital and training, we need a Scottish Parliament. No doubt Government members will tell us happily about the statistics, about the polls carried out among Scottish business men, showing that a Scottish Parliament is not tops among the things that those people would like to see. Within the last two or three weeks, Scotland on Sunday carried an article, written anonymously by a Scottish business man, putting the case for a Scottish Parliament. It says something about the climate of Scottish business that somebody putting his head above the parapet to support a Scottish Parliament feels that he has to do so anonymously. This is the bunker mentality.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

I agree that people should be prepared to put their names to things in which they believe. Why did the Social and Liberal Democrats fail to table an amendment to this motion?

Mr. Wallace

The hon. Gentleman will be delighted to know that the matter was discussed last night at a parliamentary party meeting, and it was decided that the motion in the name of the hon. Gentleman's right hon. and hon. Friends was one that we could support.

I believe that a Scottish Parliament would be much more in touch with the continuing development needs of Scottish industry. I have already mentioned how it could target its tax-cutting powers; how it could look into the possibility of lower interest rates and the setting up of an industrial credit bank. Consider the situation in West Germany, where power is diffuse, where there is a federal structure. One often finds businesses being set up in centres of power. In many ways, centres of power attract new business. I believe that a Scottish Parliament could be a catalyst and could add some dynamism to the Scottish economy.

As one looks forward to 1992, one is conscious of the need for an improved transport infrastructure. The hon. Member for Tayside, North, who has left the Chamber, referred to the importance of Scotland's export industries. He mentioned whisky and office equipment. Clearly, in the case of an economy that is so dependent on exports, access to markets is important. I remember going to the constituency of the hon. Member for Edinburgh, East (Mr. Strang) when the Portobello Freightliner terminal was being closed. At the time, that seemed to be a very short-sighted move, and experience has shown just how short-sighted. Our European competitors are improving their infrastructure, particularly in the case of railways, while the Government here seem to baulk at extending electrification north of Edinburgh.

Take the question of air transport. Currently, and quite properly, there is a debate on the future of Prestwick. In this regard, I think that the hon. Member for Eastwood (Mr. Stewart) will find that my views do not differ much from his. This is the focus of Scottish debate at a time when, for example, the Charles de Gaulle airport in Paris is being integrated with the whole transport network—linking it to the city and to the rest of the country. While these imaginative things are being done by our European competitors, little imagination is being used here. I certainly do not count a toll bridge to Skye as one of the imaginative projects that we need if we are to compete on equal terms.

Finally, I want to refer briefly to the fishing industry, which is so important to many communities round our coast. When the Government failed to embark on a decommissioning scheme, they missed an opportunity. It was a big mistake. Of course it would not have been the whole answer, but I cannot see a better way of ensuring that the capacity of the fleet is more in line with the catching opportunities. If the fishing opportunities of the industry are to be reduced, it must be given some financial compensation. One wonders what kind of fleet the Government expect to see at the end of this year if they allow pure market forces to take their course.

6.5 pm

Mr. Allan Stewart (Eastwood)

The hon. Member for Orkney and Shetland (Mr. Wallace) has made a number of points to which I want to refer later. He referred to the absence of my hon. Friend the Member for Tayside, North (Mr. Walker) from the Chamber. I should point out that my hon. Friend is attending a Committee meeting upstairs.

I apologise to right hon. and hon. Gentlemen on both Front Benches for my absence during the opening few minutes of the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar). I was having a personal meeting with the Prime Minister. [HON. MEMBERS: "Oh."] It was about the Armitage Shanks Tubal works in Barrhead. I want to thank the Minister of State and a large number of Opposition Members for their support in that regard. It is an issue of great importance to my constituency.

Mr. William McKelvey (Kilmarnock and Loudoun)

rose—

Mr. Stewart

As the hon. Gentleman has signed my early-day motion, I will certainly give way to him.

Mr. McKelvey

I wish the hon. Gentleman every success when he meets the Prime Minister. I hope that she will be able to do something about Armitage Shanks. When I went to see her about the Armitage Shanks closure in Kilmarnock, she said that she would do her best. Unfortunately, however, the closure took place. I accepted the hon. Gentleman's support at that time, and respected him for giving it. Indeed, I received support from other hon. Members. I cautioned the hon. Gentleman not to put too much faith in the Prime Minister's ability to do anything against a multinational that is determined to move elsewhere.

Mr. Stewart

The purpose of my meeting was to look to the future in Barrhead. Armitage Shanks has, indeed, confirmed its decision to close the Tubal works. When I went with a letter from the Prime Minister to discuss the situation I was prevented from passing the factory gate. That is an indication of the company's management.

The hon. Member for Orkney and Shetland referred, rightly, to the importance of transport policy. As he said, we await the decision on Scottish lowlands airports policy. My hon. Friend the Minister of State cannot possibly be expected, in this debate, to announce a decision; that is a matter for the Secretary of State for Transport. However, anything that he can tell the House about the timing of the announcement would be helpful to hon. Members in respect of the positions that they may take.

While I am on that point, I wish to congratulate the noble Lord King on his excellent announcement about the Scottish headquarters for British Airways and the intention to provide a service from Glasgow to New York, starting on 3 August, if the Secretary of State for Transport takes the correct decision on airports policy.

I want to draw the attention of my hon. Friend the Minister of State to the importance of the imaginative set of proposals for the development of the corridor. These will turn on Glasgow's getting transatlantic status. There is immense potential for new growth in that area of west central Scotland—and that is not just my opinion; it is an opinion shared by others, such as the Labour group in Renfrew district council.

More generally, my right hon. and learned Friend the Secretary of State and my hon. Friend the Member for Tayside, North have put forward very clearly and comprehensively the basic figures on the Scottish economy. Manufacturing output is now the highest in Scotland's economic history. One has only to look at the CBI's figures on output and employment.

The hon. Member for Dundee, East (Mr. McAllion), who is also attending a Standing Committee meeting, and the hon. Member for Orkney and Shetland both referred to the need for indigenous growth in the Scottish economy. That is a very important point. The self-employment figures have increased by about 50 per cent. since 1981, compared with no change at all in the previous three decades. Many of these people will in future need small, medium-sized and large firms in Scotland. The other most encouraging indicator for the future is that manufacturing productivity in Scotland in recent years has been as high as in any other industrialised country and higher than most.

When I saw the motion on the Order Paper, I wondered why the Opposition had chosen to debate the Scottish economy today. I hoped that we would hear concrete proposals from the Labour party about how it would tackle the problems, as it sees them, of the Scottish economy. We have had some proposals. The hon. Member for Dundee, East talked in ringing terms about the importance of a Scottish Parliament, which was also referred to by the hon. Member for Orkney and Shetland.

We know of the enthusiasm of the Opposition Benches for that important body. No doubt if I took a show of hands, most Opposition Members would put up their hands. I see the hon. Member for Kilmarnock and Loudoun (Mr. McKelvy) putting up his hand. If such a body were set up, no doubt Opposition Members would give up their seats in this place to serve in it. May we have a show of hands to see which hon. Members agree with that? I see that Opposition Members are about 50:50. If there is ever a Scottish assembly, we look forward to by-elections in Scotland.

The Labour party proposes that the new body would have economic and industrial responsibilities. We are also told that the new powerhouse of Scottish Socialism would have responsibility for inward investment. No doubt hoardings would go up from Massachusetts to Mississippi and from Los Angeles to Long Island saying, "Come to sunny Scotland. We can offer you what no other European country can—Socialism." But there would need to be a footnote—"except Albania." Only in Albania and on the Benches occupied by Scottish Labour Members is there any following left for Socialism in Europe.

Mr. Wallace

Does not the hon. Gentleman presuppose that that would be a Scottish Parliament elected without proportional representation? Would he change his mind if there was proportional representation?

Mr. Deputy Speaker

Order. Would the hon. Gentleman please keep to the motion on the Order Paper?

Mr. Stewart

If the hon. Member for Orkney and Shetland thinks that the Labour party will go for proportional representation, he will have a sad awakening.

The second proposal from the Opposition was on business rates. The important progress towards a unified business rate, which the entire business community, large and small, has underlined as of crucial importance to the future of Scottish business and industry, would be thrown away by the Labour party. There would be huge increases in the burden of rates.

Of course, local authorities have a tendency to increase the burden on non-domestic ratepayers, because businesses do not have votes. The burden of the increase on businesses is often passed on to consumers who live outside the area. When the hon. Member for Glasgow, Cathcart (Mr. Maxton) replies to the debate, he may confirm his belief, which I have heard in the past, that rates have no effect on jobs. That is not the view of any business man to whom I have talked on the subject.

We also heard a proposal from some Opposition Members for a roof tax. That was well analysed by my hon. Friend the Member for Tayside, North. It is interesting to note the rumours that the Labour party in England would not go ahead with that proposal. No doubt, in the next 24 hours or so, we will hear another authorised version from the Opposition.

My right hon. and learned Friend the Secretary of State may have been slightly unfair to the roof tax in his general criticisms. The roof tax would be good news for some parts of the Scottish economy. It would be good news for that admirable body of people, double glazing salesmen, and for central heating engineers, because their products are to be exempt from the general increase in taxation which would follow other house improvements. But it would be bad news for precisely the people upon whom the future of the Scottish economy most depends—those who are trying to improve themselves as workers, managers and entrepreneurs, who are upwardly mobile and who wish to move, naturally and properly into better housing for themselves and their families. They are classically the people, as well as the elderly, who would be hit by the absurd proposal.

We have heard from the Opposition the usual parroting of doom and gloom. We have heard complaints not solutions, and problems not answers. Yet again, the Labour party has confirmed that it has nothing new to offer. It has forgotten nothing and learnt nothing from its period of power.

I compliment my right hon. and hon. Friends on their common-sense policies, which are steadily turning the Scottish economy round. I wish them every success in continuing with those policies.

6.15 pm

Mr. Harry Ewing (Falkirk, East)

As my old granny would have said, February is always a dull month. That speech fairly shortened the winter, but that is about all it did. The hon. Member for Eastwood (Mr. Stewart) started off not too badly, but he drifted into his usual rambling. If the speech of the hon. Member for Tayside, North (Mr. Walker) was that of a teetotaller, he should try taking a dram now and again.

I want to put on record my thanks to BP, with which I have not always enjoyed the best relationship, for its massive investment in the petrochemical industry at Grangemouth in my constituency. The investment will provide some new jobs, but it will certainly secure existing jobs. I understand the annoyance of the hon. Member for Banff and Buchan (Mr. Salmond) with BP because of its involvement with Britoil. In my defence, I warned the House, on the day of the announcement that BP was being given Britoil, what would happen. The takeover of Britoil has had precisely the outcome I expected. However, on a constituency basis, I record my thanks for that massive investment.

I also want to thank the Secretary of State for Energy. As the House knows, I have been campaigning, sometimes alone, against the application by Shell Exxon to construct a pipeline from Grangemouth to Manchester to pipe all the ethylene manufactured at the most northern plant down to England. I am grateful to the Secretary of State for refusing the application; he has informed me that he has ordered a public inquiry.

I hope that all the parties will examine carefully the proposal to construct a pipeline. As I have said often, the future of downstream industries in west central Scotland depends on the retention of ethylene. A pipeline from Grangemouth to Manchester would leave only one gap in the ethylene grid. If companies could move ethylene about as if jobs did not matter, they would do so to the detriment of almost every area where petrochemicals are based. Therefore, I am grateful to the Secretary of State for Energy for ordering a public inquiry.

The hon. Member for Eastwood sounded hollow when he talked about the industry's rates and business rates and general rates on people. I live with the abiding memory of when he was a Minister in the Scottish Office. The then Government introduced legislation to derate the plant and machinery outside buildings, which cost Central regional council £8 million of rateable value.

I took a deputation from Central regional council to see the Minister in his ivory tower at Dover house to ask the Government to make good the shortfall that his legislation had caused in rate income for Central regional and Falkirk district councils. The Minister said, "Your rates in Central region are below the national average per head of the population, so I shall not give you any money. The increase in rates for Falkirk district council of 6p in the pound and for Central region of 4p in the pound will only bring you up to the national average." Now the hon. Gentleman has the gall to criticise local authorities for increasing rates.

I wanted to make that point before the Tories in Scotland started an attack on local authorities about rates in the run-up to the regional elections. The hon. Gentleman's expressions of concern about rate levels sounded hollow when set against the background of the Labour party's proposals on what has been described as the roof tax.

Last night I made an offer to the hon. Member for Tayside, North that I extend to any Scottish Conservative Member. It will not take me long to go round the Scottish Conservative constituencies. I am not contesting the next election and as we run up to it I shall have time on my hands, so I offer to come to any Conservative seat, providing the sitting Member of Parliament makes the arrangements and debate the merits of the poll tax against the Labour party's proposals. That offer is on the table.

I shall take up two points made by the hon. Member for Tayside, North, possibly the only two serious points in his speech. The first concerns the export of whisky. One decision that has been taken in relation to the construction of the Channel tunnel is that whisky in bulk form—this should be a warning to all of us who enjoy a glass now and then—is so volatile that it will not be allowed to go through the Channel Tunnel. Three commodities will not be allowed through the tunnel: liquid petroleum gas, liquid chemicals, and whisky. Therefore, it is fairly obvious that all the exports of Scottish whisky will have to go by sea. What is the Scottish Office doing to ensure that the exports go through Scottish ports? What is now happening is absolute madness.

The second serious point made by the hon. Member for Tayside, North involved general exports from Scotland. During the past 10 years—and, I admit, just a wee bit longer than that—the volume of exports of manufactured goods originating in Scotland, going out through Scottish ports, has dropped from 75 per cent. to about 18 per cent. That is an absolute disgrace.

The hon. Member for Orkney and Shetland (Mr. Wallace) talked about the closure of the terminal at Leith. It was closed because the shipowners introduced the grid system. Whisky that is manufactured in Perth is taken by road—at no cost to the exporter and manufacturer because it is paid for by the ship owner—to the non-scheme port of Felixstowe, from where it is exported. Of course, they are all non-scheme ports now. That is done on the basis that it is cheaper to take the goods by road than to steam the vessel up to Grangemouth or Glasgow.

That policy is all right until all the Scottish ports are closed down, and we are heading that way. We shall then see what happens to the grid system. It will be abolished overnight. The whisky industry is important and the Government should consider those two aspects of it.

The Scottish economy is fragile, and the Minister would mislead the House if he sought to pretend otherwise. All the surveys to which my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) referred prove the validity of that point. Anyone who is complacent about the future of the Scottish economy will have to answer to the people who will lose their jobs as a result of an upturn in unemployment.

Like other hon. Members, I speak to industrialists. None of them says that he is confident about the next 18 months or two to three years. They are all looking ahead to difficult times. I was horrified when, over Christmas and the new year, I saw a Minister on Scottish television arguing that high interest rates were good for the Scottish economy because they made us work harder and become more efficient. The Secretary of State hinted at that, too. I have never heard such rubbish in my life.

The Minister should acknowledge that, far from being good, high interest rates are damaging. We need to keep a careful watch on the development of our economy. I look forward to the day, not too far distant, when the responsibility for running the economy is in the hands of my hon. Friend the Member for Garscadden and his colleagues.

6.26 pm

Mr. Alex Salmond (Banff and Buchan)

I was going to open my speech by saying that I thought that Labour and Tory Members had a psychological problem when debating the Scottish economy. After listening to the hon. Member for Tayside, North (Mr. Walker), perhaps I should say that they have a geographical problem as well.

Labour and Tory Members suffer from the delusion that Scotland is a poor dependent economy that will always rely on the good will of the Westminster Government. I want to make the opposite case in terms of the amendment in the name of my hon. Friends and myself. Scotland is an exceptionally rich country, but its economy is being mismanaged and its assets are being pillaged.

No one, including the present Chancellor, the past Chancellor, and even the Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), who was in charge of the Scottish economy, would prescribe the present level of interest rates, given the level of demand in the Scottish economy. I have an impeccable source for this view—no other than the vice-chairman of the Scottish Conservative party, Mr. Bill Hughes, who, with engaging candour, said on 29 June last year on Radio 4: we have to periodically endure the higher interest rates because that is for the better end of the total United Kingdom economy. I think that this is a very fair trade off.

I suspect that Scottish manufacturing industry, which, because of the at least 5 per cent. surcharge in interest rates in the Scottish economy, is facing additional borrowings—that is, taxation—of £200 million, might think differently. Scottish farmers who face additional borrowings of £50 million and the hard-pressed Scottish fishing industry that faces additional borrowings of up to £10 million might also think differently.

Earlier the Secretary of State for Scotland said that the Scottish economy was not overheating. He did not go on to explain why we should have a level of interest rates that was appropriate only, if at all, for an economy that was overheating. Will Tory Ministers accept that, whatever the present level of activity in the Scottish economy, it would be higher if we had a level of interest rates appropriate to Scottish economic conditions.

When we debate the Scottish economy, the Secretary of State for Scotland always clutches at straws. Last year in the Scottish Grand Committee he clutched at the straw of a Fraser of Allander Institute report that he found sympathetic to his case. However, when we read the report in detail we found that it warned of the damage that would be done to an investment/export economy such as Scotland by higher interest rates.

During Scottish questions in December, the Secretary of State quoted, in glowing terms, a Royal Bank of Scotland report that argued that Scottish growth this year might be marginally higher than that of the United Kingdom as a whole. I took the trouble to examine that economic analysis in detail. The relevant passage reads: Demand is, consequently, marginally stronger in relative terms and may well result in a better Scottish growth performance in 1990 (perhaps 2 per cent.—2.5 per cent.) than in the UK as a whole—little comfort given that the demand-dampening policies in force just now were aimed at cooling the overheated south-east and will still leave Scottish employment and output levels lagging well behind the national average. The Secretary of State cited that report favourably. If he cites the forecast favourably, does he accept the analysis that accompanied that report?

There are two reasons why the Secretary of State would be unwise to rely on favourable short-term forecasts for the Scottish economy. The first is obvious. Earlier tonight, the right hon. and learned Gentleman quoted the industrial production figures and said that they showed that the Scottish economy was doing particularly well. However, the index of industrial production, minus class 13—investment in oil and gas—shows a different picture. Minus class 13, the latest figures for industrial production for Scotland show a 10 per cent. Increase since 1985. The comparable figures for the United Kingdom show a 19 per cent. increase.

The evidence is clear. There is not a general economic recovery in Scotland, relative even to the modest improvement in the United Kingdom economy. There is an investment surge in the North sea now because of strengthening oil prices, but I doubt whether even the Secretary of State wants to take credit for that.

There is a more serious reason why the right hon. and learned Gentleman would be unwise to rely on short-term forecasts. No economic forecast can cope with the impact of a major industrial collapse, but the Scottish economy now faces at least two clear dangers of collapse in core industries.

The first is the steel industry. From the position of jobs related immediately to steel—that is, people working directly in the steel industry and for the suppliers of steel—it is clear that at least 25,000 jobs are at stake. Taking a broader picture, and including industries which are dependent on the supply of steel—and are therefore dependent on the pricing and source pricing of steel—that figure could be expanded to well over 100,000.

The second is the fishing industry, on which 30,000 jobs in Scotland depend. The Secretary of State said yesterday that the fishermen were rich and did not need any Government help. Does the right hon. and learned Gentleman have no compassion for family businesses which are caught in a cost-revenue squeeze? A constituent of mine has had his boat sold by the Sea Fish Industry Authority. He got for it one third of the price at which it was valued a few months ago. As a result, he is in danger of losing not only his job, his boat and his livelihood but his home and everything else.

Has the Secretary of State no compassion for fish processing workers earning less than £100 a week who are being offered by their employers a zero per cent. wage round—no increase whatever in their pay? Will the Government not dip into their pocket and provide for the Scottish fishing industry even the same level of support that is available to every other European fishing industry?

I took part in a BBC television programme shortly after the turn of the new year, in which people were asked to comment on Scotland's economic prospects in the 1990s. I was struck by the remarks of David Murray, who the Government will undoubtedly say is a model Scottish business man, and he deserves that title. He did not in that programme speak of some major industrial renaissance for Scotland. He spoke of his real concerns about the level of external ownership in the Scottish economy and about the damage being done to his and other business by high interest rates.

Even more disturbing than the present situation is the total lack of vision in Government economic policy to meet the challenges of this decade and those of the next century. The only strategy that this Government have ever had for the Scottish economy has been the attraction of mobile international investment. Yet it is clear that international investment will become tougher to attract because of competition not simply from Ireland and southern Europe but also from eastern Europe. That strategy has only limited potential in the present decade.

We should be moving to a natural resource-based economic policy instead of either demand-managed economy or policies based on attracting international investment. We have not done well so far. In the last decade, £87 billion of oil revenues went straight to the London Exchequer. That represented £17,000 a head for every man, woman and child in Scotland. We should remember that when the hon. Member for Stirling (Mr. Forsyth)—the Under-Secretary—and his fan club of Sudeten Scots who disrupt Scottish Question Time tell us how lucky Scots are to experience the munificence of the Westminster Exchequer. It would not be so bad if we did not have the knowledge that it is Scottish assets which have bankrolled the Thatcher economic experiment for the past 10 years.

Announcements in recent days show that the great gas robbery planned for the 1990s will be even worse than the great oil robbery of the 1980s. At least the oil was landed in Scotland and we received some direct jobs impact. The gas from the central North sea that Amoco is taking to Teesside will not even touch Scotland.

The implications of that are severe. First and obviously, the petrochemical and downstream jobs will go to the north-east of England. They are severe, secondly, because of the plan to construct a 1,750 MW power station at Welton, near Redcar. Perhaps when he replies to the debate the Minister will say how he intends to sell Scottish electricity, generated by coal or nuclear power, twice or, in the case of nuclear, perhaps five times as expensively as gas power over the border when faced with competition from a power station of that magnitude.

There are even more serious implications. What energy intensive industry will locate in central Scotland when it can get more favourable electricity prices by locating in the north-east of England? Labour Members should be able to think of at least one major energy-intensive industry in central Scotland which is currently making the choice between a Scottish and a north-east of England location.

I have no doubt that Labour Front-Bench spokesmen, remembering that the Labour party initiated this debate, will wish to say whether they intend to oppose the plan to send North sea gas from the central North sea to Teesside rather than to a Scottish landfall point.

We in Scotland face a basic choice: either we use our immense resources quite literally to power an efficient competitive Scottish economy in Europe, or we continue with a situation, under any Westminster Government, by which our economy is mismanaged, our resources pillaged, our industry decimated and our nation humiliated. If we are prepared to put up with that, we will be what Carlyle once called the English—"a nation of fools."

Mr. Brian Wilson (Cunninghame, North)

On a point of order, Mr. Deputy Speaker. I am anxious to raise a point with you now so that the Minister is able to respond when he replies to the debate.

In his opening speech, the Secretary of State for Scotland seriously misled the House by claiming that a document to which the shadow Secretary of State, my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), referred extensively had been reported in the Glasgow Herald on 12 December. Clearly, that was intended to mislead the House and the Press Gallery. I have with me—

Mr. Deputy Speaker (Sir Paul Dean)

Order. I am sure that the hon. Gentleman is not suggesting that a Minister deliberately misled the House. He knows that that would be out of order.

Mr. Wilson

In that case, Mr. Deputy Speaker, he must have done so inadvertently, although the consequence is the same. In advance of the Minister of State replying to the debate, I shall be happy to give him a copy of the newspaper in question so that he may quote the source, because it would be an intolerable abuse of the House if that tactic were used to mislead.

Mr. Deputy Speaker

That is a matter for debate. It is not a point of order for the Chair.

6.38 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

We must remember when we talk about the Scottish economy that it is made up of a conglomeration of local economies. The Minister of State will agree that the retention of profitable firms is as important an object as the creation of jobs.

That being so, I ask the hon. Gentleman to use his good offices to intervene in the dispute between Suter Estates of London and the Drummond Packaging Company of Greenock. Many jobs are at stake. The London company is seeking to remove Drummond Packaging from its premises in Greenock. It would be disastrous if that happened. The Minister is aware of the severity of the unemployment problems of Inverclyde. Will his officials intervene in the matter?

The French parent company of Drummond Packaging offered Suter Estates, which owns the land, £1.4 million. That was rejected, and Drummonds entered into discussions with the Inverclyde district council to purchase land on which to build customised premises. The buildings should be completed at the end of November this year, but Suter Estates, the London-based property company, is telling Drummonds to quit by mid-summer. If that happens, several score of my constituents will be put out of work. I hope that the Minister will intervene in that important matter.

I said that I would be brief and I shall be. However, I should like to speak for two minutes on that once magnificent industry, which is now but a remnant of its former glory—the shipbuildng and marine engineering industry.

What recent discussions have the Minister or his officials had with their colleagues at the Department of Trade and Industry about the European Community directive on the shipbuilding intervention fund? That is an important form of aid to shipyards. Will the Minister say how many Scottish shipyards have access to that form of European Community subsidy? I make a plea on behalf of Scott Lithgow—a company which, until now, has been denied access to that form of subsidy—that it be given sympathetic consideration because what we are seeing Europewide, and it is a welcome development, is a full capacity of berths in shipyards.

Some experts estimate that, within the next two or three years, European yards will be short of between 35 and 50 berths to build vessels. I know of European shipping lines that are now seeking tenders from British shipyards, but in some cases those shipyards—and Scott Lithgow is one of them—have had to turn away those notifications of interest because they do not have access to that type of subsidy. That is a disgrace if there is a European Communitywide subsidy for the shipbuilding industry. Firms such as Scott Lithgow and Fergussons are denied the opportunity of recruiting, selecting and employing highly skilled adult males. There are too many such men on the dole in my constituency.

I understand that Caledonian MacBrayne will have to replace up to four major and four minor passenger ferry vessels over the next five years. That figure was given to me in an answer by the Under-Secretary some days ago. I make a plea for those orders to go to Scottish yards. It does not embarras me to say that some of those orders should come to Fergussons in Port Glasgow. It is a first-class, small ship, specialist yard. Some of the Scottish orders that the Secretary of State now signs because, in essence, he is Mr. Caledonian MacBrayne should be built in Aberdeen and in Port Glasgow.

Kvaerner of Govan, Yarrow, Hall Russell, Fergussons and Kincaids are the remnants of this once great industry. The shipbuilding industry uses modern electronics and employs highly skilled labour. Over the next two years, the Government should seek to defend the interests of those employed in that industry or who could find employment in it.

6.44 pm

Mrs. Maria Fyfe (Glasgow, Maryhill)

Anyone listening to the speech of the Secretary of State could be forgiven for thinking that the production of candy floss was a major growth industry in the Scottish office—it was bright and cheerful but when you bite into it you find it lacks substance and nourishment. Anyone sitting at home watching this debate on television, who used to work a Caterpillar, at Linwood, at one of the shipyards, or anywhere else that has lost jobs, and who is eking out his unemployment benefit, must be sick to the back teeth by what we have heard from Scottish Office Ministers today.

It is not good enough to respond to this serious matter by bandying statistics about the 1960s and 1970s and who was responsible for what and when. The truth is that there has been a long-term decline in Scottish industry for more than a century, as other industrial nations have equalled and surpassed our output and brought in orders in sectors where we have formerly had an unrivalled lead. There is no point in ignoring that fact—it is the future that matters, so let us concentrate on that.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) referred to the unpublished reports written by the university of Louvain, which forecast a sharp decline in Britain's industrial areas and a massive increase in job losses as a result of the introduction of the European single market. The report specifically mentions Strathclyde as one of the areas for which it forecasts dire results. It pointed out that coal and steel-producing areas would suffer from competition.

The Government have asked what answers the Opposition have. The Louvain report came up with some of the answers, but we have heard nothing about that from the Government today. The report says that the problems are related to insufficient investment in railways, to widespread dereliction, to the dearth of investment and to a shortage of professional expertise—the report calls it an "exodus of grey matter" to the south-east, where clearly jobs and promotions exist.

Business men and local authorities are pessimistic about the single market because they fear that American and Japanese companies will move to the continent, with a consequent loss of orders for suppliers and a loss of customers for small businesses in the surrounding areas.

The absence of regional government in Britain is an extremely important aspect of the debate, and Louvain also mentioned it as something which has hindered progress in Scotland. In North Rhine Westphalia the Government provide up to 10 times as much money for research and development in industry as the Department of Trade and Industry does in England. Whatever the figures may be for Scotland, it is certainly not as good as 10 times that of England.

Firms in my constituency have expressed anxiety about the future. Some of the construction firms are steady at present, but they are faced with Europewide competition for orders of quite modest value. How can that contribute to forward planning and job security for the work forces?

A clothing manufacturer in Maryhill sees the dangers of competition from Germany; West German manufacturers have already obtained supplies from East German sources at a lower cost than can be obtained here. The textile industry has already had a series of redundancies in the Borders and elsewhere as a result of decreased orders and falling sales.

I thank my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) for standing back and allowing me to speak. His attitude is a contrast to that of the Secretary of State, who has the habit of constantly referring to "hon. Gentlemen opposite". He does not seem to notice that Scotland has three women Members of Parliament. We are sitting here, but we seem to be invisible. I have often seen reports that refer to women as an under-used resource. Women are also described as an invisible resource. I thought that that was an exaggerated description until I entered the House a couple of years ago and observed the conduct of Conservative Members such as the Secretary of State, who do not even recognise our existence.

Although female unemployment is approximately one third of male unemployment, far too many women are in low-paid or part-time jobs with no prospects or training opportunities. Women need not only training schemes but time off to take part in them, and we need far more child care provision. If Britain could provide child care on the scale that it did during the second world war, when we were fighting an enemy for our very existence, surely we can provide child care when we are fighting for our economic existence.

6.49 pm

The Minister of State, Scottish Office (Mr. Ian Lang)

My hon. Friend the Member for Eastwood (Mr. Stewart) in his excellent speech asked why the Labour party had chosen to have this debate on the Scottish economy. Having listened to it, I share his curiosity, because nothing that has emerged has in any way advanced its cause one bit.

With policy documents falling thick and fast from the Labour party, rather like leaves in autumn and with roughly the same life expectancy, it occurred to me that, when the hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to a genuine and authoritative document, he was referring to the industry policy document that the Labour party published this week entitled "Fulfilling our future: Industry 2000". But when I looked through it and found almost nothing of policy but rather a lot of wind and verbiage, I realised that he could not have that in mind.

I am not surprised that such a vacuous document has been presented this week. The Labour party may want to conceal the fact that its industrial policy in "Meet the Challenge, Make the Change", which was published last year and ratified by the 1989 Labour party conference, contains such policies as a payroll tax on all Scottish business based on turnover, or a commitment to renationalise British Telecom, British Gas and the water and electricity industries, or the plan to legalise secondary picketing and to allow unions to call strikes before a ballot has been called. No wonder it is not keen to draw attention to that. Perhaps the next policy document will be called "Back to the Drawing Board".

After the Labour party's drubbing over its proposals for a roof tax from every commentator throughout Scotland, after the revelation of its jobs tax, to which my right hon. and learned Friend the Secretary of State drew attention in his opening speech, whereby already an extra £130 million would have been taken out of Scottish businesses, after its earlier commitment to a payroll tax, after the revelation in its local government finance document of its intention to put the Scottish Enterprise initiative into the hands of the local authorities, and after its already well-known plans to introduce a tax-raising assembly in Scotland, it is not surprising that the hon. Member for Garscadden should fall back on selective quotations from a discussion paper of no status whatever, the substance of which was reported in an article by Alastair Balfour in the Glasgow Herald in December. [HON. MEMBERS: "What date?"] I think that it was 30 December—at the end of last year.

I would prefer to rely on some of the surveys that have been coming out from responsible and recognised bodies such as the Fraser of Allander survey which referred to growth continuing over the next five years, a survey which prompted The Scotsman to headline an article Outlook brightens for Scots economy in 1990s Who am I to argue with The Scotsman?

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Will the hon. Gentleman give way?

Mr. Lang

I shall give way to the hon. Gentleman, since he has not spoken.

Mr. Kirkwood

As the Minister is busy talking about surveys, has he undertaken any surveys of the state of the Scottish fishing industry? Is he aware that earlier this week 130 jobs were lost in Holmac Seafoods in my constituency? If he undertook such a survey, he would get some fairly dire results.

Mr. Lang

No doubt the hon. Gentleman will find an opportunity to develop his point in due course, but I want to reply to the points that were raised in the debate.

The survey by Cambridge Econometrics suggested that the Scottish economy grew more rapidly than that of the United Kingdom last year and will do so this year. The CBI survey suggested that output would rise faster in the United Kingdom, and there was more optimism about exports and employment increasing in Scotland in the year ahead while it is falling in the United Kingdom. There was similar optimism in the business strategy survey and the Building Employers Confederation survey.

My hon. Friend the Member for Tayside, North (Mr. Walker) recounted the successful growth of most of Scotland's major industrial companies. No wonder the Labour party is forced to talk about relative decline when there has been so much growth and increased prosperity, with the average income of Scots rising by a third over the past decade, compared with absolute decline under the previous Labour Government.

It is interesting to reflect that, between the mid-1960s and the mid-1980s, manufacturing industry declined more steeply in the United Kingdom than in Scotland. Today, Scottish manufacturing output and GDP are at their highest ever levels. The latest figures show GDP per head in Scotland to be some 3 per cent. above the United Kingdom average, excluding the south-east. That is hardly symptomatic of an economy in relative decline.

The hon. Member for Garscadden referred to the Louvain report, as did the hon. Member for Glasgow, Maryhill (Mrs. Fyfe). It was originally prepared in French and it may have lost something in translation, but the hon. Gentleman seems to have accorded the opposite view of the state of Strathclyde, as summarised in the report, to the reality. For greater accuracy, I have obtained a translation. Referring to Strathclyde and its technological position, the report said: Strathclyde is, in fact distinguished from all other regions studied by a distinctly weaker presence of traditional sectors … and in comparison with other regions of Europe which are characterised with traditional industries has a better representation of advanced technology activities in its territories. That is the opposite of the point that the hon. Gentleman was seeking to make.

The hon. Member for Dundee, East (Mr. McAllion), referred to expenditure in docklands and sought to compare that adversely with—

Mr. Wilson

On a point of order, Mr. Deputy Speaker. The House was misled earlier and I have drawn attention to that. The Secretary of State, having looked for a reference to cancel out my point, came back with another reference to the article. In doing so, he sought, for the benefit of the press, to devalue the report to which my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) referred. I have now found the article which the Secretary of State claimed establishes his case, but it made no reference to the report. Let me quote the last paragraph.

Mr. Deputy Speaker

Order. I am having difficulty in finding a point of order for me. The hon. Gentleman is raising a point for debate, not a point of order. What is the point of order for me?

Mr. Wilson

I shall come to the point of order and to do so I shall quote the last paragraph of the article by Alastair Balfour in the Glasgow Herald. It says: The State of our Nation in this last decade of the century is poor, and getting worse. The pity is that so few recognise it and fewer still are ready to address it.

Mr. Deputy Speaker

Order. That is a point for debate, not a point of order.

Mr. Wilson

The House has been misled twice in order to disinform the press.

Mr. Deputy Speaker

Order.

Mr. Lang

The article in question was wrong and so the paragraph in it is wrong.

Mr. Dewar

I have not had time to study the article, but I want to be clear what the Minister of State is saying. Is he telling me that the article of 30 December by Alastair Balfour specifically referred to the document from which I was quoting and deals with its contents?

Mr. Lang

My right hon. and learned Friend the Secretary of State said that the substance of the article—[Interruption.] The hon. Gentleman may check that in Hansard. But as the substance of the report is incorrect, and as it was not accepted by the Scottish Development Agency-—[Interruption.]

Sir Hector Monro (Dumfries)

On a point of order, Mr. Deputy Speaker. Are you not going to reprimand the hon. Member for Cunninghame, North (Mr. Wilson) for throwing a newspaper across the Dispatch Box?

Mr. Deputy Speaker

I am sure that the hon. Member for Cunninghame, North (Mr. Wilson) regrets the action that he has just taken and I hope that he will feel it appropriate to apologise to the House.

Mr. Wilson

I overestimated my strength, Mr. Deputy Speaker. The second copy of the newspaper was meant to land alongside the first. I apologise.

Mr. Deputy Speaker

I am grateful to the hon. Gentleman.

Mr. Harry Ewing (Falkirk, East)

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. The hon. Member for Cunninghame, North has apologised and that is the end of the matter.

Mr. Ewing

rose—

Mr. Lang

The relative comparison is not with the United Kingdom's economy—

Mr. Ewing

On a point of order, Mr. Deputy Speaker. Misleading the House used to be a very serious matter. It is now taken as a matter of course.

Mr. Jimmy Dunnachie (Glasgow, Pollok)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 204, Noes 275.

Division No. 70]	[7' pm
AYES
Abbott, Ms Diane	Cunliffe, Lawrence
Allen, Graham	Dalyell, Tam
Anderson, Donald	Darling, Alistair
Archer, Rt Hon Peter	Davies, Rt Hon Denzil (Llanelli)
Armstrong, Hilary	Davies, Ron (Caerphilly)
Ashley, Rt Hon Jack	Dewar, Donald
Ashton, Joe	Dixon, Don
Banks, Tony (Newham NW)	Doran, Frank
Barnes, Harry (Derbyshire NE)	Duffy, A. E. P.
Beckett, Margaret	Dunnachie, Jimmy
Bell, Stuart	Dunwoody, Hon Mrs Gwyneth
Benn, Rt Hon Tony	Ewing, Harry (Falkirk E)
Bennett, A. F. (D'nt'n & R'dish)	Faulds, Andrew
Bermingham, Gerald	Fearn, Ronald
Bidwell, Sydney	Field, Frank (Birkenhead)
Blair, Tony	Fields, Terry (L'pool B G'n)
Boateng, Paul	Fisher, Mark
Bradley, Keith	Flannery, Martin
Bray, Dr Jeremy	Flynn, Paul
Brown, Gordon (D'mline E)	Foster, Derek
Brown, Nicholas (Newcastle E)	Foulkes, George
Buchan, Norman	Fraser, John
Buckley, George J.	Fyfe, Maria
Caborn, Richard	Galloway, George
Callaghan, Jim	Garrett, John (Norwich South)
Campbell, Menzies (Fife NE)	Garrett, Ted (Wallsend)
Campbell, Ron (Blyth Valley)	Gilbert, Rt Hon Dr John
Campbell-Savours, D. N.	Godman, Dr Norman A.
Canavan, Dennis	Golding, Mrs Llin
Carlile, Alex (Mont'g)	Gordon, Mildred
Clark, Dr David (S Shields)	Gould, Bryan
Clarke, Tom (Monklands W)	Graham, Thomas
Clay, Bob	Griffiths, Nigel (Edinburgh S)
Clelland, David	Griffiths, Win (Bridgend)
Cohen, Harry	Grocott, Bruce
Coleman, Donald	Hardy, Peter
Cook, Robin (Livingston)	Harman, Ms Harriet
Corbett, Robin	Healey, Rt Hon Denis
Corbyn, Jeremy	Heffer, Eric S.
Cousins, Jim	Henderson, Doug
Cox, Tom	Hinchliffe, David
Crowther, Stan	Hogg, N. (C'nauld & Kilsyth)
Cryer, Bob	Home Robertson, John
Cummings, John	Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)	Orme, Rt Hon Stanley
Howells, Geraint	Parry, Robert
Howells, Dr. Kim (Pontypridd)	Patchett, Terry
Hoyle, Doug	Pendry, Tom
Hughes, Robert (Aberdeen N)	Pike, Peter L.
Hughes, Roy (Newport E)	Powell, Ray (Ogmore)
Hughes, Simon (Southwark)	Primarolo, Dawn
Illsley, Eric	Quin, Ms Joyce
Ingram, Adam	Randall, Stuart
Janner, Greville	Redmond, Martin
Johnston, Sir Russell	Rees, Rt Hon Merlyn
Jones, leuan (Ynys Môn)	Reid, Dr John
Jones, Martyn (Clwyd S W)	Richardson, Jo
Kaufman, Rt Hon Gerald	Robinson, Geoffrey
Kennedy, Charles	Rooker, Jeff
Kirkwood, Archy	Ross, Ernie (Dundee W)
Lambie, David	Rowlands, Ted
Lamond, James	Ruddock, Joan
Leadbitter, Ted	Salmond, Alex
Leighton, Ron	Sedgemore, Brian
Lestor, Joan (Eccles)	Sheerman, Barry
Lewis, Terry	Sheldon, Rt Hon Robert
Litherland, Robert	Shore, Rt Hon Peter
Livingstone, Ken	Short, Clare
Lloyd, Tony (Stretford)	Sillars, Jim
Lofthouse, Geoffrey	Skinner, Dennis
Loyden, Eddie	Smith, Andrew (Oxford E)
McAllion, John	Smith, Rt Hon J. (Monk'ds E)
McAvoy, Thomas	Smith, J. P. (Vale of Glam)
Macdonald, Calum A.	Snape, Peter
McFall, John	Soley, Clive
McKay, Allen (Barnsley West)	Spearing, Nigel
McKelvey, William	Steel, Rt Hon Sir David
McLeish, Henry	Steinberg, Gerry
Maclennan, Robert	Strang, Gavin
McWilliam, John	Straw, Jack
Madden, Max	Taylor, Mrs Ann (Dewsbury)
Mahon, Mrs Alice	Thomas, Dr Dafydd Elis
Marek, Dr John	Thompson, Jack (Wansbeck)
Marshall, Jim (Leicester S)	Turner, Dennis
Martin, Michael J. (Springburn)	Vaz, Keith
Martlew, Eric	Wall, Pat
Maxton, John	Wallace, James
Meacher, Michael	Walley, Joan
Meale, Alan	Wardell, Gareth (Gower)
Michael, Alun	Wareing, Robert N.
Michie, Bill (Sheffield Heeley)	Watson, Mike (Glasgow,C)
Michie, Mrs Ray (Arg'l & Bute)	Welsh, Andrew (Angus E)
Mitchell, Austin (G't Grimsby)	Welsh, Michael (Doncaster N)
Moonie, Dr Lewis	Williams, Rt Hon Alan
Morgan, Rhodri	Williams, Alan W. (Carm'then)
Morley, Elliot	Wilson, Brian
Morris, Rt Hon A. (W'shawe)	Winnick, David
Morris, Rt Hon J. (Aberavon)	Worthington, Tony
Mullin, Chris	Wray, Jimmy
Murphy, Paul	Young, David (Bolton SE)
Nellist, Dave
Oakes, Rt Hon Gordon	Tellers for the Ayes:
O'Brien, William	Mr.Frank Haynes and
O'Neill, Martin	Mr. KenEastham.

NOES
Adley, Robert	Blackburn, Dr John G.
Aitken, Jonathan	Blaker, Rt Hon Sir Peter
Alison, Rt Hon Michael	Body, Sir Richard
Allason, Rupert	Boscawen, Hon Robert
Amess, David	Boswell, Tim
Amos, Alan	Bottomley, Mrs Virginia
Arbuthnot, James	Bowden, A (Brighton K'pto'n)
Arnold, Jacques (Gravesham)	Bowden, Gerald (Dulwich)
Arnold, Tom (Hazel Grove)	Bowis, John
Ashby, David	Boyson, Rt Hon Dr Sir Rhodes
Atkinson, David	Braine, Rt Hon Sir Bernard
Baker, Nicholas (Dorset N)	Brandon-Bravo, Martin
Baldry, Tony	Brooke, Rt Hon Peter
Banks, Robert (Harrogate)	Brown, Michael (Brigg & CI't's)
Bellingham, Henry	Browne, John (Winchester)
Bendall, Vivian	Bruce, Ian (Dorset South)
Bennett, Nicholas (Pembroke)	Buck, Sir Antony
Bevan, David Gilroy	Burns, Simon

Burt, Alistair	Hughes, Robert G. (Harrow W)
Butler, Chris	Hunt, Sir John (Ravensbourne)
Butterfill, John	Hunter, Andrew
Carlisle, John, (Luton N)	Hurd, Rt Hon Douglas
Carlisle, Kenneth (Lincoln)	Irvine, Michael
Carrington, Matthew	Jackson, Robert
Carttiss, Michael	Janman, Tim
Channon, Rt Hon Paul	Jessel, Toby
Chapman, Sydney	Johnson Smith, Sir Geoffrey
Chope, Christopher	Jones, Gwilym (Cardiff N)
Clark, Dr Michael (Rochford)	Jones, Robert B (Herts W)
Clark, Sir W. (Croydon S)	Jopling, Rt Hon Michael
Clarke, Rt Hon K. (Rushcliffe)	Key, Robert
Colvin, Michael	Kilfedder, James
Coombs, Anthony (Wyre F'rest)	King, Roger (B'ham N'thfield)
Coombs, Simon (Swindon)	King, Rt Hon Tom (Bridgwater)
Cormack, Patrick	Kirkhope, Timothy
Couchman, James	Knapman, Roger
Cran, James	Knight, Greg (Derby North)
Currie, Mrs Edwina	Knight, Dame Jill (Edgbaston)
Curry, David	Knowles, Michael
Davies, Q. (Stamf'd & Spald'g)	Knox, David
Davis, David (Boothferry)	Lamont, Rt Hon Norman
Day, Stephen	Lang, Ian
Devlin, Tim	Latham, Michael
Dickens, Geoffrey	Lawrence, Ivan
Dorrell, Stephen	Leigh, Edward (Gainsbor'gh)
Douglas-Hamilton, Lord James	Lennox-Boyd, Hon Mark
Dover, Den	Lilley, Peter
Dunn, Bob	Lloyd, Sir Ian (Havant)
Durant, Tony	Lloyd, Peter (Fareham)
Dykes, Hugh	Lord, Michael
Evans, David (Welwyn Hatf'd)	MacKay, Andrew (E Berkshire)
Evennett, David	Maclean, David
Fallon, Michael	McLoughlin, Patrick
Fenner, Dame Peggy	McNair-Wilson, Sir Michael
Field, Barry (Isle of Wight)	McNair-Wilson, Sir Patrick
Fookes, Dame Janet	Malins, Humfrey
Forman, Nigel	Mans, Keith
Forsyth, Michael (Stirling)	Marshall, John (Hendon S)
Fox, Sir Marcus	Martin, David (Portsmouth S)
Franks, Cecil	Maude, Hon Francis
Freeman, Roger	Mawhinney, Dr Brian
Gale, Roger	Maxwell-Hyslop, Robin
Gardiner, George	Mayhew, Rt Hon Sir Patrick
Garel-Jones, Tristan	Mellor, David
Glyn, Dr Sir Alan	Meyer, Sir Anthony
Goodhart, Sir Philip	Miller, Sir Hal
Goodlad, Alastair	Mitchell, Andrew (Gedling)
Goodson-Wickes, Dr Charles	Mitchell, Sir David
Gorman, Mrs Teresa	Moate, Roger
Gorst, John	Monro, Sir Hector
Gow, Ian	Montgomery, Sir Fergus
Greenway, Harry (Ealing N)	Morris, M (N'hamptonS)
Greenway, John (Ryedale)	Morrison, Sir Charles
Grist, Ian	Moss, Malcolm
Grylls, Michael	Neale, Gerrard
Hague, William	Needham, Richard
Hamilton, Neil (Talton)	Nelson, Anthony
Hampson, Dr Keith	Neubert, Michael
Hanley, Jeremy	Newton, Rt Hon Tony
Hannam, John	Nicholls, Patrick
Hargreaves, A. (B'ham H'Il Gr')	Nicholson, David (Taunton)
Hargreaves, Ken (Hyndburn)	Nicholson, Emma (Devon West)
Harris, David	Norris, Steve
Hawkins, Christopher	Onslow, Rt Hon Cranley
Hayes, Jerry	Oppenheim, Phillip
Hayward, Robert	Page, Richard
Heathcoat-Amory, David	Paice, James
Hicks, Mrs Maureen (Wolv' NE)	Patnick, Irvine
Hicks, Robert (Cornwall SE)	Patten, Rt Hon Chris (Bath)
Higgins, Rt Hon Terence L.	Pattie, Rt Hon Sir Geoffrey
Hind, Kenneth	Pawsey, James
Hogg, Hon Douglas (Gr'th'm)	Peacock, Mrs Elizabeth
Holt, Richard	Porter, David (Waveney)
Hordern, Sir Peter	Portillo, Michael
Howard, Rt Hon Michael	Powell, William (Corby)
Howarth, Alan (Strat'd-on-A)	Price, Sir David
Howe, Rt Hon Sir Geoffrey	Raison, Rt Hon Timothy
Howell, Ralph (North Norfolk)	Rathbone, Tim

Renton, Rt Hon Tim	Taylor, John M (Solihull)
Rhodes James, Robert	Taylor, Teddy (S'end E)
Riddick, Graham	Temple-Morris, Peter
Ridley, Rt Hon Nicholas	Thompson, D. (Calder Valley)
Ridsdale, Sir Julian	Thompson, Patrick (Norwich N)
Rifkind, Rt Hon Malcolm	Thorne, Neil
Roberts, Wyn (Conwy)	Thornton, Malcolm
Roe, Mrs Marion	Thurnham, Peter
Rossi, Sir Hugh	Townend, John (Bridlington)
Rost, Peter	Tracey, Richard
Rowe, Andrew	Tredinnick, David
Ryder, Richard	Trippier, David
Scott, Rt Hon Nicholas	Trotter, Neville
Shaw, David (Dover)	Twinn, Dr Ian
Shaw, Sir Giles (Pudsey)	Vaughan, Sir Gerard
Shaw, Sir Michael (Scarb')	Wakeham, Rt Hon John
Shelton, Sir William	Walden, George
Shephard, Mrs G. (Norfolk SW)	Walker, Bill (T'side North)
Shepherd, Richard (Aldridge)	Waller, Gary
Shersby, Michael	Walters, Sir Dennis
Sims, Roger	Ward, John
Skeet, Sir Trevor	Wardle, Charles (Bexhill)
Smith, Sir Dudley (Warwick)	Warren, Kenneth
Smith, Tim (Beaconsfield)	Watts, John
Soames, Hon Nicholas	Wheeler, Sir John
Speed, Keith	Whitney, Ray
Speller, Tony	Widdecombe, Ann
Spicer, Sir Jim (Dorset W)	Wiggin, Jerry
Spicer, Michael (S Worcs)	Wilkinson, John
Squire, Robin	Wilshire, David
Stanbrook, Ivor	Winterton, Mrs Ann
Stern, Michael	Winterton, Nicholas
Stevens, Lewis	Wolfson, Mark
Stewart, Allan (Eastwood)	Wood, Timothy
Stewart, Andy (Sherwood)	Woodcock, Dr. Mike
Stewart, Rt Hon Ian (Harts N)	Yeo, Tim
Stokes, Sir John	Young, Sir George (Acton)
Stradling Thomas, Sir John
Sumberg, David	Tellers for the Noes:
Summerson, Hugo	Mr.David Lightbown and
Tapsell, Sir Peter	Mr. TomSackville.
Taylor, Ian (Esher)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments) and agreed to.

Mr. Deputy Speaker

forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House congratulates the Government on the success of their economic policies in Scotland which have resulted in higher living standards, greatly reduced unemployment, a substantial increase in the workforce in employment, and record levels of manufacturing productivity and output; have promoted the competitiveness of Scottish industry and its readiness to meet the challenge of the Single European Market; have encouraged the growth of investment of enterprise and small businesses, and have provided a basis for sustained growth and development across the economy as a whole; and notes that unemployment is now falling faster in Scotland than in the United Kingdom as a whole.