Inward Investment (Hansard, 3 July 1996)

§ 2. Mr. Stewart
To ask the Secretary of State for Scotland what is his latest estimate of the level of inward investment into Scotland; and if he will make a statement. [34170]

§ The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)
In the year to March 1996, Locate in Scotland and the Scottish Office Education and Industry Department helped to attract 84 inward investment projects to Scotland involving planned investment of nearly £1 billion and the expected creation or safeguarding of a record 12,560 jobs.

§ Mr. Stewart
Is not the Government's outstanding record on inward investment, about which we have just heard, due in large measure to consistency of policy and the ability of my hon. Friend and his colleagues to make decisions about Scotland in Scotland? What does he think would happen if the present Scottish Office team were replaced by a bunch of puppets who would do every U-turn at the behest and whim of Islington spin doctors?

§ Mr. Kynoch
There is no doubt that my hon. Friend is correct in saying that speedy decision-making is critical in the process of attracting inward investment. Equally, it is critical to ensure that we have the right business environment in which inward and indigenous investors can thrive. The one thing that is absolutely certain is that the Opposition's proposal for a tartan tax in Scotland, whether by referendum or otherwise, whereby Scotland will be taxed at a higher rate than the rest of the United Kingdom, is bound to influence inward and indigenous investors.

§ Mr. Norman Hogg
Although the Minister has little experience of success in business, would he care to comment on Professor Hood's statement that a Scottish Parliament would have no impact at all on inward investment to Scotland?

§ Mr. Kynoch
The hon. Gentleman is an expert in acrobatics, supporting something which in the past he was against. Tax is bound to be an important element in any equation for a potential inward investor, and if the taxation rate in Scotland were higher than that in the rest of the United Kingdom, and if other Opposition policies were brought into being, such as the social chapter or the minimum wage, that would all contribute towards a reduction in inward investment and in investment in Scotland, and that would be bad news for Scotland.

§ Mr. Bill Walker
Does my hon. Friend agree that, when overseas companies consider inward investment into Scotland, one of the factors they have to consider is political stability—the fact that Scots can be Prime Ministers, Foreign Secretaries and Home Secretaries and can occupy any Front-Bench post—and the fact that the 954 Government have no plans to put all that at risk with madcap policies that are unworkable, unsaleable in England and dangerous for the United Kingdom's unity?

§ Mr. Kynoch
My hon. Friend is right. I am sure that he will have read in The Sunday Times an article concerning an Edinburgh fund management company, Stewart Ivory, which has already said that the uncertainty caused by the fear of a tartan tax in Scotland has been sufficient to persuade investors from south of the border not to invest in Scotland. I am sure that that view is alive in business, but it is one on which the Opposition seem slow to pick up.

§ Mr. Wallace
Does the Minister accept that perhaps the most important attraction for inward investment is the access that locating in Scotland gives to markets in the European Union, and that incalculable harm may be done to that if the Conservative party continues its anti-European rhetoric and if his right hon. Friend the Secretary of State makes petty points about flying European flags and sits on the Treasury Bench giving tacit encouragement to Conservative Back Benchers introducing Bills to dissociate us from the European Court of Justice?

§ Mr. Kynoch
I understand that the hon. Gentleman supports the introduction of a social chapter. That would be incredibly damaging for United Kingdom business, and particularly for Scottish business. The minimum wage would also be counter-productive. The hon. Gentleman's party is rather more honest and straightforward than the official Opposition, as it apparently does not need a referendum to tell the people of Scotland that it believes that taxation in Scotland should be increased beyond that of the rest of the United Kingdom, which would definitely be counter-productive for business in Scotland and for inward investment into Scotland.

§ Mr. Sykes
My company used to have a factory in Glasgow and a depot in Edinburgh, and they were successful enterprises up there, but if we had had a minimum wage, the social chapter, the 48-hour week, the tartan tax and a Scottish Parliament, we would have had to close both down and withdraw back to England.

§ Mr. Kynoch
I am pleased to hear that; it is confirmation of the message that I have been getting from the many businesses around the country that I visit. Indeed, if the hon. Gentleman had read The Scotsman, he would have seen an article about Scottish and Newcastle plc, whose chief executive, Brian Stewart, has indicated that devolution for Scotland would be "bad and disruptive commercially." That is a view with which I am sure my hon. Friend agrees.

§ Mr. McFall
I challenge the hon. Member for Eastwood (Mr. Stewart) outwith the Chamber to call me a puppet. The puppets are there, on the Government Front Bench, who are allowing their colleagues in England to try to absorb Locate in Scotland into Invest in Britain. Will the Minister fight on that? Does he not realise that companies such as Quintiles and Chunghwa have said that devolution and the tartan tax threat played no part in their decision to locate in Scotland, but that what did play a 955 part was a good, educated and trained work force, the product of good local Labour authorities, a tradition that we shall continue with a Scottish Parliament?

§ Mr. Kynoch
It is interesting to see how touchy the hon. Gentleman is, but I am not surprised: if I were on the Opposition Front Bench and had to undertake the U-turn that they have had to undertake in the past week at the instigation of their master south of the border, I, too, would be rather touchy about such a comment.
The hon. Gentleman referred to two inward investors—Chungwa and Quintiles. He is probably referring to an answer given by Quintiles in an interview with the BBC, in which it announced its inward investment. I was there, whereas the hon. Gentleman was not. It clearly said that devolution was not the main issue and that tax was only an element. For a company such as Quintiles, and the business that it is in, it is rather more appropriate for it to be near higher education of a high standard. That is the important element for it.
For others, taxation is a very important element, as is competitiveness. The hon. Gentleman and his party do not understand what competitiveness is all about. He advocates policies—the tartan tax, the social chapter or any of the other taxation measures that have been talked about—that would be bad for business in Scotland.