§ 2. Chris Grayling (Epsom and Ewell)
If she will make a statement on trends in manufacturing employment in Scotland over the last 12 months. 
§ The Secretary of State for Scotland (Mrs. Helen Liddell)
The manufacturing sector continues to be very important to the economy of Scotland, employing around 281,000 people up to December last year and supporting a further 180,000 jobs in the Scottish economy. Both the Scottish Engineering quarterly review and the Bank of Scotland review in March this year reported an increase in manufacturing activity for the second month running, which is very encouraging. However, significant issues still need to be addressed in the manufacturing sector, and the Government, working in partnership with the Scottish Executive, will seek to do that.
§ Chris Grayling
I thank the Secretary of State for that reply. She will be aware that manufacturing employment in Scotland, at the 281,000 figure that she cites, is at one of the lowest levels ever. Does she think that the Chancellor of the Exchequer's decision to charge Scottish manufacturing firms an additional £50 million or more in employers' national insurance contributions will increase or reduce the number of manufacturing jobs in Scotland?
§ Mrs. Liddell
I have to say to the hon. Member for Epsom and Ewell (Chris Grayling) that Labour Members take no lessons on manufacturing industry from members of Her Majesty's Opposition. In the years the Tories were in office, 327,300 Scottish manufacturing jobs were lost—some 52 per cent. of the total—as a result of the rape of our coal, iron, steel and shipbuilding industries. It has been the job of this Government to put in place measures that will stabilise and add value to manufacturing employment, and also increase skills. We are working closely with Scottish industry to achieve that.
The hon. Gentleman referred to my right hon. Friend's Budget. The Budget is good for industry in Scotland. It puts in place a framework for stability in the economy and provides assistance through research and development, which is especially relevant to the 100 large companies in Scotland that employ some 40 per cent. of the population. At the same time, it puts in place the framework for enterprise that is needed to stimulate new starts in the economy. That is critical for the Scottish economy, as those who know and understand it accept.
§ Mr. Mohammad Sarwar (Glasgow, Govan)
Does my right hon. Friend agree that last week's Budget was a Budget for fairness and enterprise? Does she also agree that employers and employees should take a fair responsibility for funding improvements to the NHS?
§ Mrs. Liddell
I agree with my hon. Friend. Improvements in the NHS are important in Scotland, as anywhere else, and it is significant that employers recognised before the Budget that the cost of ill health in Scotland was between £2 billion and £2.5 billion a year, so anything that improves the health and well-being of the Scottish work force benefits everybody. The procurement strategies of the health service will be important as the increased injection of cash finds its way through the 792 system. An additional accumulated £8.2 billion of expenditure in the health service in Scotland is good news for Scottish business.
§ Mr. Alex Salmond (Banff and Buchan)
Notwithstanding what the right hon. Lady has just said, is it not the case that, according to a report in the Daily Record of 3 April, a reputable journal with which the right hon. Lady was once connected, no fewer than 18,374 manufacturing redundancies were announced in Scotland in January and February alone, 7,400 of which were in four companies—Motorola, NEC, BAE Systems and British Petroleum? I know that, famously, the Secretary of State believes that the Scottish economy is performing quite well, as she told us last year, but do not those figures give the lie to that? Before she embarks on her usual anti-Scottish National party rant, will she tell us three things that she is doing as Secretary of State to improve the lot of, and the dismal outlook for, Scottish manufacturing?
§ Mrs. Liddell
The hon. Gentleman is always good at talking Scotland down, but he never enters into a concrete debate about how, for example, to improve productivity in Scotland. He wants to talk about three things. How about the stable and strong economy, which this British Government have created for all the United Kingdom, and Scotland in particular? How about the reduction in unemployment to historically low levels, which the hon. Gentleman never gives credit for, especially not to those people who have moved from welfare into work, which more and more are doing as a result of the Government's policies? Neither does the hon. Gentleman give credit to those in the hi-tech area of the Scottish economy, for example in the biotech and software sectors, which are experiencing unprecedented growth thanks to the economic conditions created by the Government. The hon. Gentleman is happy only when Scotland is not performing. Scotland is performing and the hon. Gentleman's party's fortunes are declining.
§ Rosemary McKenna (Cumbernauld and Kilsyth)
Yesterday, my right hon. Friend visited my constituency and Morgan Stanley Dean Witter, a successful American inward investment company. Does she agree that the SNP seems to spend its time living in the past and does not recognise that the financial services sector in Scotland is of huge importance to the economy of Scotland and the UK?
§ Mrs. Liddell
What my hon. Friend says is true and I pay tribute to her for her links with companies such as Morgan Stanley Dean Witter. I was greatly encouraged by what it told me yesterday. It came thinking that it would end up employing 200 or 300 people in Scotland, but so impressed was it with the skills and determination of people in Lanarkshire, Dumbartonshire and Glasgow that not only has it expanded in my hon. Friend's constituency, but it is now putting some of its securities operation into Glasgow, employing a further 400 people. The financial services sector in Scotland—not just in Edinburgh, but in places such as Glasgow and Cumbernauld—is going through a period of unprecedented growth. It contributes greatly to our gross 793 domestic product and it thrives in the atmosphere of economic prudence and competence that the Government have created.
§ John Thurso (Caithness, Sutherland and Easter Ross)
Does the right hon. Lady agree that manufacturing jobs—indeed any jobs in Scotland, but particularly in the telecoms manufacturing industry—depend heavily on a good and solid investment in communications infrastructure, such as broadband? In that regard, is she aware that of the £30 million that had been earmarked by Government for the rural roll-out of broadband only £4 million will go to Scotland, which perhaps has the greatest need of all? Can she assure us that she will speak to her colleagues in the Department of Trade and Industry and the Department for Culture, Media and Sport to ensure that broadband is properly rolled out in Scotland and there is not the social exclusion that will follow from lack of investment?
§ Mrs. Liddell
Perhaps the hon. Gentleman is not aware of the pathfinder projects in Dumfries and Galloway and the highlands and islands that are aimed at extending broadband. Indeed, Wendy Alexander, the Minister for Enterprise, Transport and Lifelong Learning, has made the issue one of her main priorities. The hon. Gentleman makes an important point, and I look forward to the introduction of the Communications Bill, which will allow us to put the regulation of telecoms and broadcasting together in a much more modern setting. It is important that industry, the Executive and the Government work closely together to ensure the roll-out of broadband, which is just as important for the financial services industry as for other aspects of the telecommunications industry. It is high on the Government's list of priorities.
§ David Cairns (Greenock and Inverclyde)
Does my right hon. Friend agree that one factor that is vitally important for the future of manufacturing in Scotland is ensuring that new technologies and developments that are created there result in manufacturing jobs remaining there? To that end, will she join me in welcoming the news on research and development that she mentioned with regard to the Budget of my right hon. Friend the Chancellor? Will she also join me in congratulating companies such as IBM in Greenock on investing millions of dollars in this country so that manufacturing jobs can remain in Scotland, where they belong?
§ Mrs. Liddell
I had a very enjoyable visit with my hon. Friend to IBM in Greenock only a few weeks ago. It is a well established company in Scotland, as it came there at the end of the second world war. It moved in primarily as a screwdriver manufacturing operation, but has now invested much of its international activity in the Greenock plant. I was impressed with the far-sightedness of IBM and its local management, which has produced a facility that is very good for the local community and exceptionally good for the reputation of the Scottish economy internationally, especially at the high-tech end of the telecoms market.
§ Mr. Greg Knight (East Yorkshire)
Is the Secretary of State aware that CBI Scotland states in its industrial trends report 2002:The outlook for Scottish manufacturers continues to look bleak"?Was not that diagnosis confirmed last week, when Foxteq in Renfrew revealed that it was about to dismiss up to half its entire work force? With almost 6,000 job losses in one sector alone in Scotland last year and closure of facilities by Motorola and NEC, when will she show a little humility on this matter and acknowledge that it is her policies of over-regulation, more red tape and higher taxes that are adding to the ever-increasing number of manufacturing job losses in Scotland?
§ Mrs. Liddell
I would encourage the right hon. Gentleman to come and visit Scotland on occasion, because he will find a very different picture from the one that he paints. Indeed, I met the CBI as recently as last week. Its quarterly industrial trends survey shows that business optimism was positive among Scottish manufacturers for the first time since January 2000, and that export optimism for the year ahead is also positive for the first time since January 2001. Yes, significant problems remain for the Scottish economy—problems that we inherited because of the previous lack of investment in skills and research and development in Scotland. As a consequence of the action that we have taken in the past five years, record low numbers are in unemployment. For the first time ever, we also have record numbers of young people going straight from school into employment—something that we never saw during 18 years of Tory government.