The Scottish Economy

HL Deb 12 February 1992 vol 535 cc763-808

5.51 p.m.

Lady Saltoun of Abernethy rose to call attention to the economy in Scotland; and to move for Papers.

The noble Lady said: My Lords, in moving this Motion I must say how delighted I am that so many noble Lords have decided to speak in this debate. I am particularly delighted that my noble friend Lord Kintore, the noble Lord, Lord MacFarlane of Bearsden, and the noble Earl, Lord Dundonald, have chosen to make their maiden speeches on this occasion. I look forward to hearing their contributions. I myself made my maiden speech exactly 12 years ago today almost to the hour. I well remember how nerve-racking it was. I also wish to record my gratitude to my noble friend Lord Chalfont for reducing the time allocated to his debate to two hours to allow this debate to run for three hours.

The economy in Scotland is suffering because uncertainty regarding the shape of the future government of Scotland is not conducive to that increased investment in Scottish industry which would hasten the end of the recession. In that context we should listen carefully to the views of the CBI and the Institute of Directors on the effect of the various options which have been suggested. However, despite black spots such as Ravenscraig, it is important to remember that all is not gloom on the economic front in Scotland. The Scottish economy is growing faster than the economy in the United Kingdom as a whole. There are particularly bright spots such as oil, North Sea gas, electronics, food processing, the order for frigates to be built at Yarrow's shipyard, the timber processing industry and plans to create jobs in the Holy Loch area after the departure of the United States Navy.

Having said that, there are steps which the Chancellor of the Exchequer might take in his Budget to stimulate investment. He could temporarily reinstate the 100 per cent. capital allowances that were abolished in 1984 by Nigel Lawson. Provided a tight time limit was imposed—say, six to eight months—an immediate upsurge in capital expenditure by companies would be virtually guaranteed and the extra economic growth generated would make the cost negligible. Next he could boost the sale of new cars by abolishing the 10 per cent. sales tax. The VAT on the extra cars sold would go a long way towards paying for that. At the same time he could reduce the road fund tax on new cars using lead free petrol, so creating a real incentive to change polluting old bangers for new cars.

Finally, the Chancellor could stimulate the housing market by increasing mortgage tax relief for first-time buyers—thereby following the example of President Bush—to be funded by reducing mortgage tax relief for existing home owners. Surely it is wise to spend money on stimulating the economy and thus increasing employment even if that means income tax cannot be reduced at present.

I now turn to various aspects of the rural economy where the Government could perhaps take positive steps to stimulate growth or alleviate problems. Modern society makes demands upon rural industry, particularly with respect to environmental considerations, animal welfare and other such matters, for which it is not prepared to pay. Those demands impose a heavy extra burden on industries such as farming and forestry which are already struggling. The possibility of unhelpful changes in the common agricultural policy and an unsatisfactory outcome to the GATT negotiations have created uncertainty and a rural recession and investment blight which may well last beyond the end of the general recession. How then can investment be attracted into an area which regulations, restrictions and conservation politics among other factors are making less and less attractive for the investor who has a world of less risky and more hassle free options to choose from?

The processing sector of the timber industry is undoubtedly suffering from the recession. Margins are tiny or non-existent and the market depressed. Yet the wood processors are increasing their demand for home grown timber, of which the supply to our mills has increased by 35 per cent. between 1987 and 1990, with a further growth of up to 25 per cent. predicted for 1990 to 1993. Despite the recession, production is up and the share of the market captured by our industry is increasing dramatically.

All that is good, but the sawmills are working on trees planted about 50 to 60 years ago. The supply of home grown timber is due to peak in 2025 and is expected to fall away after that. There is concern that the 20 million tonnes of home grown softwood timber required to keep the processors going will not then be available. There has been a dramatic fall-off in new planting since the abolition of Schedule D in March 1988. In the year ending 31st March 1991 new planting accounted for less than half the Government's target of 33,000 hectares. Will the Minister say whether the Government have any plans to reverse that trend? Helpful measures might include extending tax exemption to corporate owners; exemption from inheritance tax; tax relief on loans to buy land and increased planting and management grant rates which should be index linked.

The problems of farming in Scotland are perhaps even more severe than in the United Kingdom as a whole. The National Farmers Union of Scotland believes that many aspects of the so-called accompanying measures to the European Commission's proposals for CAP reform could mitigate the pressure on Scottish farm incomes which will intensify as market support diminishes. The encouragement to extensify production methods foreseen in the agricultural/environmental proposals could help towards reducing supply to markets and work in line with increasing consumer interest in the way food is produced.

In a recently published booklet entitled Our Farming Future the Government have said that their proposals for CAP reform envisage a greater role for environmentally targeted policies. The NFU would like to see the Government translate that sentiment into cash support for the accompanying measures. The proposals for pre-pensions will need to be more flexible to be of potential use in Scotland because it is envisaged that eligibility would be tied to an increase in the size of holding. The Government are about to announce improvements to the farm woodland premium scheme. Perhaps, with the support of Community funding, the Government could increase incentives in this area.

In recent years diminishing stocks of fish have made conservation measures and a reduction in the total allowable catch a necessary part of European Community and United Kingdom fishery policy. The Scottish Fishermen's Federation accepts that. The problem lies in deciding which measures will be both most effective and least damaging to the industry. The fishermen are disappointed that the Government have not seen fit to take advantage of the generous grants available from the European Community towards a decommissioning scheme for fishing boats with a view to reducing by 30 per cent. the size of the fishing fleet and thus the effort put into catching fish. I cannot understand why the Government will not take advantage of that measure. I do not believe their arguments against such a scheme are valid.

As a result the fishermen have been obliged to accept the 135-day tie-up rule, with an alternative of using 110mm. mesh size nets and half the number of days' tie-up or 120mm. mesh size nets and no tie-up. While on the east coast of England, where the principal fishery is for cod, that may be a viable alternative, in northern Scotland, where the fishing is mainly for haddock and whiting, it is not a viable alternative because they are smaller fish than cod and with 110 mm. mesh nets one would catch few haddock and no whiting. Thus fishermen are forced to opt for the 135 day tie-up scheme.

Last September the Scottish Fishermen's Federation proposed to Ministers an alternative approach to decommissioning to that provided under the European Community regulations. I wonder whether in his winding-up speech the noble Lord will tell us whether progress has been made along those lines. The Scottish White Fish Producers' Association believes that a combination of a decommissioning scheme, the introduction of a one net rule, a ban on industrial fishing and the licensing of all salesmen and buyers of fish would be so effective as to make the restrictive tie-up unnecessary.

Both the Scottish White Fish Producers' Association and the Scottish Pelagic Fishermen's Association have expressed interest in the proposals in the European Commission's 1991 report that consideration be given to introducing multi-species total allowable catches. Whereas now they are fixed on a species by species basis, fishing in a mixed stock fishery such as the North Sea and west of Scotland commercial fisheries may have to be halted because the quota of one species, is used up, or, if fishing continues for other species, discarding will have to take place if fishermen are to abide by the rules, or sales to the black market if they do not. Discarding is not only wasteful and inimical to conservation but, since most of the fish are dead, leads to pollution and possible risk to the health of stocks.

In that context it might be helpful if the minimum landing size for whiting were to be the same as the minimum landing size for haddock. The associations have also expressed interest in the Commission's proposals that total allowable catches might be fixed on a multi-annual basis. That would bring an element of stability to the industry as well as doing away with the intense negotiating round at the end of every year.

The Scottish Pelagic Fishermen's Association is unhappy that the arrangements for landing and transhipment of catches require to be designated by the Scottish Office Agriculture and Fisheries Department. It considers that where the fish are caught should have no bearing on where they are landed and that arrangements for landing should depend entirely on commercial and practical considerations. White fish catchers can catch white fish off the west coast of Scotland and land them at ports on the east coast and vice versa if they wish. Can the noble Lord say why there should be a different rule for pelagic catches? The pelagic fishing industry is beginning to suffer from the lack of mackerel klondikers waiting to buy their catches due to the economic problems in the Russian commonwealth. Would it be possible for aid to Russia to take the form of helping their klondikers to continue to buy our mackerel? On the credit side, fish and prawn processing plants are on the increase, and that is good news.

The distilling of whisky is another very important industry in rural areas. The industry believes that it would be very much in the national interest to end the present discrimination against spirits in favour of treating all alcoholic drinks on the same tax basis, which should be based on alcohol content. Perhaps the noble Lord will put pressure on his Treasury colleagues to be more sympathetic to the whisky industry's desire for a level playing field. I think that my noble friend Lord Palmer will say more about that and also about tourism, which has grown vastly in recent years despite a set-back last year.

Tourism is of course an industry which is very much at the mercy of the exchange rate. One small worry is that the imposition of commercial rates on bed and breakfast landladies who put up more than six people, and also food hygiene regulations, may drive many bed and breakfast landladies out of business. Can the Government help with that problem?

Good public transport is also crucial for the tourist industry. Can the Government give any assurances as to the future of passenger rail services north of Edinburgh and Glasgow and say whether there is any prospect of electrifying the line from Edinburgh to Aberdeen in the foreseeable future?

The upturn in the oil industry in recent years has ensured the prosperity of Aberdeen and a wide area surrounding it. Here the worry must be that eventually, possibly in about 30 years' time or perhaps longer, the oil will run out, with dire consequences for Aberdeen. I believe that it is not too soon to start trying to plan for that sad day. Perhaps the noble Earl, Lord Lauderdale, and the Minister will have views on that subject.

Finally, I should like to say a word about the plans of the Cowal peninsula task force for developing the area in the wake of the departure of the United States Navy from Holy Loch. They make inspiring reading, with their emphasis on helping the local people to help themselves and their aim of encouraging small businesses so that the area shall never again be dependent on one large employer. Perhaps something on the same lines might be done in and around Motherwell in the wake of the closure of Ravenscraig, and in other areas when the necessity arises.

I have said enough. I beg leave to move for Papers.

6.4 p.m.

Lord MacFarlane of Bearsden

My Lords, I am a businessman and a lover of things artistic, unreservedly so in both respects. I would, however, seek your Lordships' indulgence on this special occasion to speak about another subject which is dear to my heart.

I wish to speak about an entity which has enjoyed greatness in the past, has gone through the depths of decline and has emerged in a manner which promises its restoration to greatness in the future. It is an entity which has enjoyed the highest reputation among its customers, and which extended its influence to almost every part of the globe.

Times changed, however. Turnover fell; customers disappeared; reinvestment did not take place on a sufficient scale; able people left and competitive pressures arose. The decline and the necessary restructuring were painful. However, through it all a confidence in the future was retained, and now it has emerged with a powerful sense of mission and a corporate culture which encourages freedom of action, initiative, collaboration and, most importantly, partnership.

The entity to which I refer is not a commercial company, but a city. A city, however, which increasingly thinks, acts and responds like a business and knows what it takes to be successful in the business of cities. I am, of course, describing Scotland's largest city, Glasgow.

Glasgow's economic base is being transformed by the injection of modern value-added service activities and, wherever possible, by the modernisation of the manufacturing sector. Glasgow is now recognised internationally as a market leader in urban regeneration. Forewarned by the seemingly irreversible decline experienced in many other cities throughout the world, innovative policies of partnership have attracted city centre and other planned investments amounting to nearly £2 billion, the vast majority of which is arms length profit seeking, private sector investment.

Glasgow now stands on the threshold of once again becoming one of Europe's great cities;: great in the sense not only of prosperity but of completeness as a city, a city of opportunity, a city of environment, a city of culture and a city of real community.

Glasgow is a city which has literally got its act together. Partnership has been the crucial factor in the regeneration of Glasgow. The Scottish Development Agency was established in 1975 and from its loins Glasgow Action emerged. Glasgow Action was private sector led and it provided the necessary catalyst between the public and the private sectors in the city. Since then the still private sector led Glasgow Development Agency has been set up, taking over from Glasgow Action and furthering the close and necessary relationship with Glasgow City Council, Strathclyde Regional Council and every other major institution in Glasgow.

Political, religious, ideological and bureaucratic prejudices and differences have been set aside in the interests of the greater good of the city. All the organisations which can make a contribution to the process of regeneration in Glasgow are being encouraged to work together for the common good.

However, Glasgow has by no means solved all its problems. We have 25 per cent. of Scotland's unemployed in the city, and the concentration of unemployment and other aspects of deprivation in the outlying housing estates is still an enormous challenge. Almost 50 per cent. of the population of Scotland is dependent on the economic performance of Glasgow, so we must get Glasgow right if the Scottish economy is to flourish.

Investment is required from both Government and business, but that investment will reap substantial rewards because Glasgow is not only a city of great need but also a city of great opportunity. It has the potential to become a major asset and contributor to the economic and cultural base of our country. This is true not only of Glasgow, although Glasgow is at present showing the way for other major British cities to revive, regenerate and play their full part in the economy of the country.

To encourage that process I would suggest that a recast regional and urban policy must look beyond the excitement of the East Thames corridor and London Docklands and aim at the economic revival of the United Kingdom's proud provincial cities. A national programme is needed for the revival of the provincial cities which can be the economic powerhouses of the 1990s. It could be piloted in Glasgow which has a long and innovative record of regeneration.

Perhaps I may seek the forbearance of your Lordships for this personal commitment to the future of my own city, but it is difficult for me to be other than enthusiastic having lived through Glasgow's decline and witnessed and participated in its renaissance and seen the potential of its future. I would invite your Lordships to ensure that the most worthy goal of realising the full potential of the country which we serve embraces not only the concentrated and congested area of economic activity in the South East but includes the great cities of the United Kingdom such as Glasgow which offer the potential to become even greater major national assets in the future.

6.12 p.m.

Lord Macaulay of Bragar

My Lords, I welcome the debate and thank the noble Lady, Lady Saltoun, for giving us the opportunity to discuss Scotland's economy. I also thank the noble Lord, Lord MacFarlane of Bearsden for the very informative speech he has just made. In view of the short time I have available I cannot go much further than to say that we in Scotland know that Lord MacFarlane is a great Scot in his own time and, if I may say so, is very worthy of his place in your Lordships' House. We look forward to hearing a lot more from him in future.

The Motion draws attention to the economy of Scotland, to which the cynics (or perhaps nowadays the realists) would respond, what economy? What was once a rich nation—Scotland—has been ravaged, first, by the rapid and massive decline of its heavy industries, the final nail in the industrial coffin being the rape of Ravenscraig by British Steel, whose reasons to justify the closure remain obscure. But enough has been said about that and I shall leave it for the time being.

Secondly, successive recessions under this Government have probably affected Scotland more than any other area of the United Kingdom, apart perhaps from the Midlands. Perhaps the Motion should have drawn attention to the state of the Scottish economy and posed these questions. Is it in a good state? Is it in a bad state? Is it in no state at all? Having heard the noble Lady introduce the debate, it is clear she would not have had to make the suggestions she did make if the Scottish economy was not in a bad state.

I do not wish to talk down Scotland or its people, but it can be fairly said that Scotland has nothing more than a patchwork economy with no shape or pattern. That is not to ignore the new contracts which we hear about from time to time such as those won by the Yarrow shipyard. But the fact that each new contract is welcomed with a fanfare of government trumpets indicates the state of the economy. There is no sense of direction and no structured investment in the working of the economy. It is being left to float in the market and as far as the Government are concerned the industries, companies or firms can sink or swim.

The figures for 1991 are startling. A recent report showed that more Scottish businesses failed in 1991 than ever before. Over the past 12 months 7,950 firms collapsed. That is an average of 32 for every working day of the year and represents an increase of 76.9 per cent. over 1990. That demonstrates that Scotland is now catching up with the rest of the United Kingdom. Of course the Grampian area is wealthy and is becoming wealthier, but if one takes Grampian out of the Scottish equation, the country faces a pretty gloomy prospect. One asks, how can the country survive on that basis? The answer is that it cannot. It is difficult to find anyone to give a hopeful forecast. As recently as January 1991 the Scottish Chambers of Commerce said there were no signs of recovery and, There is no tangible evidence that the Scottish economy started to move out of the recession in the fourth quarter of 1991", No one knows when it is going to move, if it is going to move at all. What is required—as the noble Lord, Lord MacFarlane, perhaps hinted at—is a more structured approach to industry and the rest of it and the establishment of proper development agencies bringing everyone together, looking at the country and the area as a whole and asking, where are we going? If it is necessary for the Government to restore regional grants to revive the economy, that must be the price the country must pay to restore the Scottish economy. In any economy the strong should look after the weak and if that means government help, it should be given.

I should like to say a special word about the Western Isles. The Western Isles have the most fragile economy. I say nothing about the BCCI affair because enough has been said about it already and I do not think it matters any more. But I urge the Government to take a close look at the economy of the Western Isles independently of the BCCI liability. There has been a fivefold increase in the community charge; it has gone from £26 to £122. But in an economy like that that means a lot of money.

In every aspect of economic life the Western Isles are below the UK average in GDP, per capita income and unemployment, which at 13 per cent. is the highest in Scotland. Because of the heavy input of the local authority into the economy, the area must be looked at in a special light independent of the BCCI affair. The local authority is responsible for 22.4 per cent. of household income and 27.4 per cent. of full-time equivalent jobs in the Western Isles. If that base is wrecked the economy is wrecked. The textile industry, fishing and fish farming are under pressure and the Harris tweed industry is in decline.

The Government must recognise that unless something is done the economy of the Western Isles will go into terminal decline and we may as well shut the doors. The Western Isles cannot benefit from economies of scale. They have no manufacturing base. They must be treated as a special case. Since 1976 when it was established the Western Isles council has done a lot to stabilise the economy of the islands with further education and so on, but they have a declining population. In the 10 years up to 1991 the population declined by 8.7 per cent. If the disaster which is hitting the Western Isles continues, there will be a haemorrhage of young people from the islands. If the young and the skilled leave the islands because there is nothing for them to do, the islands will die.

Before I sit down perhaps I may ask the Government the following question. If they are prepared to put £100 million into the Stirling area—the cynics will say that it may have been done for a political reason—is there no money left in the kitty for an in-depth look at the Western Isles on a purely objective basis to decide what must be done for the economy of the islands, whether it be tourism, fishing or other industries?

Perhaps the state of Scotland at the moment is best summed up by the words of Mr. Bill Anderson, Scottish secretary of the National Federation of Self-Employed and Small Businesses. He has described the recent figures as "frightening". I close by quoting his words: I knew that they were going to be bad, but never for a moment did I think they were going to be anything like this … In Scotland, we are no longer cutting into the fat, we are now into the bone".

6.19 p.m.

The Earl of Kintore

My Lords, I am grateful to my noble friend Lady Saltoun of Abernethy for introducing this important debate and thus giving me the opportunity to make my maiden speech, for which I crave the indulgence of the House, and to thank her for all her kindness and guidance since I have been a Member of this House.

My forebear was so against the Union that he petitioned Parliament to try to prevent it. Parliament paid no attention to him. I trust I shall not suffer a similar fate this evening.

I should like to concentrate on one agricultural matter and hope the noble Lord will give a positive reply when he winds up the debate. It concerns the continuing ban on the export of live pedigree cattle because of BSE. I speak in particular about pedigree Highland cattle and possibly I should declare an interest. My wife and I farm in partnership. She has a small fold of Highland cattle. It is an ideal arrangement: she organises for all the hard work to be done and I share in the profits.

However, profits are getting much harder to come by. For example, the average price achieved for a typical export animal—a two year-old heifer—at the autumn sale in Oban in 1989 was £2,421, falling in 1990 to £1,962 and falling again in 1991 to £1,498. The home market can absorb so much but for any real recovery we need to get back into the continental markets, particularly Germany, Austria, France and Holland. The known value of exports of pedigree Highland cattle before the ban was approaching £100,000. Galloway cattle, another native breed exported in the last pre-ban year, had a value of just over £750,000. Although small beer compared with some of the amounts mentioned in debates in this House, £850,000 is a significant amount of money to hard-pressed Scottish beef breeders.

Speaking at the dinner in Oban to celebrate the 100th spring show and sale of Highland cattle on 25th February 1991, the Minister said: I turn now to the BSE issue and the export ban. I have considerable sympathy with the Highland Cattle Society's desire for a derogation which would allow the resumption of live pedigree cattle exports to member states. I acknowledge that the incidence of confirmed cases of BSE among the Highland cattle breed has been very low. Indeed there has only been one case in a pure bred animal and one in a cross-bred. Other pedigree societies—the Galloway, Luing, Aberdeen Angus and Shorthorn—have a similar low incidence of BSE. Against this background I can understand your frustration at the halt to export trade. However, I have to stress that BSE has been an extremely sensitive issue for some member states. To achieve a derogation for pedigree exports we shall need to marshal the scientific evidence in support of our case and address the concerns of the likely importing countries. It is the Government's view that the timing is not yet right". That is from a speech made almost a year ago. The ban remains and the frustration continues.

A press report in my local paper a fortnight ago indicated that Irish farmers, following diplomatic and commercial lobbying, were about to get back into their traditional Middle East and North African markets. If the Irish story is true, I hope that following similar initiatives Scottish beef farmers will also shortly be allowed back into their traditional markets.

6.24 p.m.

The Earl of Glasgow

My Lords, it is a very special privilege for me to be in a position to congratulate the noble Earl, Lord Kintore, on his interesting and extremely important maiden speech. I am sure the House will join me in hoping that we shall hear many more speeches of that calibre from him in the future.

I should like to speak about tourism in Scotland. Like many others in my position, I have converted part of my estate into a country park or leisure centre. We get about 75,000 visitors a year and are always trying to think up ways of getting more. This year in our craft shop we are selling a badge in the shape of a crocodile which states: "Send us more tourists; the last lot were delicious". As noble Lords may know, tourism is Scotland's single largest industry. According to the Scottish Tourist Board over 9 per cent. of the population are employed in tourism—about 160,000 employees and 25,000 self-employed.

Scotland has a lot to offer the visitor. Yet, despite its many natural attractions, its ability to attract tourists is not much better than average. For instance, only 10 per cent of overseas visitors to Britain come to Scotland. That is not particularly impressive. Of course, Glasgow airport has only recently been enlarged and more overseas carriers now fly direct into Scotland rather than going first to London. We hope that that will result in improving the statistics.

There seem to be two particular problems facing Scottish tourism. The first is the short season. Most visitors come to Scotland in July and August. Some come in May, June, September and October. But the number of holidaymakers who come in other months is negligible. Therefore many hotels and tourist attractions not in the central belt (which is slightly different) must close down or run at a loss for six months of the year. That means that many tourist-related businesses have to make enough money in the six good months to sustain them for the rest of the year—rather like squirrels before going into hibernation. In that sense, tourism in Scotland is a very odd industry. Attempts are always being made to extend the season but so far they have not been very successful.

The second problem is the cumbersome way in which tourism is managed in Scotland. In theory, the Scottish Tourist Board is meant to be responsible for promoting tourism and improving visitor facilities. In practice, the Scottish Tourist Board has only limited power over tourism. Many other government and local government bodies as well as quangos have their fingers in the pie.

For instance, there is Highland and Islands Enterprise, formerly the HIDB, which is largely responsible for tourism in its territory. That territory includes most of Scotland's wildest and most dramatic scenery. There is the British Tourist Authority, which has the statutory responsibility for promoting Scotland abroad, although the STB also has some resources for overseas marketing. There are the 30 or more area tourist boards set up by the Scottish Tourist Board which tend in practice to be controlled by the local district councils. Perhaps inevitably they stick jealously to their own district or country boundaries which do not necessarily coincide with natural tourist areas. There are the district and city councils themselves which are responsible for planning and encouraging tourist development in their areas. Then there are the regional councils which, although not directly responsible for tourism, have, for instance, the power to set up regional parks. There are now the new local enterprise boards which have money to invest and are actively attempting to develop the tourist potential in their areas.

Then there is the Countryside Commission, soon to become part of Scottish National Heritage, which is responsible in particular for visitor centres and the countryside ranger services. There is the Forestry Commission and the National Trust for Scotland which own some of Scotland's most popular tourist attractions. Then there are privatised one-off bodies such as the Greater Glasgow Tourist Board. One of the reasons that that has been so successful is that, with the backing of Glasgow City Council and Strathclyde Regional Council, it is big and powerful enough to do its own thing without having to be dependent on other government bodies. In five years tourists to Glasgow have increased from 700,000 to 3 million. Following the Glasgow experience, we now have Edinburgh Marketing setting itself up in healthy competition.

My point is that tourism in Scotland is being administered by so many bodies and quangos, some jealously guarding their own territory or sphere of influence, that it is difficult to identify any coherent national tourist policy and very difficult for potential investors to know with whom they should be dealing. The Scottish Office has set up a Scottish tourist co-ordinating group which meets twice a year, under the chairmanship of the noble Lord, Lord Strathclyde. This suggests that the Government recognise the need for co-ordination but they are a long way from solving the problem.

It seems to me that we need one powerful unifying body, which the STB should be but is not, responsible for marketing Scotland through Great Britain and the world, and under it a dozen or so tourist boards representing identifiable and marketable tourist areas or focal points such as the Firth of Clyde, Loch Lomond, Edinburgh, the Western Highlands or the east coast golf courses—areas not dictated by district or county boundaries; in fact with no definite boundaries at all because each tourist board should bleed freely into its neighbours' territories. Of course each of the boards would need to work and co-operate with local government and other bodies, but they must also be wealthy and powerful enough, like the Greater Glasgow Tourist Board, to work independently if necessary.

Tourism is vitally important to Scotland's economy and it is going to face ever-increasing competition from other parts of the world. It has to be managed in the most efficient way possible, and that must be done with flair and imagination.

6.31 p.m.

The Earl of Dundonald

My Lords, I am grateful and very honoured to be given this opportunity to make my maiden speech. I am acutely aware of the great experience many of your Lordships are able to bring to bear on all the subjects that are debated in the House. I hope your Lordships will forgive my inexperience and that I shall be able to contribute to the debate in a positive way.

This debate could not have been tabled at a more appropriate time. Scottish devolution or independence is being actively debated in all quarters of the United Kingdom, and for once these discussions are not merely being confined to the more interesting drinking establishments of our native cities. The Scottish media, I am glad to say, are focusing on the more important issues, as opposed to the mere romantic notion of Scotland's independence; namely, that of the economic cost to Scotland if the Union were to be permanently severed. The economy of Scotland fares rather better than some other parts of the United Kingdom, but we are faced with one of the world's worst recessions this century and, in the words of some economic commentators, the worst for 60 years.

Many parts of the Scottish economy are doing well. The oil and gas business, despite the relatively low price of North Sea oil, fares better than most and, as a result, the economy of the city of Aberdeen is buoyant, in marked contrast to its southern counterparts. The whisky business has not been so healthy for many decades and as the quality end of the market expands so will the profitability of the industry. Our businesses—those that have survived the recession so far—are more competitive than ever, but times are very tough for many companies in many sectors of the Scottish economy. The construction industry expects to have shed 250,000 jobs in the United Kingdom over the course of the last two years and during 1992. Many employers in the industry are seriously concerned that this will produce a "skills vacuum" in years to come, when the recession does end.

The hotel and tourism industry, so important to the economy of Scotland, is suffering its worst slump in memory. The North Americans who have graced our shores for so long have stayed at home. Economic woes in the United States and Canada, together with the punitive exchange rate, have nailed the coffin lid shut. The continental tourist market, which to a certain extent has taken up some of the slack, is showing signs of slowing as the world recession starts to affect the economies of our neighbours. Even mighty Germany shows signs of faltering, and Japan has issued directives to its banks not to invest in overseas property-related projects until times are more stable in the economic powerhouse of the world.

Despite well-reported Japanese hotel investments related to golf in Scotland, there have been no investments made in this sector during the last 12 months and there are not likely to be any during the next 12 months. On a lighter note, your Lordships might be interested to know that there are no fewer than 13 million registered Japanese golfers. These golfers pay an average of £200,000 each to become lifetime members of golf clubs in Japan. In an interesting extrapolation of the figures it might be possible to attract each golfer to the cultural home of Scotland at least once in his or her lifetime. If one assumes a generation lasts 20 years, that would mean half a million or more Japanese golfers visiting Scotland every year. Just think what this could do for our economy if it could be realistically tapped!Perhaps this will give my noble friend Lord Strathclyde food for thought when the Japanese are allowed by their government to invest in Scotland.

It is my hope that the economic recovery, when it does come —and I can say now that I see no sign of it arriving this year—will start in Scotland and the North of England, where the average citizen is less indebted than his southern counterpart and therefore is more likely to start spending sooner. For this recovery to take place it is critical that not only company managers should feel confident, but also that employees and their families should feel confident. In other words, they feel that they have money to spend and will continue to have that money to spend in a years' time or maybe two or three year's time.

Let us examine the meaning of "confidence" for a moment. It is derived from job security and therefore economic security and political security. We have only to look at present-day Russia to see what lack of confidence on a massive scale can do. How can we possibly secure this confidence in Scotland while in the background a debate on the country's political future is under way? Quite rightly, both companies and individuals are worried about the cost of a separate Scotland. If it could be proved conclusively that Scotland would be financially better-off on its own, do your Lordships not think the opportunity would have been grasped earlier? Instead, Scotland may lose its opportunity to come out of the recession faster than its English neighbour because some of its leaders insist on introducing additional "wild cards" in our country's future. I urge your Lordships to persuade yourselves to think of Scotland's economic well-being first and foremost and to put head before heart, to enable Scotland to come out of this recession first, and not last, among equals.

If there is to be a debate about Scotland's political future, let that be a full and frank debate with hard economic facts to support each major party's view; but let us put this to one side until economic recovery is well under way. We shall otherwise put a major question mark over further organic growth and future inward investment in the Scottish economy. I thank your Lordships for your time and the courtesy you have extended to me in listening to my maiden speech.

6.36 p.m.

Lord Palmer

My Lords, as a comparative newcomer to your Lordships' House, it is a great honour and pleasure for me to congratulate, on behalf of the whole House, the noble Earl, Lord Dundonald, on his well-informed and amusing maiden speech. The thought of these thousands of Japanese running over the whole of Scotland is indeed daunting. I am sure we shall all greatly benefit from his wide experience, especially on Scottish affairs, and we look forward to hearing from him on many occasions in the future.

I am sure that all Members of your Lordships' House are greatly indebted to my noble friend Lady Saltoun for introducing this debate. Each time I have had the honour of addressing your Lordships I have concentrated on the serious problems facing agriculture. These problems, I am sure, especially where Scotland is concerned, will be well aired by other noble Lords, as indeed was done by my noble friend Lord Kintore, in his excellent maiden speech. I therefore propose, in the brief time allowed, to raise two points both of which concern two of Scotland's major growth industries. First, there is the whisky industry, which now accounts for over one-third of United Kingdom food and drink exports and is Scotland's largest export. These export sales have almost tripled in value in the last decade, and whisky is now exported to over 200 markets throughout the world. At home, the Scotch whisky industry directly employs some 16,000 people and when all the ancillary industries, such as cereal production, advertising, printing, packaging, distribution, retailing and tourism are taken into account, that figure rises to very nearly 1 million people. Nor must it be forgotten that this industry alone makes an annual contribution of around £1 billion to government revenue.

To show real concern for such an important industry with these impressive vital statistics, the Government must ensure that the present tax differentials between wine, spirits and beer are not increased. They must strive to set the lowest possible minimum rate for spirits and for Scotch whisky in particular. This issue is important, indeed crucial, if our Scotch whisky industry is to continue to thrive and to play such a key role in Scotland's economy, with the resultant benefit to the livelihood and prosperity of us all.

The second point which I should like to bring to your Lordships' attention is the vital role which tourism plays in the Scottish economy. I know that the noble Earl, Lord Glasgow, has already mentioned that. I do not share his view that there are too many quangos doing their best to support the Scottish tourist industry. I must declare an interest as I own a small tourist attraction. The additional £1 million financial assistance promised to the Scottish Tourist Board for the coming year is most welcome. I fervently hope that the Government will continue to support the tourism industry, which is, despite what the noble Earl, Lord Dundonald, said, now going from strength to strength, as I shall try to illustrate.

Tourism is now Scotland's largest industry, sustaining 185,000 people in full-time employment and generating £1.4 billion in the local economy, which represents about 5 per cent. of Scotland's gross domestic product. Therefore, tourism is a significant enterprise at the heart of Scotland's economy, and it is only right and proper that the Government should support the efforts of the Scottish Tourist Board and others.

Last year was obviously a difficult one, beset by the problems of the Gulf War and the start of the recession. Nevertheless the 10-year figures show a most healthy growth. Employment has increased by 17 per cent., which means 2,500 new jobs each year have been created. With other industries in major decline, as other noble Lords have pointed out, that is a substantial increase.

As my noble friend Lady Saltoun said, undoubtedly there are sectors of the industry that fared less well last year, such as the bed and breakfast category which inevitably suffered due to the drop of some 12 per cent. in overseas visitors. However, I and many of my colleagues in the tourism industry feel that with continued government help the trend upwards of those encouraging figures will continue. There can not be many countries around the world which have such an impressive 10-year record.

The challenges over the next year or two are significant; for example, EuroDisney and the Channel tunnel. Scotland represents the antidote to EuroDisney. Its scenery, its heritage, its environment and, above all, its people cannot be mimicked in theme parks nor packaged and presented as an "experience". Nor, I should hasten to add, would anyone involved in the Scottish tourist industry wish that they could be.

As I have tried to show, all is not gloom and doom on the Scottish front. We must all hope that the Government will continue to support the tourism industry wherever they can, whilst doing everything in their power to ensure that the Scotch whisky industry is not unfairly treated. There are challenging times ahead for us all, and especially for those of us who live and work north of the Border. Let us hope and pray that, with a little bit of luck and continued support from the Government, those two vital industries will continue to grow and prosper well into the next century.

6.45 p.m.

The Earl of Selkirk

My Lords, I congratulate the noble Lady, Lady Saltoun, for initiating the debate. I suggest that we should have a similar debate every year. There is great advantage in having the views of Scotland brought to bear in this House so that we can know what the Government have in mind.

I enjoyed hearing what my noble friend Lord MacFarlane had to say about Glasgow. There have been great changes there. It is 50 years since I saw much of Glasgow. One loss has been the big liners. I do not know whether the noble Lord saw the "Queen Elizabeth" and the "Queen Mary" being launched in the early 1930s. Such ships are not being produced today. P&O goes to Germany for ships of that quality which is very sad. At present I cannot suggest how the situation could be changed. We have lost that quality of workmanship and somehow it should be restored. I do not know whether the loss is due to the nature of the training now available; it is nevertheless a very sad situation.

I was glad to hear about the tourist industry. Many people from North America think they must travel to London to be anywhere near Scotland. One lady from Canada wanting to reach Prestwick was told that she must go to London. As we all know, that is sheer nonsense. It is a matter about which those in charge of the tourist industry should be kept fully informed.

There are things which I believe should be done. Today we have motorways. They were invented by Hitler who had them 20 years earlier than we did. We were slow to get going but today we have motorways to most corners of England and Wales: Northumberland, the West Country, Cardiff, Exeter, and Southampton. However, there is no road from the capital of England to the capital of Scotland. Why is that? It is a grave error of considerable economic importance. If one wishes to deliver goods, one must have a means of doing so. There is no motorway to Glasgow. I am told that the roads to Glasgow are being improved, but there is a long way to go.

The debate which preceded this one was on the subject of methods of modern warfare. The safest answer to the atomic bomb is good government. It is curious that where one finds bad government—for example, Yugoslavia—the people are now fighting. In contributing to the good government of this country, we make use of the atomic bomb less likely.

When one looks at the Commonwealth, which Scotland and England have produced, there are 50 countries which gaily and happily meet every year without dispute and which enjoy one another's company. We have made a great contribution by allowing people to live in peace and quiet in their own countries. That is a tremendous contribution. We shall see if Russia can achieve a commonwealth like that. I am extremely doubtful.

It is important that we should have proper roads in Scotland. Although I have not been to the Highlands recently, I have heard a good many complaints about the state of the roads there. Apparently, they are deteriorating. We must remember that Parliament is responsible for the structure of Scottish government. When the union took place, as most of your Lordships probably know, the government of Scotland was literally destroyed. There was no known form of government throughout the whole of the 18th century. There were people called managers. I do not know who they were. It was only at the end of the 19th century that Lord Rosebery, supporting the Prime Minister, who at that time was Lansdowne, persuaded the Government to appoint an officer for Scotland. About 20 years later a Secretary of State was appointed and 10 years later after that he was given a house in which he could work. We can improve on that situation today and we have the responsibility to do so.

I believe that my noble friend Lord Polwarth did a tremendous job in Scotland in the early 1960s. Someone should be in a position to look at industry to see where improvements can be made. That would be a contribution of great value.

6.49 p.m.

Baroness Elliot of Harwood

My Lords, I should like to thank the noble Lady, Lady Saltoun, for inaugurating this debate at an important time in Scottish politics. I speak today as someone who has spent more of my life in Scottish local government and Scottish agriculture than almost anyone in this House. I am not in favour of home rule for Scotland. Scottish MPs have always taken an active part in UK politics. Scotland has provided the United Kingdom with no fewer than five Prime Ministers since 1902—Balfour, Campbell-Bannerman, Ramsay MacDonald, Harold Macmillan and Alec Douglas-Home. In the House of Lords we have provided many Peers to take an active part in the UK Parliament. All that would end if Scottish Parliament divided the United Kingdom and would be a great loss to both countries.

Scotland still has a great shipbuilding industry and, as has been said, an enormous agricultural industry. In the shipbuilding industry, apart from the great liners of history—the "Queen Mary" and "Queen Elizabeth"—we are building for the Navy and the Air Force. That is important at the present time.

Many noble Lords have spoken about agriculture. It is an important industry. Two-thirds of the land is known as less favoured areas. We provide sheep and cattle which are sold all over the world to the advantage of farmers. The fact that today there is a serious slump in sales and prices is producing a serious effect and we urge the Government to take a more positive part in the farming industry.

People living in towns and cities urgently require farms to keep the agricultural land in good condition; to enable them to walk upon the hills with no great difficulty and allow them to enjoy the country. It is the farming industry that can keep the land in such condition, to everyone's benefit, for what are now known as the "greens".

The form of a common agricultural policy is at present a difficult subject. But there is no doubt that it must be discussed and agreed before things will get any better. The present proposals are not acceptable either to farmers or to the Department of Agriculture. I have a list of farm returns which does not make good reading. The return to land, labour, capital and managerial skills fell by 11 per cent. in 1991. The total income returns have fallen by 4 per cent., and the farming income to families has dropped by 27 per cent.

There is hope that sheep prices may rise a little, due to the sheep annual premium and the LFA supplement. As store cattle and sheep are the biggest users of the Highlands in Scotland, in Wales and the North of England, it is vital that the right policy must be pursued. The Government can act. Scottish MPs and Scottish people must remain as part of the United Kingdom where they play an important part.

Those things are all quickly said because of the five minute time limit. But the importance of Scottish politics cannot be exaggerated. I support those who are anxious to do all they can to enable the Government to preserve the importance of Scotland.

6.53 p.m.

Lord Stodart of Leaston

My Lords, one of the most impressive points in the speech of the noble Lady, Lady Saltoun, was its well-informed nature. I must say to her that she would help us enormously in Sub-Committee D where we are trying to examine in detail the complexities of the common fisheries policy. We would certainly welcome her. The other impressive point has been the speeches by the maiden speakers, particularly because they, unlike the old hands, have taken their guidance from the clock whereas most of us—one hopes—are taking our guidance from the Lord.

The only point I wish to make on the subject of what is known as the "Scottish Question" is this. I remember in another place, some 30 years ago, the all-party enthusiasm, the waving of Order Papers when it was announced that the motor car industry was going to Bathgate, followed by more motor cars to Linwood; then came the pulp mill at Fort William and the smelter at Invergordon. Alas, they all failed. The only question I ask myself is whether they would have succeeded; would they even have got there if there had been a Scottish Parliament or Assembly rather than the dynamo of the Macmillan government?

Having brought in 57 harvests it would seem rather foolish for me not to say a word on agriculture. One thing is absolutely certain; that change is unavoidable. The wheel has turned full circle. I must confess that the free market in 1934 when I started was not much fun. Uncertainty was the name of the game. One never knew what prices were going to be like from one year to the next. Today, however, we have better skills in the industry than we had then. What is of the greatest importance is that business mentality was almost totally lacking in those days. Nobody had heard of cost accounting. Gross margins and fixed costs—I always think that is a stupid description because they never are fixed—had never been heard of. Today, all that forms an important and recognised part of the farming industry.

I believe many young folk are keen to have a go, and it is essential that new blood should be more easily enabled to enter the industry. That touches upon the difficult subject of the landlord and tenant system. I know the heartbreak of going out of a farm; it is not easy. Yet to hand on a farm from generation to generation is not the way to obtain the best from it.

All in all, I am reasonably optimistic about the future of farming. It has again what we lacked all those years ago. Thanks to the tourist industry, which has been mentioned several times already, a wonderful market is brought to our doorstep—hoteliers in Scotland, excellent chefs, visitors coming up from England, if only for the lobsters which cost half the price that they do in London. All that causes me to say that, although the wheel has gone full circle, I am reasonably optimistic.

6.59 p.m.

Lord Gray of Contin

My Lords, like other noble Lords I should like to thank the noble Lady, Lady Saltoun, for giving us the opportunity this evening to discuss the Scottish economy. It is perhaps ironic that at a time when the economic situation in Scotland is much better than in many other parts of the United Kingdom, there should be a sudden or reasonably sudden turn towards total separation among those who have been polled in Scotland.

The recession has bitten less savagely in Scotland. No less than £4.2 billion worth of inward investment has been attracted to Scotland during the past decade. Government expenditure in Scotland has reached a higher level than ever before. Per head of population Scotland is receiving more than any other part of the United Kingdom, with the exception of Northern Ireland. The industries are doing well; whisky, tourism, oil, gas and financial services are all established and doing very well in Scotland.

It saddens me when I hear Scotland being talked down as we have heard a little this evening. Scotland is a good place; it is a great country and a fine place in which to live and work. So why should there be discontent? It is possible that there is frustration of the kind that hits the English when they have to suffer a Labour government elected by Scottish and Welsh votes.

However, the main reason, in my view, is that the case for the Union has been allowed to go by default. It is only in recent months that a real attempt has been made to focus on the great benefits which we enjoy from our membership. I congratulate the Secretary of State for Scotland on the very brave stand which he has taken in leading the way, ably assisted by my noble friend Lord Whitelaw, who took the same line recently at a conference at which he spoke in Scotland.

If the people of Scotland really want separation then they must vote for it. It is essential that they have set before them, first, in detail and in clarity, the consequences of such action and the alternatives. The policies of the Scottish National Party matter little to its supporters. They are voting for total separation —nothing more and nothing less. Sometimes it is suggested that, because the Conservative Party of Scotland does not support a Scottish Assembly, we are losing out so far as votes are concerned. I suggest that if one goes to socialists in Scotland and asks, "Why do you not vote Conservative?", one will be given a dozen reasons why they do not, but one of them will not be that we are not in favour of a Scottish Assembly.

The debate this evening does not permit a detailed discussion of the proposals of the Scottish Convention. Sufficient to say that I see that as a major step towards separation and the break-up of the United Kingdom. It has another great disadvantage in that it would become a breeding ground for discontent and bickering between Edinburgh and Westminster. However large the block grant to Scotland might be, it would never satisfy the appetite for funding of that potential bureaucratic monster.

As regards tax raising powers of its own, that would make Scotland the most highly taxed part of the United Kingdom. Inevitably that would lead to a reduction in Scottish representation at Westminster. It is inconceivable that English Members of Parliament would go along with the idea of a Scottish Assembly with tax-raising powers and the kind of powers that that would give, and at the same time accept the same number of Scottish Members here participating in affairs which are purely English.

Recently, an interesting series of articles appeared in the Scotsman which asked businessmen what their opinion would be of independence or a Scottish Assembly. In almost every case the answer was that from choice they would have status quo. It is sad, at a time when Scotland has so much to offer and when it has the opportunity of becoming one of the leading participants in the Union, that there should be this distraction creeping in of independence and separation.

I do not believe that the Labour Party itself is wholly dedicated to separation. I accept that, but where it has got things completely wrong is that by going along with an assembly with the powers that it proposes, it is taking the first step on that slippery slope which would lead ultimately to separation. I cannot forget that when I entered Parliament in 1970, the leader of the Labour Party was one of the most anti-devolutionist Members of Parliament at that time. There were in that camp a great many Scottish Labour MPs who shared the same views. I would like to say more but my time is up. Again I thank the noble Lady for giving us the opportunity to talk about Scotland.

7.5 p.m.

The Earl of Lauderdale

My Lords, in addition to congratulating the three excellent maiden speakers we have heard, it would be a pity to allow tonight to pass without a "Happy Birthday" greeting to my noble friend Lady Elliot who very recently entered her 91st year and who is speaking with all the vigour of the girl whom we have known and loved for so long.

We all enjoy the occasional Scottish debate. We are very grateful to the noble Lady, Lady Saltoun, for introducing this one. I certainly echo what my noble friend Lord Selkirk said. Perhaps she will get it started every year.

At all costs on a Scottish occasion let us maintain our sense of proportion and our traditional realism. The Financial Times is from our point of view an outside observer. On 13th December it said that the world recession hit Scotland later and less than the rest of Britain. The only part of Britain to see a fall in long-term unemployment in the six months to last July was Scotland. The number of self-employed people is up 50 per cent. since 1979 after no less than 30 years of no increase at all.

The Observer is another outside English newspaper observing Scotland. It said the other day that there is now a nimbleness and dynamism in the Scottish economy unseen for many years. There are various reasons, but one is the offshore oil and gas industry sending ripples right through the economy. About 100,000 jobs—that is, 5 per cent. of the number of people in work in Scotland—are either directly or indirectly in or related to the offshore industry. Last year more than £4 billion worth of developments were authorised and approved for the North Sea offshore industry as against £2½ billion the year before.

I have an interest to declare. I am a director of the French company ELF Aquitaine which, true to the old Franco-Scottish alliance, is becoming more and more interested in Scotland. In a decade we have provided about a third of all the United Kingdom's natural gas. We have interests in more than a dozen fields offshore for oil and gas, partly in production and partly being explored, to say nothing of the new Piper platform.

But as with coal, so with oil and gas: both are extractive industries and so the quarry becomes harder to get the further you go. There are thus two big anxieties overhanging this industry just now. The first is the oil price at about 17.75 dollars or £10 a barrel. That is not a great reward when North Sea costs are higher than in many other geographically attractive parts of the world. But those costs are counterbalanced, in the judgment of the world oil industry, by a stable political environment. Here I would like to echo what my noble friends Lord Dundonald and Lord Gray of Contin said earlier.

Stability of the political environment is critical to attracting overseas investment. Nothing would discourage heavy long-term investment in the North Sea more than a separatist challenge to the UK sovereign right to issue licences and draw revenue. Yet, amid the illusions of the separatists, it is worth recognising that a separate Scotland could not by international law claim title to anything south of the Forties Field. It would have to forfeit Nelson, Elgin, Franklin and everything to the south.

If the fragmentation syndrome now popular spread from Scotland to Orkney and Shetland, as might well happen, then a separate Scotland must say farewell to all the offshore north of the Pentland Firth. A constitutionally separate Scotland could throw away nearly all the offshore benefit enjoyed today.

7.11 p.m.

The Earl of Lindsey and Abingdon

My Lords, I begin by joining with other noble Lords in congratulating the three noble Lords who have made their maiden speeches today.

I am one-quarter Scottish and my wife is three-quarters Scottish. By choice we live in Scotland when I am not working in London. We moved to Ayrshire from the south east of England some 12 to 13 years ago. It was most noticeable then how depressed that part of Scotland was after the previous depression of the mid-seventies. For those of your Lordships who are not familiar with that area, it consists mainly of arable farming and golf links on the coastal belt and hill farming inland. That was interspersed with coal mining which was being run down together with the traditional heavy industries.

Since then in its place have come new light industries of high technology, such as electrical and computer manufacturing which have gone a long way to solving the serious unemployment problem and contributing to a greatly improved standard of living. So far as concerns the economy of Scotland that must be tied to any future political developments and any further taxation proposals that may arise. I am personally for retaining the status quo so long as politicians from London stop using Scotland as a testing ground for possible legislation that might be introduced into other parts of the United Kingdom.

I turn now to the main reason for putting my name down to speak in today's debate. It is to bring your Lordships' attention to British Coal's policy of granting licences to private mining companies to carry out opencast mining in Scotland and elsewhere. There seems to have been a mushrooming of these sites in recent years following the closing down on economic grounds of the old deep underground coal mines. My research reveals that though strict guidelines on working hours and noise levels are laid down by local councils they are in some cases overlooked.

Employment is another matter of interest. The equipment used is so large that one man can operate a piece of machinery which can do the work of 30 men. Those employed on site are not necessarily redundant coal miners. They belong to another union. But that is another story.

In summing up I should like to ask my noble friend the Minister, who knows well the area to which I am referring, whether any serious research has been carried out into the long-term environmental and health effects on the local communities of this type of mining, not to mention the upheaval caused to wildlife and vegetation. Does it contribute in any great way to the economy of Scotland when we seem to be importing cheap subsidised coal from abroad?

7.15 p.m.

Lord Selsdon

My Lords, we have had three outstanding maiden speeches. It makes me realise that this is the first time that I have spoken in a Scottish debate. With a name like Selsdon of Croydon I feel something of an interloper, although my family name declares that I have some chill blood within me. I remember once when I was on a train, I went into the loo. There was a sign there saying "Do not pull the chain when the train is standing at a station". Someone had written underneath "Except at Croydon". I must be the Croydon of your Lordships' House and I therefore have a duty to behave rather like a latter day Tony Hancock of East Cheam Cuttings.

There are serious sides to this debate, but in a few short moments it is difficult to deliver a lot of serious information. Therefore I took the liberty earlier this afternoon of conveying a missive from the City of Glasgow to my noble friend Lord Strathclyde. More will follow.

I echo in particular the noble Lord, Lord MacFarlane. It was because of his initiatives with Glasgow Action that I suddenly found myself going back to Glasgow, realising that there was a city that was due to restore itself. I found too that I was a Unionist. My grandfather, whose father was Provost of Edinburgh at the turn of the century, thought that "Glasgow was better" and stood as a young man in North Lanark, overthrowing a Labour majority. He lost his seat fairly quickly thereafter but managed to return to Maryhill. I researched it through. I wanted to know what a Unionist was, but I am still not quite sure.

I went back to look at the treaty of union, which was concluded about the time that Queen Anne sent a spy called Daniel Defoe up there to look at Scotland and to see what was going on. He wrote describing Glasgow as the paradise of Scotland and one of the cleanliest and best built cities in Britain. We know that images of Glasgow change but your Lordships probably do not know that a recent quality of life study put Glasgow way above every other city in the United Kingdom in terms of quality of life.

I thought that maybe the gap between Whitehall and Westminster and Scotland had widened so much that I might try to become a form of spy for Scotland down here in Whitehall and Westminster. I find there are some strange things going on. On the Benches opposite, where there is meant to be considerable interest in Scotland and considerable support for Scotland, there are not many people. On these Benches, there are lots of people. In another place, the best Front Bench spokesmen for the party opposite all seem to come from Scotland. The break-up of the Union could be disastrous for the Labour Party. However, the Union will not break up because what we are seeing at the moment is a protest from Scotland.

The important thing about the original Treaty of Union is that it gave a great benefit to Scotland that many of us have forgotten about. It opened up the trade with the English colonies to the Scots, who took rapid advantage of the opportunity. Before long they had stolen the tobacco trade away from Bristol because their ships could get to the colonies quicker. They could get to Maryland, Virginia and even the Carolinas. Then they found that they were competing with their own people downstream at Greenock. So they hired some engineers—Golborne, Smeaton and later Sir Thomas Telford—and said, "Look, this river is so shallow that at low water we can't get the ships up here". They put in 117 piers and then more and before long ships were coming up to Glasgow, which ended up building ships.

Even in 1776, when the War of Independence came along and we lost the tobacco trade to Amsterdam, people said, "There's a new trade". They went out to the West Indies. Over time one found that the strength of the city was the people in that city and not the people outside. We see in my noble friend Lord MacFarlane a Scot who is rebuilding his city, but rebuilding it with considerable difficulties because the resources may well not be there. Unionist though I am, I am not—to quote Scott—one of those "Unionist courtiers, that have bought and sold old Scotland". I would remind your Lordships, and particularly my right honourable friends in another place, at this time of the English proverb: He that will England win must first with Scotland begin". There are now many opportunities that we come across, but Scotland is being penalised and it needs more support. I wrote to my noble friend about the problem of business rates. He will have seen the press reports showing that Scotland has the third highest business rates in the world. Business rates in Scotland are 50 times higher than they are in Berlin.

I sit down happily and pull the plug on Croydon by reminding myself again of these words: The Scots give oats to their people; the English to their horses; The Scots have good people; the English have good horses". Please will my right honourable friends in another place give more oats to my right honourable friend the Secretary of State for Scotland?

7.20 p.m.

Lord Lyell

My Lords, it will not surprise your Lordships that earlier today I was watching Olympic skiing on television. The speech of my noble friend who has just spoken would be given the new "best time." I congratulate the three noble Lords who in their various ways made excellent and memorable maiden speeches. My thanks are due to the noble Lady, Lady Saltoun, for giving us this marvellous debating opportunity, which has been amply rewarded by the attendance of an enormous number of noble Lords from Scotland.

I hope that my noble friend the Minister and his colleagues will continue to push, to lobby and to fight for Scottish farmers—being one myself, I declare an interest—in Brussels, throughout Europe and all over the world and will do all they can to support our agriculture, food industry, forestry, fishing and sport. My noble friend Lady Elliot and others have drawn attention to the enormous importance of the Scottish rural economy.

Scots everywhere are famous. Indeed, it is said that many a true word is spoken in jest. I regret to say that for better or worse throughout the world we tend to be famous for the way in which we deal with money—our competence and our prudence. I understand that the latest figures show that nine out of the 15 largest corporations in Scotland are in the financial sector employing 10 per cent. of the Scottish workforce and producing 15 per cent. of the identifiable gross domestic product of Scotland. To me those figures are something of an agreeable surprise. They will not be a surprise to my noble friends Lord MacFarlane and Lord Polwarth, and certainly not to my noble friend the Minister. I wonder whether non-Scots outside Scotland believe us to be more canny, more professional and perhaps even more trustworthy, or merely better in the long term at managing savings, pensions and investments.

The first outward sign of the Scottish financial sector is our excellent banks. The Bank of Scotland was founded in 1695. That is also a special date in the family history of my noble friend Lord Kintore. I believe that something concerning the Earl Marshal happened in that year. The Royal Bank of Scotland, in which I declare an interest as a client, looks after me and an enormous part of Scottish industry and agriculture. It was founded in 1727. The Clydesdale and Northern Bank, which alas is no longer represented—I do not know why—in my home town of Kirriemuir, was founded in 1838. A strong, excellent and professional institution is the TSB Scotland which is the fourth major performer among the clearing banks in Scotland. These major institutions control £50 billion of assets.

Another arm of the Scottish financial industry is pre-eminent not just in Scotland and the United Kingdom but, I am happy to say, in Europe. The nine life offices—the enormous companies that look after our pensions and our savings—control funds under management of approximately £60 billion. The population of Scotland is around 5.5 million. Your Lordships' arithmetic will be quicker than mine but that shows the trust that is placed in the financial industry of Scotland by outsiders, let alone Scots. Scottish Widows, the company which we see advertised beautifully, dates from 1815, a great date in British history. The Standard Life Assurance Company is the largest mutual life assurance company throughout Europe. It is based and centred in Scotland.

Until I studied for this debate I had no idea that the Scottish banking and insurance industry had increased the number of its employees from around 18,000 outside Scotland in 1987 to around 30,000 at the end of 1990. Pure Fund Management—investments and savings for us all—was started by a remarkable man and a remarkable family in my home city of Dundee in 1879. The movement goes from strength to strength. Total funds managed in Scotland have risen from £12 billion in 1986 to around £30 billion today. It seems that the financial sector in Scotland must be doing at least one thing right.

I hope that there is no complacency. I read one report which showed that Scottish firms have a little way to go to catch up in this sector. If any noble Lord believes that there is complacency I can use two letters of the alphabet to demonstrate that there is no complacency. The Institute of Chartered Accountants of Scotland was founded in 1854. That is why my noble friend Lord Polwarth and I have two letters after our name, and not three, like the other institutions that have sprung up throughout the world. It is admitted that the institute has the best training and standards. The training is professional, tough and flexible. The economy of Scotland is evolving and developing in this apparently unlikely but most successful sector. I hope that my noble friend the Minister and the Government will give it all the support they can.

7.26 p.m.

The Viscount of Oxfuird

My Lords, with the leave of the House, I shall take the place of my noble friend Lord Dulverton in the debate as I understand that he is not able to speak and, inadvertently, my name was left off the list.

We are indeed fortunate with our three maiden speakers. I hope that we shall not have to wait too long before we have the opportunity of listening to them again. The issues raised by the debate are of great importance not just to Scotland but to the United Kingdom as well. I wish to make a short contribution and I must thank the noble Lady, Lady Saltoun, for giving me the opportunity to do so.

As I listened to the issues raised by noble Lords, a real fear hit me that we could, perhaps unconsciously, be projecting a wrong and inaccurate image of Scotland to the world at large. I acknowledge that the Scottish economy, like most economies in the world, is facing up to some real problems. I sense however that we are in danger of exaggerating the negatives and understating the positives. We have heard some remarkable facts and figures. There has been reference to the analysis by the Financial Times in December which indicated that in recent years the Scottish economy has grown faster than that of the United Kingdom economy as a whole. To me it is quite remarkable that Scotland's exports of manufactured goods per head are greater than those of Japan. Perhaps for the cynics among your Lordships I should say that it is not just because of the Scots whisky industry, employing 15,000 people and exporting £1.7 billion of whisky in 1990, an increase of 14 per cent. over the previous year.

What is perhaps far more important is the electronics industry in Scotland, which now employs 46,000 people. Nine out of 10 of Europe's personal computers are made in Scotland. Positive internal investment in Scotland's electronics industry has now been attracted from nearly all of the major international electronics firms. That is a singular achievement.

In seeking the reason for these positive trends, we can draw some conclusions that go beyond Scotland and might well be applied universally to the whole of the United Kingdom economy. Scotland has only succeeded so well in the electronics sector because of a commitment to flexibility on the part of the workforce and because of a respect for, and dedication to, training and retraining in the broadest sense.

When I was fortunate enough to contribute to your Lordships' debate, initiated by my noble friend Lord Caldecote, following the publication of the Select Committee's report on Innovation in Manufacturing Industry, I drew attention to the respect with which both the education process and the engineering profession are held north of the Border. That has to be contrasted with the less satisfactory position in the United Kingdom as a whole.

The report concluded that skill shortages are a problem at all levels in manufacturing industry. The more positive attitude, endemic in the whole of society in Scotland, to education, retraining and the engineering profession should be emphasised and re-emphasised and used as a positive selling point to encourage an even higher level of internal investment in the Scottish economy.

In the same debate, I spoke of that legendary fellow, the Scottish engineer, one of our nation's more positive exports. The brain drain of Scottish enterprise has certainly enriched the global environment. I understand that there are over 25 million people of Scots descent in the United States alone. We should give more thought to how we might make Scotland itself an environment and a society where more of the skilled workforce are keen to stay.

A good deal has already been done in that direction. Those of your Lordships who, like me and my noble friend Lord MacFarlane, who spoke earlier, have been fortunate enough to visit Glasgow, cannot have failed to notice the transformation of that great city in recent years. It now offers its inhabitants an environment that many of us in London envy together with a rich variety of cultural opportunities that would be hard to match anywhere in the world. Such changes, which should be fostered and encouraged, must be positive and must encourage a reverse of the Scottish brain drain.

But, in addition, I hope that such changes will also engender a more positive attitude towards Scotland from those on the outside looking in. A good start has already been made in that direction. As my noble friend Lord Lauderdale said, since "Locate in Scotland" was established in 1981, £4,200 million of inward investment from abroad has been made in Scotland and the figures for last year show that the process is accelerating.

All of that is positive. But my real point is this: a message will go out from the House today to the whole of the United Kingdom, to Europe and to the world. It will help to project Scotland, a land of rich cultural heritage, with a well-educated and well-motivated workforce and an ability to operate in the forefront of many new and emerging technologies. I suggest that that approach is the right way forward to attract skills and investment, and to enhance the dignity of a country which is beloved and an essential part of our great union.

7.33 p.m.

The Earl of Dundee

My Lords, I should like to join other speakers in expressing my thanks to the noble Lady, Lady Saltoun, for introducing the debate. It is not often that extra time is awarded on a Wednesday. That certainly reflects the keen response of your Lordships to the subject before us. We have also heard today three very fine maiden speeches. I warmly congratulate my noble friends Lord Dundonald, Lord Kintore and Lord MacFarlane. All three speeches were well informed and well delivered. It is to be hoped that my noble friends will manage to come here very often to speak.

My noble friend Lord Gray in particular and other speakers pointed to the measure of success already in Scotland and how, not least, this has been brought about through policies of reduced taxation and lower inflation. As we have heard, inward investment has accrued to £4.2 billion and a continuing pattern of growth has spread to many parts of the economy. More predictably affected are the oil and gas industries. Less predictable perhaps are the achievements that we find in the service sector, providing 1.34 million jobs, in electronics, which employs 11.5 per cent. of the total in Scottish manufacturing, and with shipbuilding, which in recent years has often been consigned to the deep by economists and popular forecast but which is now happily once more buoyant and afloat.

Another traditional endeavour always supported in your Lordships' House in a moderate and patriotic way is the whisky industry. That was clearly demonstrated by a record level of exports of £1.7 billion in 1990. It is now fully recovered from its previous hangover and is currently in excellent spirits.

Therefore, the questions we now ask are how to conserve and improve upon all those results, which new directions should we also take and how far can those aims be assisted and directed by government. Here I should like briefly to mention two aspects. The first is the need to take more steps to strengthen our entrepreneurial base in Scotland; and the second, in order better to facilitate trade with Europe and elsewhere, there is the case for beginning straightaway a proper programme of investment into those parts of the infrastructure concerned.

On the first point, one problem of which we are all aware is that, compared with the South East, Scotland has a far weaker entrepreneurial base. Mergers and company takeovers move headquarters, R&D and support services to the South, while multinationals take them overseas. However, without having to interfere and meddle with commercial decisions, clearly there are a number of ways in which government can help. Privatisation is an obvious area and that of Scottish Electricity a particular example where companies and their headquarters can be located in Scotland.

Nor, clearly, is every single proposed takeover desirable. In fact, although hardly ever used, there is an enabling provision of protection in the Act concerning monopolies and mergers. I wonder whether my noble friend agrees that that provision should be employed rather more than it is. Can he also say what plans there are to help increase the number of Scottish-based companies through further measures of privatisation or through some other means?

A direct lead which the Government can give is with the Civil Service. Some civil servants have to be in London. Most, however, do not. If recruitment down here with ever-rising wages proves difficult, then there is surely a solution by relocating the job to a part of the country where higher salaries are not needed. In East Kilbride we already have the ODA and elsewhere there are a few other minor examples. However, there is no good reason why even more of the DSS could not be moved to the North of England or the Department of Energy to Aberdeen. Dispersal along those lines would encourage the private sector to look beyond the South East and north of Watford for its development, investment and centres.

A connected matter is infrastructure and what government can and should be doing now to help facilitate Scottish trade over the years ahead. My noble friend Lord Selkirk emphasised the importance of roads. There is a strong case for building a new motorway, possibly financed on the toll principle, extending the whole way down the east coast of Scotland and England from Edinburgh to the Channel. To date it seems that plans to upgrade what is there address only the existing level of use on certain sections of road. That premise is rather like saying that we should not have opened the Suez Canal because previously there may not have been much traffic there except for a few camels.

Other aspects of long-term planning, so far apparently lacking, concern Hunterston and Scottish ports in general. Will my noble friend concur that, while the running of those ports should be left to private enterprise, it is the job of government to help provide co-ordination between Scottish ports and a proper strategy for trade, encompassing many opportunities—whether it be the import of cheap coal from South Africa and Australia to Hunterston or traffic of various kinds between Scottish ports and western and eastern Europe?

Certainly the current level of progress in Scotland may cause us to take heart. We must continue with fiscal and monetary policies which give maximum encouragement to inward investment, business and industry. However, in the interests of competitive trade a far-sighted strategy of investment is now needed, as is also for a sounder more confident economy, a far stronger Scottish entrepreneurial base.

7.40 p.m.

Lord Polwarth

My Lords, the Scottish Council Development and Industry, to which other noble Lords have referred, flourished and did its best work about 25 to 30 years ago. It is remarkable to remember that all that it did was done without a penny of public expenditure. It was all done on funds raised voluntarily. It attracted industry. It went out to America, hurried around and persuaded industry to come to Scotland. It did many things. Thirty years ago we had the Toothill Report. Not many people remember it now. It was produced by the Scottish Council and that remarkable man, Sir John Toothill.

The report suggested a number of policies that should be carried out. Nearly all of them were taken up by subsequently created government bodies. They now have a great deal of money and they are going ahead with them. The Scottish Council was the originator of them all. We shall see a result although it may take a long time.

In those days the unemployment rate in Scotland was 50 per cent. higher than that of the United Kingdom as a whole. It is now practically down to the average level for Britain even at a time of increased unemployment. Scotland has not been so greatly affected because we have built a strong Scottish economy and we are holding our own. Yarrow has an order for three frigates. Kvaerner Govan has won an order for an advanced ship in the face of worldwide competition, including competition from the Far East. Weirs of Cathcart is flourishing. It is constructing pumps, valves and all manner of things needed by industry. ICI is flourishing in Scotland. General Accident Insurance has more business in the United States than it has in Great Britain. The Dawson Group in the Borders (Pringle and Braemar, for example) is flourishing. Meanwhile, Scottish and Newcastle Breweries is slaking the thirst of workers all over Scotland and England. I could give many more examples. The electronic industry, which is made up of small companies, has done well. There is the financial industry made up of the banks and insurance companies to which my noble friend Lord Lyell referred.

All those companies are linked closely to the British economy. They are part of it. If there is devolution—Heaven help us if there is independence—what will those companies do? I sense a feeling of deep unease among the people running those companies about what will happen if Scotland has its own tax system. What will happen to those companies which are minded to seek a base in Britain? We have fought hard and persuaded a great many of them to come to Scotland. They might think twice in the future about deciding to come to Scotland.

We should say to our fellow Scots, "Think hard about what you are doing before you vote. Are you jeopardising your future jobs and all the work done by the Scottish Council and others to make Scotland what it is today?"

7.44 p.m.

Baroness Strange

My Lords, we are all grateful to the noble Lady, Lady Saltoun, for giving us this opportunity to speak on Scotland which, being our ain country, is very dear to our hearts. I should like to congratulate my noble friends Lord MacFarlane of Bearsden and Lord Dundonald and the noble Earl, Lord Kintore, on their winning treble of maiden speeches. My noble friend Lord MacFarlane of Bearsden was, like Glasgow, miles better. The noble Earl, Lord Kintore, gave us a speech masterly in its grasp of Highland cattle. My noble friend Lord Dundonald, in his brilliant and amusing speech, made us all feel that we should learn Japanese at once.

With so many speakers, I should like to make just the briefest of contributions. While I was writing this, I was reading through some old letters of an ancestor of mine, Adam Drummond, who was a Member of the Scottish Parliament in Edinburgh 300 years ago. In those days, the Scottish economy was very different from what it is now, with a faster growth than the growth of the United Kingdom economy as a whole. Now, our exports of manufactured goods, electronics and whisky have all gone up. (90 per cent. of the computers sold in Europe are made in Scotland.) Then, our exports were oatmeal and salted fish.

If we could onlie have ane union of parliaments, and join the Scottish economy to that of England, such misery and corruption as I now see every day in Edinburgh would not then afflict us", wrote my ancestor home to his wife. If only he could see now how that looked-for union of Parliaments has come about, and with it the prosperity which we now have in Scotland, how he would rejoice. How amazed and delighted too he would be to find a whole debate on the Scottish economy going on in your Lordships' House in the Palace of Westminster. How amazed that we no longer had a secondary currency of pounds Scots which were worth very much less than the pound sterling.

There is much talk on television and in the newspapers today of how a separate Scotland would benefit the Scots. It might well benefit the English—there would be a lot less time taken up here at Westminster with Scottish business for one thing. But it would not be any good for Scotland. We should only have to pay twice as much in tax for every man, woman and child as we do already. We should probably, as we did in the 18th century and at other times, squabble among ourselves a great deal more, without the common cry of England to unite us. Our new found prosperity would drop, and I fear that my revered ancestor would certainly be turning in his grave.

7.47 p.m.

The Marquess of Huntly

My Lords, I join all other Peers in congratulating the three maiden speakers we have had the privilege of hearing tonight. It was a pleasure to hear them and I hope that we shall hear many more speeches from them.

I am grateful to the noble Lady, Lady Saltoun, for giving us the opportunity to discuss the importance of the forestry industry in Scotland with particular reference to the Grampian region. Most regional councils are now preparing forestry strategies. They have been encouraged to do so by a circular from the Scottish Office. The circular outlines current government forestry policy and clarifies the relationship of indicative forestry policies to structure plans. The consultative draft report from the Grampian region has now been published following consultation with numerous official bodies, local interest groups and individuals.

I expect that it will be impossible to satisfy all parties, which themselves may differ fundamentally on an appropriate strategy for the future. There is, however, a great deal to be commended in what has been drafted by the authors of the Grampian Indicative Forestry Strategy, even though there remain fundamental misgivings among farmers and landowners as to whether adequate consideration is being given to the position of those who fall within restrictive zoning. I shall come back to that in a moment.

Forestry is vital to the Scottish economy as a whole, covering 12 per cent. of our land area. It is even more significant in the Grampian region where the figure rises to 17 per cent. It is still rising, which is why it is so important to secure sound and positive ground rules actively to encourage the growth of the industry. To fail to do so would harness landowners to unworkable and restrictive guidelines and overlook, on account of selective arguments, the overriding economic imperative.

There is already an impressive record in the north east. The forestry industry has made a significant investment in the Grampian region. Roughly 150,000 hectares of the region are either under forest and woodland or with permission to plant. This high quality timber resource has also attracted significant downstream processing capacity to the area. The new sawmill at Aboyne, for example, is one of the most technologically advanced in Europe and between purchases of wood and services it puts over £4 million a year into the local economy of Grampian region. The mill is currently investing a further £million in the latest kilning technology which will enable it to compete in UK markets against the top grade imported timber from Canada. Timber production within Grampian is forecast to increase by about 60 per cent. over the next 20 years, offering scope for more processing expansion and related employment.

With the need for a reduction in agricultural surpluses under reforms of the CAP, forestry clearly has much to contribute to the Grampian economy, both as an alternative land use and as a major Scottish manufacturing industry. Unlike many other types of industry, it has genuine potential for growth.

If the potential is to be realised, however, investment must be positively encouraged by both national and regional policies. With the opening up of Europe in 1992–93 and with the rest of the world to invest in, the Government must do more to encourage rather than constrain investment in our rural economy. It is now subjected to too much conservation theory and perhaps too little genuine experience of land use production practice.

It is the threat from this conservation theory that requires clarification for those farmers and landowners who are zoned in the draft strategy document as being "sensitive"; that is to say, those holding land designated as being too sensitive to permit the establishment of forestry. May I illustrate an obvious example? As your Lordships know, there is a new initiative known as the farm woodland premium scheme, which was mentioned briefly by the noble Lady, Lady Saltoun, in her opening remarks. From the beginning of April it replaces the farm woodland scheme. The new scheme has a better land supplement, higher planting grant and higher annual payment. Under it timber can be considered as a commercial crop worthy of field scale operation rather than merely landscaping or shelter belt cover, as would have applied with previous schemes. The decision to plant on a significant scale would thereby have major consequences for future profits, cash-flow and viability for the farm for years to come.

The issue that has to be resolved is how farmers in these circumstances would be treated. What financial compensation would be forthcoming for those farmers who are prevented by the restrictions contained in the strategy document from benefiting from this or any other similar scheme? On a different scale but of equal importance to the applicant would be the restriction on large-scale plantations in the upland areas of, for example, West Aberdeenshire, where blanket constraints are proposed.

If compensation is to be forthcoming, who would administer it? Would the Scottish Tourist Board or the district tourist board be appropriate, or should some other altogether separate department of government take responsibility? The weight of scholarship being assigned to this subject from many standpoints is considerable. I do not believe that we should be concerned that hasty and ill-considered solutions will be pressed upon us.

In raising the subject this evening, I simply ask your Lordships to acknowledge two points. The first is that compensation ought to be paid to individuals in the event that they are disprivileged as a direct result of the strategy adopted in their areas.

The second is this. The need to harmonise forestry with other land interests such as farming and nature conservation is fully acknowledged. It is accepted that appropriate controls and restrictions in all aspects of land management are essential. However, every encouragement should be given by government and planners at all tiers of responsibility to promote the continued growth of the forestry industry throughout rural Scotland. We must be alert. The ground rules for the future are being laid now and I urge the Government to take these matters into consideration when taking the decisions that will affect so many of US.

7.55 p.m.

Lord Burton

My Lords, I apologise for not having put my name down to speak, but had the parliamentary programme not been considerably disrupted today I should not have been able to be present. I wish to add my congratulations to the maiden speakers and also to the noble Lady, Lady Saltoun, on putting down the debate. It has been excellent, as Scottish debates usually are, and I am told that we are well to time.

One or two interesting points were made by my noble friends, particularly my noble friend Lord Palmer who referred to tourism. I should draw attention to the fact that many restrictions which may not be obvious are being put on tourism. For example, the preparation of food comes under stringent regulations which I believe emanate largely from the European Community. I understand that it is illegal to have any wooden equipment in the kitchen; one cannot use a wooden chopping board or, which is worse, a wooden spoon. These problems are causing difficulties in the tourist industry, and furthermore the taxation rating for bed-and-breakfast accommodation has recently been greatly increased.

My noble friend Lord Selkirk mentioned road improvement. Having been chairman of the Inverness roads committee of the county council for several years, I well remember that when my noble friend Lord Campbell of Croy was Secretary of State we achieved substantial improvements. I emphasise even more what my noble friend Lord Selkirk said, that road improvements are vital. I plead with the Government to give more money to Scottish, particularly Highland, roads.

The other point I wish to make is that once again with forestry and agriculture we are being strangled by health and safety regulations. A young forester cannot be trained when he leaves school because he is not allowed to use any mechanical instrument until he reaches a certain age, which is far older than necessary. For example, he cannot use a power saw and it is difficult to train young foresters. Furthermore, it puts farming and agriculture at a disadvantage compared with our European neighbours because most other countries do not apply the regulations, even if they have them. I remember visiting a French farm and seeing the hay-making equipment. It was simple compared with ours. Although safety regulations may be necessary, they should apply throughout the European Community so that there is a level playing field.

Then we have trouble with people who, for one reason or another, call themselves conservationists. They seem to forget that the countryside which so many tourists and others come to see in the Highlands has been created by the people who are looking after the ground now. Yet we have restrictions. We are not allowed to plant or cut down certain things; we are not allowed to do this or that.

The amount of paper work one has in an estate office now is unbelievable. It is mostly bureaucratic and presumably these people have to be paid for in one way or another. They may be regional council officials or government officials, but more and more people interfere with what we are trying to do and what I believe we have done well for many years. The Government have promised to do their level best for the farmers in the GATT negotiations. Those negotiations are like the sword of Damocles hanging over us. I wish our negotiators the best in their efforts.

8 p.m.

Lord Grimond

My Lords, it is always a pleasure to follow the noble Lord, Lord Burton. I, too, wish to thank the mover of this Motion and congratulate the maiden speakers. This is not a constitutional debate, but I would not put much money against the proposition that the constitution of Scotland will be altered soon after the next election. It is important that we should treat that matter sensibly. Some of the things that have been said about it seem to me to be fairly senseless.

If Scotland should by any chance become independent—I hope that will not happen—how it will fare depends on how the Scots behave. Switzerland is a successful independent country. Russia, which is a large country, was not at all successful as an independent country. I am against independence for Scotland, but I believe some constitutional change may well be coming and it will certainly be needed.

Whether taxation goes up or down depends on the Scots. On the matter of whether the economy will fare well or badly, I cannot say that the management of the British economy is doing so brilliantly well after the past 10 years. Some change might be welcome. When one considers how oil has poured wealth into this country, I am a little surprised at the enthusiasm for the status quo.

The one thing that can be said about the economic position is that since the First World War Scotland has suffered the continual beheading of its industries and the loss of control over its major industries. That not only affects those industries, it also affects the services in Scotland which lose employees. It also affects the whole community because the able people who would normally remain in Scotland drift south and with that drift something valuable is taken out of the community.

It is desirable that foreign investment should be made in Scotland as it provides valuable employment. However, that does not compensate for the drift to the south of top people which has continued since the First World War. That loss of able people has proved a great handicap to Scottish life as well as to its industry. If there were some centre of power in Scotland that situation might well be reversed and there might well be an upsurge of new talent in Scotland, both in politics and in industry. I very much doubt, for instance, whether the works at Barrhead would have been closed had the management of Shanks remained in Scotland.

I wish briefly to discuss freight and transport. The coming of the Channel Tunnel may be either a good or a bad thing for Scotland. The outcome of that venture depends largely on the approaches to it. A speaker on the other side of the Chamber has rightly said that it is vital to have a trunk road to the south of England and to ensure that our communications from the Scottish ports across the sea and our direct air communications to the Continent and across the Atlantic are greatly improved.

I also wish to mention fishing. The noble Lady who opened this debate dealt eloquently with the common fisheries policy. A great change is coming over the industry. Enormous capital is now required to enter the industry and one needs to travel great distances to fish. Stromness in Orkney is not a well known fishing port but recently some young men there acquired a new boat. It cost millions of pounds and it is equipped to travel to the Atlantic. Inshore fishing is changing out of all recognition.

As regards agriculture, there is a feeling abroad that it has been feather-bedded. Small farmers at any rate have not been feather-bedded. Small farmers in northern Scotland have suffered greatly from the squeeze between rising costs and falling prices. That situation will continue whatever happens in Scottish politics. However, I am optimistic about Scotland. Whatever happens, I believe new talent is available and it will come to the fore. We have no particular reason to complain about our treatment. However, we might do much better with a different constitution. I much regret the way oil revenues have been handled. Oil has been an enormous benefit, but its revenues have been largely squandered when they could have been distributed much more widely throughout Scotland. Alternatively, they could have been used to endow long-term institutions such as universities. Whether we have one form of devolution or another form of unionism, I believe that if Scotland can mobilise the talent that now exists there it has nothing to fear in the future.

8.5 p.m.

Lord Carmichael of Kelvingrove

My Lords, as most other speakers have done, I should first of all thank the noble Lady, Lady Saltoun of Abernethy, for giving us an opportunity to debate the economic situation in Scotland. I do not intend to discuss the matter of an assembly or independence tonight. I should be quite happy to do so but the subject we are discussing tonight is wide and I cannot deal with the matter of independence quickly.

The noble Earl, Lord Selkirk, suggested that perhaps this debate could take place every year. I noticed that the noble Lady, Lady Saltoun, showed a certain interest in the suggestion. That is a welcome suggestion but in view of what the noble Lord the Leader of the House said earlier today on the business statement, I do not believe that such a debate should take place on a Friday.

I congratulate those who have made their maiden speeches today. The speakers list is rather oversubscribed and therefore it may not be possible for me to say quite as much as I would like in congratulating the maiden speakers. The noble Lord, Lord MacFarlane of Bearsden, has much the same attitude to the City of Glasgow as I have. There is no doubt that wonders have been performed there in the past few years.

I am not attempting to pour cold water on the debate. However, the noble Lord, Lord MacFarlane, will know as well as anyone here today that, while a great many things have been achieved, Springburn has 17 per cent. unemployment and my former constituency of Maryhill has 17.5 per cent. unemployment. I give those statistics to bring a touch of reality to the debate.

The noble Earl, Lord Kintore, made an amusing reference to pedigree cattle. He referred to the date of 1707. That date seems to be mentioned nowadays almost as often as people in Glasgow mention the date 1690. The noble Earl also referred to the frustration he has experienced when dealing with Ministers. I speak for Members on both sides of the House, with the exception of those on the Front Bench, when I say "Join the club". We have all felt frustration when dealing with Ministers. However, perhaps that will not be the case with the noble Lord, Lord Strathclyde. I shall be generous and not admit to frustration in his case.

Tourism is of course important. However, it can clash with the ideas of some people who want to preserve everything as it is in Scotland. That clash has been observed in previous debates. However, the mind boggles at the idea of Japanese golfers coming to Scotland en masse. They would be welcome but I wonder how they will get on with some of the east coast caddies I have come across.

I have never believed that all maiden speeches must be non-controversial. They should of course be non-abrasive. However, some subjects such as the one we are now discussing demand that the speaker expresses his point of view. Today the maiden speakers expressed their own points of view. They gave a refreshing angle on certain subjects. But, alas, some of the other contributions to the debate made me wonder whether I go home at weekends to the same Scotland as other noble Lords. I have already mentioned the unemployment in Maryhill and in Springburn. Serious endemic unemployment affects many areas in Scotland.

I am a townee and I love walking around cities. At weekends in Glasgow and the west of Scotland I see rows of vacant shops, emptying shopping malls and an ever-increasing number of estate agents' notice boards, intimating that some family has fallen victim to the recession and has been unable to keep up the mortgage payments. The human tragedy and irrational feeling of failure which lie behind each notice board is a condemnation of the type of society we have experienced over the past decade. I agree with the noble Lord, Lord Grimond, that we have not been very clever in the way we have handled matters in the past 10 years, particularly with regard to the boon of North Sea oil and the huge receipts from privatisation.

The arguments we have heard today, and will I am sure hear during the next few weeks on the hustings, will be exposed by history, which will lament the lost opportunities in Scotland and the United Kingdom because of the almost Messianic belief in a one club solution to all our problems. The end result of that dreadful distortion of Adam Smith was put with great clarity by the noble Lord, Lord Laing of Dunphail, in an excellent speech in this House on 22nd January this year, which is reported at col. 885 of Hansard. The noble Lord suggested that institutional shareholders buy and sell blips on an electronic screen and in our present financial and social climate are esteemed highly for so doing—so long as they happen to pick the right ephemeral choice of blips and end up with a quick profit.

Some noble Lords have quite naturally quoted figures to support their arguments. I have a plethora of figures and facts with me, but one of the most telling reports that I have seen is that of the Scottish Council Development and Industry of January 1992 which says that turnover at Price Waterhouse and KPMG Peat Marwick leapt by 25 per cent. and 21 per cent. respectively. Extra insolvency work was the factor which caused that increase.

The Fraser of Allander/Scottish chambers business survey of 22nd January 1992 said that: Business confidence has fallen back in all sectors. Demand remains stagnant or continues to contract across all major sectors. Investment continues to contract. Though demand is expected to improve in the first quarter in 1992 in manufacturing and wholesaling third quarter expectations were generally not realised in the fourth quarter". I have no wish to be a prophet of doom. Too many of my friends and acquaintances have suffered under this Government for me to wish to make any cheap debating points about the loss of jobs, careers and houses which many people have suffered. They have strived to own their own homes and in many cases have had to give them up. Their children do not have the same opportunities for a good career with a job and a house. I am striving to show the cruelty of the false optimism generated by the government machine. That optimism is false.

I am sure that the Minister will know of the speech of my honourable friend Gordon Brown in another place on 6th February at col. 495 of Hansard for another place. I am sure that the noble Lord will have read that report, and perhaps it will have been taken to pieces. One of the points which Mr. Brown brought out was that Saatchi and Saatchi, for example, spread good news about the economy on its advertising hoardings but then quietly tells its shareholders: Such limited signs of recovery in the United Kingdom economy as are visible remain patchy and do not give us any grounds for optimism". The report goes on to say that the first months of the financial year have not indicated any grounds for optimism.

A headline in the Daily Express in November stated: At last we have lift off. Economy up". However, the chairman's report to his shareholders at the AGM said: Contrary to the optimism of Government Ministers that the economy is turning, there are so far few tangible signs the advertising volumes … are picking up". The,Sun—and I think that that must be the UK Sun rather than the Scottish Sun, which has taken a different line in the last few weeks—said: "It's looking good", "Britain on the way" and, "We're OK in the UK". It also said: If that's depression let's have more of it". However, again, the report to shareholders in November said: Economic conditions as they affect the media are not expected to improve during the next year". The Secretary of State for Trade and Industry was much more open and honest. He said: The problems are deep-rooted and complex and only the most fundamental cultural, academic and educational changes are going to bring about reform. I think that message is getting over". I agree with that sentiment. But the Secretary of State was not talking to the Express, the Sun or Saatchi and Saatchi. He was talking to representatives of the technical journal, The Engineer, who are not likely to be as easily taken in as others because they are at the sharp end of industry.

I am happy to discuss what we as a party would do and what we shall be doing in a few weeks time. First, we would be honest about the economy; we would not promise candy floss. We would tackle the real problems. We would give new powers to Scottish Enterprise, establish a new Scottish education and training minister, introduce a Scottish work experience scheme to reduce unemployment and we would establish a Scottish technology trust and a Scottish innovation centre. We believe that those measures, with the enthusiasm of a new Labour Government, could give enough impetus to the Scottish economy to make it unrecognisable 10 years from now.

8.16 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)

My Lords, I, too, should like to thank the noble Lady, Lady Saltoun, for giving us this opportunity to discuss the Scottish economy. I should also like to congratulate the three maiden speakers, who all spoke with the benefit of personal experience and with the depth of feeling which that experience brings.

I believe that the Scottish economy is in good heart. Certainly, like the wider UK economy, it has been feeling the effects of recession, but it has a number of unique advantages, some of which have been referred to in the debate. I believe that the greatest resource of all is the quality and skill of the Scottish labour force which has shown itself adaptable to changing needs and conditions. For, as we are all aware, the Scottish economy has been in transition. For long it was dependent on the heavy manufacturing industries—coal, steel, shipbuilding, heavy engineering—industries which made Scottish skills and craftsmanship known throughout the world. It has given none of us pleasure to see those industries go into decline. However, we have had to acknowledge the realities. The decline of heavy manufacturing industry and the growth of services are a feature of most modern economies. What distinguishes Scotland from some other countries is the unusual degree of dependence we have had on heavy industries. That has undoubtedly made the process of transition more difficult. In some areas—and of course Lanarkshire is very much in our minds—that process has admittedly been painful.

However, we can all take pride in the determination with which the challenge has been faced. The work of diversifying the Scottish economy has already brought results. One has only to think of the large concentration of high technology industries in central Scotland—what has come to be known as Silicon Glen —and the immense benefits those have brought to the economy. Certainly those industries too have been feeling the effects of the recession, but there is nothing to suggest that the flow of high technology industry and other inward investment into Scotland is anywhere near an end. Indeed, there have been continued inward investment successes over the past weeks and months. There is every evidence that internationally mobile companies are continuing to see Scotland as an important base not only for their United Kingdom but also their European operations. I am confident that we will see yet more inward investment particularly as the world economy starts to recover.

I know that the Scottish economy needs more than inward investment. It needs encouragement and strengthening of its industrial base. The Government have given priority to that. Through various supply side measures—deregulation, tax reductions and trade union reforms—we have sought to give Scottish industry the incentives it needs. We have been the first government to tackle the thorny problem of business rates, mentioned by the noble Lord, Lord Selsdon. We have a commitment to continue that. All of those measures are aimed at improving the competitiveness of Scottish industry.

My noble friend Lord MacFarlane in an excellent maiden speech showed that he was an able advocate of the city of my birth, Glasgow. It is a city of which I know the noble Lord, Lord Carmichael of Kelvingrove, also has great knowledge. One outstanding feature of my noble friend's maiden speech was the time he spent talking about private sector initiatives in Glasgow, not the one-club solutions spoken to by the noble Lord, Lord Carmichael of Kelvingrove, but a partnership between public investment and private sector money and initiative, bringing people together so they can succeed. That is one of the secrets of the success of Scottish Enterprise and the local enterprise companies in Glasgow and throughout Scotland.

I turn to some of the other points raised in the debate. The noble Lady, Lady Saltoun, made a strong case for investment incentives for industry in the Budget. As she will appreciate, the Chancellor has been the recipient of a great deal of advice over the past few weeks. Indeed, I believe the advice the noble Lady offered is not very different from what some sectors of industry have been putting forward. I cannot anticipate what will be in the Budget, but I can give the noble Lady an assurance that the Government remain firmly committed to the need to rid industry of unnecessary burdens, financial and otherwise, so allowing it the freedom it needs to prosper and be competitive. Our record on that score speaks for itself.

The noble Lady and many other noble Lords stressed the importance to Scotland of the three basic rural industries: agriculture, fishing and forestry. As to agriculture, the noble Lady referred to the "unhelpful" changes being proposed to the common agricultural policy. If I may say so, that was a fine understatement. The Commission's proposals threaten to disadvantage agriculture in the United Kingdom and in several respects the impact on Scotland would be more damaging than elsewhere. In particular, the proposals for restricting entitlement to premia for sheep, beef and dairy cattle would apply disproportionately. We have made clear our opposition to the discriminatory features of the proposals. We have been at pains to explain to the Commission and our partners the damage the proposals would bring about in Scotland. We shall stand firm, not just because the proposals discriminate against our farmers but because they would undermine the ability of the more efficient farms in Europe to compete in a wider international market place.

We will not agree to changes in the CAP which impose unreasonable burdens upon our farmers. But we must distinguish between the actual problems facing farmers and what are as yet only threats. If we are to concern ourselves with threats let us also remember that there are opportunities. A good illustration is the SNFU's positive initiatives to develop quality control systems for livestock and now arable farms. I am glad that we have been able to offer some government support to their efforts and I understand that various programmes are making progress.

The noble Lord, Lord Kintore, in his maiden speech, spoke about BSE and current restrictions on the export of live pedigree cattle from the United Kingdom. There is no evidence of lateral transmission of BSE. The latest research findings suggest that even if lateral transmission does occur it is unlikely to be a major feature of the disease, pointing to a rapid decline in the number of confirmed BSE cases within the next years. Once it is clear that the expected decrease is being realised a strong case can be mounted for relaxing the ban on the export of breeding stock. We are in the hands of the European Commission and the hard diplomatic work by British Ministers will have to be continued before we can get re-entry into European markets.

I am very much aware of the problems facing the Scottish fishing industry, raised by the noble Lady, Lady Saltoun, and the noble Lord, Lord Grimond. While the tie-up measures introduced in 1991 did not prove popular they were required to avoid the possible collapse of the stock. The Government worked very hard to avoid the worst elements of the Commission's original proposals. Our successes can be seen in the much greater degree of flexibility available to our fishermen in this year's regime. I recognise that the gear options proposed for this year will not be a suitable alternative for all Scottish fishermen but they will certainly offer greater flexibility than would otherwise have been the case.

I noted the views of the noble Lady on decomissioning. The Government are giving careful consideration to the development of conservation measures designed to reduce effective fishing effort. We have said that we are prepared to consider decommissioning as part of a wider conservation package. The SFF and the NFFO have put proposals to us which we are looking at carefully and seriously.

The noble Lady referred to forestry and the importance of the timber-processing industry. As she will be aware, there has been over £1 billion worth of investment in the industry since 1984 and a substantial part of that has come to Scotland. We now have a processing industry which can compete on quality and technological innovation with the best in the world. As the noble Lady said, production has increased and with it market share. Even so, the noble Lady and my noble friend Lord Huntly—who spoke with great knowledge of the situation in Grampian and made a very thoughtful speech—expressed concerns about new planting by the private sector.

It was inevitable, I believe, that there would be some reduction in the rate of growth of the industry as a number of influences came to bear. There was a bulge in planting in the mid to late-1980s on the back of a buoyant economy and a rather generous tax regime. Since 1988 there has been a growing awareness that planting must be sensitive to the landscape and environment, and investors are taking more time to plan their planting. They are adjusting to the new financial regime and economic circumstances. I have every expectation that they will soon seize new opportunities. In the long term this temporary holding back will have no practical effect as forest managers use their skills and exploit the flexibility of the tree resource. I shall bear in mind the interesting suggestions of the noble Lady for further action. As she knows, forestry Ministers maintain close links with the industry. We are confident of the continuing prosperity of that industry and the communities it serves.

The noble Lady and the noble Lord, Lord Palmer, referred to the whisky industry and emphasised its importance to the Scottish economy. I make it clear that neither the industry nor the Government is opposed in principle to the harmonisation of duty rates on alcoholic drinks. The current position is that the Community is preparing a report covering possible distortions in the market for alcoholic drinks. It will be only after receipt of that report that any decision will be taken on the minimum rate of spirits duty to be applied within the Community.

The noble Lady and my noble friend Lord Lauderdale spoke about the prospects for North Sea oil. It is right that we should acknowledge the vital contribution of that industry to the Scottish economy. In less than 30 years the offshore sector has grown from nothing to become one of our most important industries. Government revenues exceeded £70 billion to March 1991. While we can no longer expect income levels to match those of the mid-1980s when oil prices were so high, the industry continues to be a major contributor to the economy. Last year's oil trade surplus is not expected to match the £1.5 billion of 1990. However, we can look forward to increases in 1992 reflecting higher production levels and a consequent rise in exports.

My noble friend Lord Lauderdale was right to mention the problems of oil and the independence movement. It has never been obvious to me that we should set such faith in a commodity which will not last for ever and whose price fluctuates so much. One of the benefits of the offshore industry has been the greater attention it has focused on the need for infrastructure. The Government are committed to maintaining and improving transport systems both within Scotland and from Scotland to the rest of Europe. Investment in railways has been at unprecedented levels since 1979. Much of this has been directly beneficial to the railway network in Scotland. We have seen investment of over £125 million in new rolling stock and £450 million in electrification of the east coast main line between Edinburgh and London.

Investment in roads, too, has been a priority. I can point out to my noble friend Lord Burton that current spending on roads is the highest ever. This is allowing us to improve much of the network more quickly and to build on recent successes such as the quick start to the upgrading of the A.74 to motorway standard. When completed the upgraded A.74 will mark a major improvement in Scotland's road links with the South. It will significantly assist Scottish industry to remain competitive in the major markets south of the Border and in Europe.

Many noble Lords, including the noble Earl, Lord Glasgow, the noble Lord, Lord Palmer, and my noble friend Lord Dundonald in his first class maiden speech, spoke on tourism. I know that my noble friend Lord Dundonald comes from an area of great tourism potential. His ideas on golf will attract a great deal of interest, not least in the Scottish Tourist Board, which I hope will take up some of his suggestions.

As all noble Lords who spoke on that subject pointed out, the industry is a substantial contributor to the Scottish economy. The Scottish Tourist Board estimate that visitors to Scotland spent over £1.6 billion last year alone. If spending by daytrippers is added, the value of tourism to Scotland's economy in 1991 was over £2.5 billion.

The noble Earl, Lord Glasgow, mentioned unemployment. Our commitment to the tourist industry is clear. Since 1979 the financial provision of the Scottish Tourist Board has increased by 27 per cent. in real terms. I have recently been able to announce a further increase in funding for 1992–93.

This latest increase of almost £1 million will be spent mainly on increased support to area tourist boards. They are an essential element in the promotion and development of tourism at the local level. The Scottish Tourist Board will also be able to target more effectively the lucrative conference market, which at present is worth £300 million to the Scottish economy. The noble Earl had some interesting ideas about the administration of tourism in Scotland at national and local level; this I have taken on board.

The noble Lord, Lord Carmichael, was also right when he mentioned some of the problems that tourism faces over the environment. He will be delighted to know that at the end of this month I shall be announcing the conclusions of a report on tourism and the environment.

My noble friend Lord Burton spoke about hygiene regulations in the tourism industry and wooden chopping boards. It is important that regulations on hygiene do not create disincentives for people. On the other hand, the consumers must have faith in the quality of the food that they receive, and that is the intention behind these regulations.

No debate would be complete without mentioning the constitutional position in Scotland. I noticed that the noble Lord, Lord Carmichael, spoke at some length but would not be drawn on the subject. I am sorry about that. However, other noble Lords have considered the options; namely, my noble friends Lord Selkirk, Lord Gray of Contin and Lord Dundonald. The noble Lord is quite right. There should be a clear debate on this subject backed up by facts and logic.

This Government believe that all parts of the United Kingdom have benefited from the Union. The Union has served the interests of Scotland well over 300 years. We have shared commercial and industrial expansion, as was explained so ably by my noble friend Lord Selsdon. We created an empire together. We stood side by side to protect the United Kingdom and the rest of the world from the tyranny of nazism. My noble friend Lady Elliot of Harwood demonstrated very well the importance that Scotland and Scotsmen have played in the governance of the United Kingdom. Yet out of political expediency the Labour Party has brought forward proposals for a tax-raising Scottish parliament, creating not only the conditions for the eventual disintegration of the Union but also imposing a heavy economic cost on the people of Scotland. I am very grateful to my noble friend Lord Gray of Contin for his speech, which I think is one of the finest speeches that I have heard him make in this House. It was not so much a defence of the Union but a glorification of it. That is very important when so many wish to denigrate the benefits of the Union.

A Scottish parliament established by the Labour Party would have the power to increase the basic rate of income tax by about 3p in the pound. The right honourable John Smith, the Shadow Chancellor, confirmed that in a speech he made on 10th January 1992. That increase in taxation, along with Labour's proposals to raise the top rate of income tax to 50 per cent., to abolish the ceiling on national insurance contributions, to impose a 9 per cent. tax on income from savings, to increase inheritance tax and reintroduce capital transfer tax would place Scotland near the top of the European tax league. Scotland's unique taxation structure under a Scottish parliament would have a major impact on inward investment to the Scottish economy.

As my noble friend Lord Dundee said, in the period 1981–1991, some £4.2 billion of planned overseas investment has come to Scotland, creating 80,000 jobs. That flow of inward investment has been of great benefit to the Scottish economy as a whole and to Lanarkshire in particular. Scotland's ability to attract inward investment has undoubtedly been aided by the Government's reductions in income tax, corporation tax and business rates and their record on industrial relations. In 1990 there were fewer working days lost in Scotland through industrial disputes than in any year since the war. Completion of the single European market has significant inward investment implications, with non-European companies considering establishing a manufacturing plant in Europe so that their products can be regarded as European in origin. Scotland has benefited from that. The noble Lord, Lord Grimond, said that what we had seen in the past was a brain drain to the south of England. I wonder whether that would not be even worse if the English economy were stronger and existed under a more beneficial tax and economic regime than did Scotland.

Undoubtedly talk of the constitutional position in Scotland will rock the confidence of commercial enterprises and individuals in Scotland. It is time that those on the other Benches said what they really believe in: unionism or separatism.

Lord Carmichael of Kelvingrove

My Lords, I wonder whether the Minister can help me. At the time of the referendum in 1979, the then leader of the Conservative Party, at least in Scotland, the noble Lord, Lord Home of the Hirsel, said that he did not like the scheme that was being put forward by the Labour Party. He advised people not to support it. He said that he and the Scottish Conservatives would bring forward a proper scheme of devolution. I am absolutely sure that the noble Lord, Lord Gray, would remember that very well. Can the noble Lord say what work has been done since 1979 on a Conservative form of devolution as inspired by the noble Lord, Lord Home?

Lord Strathclyde

My Lords, the main point is that we do not believe that devolution as proposed by the Labour Party, Liberal Party or any other party will be in the best interests of the people of Scotland or its economy. Those interests are safeguarded by a firm belief in the United Kingdom. That is what has preserved and helped not only Scotland but the other constituent parts of the United Kingdom over the past few centuries.

There is much more that I could say on that subject and on others. I could say much to my noble friend Lord Lyell on financial matters, to my noble friend Lord Lindsey and Abingdon on opencast coalmining and to the noble Lord, Lord Macaulay, on the Western Isles. I am conscious that a lot of money has been spent on agriculture in the Western Isles over the past five years.

Scottish firms have been scoring successes even in these recessionary times. One need only instance the outstanding performance of British Aerospace at Prestwick with the remarkable Jetstream aircraft; the export achievements of smaller firms, such as Norfrost in Caithness, which have proved that distance can be no obstacle to successful marketing; and the orders won by Weirs of Cathcart and Kvaerner and Yarrows on the Upper Clyde, which have demonstrated that traditional Scottish skills in engineering and shipbuilding are still very much alive; not to mention the many other commercial enterprises, large and small companies, mentioned by my noble friend Lord Polwarth. It is that sort of record which gives me confidence in the Scottish economy. It is not just a record of government achievement. It is a record of people with the skills and incentives to work together and improve their lot.

My noble friend Lord MacFarlane talked about "Glasgow, city of community" and I talk of "Scotland, nation of community". I will not talk down Scotland and I am glad the noble Lord, Lord Carmichael, said that he would not talk down Scotland either. Of course there have been problems, and in an imperfect world problems of one sort or another there will be; but if the resilience of these recent times is typical, as I believe it is, I have no hesitation in saying that we can look forward to a future that will not only consolidate the gains we have made but will also, I believe, see us making further progress along the road towards a successful and prosperous modern economy.

8.41 p.m.

Lady Saltoun of Abernethy

My Lords, we have had a very interesting and wide-ranging debate. I am most grateful to all noble Lords who have taken part in it and who have in many cases travelled far at personal inconvenience in order to do so. I, too, should like to add my congratulations to the three maiden speakers on three excellent speeches. First, the noble Lord, Lord MacFarlane, spoke about the regeneration of Glasgow. I think that we all share his pride and enthusiasm over what has happened there. Then my noble friend Lord Kintore told us about his pedigree Highland cattle breeding business and its problems. I hope he will soon have more profits to share with his wife. Lastly, the noble Earl, Lord Dundonald, gave us a most entertaining speech about attracting Japanese golfers to Scotland, among other things. I very much hope that his suggestion will come true. I am sure all noble Lords will join me in hoping that all our three maiden speakers will become regular contributors to our debates.

Although we have not taken as long as I feared this evening due to the admirable self-restraint of most noble Lords, I am not going to inflict another speech on your Lordships and therefore I shall not mention all the speeches individually. But there is just one to which I should like to refer. The noble Earl, Lord Selkirk, who is no longer here, suggested that we should have a debate on Scotland every year. I think that is an excellent suggestion; but he also seemed to imply that I would have to organise it. There I take issue with him. There are over 120 members of the Scottish Peers Association and I would respectfully suggest that another noble Lord should organise next year's debate. However, I agree with the noble Lord, Lord Carmichael of Kelvingrove: never on Fridays!

Lastly, I should like to thank the noble Lord, Lord Strathclyde, very much for the trouble he has taken to answer almost all the points I raised. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.