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Volume 458: debated on Tuesday 27 March 2007

The Secretary of State was asked—

International Development Fund

1. What discussions he has had with the First Minister on the Scottish Executive’s international development fund. (128975)

I have regular discussions with the First Minister on a range of subjects. In 2005 the First Minister, in agreement with my right hon. Friend the Secretary of State for International Development, launched a fund that will provide £12 million over four years to help improve health and education, particularly in Malawi.

I thank the Minister for that reply. In the same year of 2005, the Government signed the Paris declaration, whose stated aim was to eliminate “duplication of efforts” and to rationalise

“donor activity to make it as cost-effective as possible.”

Does the Minister agree that on both counts, the international development fund makes a mockery of the UK’s commitment to the Paris declaration?

No, I do not. If the hon. Gentleman had listened to my answer, he would have heard me say that the First Minister was in agreement with the Secretary of State for International Development. Staff of the Department for International Development sit on the expert group that advises how the fund is used, and that group is working in harmony. We will take lectures on international development from many quarters, but not from the party that cut international development spending year on year.

May I draw to my hon. Friend’s attention the fact that NHS Scotland is providing much expertise and training assistance to Malawi? When the International Development Committee visited last year, it was made clear that there was a real need to address the brain drain from that country, and its total lack of capacity. NHS Scotland and its partners in the rest of the UK are playing an important part in helping in that regard.

My hon. Friend speaks with great authority on the matter, as she is a member of the International Development Committee and has a connection with the all-party group on the great lakes region and genocide prevention. She is right to say that DFID and all the other agencies that we work with are operating in partnership in Malawi. DFID is recognised as being the gold standard when it comes to such work: that is why it is important, even though the fund being administered is small compared with the vast sums of money at DFID’s disposal, to make sure that it does not suffer from duplication of effort. I am confident that it does not.

May I too urge the Minister to ignore anti-Scottish and anti-Malawian Tories, and to acknowledge Scotland’s distinctive relationships and associations with sub-Saharan Africa? Has he seen the opinion poll carried out by the Scottish Catholic International Aid Fund, which shows that 76 per cent. of the Scottish people believe that decisions about Scotland’s share of development funding should be made in Scotland?

The people of Scotland, through the country’s membership of the UK, are making the most fantastic contribution to international development around the world. The policy of the hon. Gentleman’s party is to break up the UK and take Scotland out of it, but that would do nothing to further the cause of international development. It is this Government—led, in this instance, by the Chancellor of the Exchequer’s international leadership—who have led the way in cutting debt and helping the most heavily indebted poor countries. At Gleneagles, we brought together leaders from all over the world to set up an international finance facility. Scots should be proud of the role that Scots in the UK play to help the poorest in the world.

Digital Switchover

The Minister will be aware that people in vast areas of rural Scotland will not be able to receive through their aerials the full range of digital services that are available to the rest of the country. What action will he take to ensure that rural Scotland does not receive a second-tier service for digital terrestrial television?

The hon. Gentleman raises an important matter that I have acknowledged previously from the Dispatch Box. Essentially, this is a matter of engineering. The full suite of programmes can be broadcast from the main transmission masts, but that cannot happen from the relay transmitters because the signal is weaker. That is where the two-tier element comes in. On Thursday, I am due to meet Vicki Nash of Ofcom Scotland at the organisation’s office in Glasgow. I assure the hon. Gentleman that I will raise the matter with her, and that I will get back to him.

I assure the Minister that that issue was raised at the borders digital forum last week—but may I draw his attention to another issue? Digital TV providers are rightly promoting early adoption of the technology required for digital switchover, which means that older people and people in vulnerable groups are already converting their sets ahead of the availability of the financial assistance scheme later in the year. Will he explain why his colleagues in the Department for Culture, Media and Sport do not support the provision of retrospective support for those who convert now and would otherwise have been entitled to that financial assistance?

The whole point about assistance is to help those who are experiencing difficulties converting. Obviously, if people have converted they might not have been eligible for that assistance—and the hon. Gentleman knows that there is always a problem with retrospective payments in such cases. However, I hope that he will be reassured to learn that I will add that particular point to the ever-growing agenda for my meeting with Vicki Nash on Thursday.


I hold regular discussions with Cabinet colleagues and members of the business community on a range of matters, including fiscal matters. As part of the United Kingdom, Scotland continues to benefit from this Government’s management of the economy, which has delivered stability, low inflation, low interest rates and high employment.

Does my right hon. Friend agree with Sir Peter Burt of the Burt commission that replacing council tax with a local income tax would be impractical, and that setting up a nationally set tax would cost the Executive £19 million and employers £60 million, and that it would have annual running costs as high as £55 million? If so, will he ensure that such a rise does not happen for Scotland or the Scottish people?

Sir Peter Burt makes a powerful case. It would be very difficult for people to explain, whether at Westminster or from Holyrood, why it would be in Scotland’s interest to become the highest taxed part of the United Kingdom. A recent success of devolved government is the reversal of the brain drain and an historic turnaround in the demographic challenge that we faced in Scotland. It is for others who want to make Scotland the highest taxed part of the United Kingdom to try to make sense of that policy, in the context of the real successes that are being enjoyed at the moment.

Given that the great Budget “tax cut” con trick has been well and truly exposed, the Red Book shows that oil revenues are rising, not falling as claimed by the Chancellor, and the Labour party has committed itself not just to keeping but to revaluing the hated council tax, causing misery to hundreds of thousands of Scottish families, is it any wonder that Cabinet Ministers cannot even remember the name of the First Minister, and that the First Minister has taken to calling the Secretary of State rude names in French? Who is responsible—[Interruption.]

Order. The hon. Gentleman must take his seat. I do not see what the First Minister has to do with his question. It should be a bit more specific, and he must keep it tight. Just a few more words—nothing more.

Who is responsible for the taxation position, and the shambles and negativity in the Labour Cabinet—[Interruption.]

The second intervention was no more worthy of the hon. Gentleman than the first, Mr. Speaker. As for tax con tricks, I am concerned about the suggestion by the Scottish National party that a 3p rise in income tax would be adequate to cover the large financial hole in its income tax proposals. The fact is that it is not the Government’s policy to saddle every Scottish family with an additional tax bill of £5,000. It is not our policy to make the Scottish part of the United Kingdom the highest taxed part of the UK; that is the policy of the SNP.

My right hon. Friend will be aware that the consequences of 6p on income tax would be particularly severe in areas where incomes are higher than the Scottish average. Will he consider making an assessment of the impact of local income tax on different parts of Scotland so that we can see the full damage for ourselves?

My hon. Friend makes an important point. It is the SNP whose sums do not add up, not the Government’s figures. I would simply say that the dividing line is now clearer than ever: it is a 2p cut in the basic rate with the Government, or a 3p—or, indeed, 6p—rise with the Scottish National party.

One in five Scots will be hit by tax rises under the Chancellor’s latest Budget—that is 1 million Scots who are already on low incomes. He has proposed increased tax credits to compensate, but take-up among some groups is as low as 20 per cent. How can the Government pretend to create a fairer tax system when the reality is that the Chancellor is acting like Robin Hood in reverse?

With respect, in the middle of a debate about figures adding up, I am not sure that the Liberal Democrats are the most authoritative source. If the hon. Lady seriously wishes to address the issue of child poverty, she will welcome the child benefit rise to £20 a week. Child benefit was £575 a year in 1997, but by 2010 it will be more than £1,000. Before asking her next question, perhaps she should look at the Institute of Fiscal Studies report on the Budget, which stated that when those changes in the tax system and the tax credits system are taken into account, the poorest 20 per cent. will benefit most from the Budget.

Does my right hon. Friend agree that quite apart from the substantial damage that would be done to the people of Scotland by any proposal to increase income tax by 3p, or to introduce a local income tax, such measures are totally unworkable except at tremendous cost? Does he further agree that they would also require the agreement of the Westminster Departments that would have to collect any such taxes?

Of course, some people advocate a position called fiscal autonomy. For example, Crawford Beveridge argues that there should be a shift in the tax powers. Indeed that individual has been quoted a number of times by several Members, so it would be helpful for people to understand the consequences of such a change. On 29 October, Crawford Beveridge stated:

“I advocate the policy that Scotland should raise the money it spends. I know that could potentially plunge the place into recession, because it is unlikely that the total tax take would be as much as Scotland currently receives under the Barnett formula.”

With friends like that, no wonder those people cannot make their figures add up.

Although I might agree with the Secretary of State about the disastrous impact that the SNP’s 3p tax rise might have, did he really think that anyone in Scotland would not see through a Budget that gave with one hand and took with the other? What does he have to say to people about that?

First, may I say what a pleasure it is to welcome the hon. Gentleman to the House—not least because when he has important contributions to make to public debate in Scotland, he is so often busy with constituency events? None the less, the statement he has just offered us evidences the point that he made in his previous work as an MSP, when he stated that there was a “simple lack of thinkers” on the Scottish Conservative Benches.

On the hon. Gentleman’s substantive point about the changes in both income tax and corporation tax, I would have hoped that he would welcome the cut in corporation tax and the cut in the basic rate of income tax. If, as part of the new modern Conservative party, he is seriously concerned with the distributional effects, I again refer him to the Institute for Fiscal Studies, which said that the poorest 20 per cent. would benefit most from the Budget.

At least I know the names of my colleagues in Scotland. The Secretary of State is as complacent about poverty in Scotland as he appears to be about the Scottish election campaign, which he is allegedly running. Is he aware that figures released today by the Department for Work and Pensions show that child poverty is increasing, inequality is rising, and the incomes of the poorest fifth are in decline? Is it any wonder that the people of Scotland are so determined to get rid of Labour in May?

The reason why the hon. Gentleman knows the names of his colleagues is that they are all calling for his resignation. Frankly, with a question like that, is it any wonder that he is the only person in history—as far as I am aware—to be rejected as a parliamentary candidate by the Liberal Democrats? The fact is that over the past 10 years child poverty has fallen more rapidly in the United Kingdom than anywhere else in Europe, and child poverty is falling more rapidly in Scotland than in any other part of the UK. Of course there is work to be done, but the party that can be trusted to take it forward is Labour, not the Opposition.

Does my right hon. Friend agree that when we are trying to attract new talent to Scotland because of skills shortages, to have the highest taxation in the UK would not be appropriate?

Ferry Services

4. What recent discussions he has had with the European Commission on the effects of the European maritime cabotage regulations on Scottish ferry services. (128978)

Ferry services within Scotland are a matter for the Scottish Executive. The UK Government supported the Executive in making representations to the European Commission on matters relating to ferry services in Scotland, securing a number of important concessions.

The European rules on subsidised ferry services in Scotland are clearly a piece of useless bureaucratic nonsense. They have already forced the Scottish Executive to waste more than £15 million on a pointless tender exercise, and are putting at risk the future of vehicle-carrying services between Dunoon and Gourock. Will the Secretary of State, who represents the UK on the European Transport Council, go to Brussels, tell the Transport Ministers what nonsense the rules are, and get them altered before the Scottish taxpayer is forced to waste even more money, and vehicle-carrying services between Dunoon and Gourock are brought to an end?

May I begin by declaring that the headquarters of CalMac are in my constituency? That allows me to say that I am aware of the concerns over this protracted tendering exercise, which is, as I have said, a matter for the Scottish Executive. Both the Executive and the UK Government agreed that we had to go through the tendering process, although it has led to some slightly ill-informed speculation, and comparisons with the Paris Metro. There is a different regulatory regime for the Metro system and the maritime system—and as far as I am aware, there are no boats on the Paris Metro. People who want to make that comparison should think twice before doing so.

My hon. Friend is aware that I have the island communities of Arran and Cumbrae within my constituency. Has he given consideration to what more can be done to make the lifeline ferry services in Scotland affordable for Scotland’s island communities?

Yes. I know those communities very well indeed, and I was pleased to be in Stornoway two weeks ago with the First Minister when he announced that, if he is re-elected as First Minister, there will be a ferry discount commitment. [Hon. Members: “What’s his name?”] I understand why Opposition Members do not want to hear about the ferry discount scheme that will benefit the lifeline communities in the islands in the west of Scotland, but they will have to. If re-elected, we are going to introduce a scheme that will give a 40 per cent. discount to inhabitants of the islands—not just the Clyde islands such as Arran and Cumbrae, but the western islands. The move to introduce that important ferry subsidy is due to the intense lobbying and great activity of Alasdair Morrison, the Member of the Scottish Parliament for the Western Isles, who, more than anyone else, has helped to bring this scheme about. Great tribute is due to him.

Can the Minister properly explain why £15 million was wasted in the CalMac tendering? Was it because Scottish Executive Liberal Ministers did not get on with the Department for Transport? Yesterday we saw the reality of Labour’s own co-operation between Westminster and Holyrood, when the Health Secretary did not know the First Minister’s name. Some £15 million has been wasted—enough for three years of free travel to my constituency, and especially Stornoway. My constituents have been kept on tenterhooks. CalMac crews have not known is going on. Would it not have been much better for Scotland to have dealt directly with Europe on this matter, rather than involving imperialist Whitehall Departments—not least, to save money?

It is absolutely astonishing that when we are discussing a 40 per cent. ferry discount proposal that will benefit the hon. Gentleman’s constituents, he does not even have the grace to welcome that announcement or say that he is going to support it. That is because he did nothing whatever to bring the announcement about. That stands in sharp contrast to Alasdair Morrison, the Labour MSP, who worked tirelessly on behalf of his constituents and who has secured this great victory for them.


It is almost as if my hon. Friend had prepared his supplementary question in advance, Mr. Speaker.

The stability generated by this Government's management of the economy has delivered the strongest labour market in decades. Scotland has a higher employment rate than the rest of the United Kingdom and nearly all other countries in Europe. There is, of course, no room for complacency. Last week’s Budget shows that work continues towards the long-term goal of employment opportunity for all.

I apologise, Mr. Speaker. These events are just so exciting that I got carried away.

Does the Minister agree that under the benevolent guidance of the comrade Chancellor, unemployment in my constituency has fallen by over 50 per cent. in the last 10 years, youth unemployment is down by over 80 per cent. and long-term unemployment is down by over 90 per cent.? Is he aware that the major employers in my area are the National Savings bank at Cowglen and the Govan shipyards, both of which depend on customers in England and the rest of the United Kingdom for the vast bulk of their business? Is he aware that if bad people wrench the United Kingdom apart, there will be enormous unemployment in my area?

I certainly am aware of the final point that my hon. Friend makes. I have campaigned on the issue of National Savings in Cowglen and on BAE Systems and the Govan yard and the Scotstoun yard, along with him. Independent research published by the Fraser of Allander Institute on 19 March concluded that the Clyde yards contribute more than £238 million to the Scottish economy and support almost 4,500 jobs across Scotland. The fact is that those yards—and the tradition of shipbuilding on the Clyde—have been sustained because of naval orders placed by the British Government. I leave it to the electors of my hon. Friend’s constituency and across the west of Scotland to reach a judgment on whether, if there were not a United Kingdom, they would see those United Kingdom orders coming to the Clyde.

Is the Secretary of State aware of the impact on unemployment of Ministers’ decisions, especially regarding the loss of jobs in the Department for Work and Pensions and Her Majesty’s Revenue and Customs because of relocation away from such current offices as Wick? Will he ensure that when Ministers take such decisions, they understand their impact on remote regions?

Of course, I am happy to examine the specific point that is of direct constituency interest to the hon. Gentleman. However, I can assure him that the DWP and other Departments are in the process of increasing the computerisation of systems that are inevitably and appropriately being upgraded in the light of continuing customer demand.

Would my right hon. Friend care to comment on, or respond to, the fact that HMRC employs 1,000-plus people in my constituency, which has a good employment record? What would happen in the event of Scotland being ripped away from the rest of the UK?

My hon. Friend is entirely right to recognise the risks that would be caused to jobs coming through the DWP, Customs and Excise and other Government agencies that employ people in the United Kingdom. Both the public and private sectors have made a contribution to the uplift in employment that we have seen in recent years. While, of course, we have seen more doctors, nurses and teachers, the private sector too is growing. That is why I welcome the recent statement by Andrew McLaughlin, the Royal Bank of Scotland Group’s chief economist, in which he said:

“Growth in private sector job creation hit a new high in February.”

The Secretary of State will be aware of the support employment projects run at Falkirk football club and at Dens and Tannadice in Dundee, which take small groups of people and build them up with confidence, motivation skills and the soft skills that employers need. He might also be aware of the community project in Leith called Working Rite, which takes young unemployed people and gives them, pre-apprenticeship, one-to-one mentoring with journeymen and experienced tradesmen. All those projects have a massive success rate, so does the Secretary of State agree that for that group of people, who have traditionally found it hard to get into employment, such a one-to-one, soft-skill, motivation, mentoring and coaching process might be more applicable than the traditional one-size-fits-all approach on finding employment that Governments have historically taken?

Of course, the challenge that we face on worklessness has evolved. When we were first elected in 1997, there were many people who had found themselves unemployed as a consequence of two recessions in as many decades. Now we are addressing people with specific needs, such as those who are not job-ready because of numeracy or literacy problems, or drug dependency. That is why it is important that a range of providers is working to offer the necessary assistance. In my constituency an organisation called Working Links is undertaking such work, and I welcome the progress that it has made.

Perhaps there is one matter on which the Secretary of State and I can agree: Scotland’s place in the Union has contributed greatly to employment levels in Scotland over the years. The commitment to the Union is absolute among Conservative Members, but does the Secretary of State really believe that bullying and scaremongering is the way to keep Scotland in the United Kingdom? Does he not agree that it is incumbent on all Unionists to make a positive case for the Union?

I hope that there is common ground between us that the way not to make a case for the Union is to have a large group of students turning up with megaphones without batteries in them.

Inward Investment

6. What recent estimate he has made of the level of inward investment in the Scottish economy; and if he will make a statement. (128980)

There are no official estimates of the level of inward investment in Scotland, but the most recent data produced by the Organisation for Economic Co-operation and Development showed that the UK was the world’s largest recipient of inward foreign direct investment in 2005, while Ernst and Young’s inward investment monitor showed that Scotland attracted more of that inward investment than any other part of the UK, apart from the south-east of England.

Does my right hon. Friend agree that the level of inward investment to which he referred is due to the United Kingdom’s strong and stable economy? Does he further agree that on 3 May, if Scottish nationalists are given the chance to start divorce proceedings from the United Kingdoms, it will damage our—

I certainly agree that inward investment has a key role to play, and the competitiveness of the British economy and the Scottish economy is essential in attracting that inward investment. That is why I welcome the World Economic Forum’s global competitiveness report of 2006, which ranked the UK 10th in its table of international business competitiveness. It is 11 places above Ireland, and it is above Norway, Iceland, Canada and France.