HC Deb 03 November 1998 vol 318 cc663-6
3. Mr. Eric Clarke (Midlothian)

What steps he has taken to assist Scottish businesses in respect of the recent international financial crisis. [56103]

The Secretary of State for Scotland (Mr. Donald Dewar)

Although my hon. Friend is right to be concerned about the turbulence in the world economy, the latest monthly figures show that unemployment in Scotland continues to decline and employment to increase. The Government endeavour to help businesses by promoting a competitive, stable domestic economy. Scottish Enterprise is reviewing its economic development strategy at my request and, with my Department, is providing specific assistance to areas experiencing particular problems.

Mr. Clarke

May I take this opportunity to thank everyone who wrote to me and sent get well cards— particularly you, Madam Speaker?

The Secretary of State knows that many businesses go to the wall because confidentiality is imperative in their day-to-day dealings. Does his Department have a hotline or an equivalent service from which businesses may seek assistance? If businesses could consult such a service more quickly, there would be fewer redundancies and less unemployment.

Mr. Dewar

My hon. Friend's reappearance on the Bench, in fighting form, is very welcome. In Scottish terms, the House is a much quieter place when he is absent. I am delighted to see him back and boisterous.

As to his specific question, many local enterprise companies run one-stop shops with entry points. I agree entirely that, at a time when there are inevitable economic difficulties given worldwide conditions, it is particularly important that those who believe that they have a viable future but who require assistance over a difficult patch establish contact with local enterprise companies, Scottish Enterprise, Highlands and Islands Enterprise or directly with my Department. That would give us the chance to offer what advice and help we can. I am very much in the business of taking a positive approach to firms experiencing difficulties.

Mr. James Wallace (Orkney and Shetland)

I am sure that the Secretary of State will have heard many business people in Scotland express concern about the strength of the pound and the level of interest rates. Given that interest rates are significantly lower in countries that are about to become members of the single currency than in the United Kingdom, and given that tens of thousands of jobs in Scotland depend on manufacturing industries that export to European Union destinations, will the Government firm up their recent more positive sounds about economic and monetary union and establish a clear timetable for a referendum and British membership of the single currency?

Mr. Dewar

It is always a pleasure to hear Liberal party policy, and it is good that the hon. and learned Gentleman pushes his line with such charm.

As to the wider issues that he raised, he may have to approach my colleagues at the Treasury. However, in 1997, for example, exports from Scotland increased by 12 per cent. I take a bullish view of the Scottish economy's medium and longer-term prospects, but I am anxious not to see a return to stop-go economics and to boom and bust. I certainly do not want to return to the days—it was not so long ago—when we saw interest rates at 15 per cent. and many associated problems. The hon. and learned Gentleman is entitled to point to the Conservative Front Bench in that regard. The Chancellor is determined to end that situation, and I think that he has the full support not only of my right hon. and hon. Friends but of many other sectors of political opinion.

Mr. Martin O'Neill (Ochil)

I am sure that my right hon. Friend is aware that a number of Scottish companies have suffered as a consequence of the international turbulence and, therefore, are not necessarily able to meet the regional selective assistance targets to which they were previously committed. Will my right hon. Friend and his colleagues continue to look sympathetically at those companies' requests that their problems be considered if the employment targets to which they were committed in more optimistic times are not met?

Mr. Dewar

I would approach my hon. Friend's suggestion with a great deal of caution. RSA is very tightly controlled—and rightly so. Regional selective assistance is paid when jobs are delivered, and I want to hold to that principle. I repeat my message: firms that experience particular difficulties should not be slow in coming forward and approaching the Scottish Office and Scottish Enterprise, because they may be assisted in other ways. We naturally look sympathetically at cases in which, despite certain difficulties, the long-term viable job prospects seem to be good and realistic. I hold to the fact—there are examples that underline this point—that RSA needs to be tied to the targets that have been promised.

Mr. John Swinney (North Tayside)

In the light of the continuing economic difficulties in the shorter term to which the Secretary has referred, does he recognise the folly of the real-term reductions in the budgets for Scottish Enterprise and Highlands and Islands Enterprise? Does the right hon. Gentleman not consider that, in view of those difficulties, he should reverse the cuts and give himself more room for manoeuvre to invest in areas of Scotland that are suffering economic difficulties, such as the borders and the south-west?

Mr. Dewar

I certainly recognise the folly of taking a simplistic line, as the hon. Gentleman has just done, on this matter. The hon. Gentleman is referring to the adjustments that we have made, particularly to the property portfolio of Scottish Enterprise. We wish to invest not in property but in people, skills and economic growth. Secondly, we have adjusted Scottish Enterprise's training budget because £70 million a year is coming in under the new deal and more is being spent on skills and training in Scotland than previously. I am sure that the hon. Gentleman is aware of those facts. I hope that he will both accept them and rejoice, with me, in the fact that Scotland is leading the way in the new deal: there are 15,500 people already in the system; 2,600 are now in jobs; and 5,700 employers have already signed up. That shows that that part of the budget of Scottish Enterprise and the new deal, working together, are having considerable success.

Ms Rachel Squire (Dunfermline, West)

Does my right hon. Friend agree that there are some success stories among businesses in Scotland? Will he join me in welcoming the additional 1,400 jobs that will be coming to the Fife area through BSkyB? Will he join me also in paying tribute to the management and work force of Solectron Scotland Ltd., which deals with the global manufacturing electronics industry? I visited its plant in Dunfermline yesterday, where it now employs nearly 1,300 people.

Mr. Dewar

I am happy to endorse what my hon. Friend has said. It is important that we remember that, although there have been disappointments recently and some failures, we have been creating more jobs in Scotland than we have been losing. I hope that that situation will continue. Certainly every effort will be made to ensure that it does. In 1997–98, Locate in Scotland concluded 87 inward investment projects coming to Scotland, creating and safeguarding 18,000 jobs. I welcome the expansion in Dunfermline by BSkyB. I am well aware of the reputation and excellence of the work that is carried out by Solectron.

Dr. Liam Fox (Woodspring)

Does the Secretary of State expect unemployment in Scotland to fall or to rise between now and the establishment of the Scottish Parliament?

Mr. Dewar

The hon. Gentleman, like me, will have to wait and see. Thanks to the determined line that is taken by the Government—for example, taking £20 billion out of the borrowing requirement and the way in which we have held down inflation—we are certainly very much better placed than many competing countries to ride out the turbulence that has resulted from the collapse of the far east economies and from events in Russia. I am sure that the hon. Gentleman would want to pay tribute to that and join me in hoping that we can continue the excellent record to which I have referred.

Dr. Fox

The right hon. Gentleman's evasiveness is matched only by his willingness to blame other people. Let us go through what the Government are doing. With exporters facing continuing difficulties; with the failure of the new deal to attract sustainable jobs; with tax rises of the equivalent of 5p in the standard rate since the Government came to power; with the Chancellor of the Exchequer, in an hour's time, about to downgrade his own growth forecast; with an increase in borrowing; with a tax raid on pensions; and with a soon-to-be-announced extra 23p per gallon on petrol, which will further damage confidence in the rural economy, does not the Secretary of State accept that the price of the Government's incompetence is bound to be paid for in lost jobs, and that the next get well card that he writes will be to the Scottish economy?

Mr. Dewar

The hon. Gentleman should try to come into the real world. I am prepared to debate with him as long as his arguments are in any sense creditable. As a start, for his education, he should consider the previous Government's record and the problems that they experienced over a long period. I am confident that Scotland will ride out the troubles and that the fortunes of the Conservative party in Scotland will always be much worse than those of the Scottish economy.

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