HC Deb 16 October 1996 vol 282 cc803-7
2. Mr. Simon Coombs

To ask the Secretary of State for Scotland if he will make a statement on the latest figures for inward investment into Scotland. [38705]

The Secretary of State for Scotland (Mr. Michael Forsyth)

Inward investment in Scotland continues to perform at record levels, the latest good news story being the decision by Hyundai to invest in Dunfermline, creating 4,000 jobs in the long term and providing more than £2 billion of inward investment.

Mr. Coombs

First, I congratulate my right hon. Friend on his birthday and wish him a happy day as well as a busy one. Does he agree that the Hyundai investment project would have been impossible if Scotland and the rest of the kingdom had been burdened with the social chapter and the national minimum wage, let alone the tartan tax north of the border? Is it not much more likely that the success of the Scottish Office in attracting that investment has been brought about by the successful economic, education and training policies carried out in Scotland in the past 17 years?

Mr. Forsyth

I am grateful to my hon. Friend for his birthday wishes. On my birthday last year, my right hon. Friend the Minister of State arranged for me to open the Skye bridge, and it is a delight to be at Scottish Question Time today.

My hon. Friend the Member for Swindon (Mr. Coombs) points to an important factor in inward investment. Such companies are coming to Scotland not for the climate but because we offer a quality work force and a competitive environment. That means low taxes and low inflation. Undoubtedly, if we had the social chapter, the minimum wage and the tartan tax we would be disadvantaged in that international competition. and jobs and investment would be put at risk.

Mr. David Marshall

How many, if any, foreign companies have recently located in the city of Glasgow? What is the right hon. Gentleman doing to help Glasgow's efforts to attract inward investment to the city?

Mr. Forsyth

I am happy to do all that I can to attract investment to Glasgow. One of the first things that we need to do is to get rid of the high-spending Labour council that has made Glasgow uncompetitive.

Sir Hector Monro

In view of today's excellent news of a drop in the unemployment figures for Scotland, will my right hon. Friend give an approximate estimate of the number of new jobs in the pipeline for Fife brought by Locate in Scotland and, no doubt, by local enterprise and the local council? Has he ever heard a word of commendation and thanks from the Opposition Front-Bench spokesmen for the tremendous achievement in Fife, bearing in mind the doom and gloom they put out when times were difficult?

Mr. Forsyth

My hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch), the industry Minister, tells me that the total is 9,000 jobs. That is a significant achievement for Scotland. The Government have played their part, but it would be wrong not to draw attention to the part played by Fife council and the local enterprise companies in achieving that success. It means that we have delivered what we promised. Following the closure of both Rosyth and Ravenscraig, we promised that we would bring new jobs and new opportunities to those areas. That has happened because we have embraced the enterprise culture and been prepared to go out and win business for Scotland. The people of Scotland have reciprocated and I believe that as we approach the millennium we shall see more and more examples of people locating in Scotland because of the environment that we offer and will continue to offer under a Conservative Government.

Mr. Galloway

Is it not likely that the owners of Hyundai, although South Korean, can read English and that they know from opinion polls and from the opinions of every serious commentator that there will be a Labour Government before Hyundai lays a brick or makes a single thing in its new plant in Dunfermline—a Government who will have signed up to the social chapter and introduced a national minimum wage? Does that not give the lie to the smear that our policies are somehow a disincentive to inward investors? Can the Secretary of State say, with his hand on his heart, that the Hyundai spokesmen ever raised with him any concern about an incoming Labour Government's commitment on the social chapter and a minimum wage?

Mr. Forsyth

I congratulate the hon. Gentleman on the size of his cigar—I do not know whether it is a birthday present for me or a sign of new Labour. The answer to his question is that I visited Korea earlier this year and the social chapter was one of the issues that were regularly raised with me by companies such as Hyundai in relation to their concern about costs. Indeed, I have unashamedly sold Scotland on the basis that we do not have the burdens carried by other European countries being considered as a location.

As for the hon. Gentleman's point about opinion polls and press reports, the people with whom we deal in inward investment are very sophisticated, very intelligent and very clever and they will no doubt take account of the fact that the opinion polls before the last election predicted the result that the hon. Gentleman would have wanted. He will find himself disappointed once again.

Mr. Bill Walker

Does my right hon. Friend agree that it is essential not only for inward investment but for indigenous companies to have a competitive economic environment in which they can continue to succeed? Has he, like me, been approached by a number of individuals in senior appointments in Scottish companies who are deeply concerned about the impact of a possible tartan tax and other policies which might erode that competitive environment? They have told me clearly that they will move.

Mr. Forsyth

I agree that the tartan tax would be a disaster for Scotland and it would certainly put us at a disadvantage compared with the rest of the United Kingdom in attracting inward investment. My hon. Friend is right to point out the importance of costs. For example, in my discussions with Hyundai, one of the issues on which we focused was the cost of electricity in Scotland which, thanks to our privatisation programme, has been falling and has therefore made us more competitive. We had a long discussion about the relative cost of electricity in Scotland versus the cost in the United States. It is extremely naive to assume that those companies will not examine employment costs. The point about the social chapter and the tartan tax is that they add to those costs in an industry in which labour costs are very important.

Mr. Gallie

I welcome the announcements made during the recess of 200 jobs for Rhor and a further 100 jobs for Western Welsh in my constituency. I also welcome the intended £250 million private finance initiative investment for the new air traffic control centre in Prestwick. May I ask my right hon. Friend to press that issue hard with the Treasury and with the Department of Transport?

Mr. Forsyth

My hon. Friend seems to fill every post with letters to me on that issue, and I know of his enthusiasm to ensure that Ayr benefits from that private finance initiative. I also very much welcome the support that he has had from Opposition Members for it. My hon. Friend's arguments will of course be made robustly. As he knows, this is a matter for my right hon. Friend the Secretary of State for Transport, with whom I have had occasion to discuss the matter following my hon. Friend's representations, and he has assured me that he has been inundated with information on this matter from my hon. Friend. I know that my right hon. Friend will carefully consider all the arguments so robustly made by my hon. Friend on behalf of his constituents.

I am grateful for my hon. Friend's welcome for the good news in Ayr. There are more jobs in Ayr, and the prospects for employment for people in Ayr are very strong. I know that my hon. Friend will continue to represent the people of Ayr for many years to come.

Mr. Donohoe

The Secretary of State will be aware of the recent announcement of the closure of Robert Wilson and Sons—established in 1849 in my constituency—with the loss of 280 jobs. In those circumstances, does the Secretary of State agree that it is surely wrong to take a decision, which he has already taken, for the early wind-up of the development corporation in Irvine? The redundancies at Robert Wilson and Sons are only the latest of many redundancies in my constituency, and they clearly demonstrate the folly of the early wind-up of the development corporation in Irvine.

Mr. Forsyth

I share the hon. Gentleman's enthusiasm for ensuring that we minimise job losses in his constituency and maximise new opportunities. If he has specific proposals that he would like to discuss, having written to me on the subject, my hon. Friend the Under-Secretary of State for Scotland with responsibility for industry and local government would be delighted to see him.

Mr. George Robertson

I warmly welcome the announcements of inward investment coming to Scotland, especially the Hyundai investment in Dunfermline and the Chunghwa and Lite-on decisions in Lanarkshire. I congratulate all who were involved in local and national Government on bringing those valuable jobs to Scotland. I should, however, remind the Secretary of State of the reality that must have faced those intelligent and highly astute inward investors. They were faced with a situation in which we are six months away from a general election and in which the governing party in Scotland has a miserable 13 per cent. approval in public opinion—just 1 per cent. higher than when the Secretary of State took office a year ago. They could have come to only one serious conclusion—that there will be a Labour Government and that that Government will achieve constitutional reform and a Scottish Parliament for Scotland based, through a referendum, on the specific consent of the Scottish people. Those investors, like the majority of the Scottish people, concluded that a Labour Government will be good for Scotland and good for their industrial future.

Mr. Forsyth

Oddly enough, I did not feel that it was part of our marketing of Scotland to draw attention to the possibility suggested by the hon. Gentleman. Telling inward investors that there was a prospect of a Labour Government, who would impose a specific higher income tax rate in Scotland, does not seem to me to be a very attractive prospect to outline when one is competing not only in terms of the United Kingdom versus Belgium or Ireland, but in terms of Scotland as the preferred location in the United Kingdom. I did not feel that it was incumbent upon me to draw attention to the hon. Gentleman's aspirations.

On inward investment, it is striking that those companies plan on a long-term basis and try to minimise uncertainty. If they have observed the antics of the Labour party in Scotland, they will have seen four changes of policy on devolution and the tartan tax. They may believe that reality will break in and the Labour party will have to abandon its plans for a tartan tax and a tax-raising Parliament if it eventually decides to put the interests of country before those of party.