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Scottish Economy

Volume 514: debated on Wednesday 21 July 2010

I have had productive discussions with CBI Scotland and others on the Scottish economy, as has my right hon. Friend the Under-Secretary, and I plan to meet them again in the near future. Our plan to cut the record budget deficit that this Government inherited is the key to ensuring a sustained economic recovery.

In the years to come, it must be the private sector that creates the growth and jobs in Scotland; it is not realistic to have an ever-increasing public sector there. Does the Secretary of State agree that for my constituents in Skipton and Ripon to be funding an ever-expanding Scottish state is an unfair situation?

Across the United Kingdom we inherited a huge deficit in the public finances, which we have to tackle. If we do not, it will not be in just the private sector but the public sector where difficulties will arise.

Recent economic indicators show that the recession in Scotland has been shorter and shallower than in the rest of the UK, but the recovery is fragile. Does the Secretary of State therefore agree that the case for proper financial responsibility in Scotland to help drive economic growth makes sense?

I quite accept the underlying figures that the hon. Gentleman refers to, and the situation in Scotland and in the whole of the UK is indeed challenging. However, as far as future financial accountability and other issues in Scotland are concerned, we believe that the Calman proposals, which we will bring forward in this House, offer the best way forward.

Professor Andrew Hughes Hallett, who advised the Calman commission, says that proper fiscal responsibility could significantly add to Scotland’s GDP. Is the Secretary of State looking closely at the proposals for growth and not just at a funding mechanism, which will not achieve that?

I am sorry but I do not accept the hon. Gentleman’s proposition, and nor should he ignore the others who sat with Professor Hughes Hallett on the Calman commission expert group. They have recently again made it plain that they believe these are the most appropriate powers to give to Scotland at this time.

In my right hon. Friend’s discussions with the CBI, did he recognise that it is very important to build on the success stories in Scotland in order further to advance the Scottish economy? To that end, with the north-east of Scotland providing so much revenue to the Treasury, will he ensure that all levels of government realise how important it is that there be no barriers to investment there, and that companies locating there benefit both the region and the UK?

My hon. Friend is absolutely right about that, and in getting private sector-led recovery in this country, businesses such as those in the energy sector in the north-east will be absolutely critical. I take on board all the observations he makes.

The right hon. Gentleman is having meetings with the CBI, but does he understand that the Government’s cancelling the third runway at Heathrow will have a remarkable effect on Scotland’s air transport system? What is he going to do about that?

We fundamentally disagree with the proposal for the third runway, as the hon. Gentleman understands; we do not believe that it is appropriate either economically or environmentally. The important point is that, by ensuring that we work with the private sector across the whole of government—be it our proposals in the Budget to reduce corporation tax, or the many others to do with banking reform—we believe that we will create the right conditions for the private sector and the transport sector to recover and have a sustainable future.

Scottish employers know that the future jobs fund helps people back into work. The Secretary of State for Scotland claims that it is unsustainable, but he will not publish a shred of evidence to back up his assertion. Employers, the unemployed and even Liberal Democrats in his own constituency support the future jobs fund. As unemployment continues to rise across Scotland, I ask the Secretary of State this specific question: will he now agree to lobby the Chancellor to maintain the future jobs fund in Scotland?

We had this exchange during the last Scottish questions, and the right hon. Gentleman has repeated the phrase that I used then. If I may, I will repeat the point I made then. The future jobs fund was not sustainable in the form it was in. May I remind him, as I did then, that places are still available under that scheme, which will run through to March next year? Some 11,000 places have been funded, but they were temporary, short-term jobs. We believe that a new system of supporting the unemployed is the best way forward.

So, the Secretary of State will not publish a shred of the evidence behind his assertion, and today he has confirmed that he will not even listen to Scotland and meet the Chancellor in order to maintain the future jobs fund and help the unemployed in Scotland. Does he not share the sense of anger across Scotland about the policy immorality of a gang of millionaire politicians cutting support to the most vulnerable people across Scotland? The only surprise for many people in Scotland is that he, as a Liberal Democrat, is going along with it. But perhaps Scotland should not be surprised, because he is fast developing a reputation not as Scotland’s man in the Cabinet, but as the Tories’ salesman in Scotland.

The immorality would be for us to do nothing about the legacy left behind by the right hon. Gentleman’s Government, which is undermining the public sector and any prospect of a private sector recovery.