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Volume 522: debated on Wednesday 26 January 2011

The Secretary of State was asked—

Business Growth

1. What recent steps he has taken to promote business growth and inward investment in Scotland. (35124)

Before I answer the question, may I pay tribute to Mr Phil Gallie, whose passing has sadly been announced this week? He served this House and his party well while he was here, and he went on to serve his party and his constituents with distinction in the Scottish Parliament. He did that rare but important thing—while a feisty defender of his party’s positions on all sorts of things, he became popular across party lines. Our condolences go to his family.

Economic growth is at the centre of the Government’s agenda for this Parliament, and I promote that agenda in my regular engagements with the business community in Scotland and the UK and with international partners.

May I join the Secretary of State in his condolences to the family of Phil Gallie, a fellow Ayrshireman and someone I knew well?

The Secretary of State mentioned the efforts to promote jobs. Will he update the House on what he has done to follow up on the visit of the vice-premier of China, in particular on the trade links between Scotland and China?

A very significant part of the vice-premier’s visit, which of course we welcomed enthusiastically here in the United Kingdom, was that he started it in Scotland. I had the great privilege of welcoming him to the UK on behalf of the Government. In the course of that visit, we in Scotland and the rest of the UK were able to see very clearly the opportunities for us to develop our plan to be partners for growth, whether in renewable energy or in many other spheres.

May I add my condolences to those expressed to the family of Phil Gallie? He and I came into this place on the same day, and I have to say that he was more working-class than most Labour MPs are today, and a feisty fighter as well.

Does the Secretary of State think that inward investment to Scotland would be helped if Glasgow Prestwick airport were renamed Robert Burns airport?

From one great defender of Ayrshire to another. The family will be pleased to hear the hon. Gentleman’s tributes to Phil Gallie. As far as the hon. Gentleman’s idea for the renaming of the airport is concerned, I am sure that those who make such decisions will have heard him.

As the Secretary of State will know, the north-east of Scotland and Aberdeen is a powerhouse of the UK economy, providing much-needed tax revenues and inward investment. Crucial to the future of attracting inward investment is good communications technology. Will he meet me to discuss the barriers that mean that we have not yet seen the next generation of broadband reach Aberdeen and the north-east of Scotland?

First, I agree with my hon. Friend about the importance of Aberdeen and the regional economy not just for Scotland but for the UK as a whole. He is right to emphasise that. I met senior business leaders in Aberdeen only a few weeks ago, and we discussed how they could develop growth. Broadband is an important part of that, and he will be aware of our plans to speed up the introduction of superfast broadband. I would be delighted to meet him to discuss the matter further.

I associate myself and my colleagues with the condolences in relation to Phil Gallie’s death.

Does the Secretary of State understand that thousands of individuals and businesses the length and breadth of Scotland are suffering because of rocketing fuel prices?

I recognise that the increase in fuel prices is a real challenge for individuals and businesses, which is why the Government are looking carefully at ways in which we can tackle that issue, including proposals for a fuel duty stabiliser.

Two years ago the Liberal Democrats promised a rural fuel duty derogation. What specific action have the UK Government taken with the European authorities to secure that? Specifically, has a formal request been made to the European Commission to make it possible?

Referring to the hon. Gentleman’s earlier point, it is important for Scotland and the whole UK to get a fuel duty regime that reflects the challenges that exist, particularly in rural parts of the country. On the derogation specifically, he will be aware that the Government are working very hard to ensure that we can get the right processes in place in Europe, so that we get the pilot up and running as quickly as possible.

I welcome the Government’s moves towards a lower rate of fuel duty for the islands, but under the plans that they inherited from the Labour Government, fuel duty is due to go up by more than 4p a litre in the Budget. The rural economy could not stand such an increase, so I hope that the Secretary of State will tell the Chancellor not to go ahead with Labour’s 4p increase.

I know the particular challenges in my hon. Friend’s area, where some of the highest fuel prices in the whole country can be found. His representations to me and to the Chancellor are carefully noted, and of course the decision on the future of fuel duty will come in the Budget.

Good transport links to other parts of the UK are vital for the Scottish economy. As the Secretary of State is aware, I wrote to him and to the Secretary of State for Transport on Monday last week to express my concerns about reports that bmi is about to axe its Glasgow-Heathrow service, which will put more than 100 jobs at risk. To date, I have had no reply from either him or his colleague. Will he inform the House today what steps he and his Government are taking to persuade both bmi and BAA to save that vital transport connection?

I recognise the hon. Lady’s concerns, which are shared by people not just in Glasgow, but across Scotland. I have spoken to senior managers both at bmi and BAA, and it is clear that they have some very difficult contractual arrangements as a result of the review of landing charges at Heathrow. I am keen that they recognise—I impressed this upon them—the importance of those links to Glasgow and to Scotland.

I am grateful for the Secretary of State’s response, but given that there is increasing evidence that domestic air links between Scotland’s major airports and the UK’s largest airport might be substantially diminished, and the inevitable worries that increased fares will result if there is only one remaining carrier, will he undertake today to make contact with the EU, which is responsible for regulation, and ask it to consider possible changes better to protect strategically important domestic air links, and to ensure better competitive practices to protect Scotland’s economy and our customers?

If I may be forgiven, I am not sure that I remember the previous Labour Government doing that. I do not want us to lose sight of the fact that Glasgow, Edinburgh and other major Scottish cities have a range of links to different London airports—substantial links that we want to be enhanced and to grow. The issue that the hon. Lady raises is obviously one of concern, and the Government will continue to discuss it with the parties involved.

Calman Commission

2. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish Devolution; and if he will make a statement. (35125)

6. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish devolution; and if he will make a statement. (35129)

The coalition agreement contained a commitment to implementing the recommendations of the Commission on Scottish Devolution, which is also known as the Calman commission. The Government introduced the Scotland Bill on 30 November—St Andrew’s day—2010. The Bill will have its Second Reading in this House tomorrow and I look forward to hon. Members taking part in the debate.

I very much welcome the provisions in the Scotland Bill to make the Scottish Parliament more fiscally accountable, but can my right hon. Friend give me an assurance that the business community on both sides of the border will be fully consulted about the implementation of the tax powers, so that it does not suffer an undue administrative burden?

I welcome my hon. Friend’s comments—I know that he has more than a passing interest in those particular powers. I can give him absolutely the assurance that he wants. Through the high-level implementation group, which brings together experts from a range of bodies, and Her Majesty’s Revenue and Customs technical groups, we are consulting very carefully and taking on board all the comments being made.

Calman acknowledged that the Barnett formula no longer reflected need. As a consequence, constituencies such as mine—Warrington South—receive many millions of pounds per year less than equivalent constituencies in Scotland. Does the Minister have any plans to amend the Scotland Bill to put the allocation on to a basis of need?

All I will say to the Secretary of State is that that question is very wide of the considerations of the Calman commission, and I feel sure that he will be dextrous enough to provide an orderly reply.

The problem is that the recommendations of the Calman commission are not being implemented—they are not in the Scotland Bill. The proposal on the aggregates levy, the proposals for the devolution of the marine environment and the proposal on air passenger duty have all been abandoned. Is that a lack of imagination on the part of this Government, or merely a lack of ambition for Scotland?

We certainly do not lack ambition for Scotland. We have a set of proposals that are being thoroughly scrutinised in the Scottish Parliament, and from tomorrow, they will be scrutinised in the House as well. As far as the specifics are concerned, the hon. Gentleman will be aware that, in respect of the aggregates levy, we have said that given the current court case, it is inappropriate to devolve that just now, but we will do so in future. I recommend that he goes back to the Command Paper and studies it carefully.

Value Added Tax

3. What recent discussions he has had with the Chancellor of the Exchequer on the effect in Scotland of the increase in the basic rate of value added tax. (35126)

May I associate myself with the Secretary of State’s comments on Phil Gallie? Phil was a true, great Conservative in Scotland.

I have regular discussions with the Chancellor of the Exchequer on a range of issues. The VAT rise is a tough but necessary step towards Britain’s economic recovery. Income tax and national insurance increases would have had a more damaging impact on poorer people in our society.

Almost half the respondents to a recent survey by the Federation of Small Businesses said that they would increase prices because of the VAT rise, and 45% of those respondents said that the rise would decrease turnover and have an obvious impact in hindering job creation and growth. How can the Secretary of State and the Minister continue to sell out the people of Scotland and support this abysmal tax rise?

How can the hon. Gentleman continue to fail to take responsibility for his Government’s record, which took our country to the brink of bankruptcy and required the VAT rise to fill the black hole? If anyone is responsible for the issues that Scottish business currently faces, it is his Government.

Business Confidence

Returning the UK to sustainable economic growth is the Government’s overriding priority. The Government are doing everything they can to create the conditions that enable all businesses to be successful and create more jobs.

Business organisations have welcomed the Government’s plans to reduce the headline rate of corporation tax and simplify the tax system. Does the Secretary of State agree that cuts are vital for boosting enterprise?

I welcome my hon. Friend’s comments and reinforce the points made by my hon. Friend the Under-Secretary a moment ago. The priority for economic growth in this country is to cut the deficit of £155,000 million that we inherited from Labour. Cuts in corporation tax, reducing the national insurance burden and keeping interest rates low are important parts of the package.

Given the over-reliance on the public sector in Scotland, does the Secretary of State agree that the Scottish Government should be following the policies of the national Government by encouraging private sector investment and ensuring a balanced economy?

We certainly believe that the private sector has a central role to play in returning us to sustainable growth in this country, whether in Scotland or the rest of the United Kingdom. The Scottish Parliament debates the Scottish Government’s budget this afternoon and no doubt some of these points will be made in that debate.

Is the Secretary of State worried that the Scottish Government’s plans to introduce a business surcharge will damage business confidence?

The Scottish Government have received serious representations on their proposals, and I am confident that those will be debated extensively this afternoon.

A double dip in the housing market in Scotland would be a disaster for the country. What discussions has the Secretary of State had with Scottish banks about more flexible lending?

The hon. Gentleman will be more familiar than most with the situation that we inherited, in which bank lending—to businesses or to householders—was not in a good state. We are determined to increase the amount of lending and I have regular discussions with the banks on a range of issues. This issue is a central part of those discussions.

Does the Secretary of State accept that business confidence will have been extremely dented by yesterday’s appalling growth figure announcements? Does he now accept that the Government’s cuts go too far, too fast, and will the Government now pull back from this reckless course?

I recognise that yesterday’s growth figures were very disappointing. We have said for months that the recovery would be choppy. There are special circumstances about the weather in yesterday’s announcement, which she will be aware of, but if we do not tackle the deficit, introduce measures to help businesses to grow or invest in infrastructure and science funding, we will not get the recovery from the situation that we inherited from the Opposition.

In the Secretary of State’s last answer, he referred to investment in infrastructure. He will know, from the Scottish business organisations that are in London today to appear before the Select Committee, that an important part of increasing confidence is having the right transport links and access to markets. Given that, and the future of the Secretary of State for Wales notwithstanding, will the Secretary of State clear up the confusion on his position on High Speed 2 and its extension to Scotland? I know from the discussions a couple of weeks ago that people from Glasgow and Edinburgh are slightly confused about where he stands. Can he clear this up and put on the record his support for High Speed 2 being extended to Edinburgh and Glasgow for the future of the economy of the whole UK?

I would not accuse the hon. Gentleman of wilfully misinterpreting the outcome of that particular meeting. I was pleased to arrange the meeting between the leaders of Glasgow and Edinburgh councils and my right hon. Friend the Secretary of State for Transport, who is sitting on the Front Bench. I am a passionate supporter of high-speed rail coming to Scotland, as is my right hon. Friend and the rest of the Cabinet.

Tuition Fees

5. What assessment he has made of the likely effect on universities in Scotland of the increase in the maximum fees chargeable by universities in England. (35128)

Education is devolved, and the hon. Gentleman will be aware that the Scottish Government are currently consulting on the future of higher education in Scotland. The UK Government are developing a White Paper on higher education in England that will fully consider the effect of their proposals on higher education in the devolved Administrations.

I am grateful to the Minister for that answer, although it was not quite an answer to my question. He will know, as I do, that the tripling of university fees in England will bring nothing but pain and misery to Scottish universities and Scottish students, whether in funding or support for students, or through the intolerable pressure on the Scottish Government to respond. What does he have to say to the university students who will suffer so much because of the appalling decision made by his party and the Scottish Liberals?

Higher education in Scotland is devolved. The UK Government are taking account of the impact of their policies in Scotland, but I tend to agree with Sir Andrew Cubie when he said that the Scottish Government were behind the curve in responding to the Browne report and bringing forward their own proposals. They are followers, not leaders. [Interruption.]

Order. There is a constant hubbub in the Chamber. People outside must think that it is extremely discourteous.

The Minister should be aware that what is not devolved are decisions on research funding—decisions that are arrived at here in Westminster and which will have an impact, not least for those Russell group universities in Scotland. Will he give us an undertaking that he will ensure that the Secretary of State for Scotland stays closely in touch with Mike Russell’s all-party working group at Holyrood, so that whatever the political composition after May, we get an outcome for Scottish universities that does not replicate the errors of policy judgment that have sadly been arrived at here?

I am happy to give my right hon. Friend an undertaking about the Scotland Office liaising with the relevant Scottish Parliament committee, and also to assure him that the Scotland Office works closely with Universities Scotland on all issues affecting universities in Scotland.

Bank Bonuses

8. What discussions he has had with ministerial colleagues on the level of employee bonuses to be paid by banks based in Scotland. (35131)

12. What discussions he has had with ministerial colleagues on the level of employee bonuses to be paid by banks based in Scotland. (35135)

With permission, Mr Speaker, I will answer Questions 8 and 12 together. I have regular discussions with ministerial colleagues on a range of issues. As the predominant shareholder in RBS, the Government expect the bank to be a back-marker and not a market leader on bonuses. People across the country are having to make adjustments as we come out of recession and repair our public finances. Everyone expects bankers to be part of this process.

Given that the Financial Services Authority report found that 1.1 million customer complaints were made against RBS in one year and that more than 50% were shown to have been dealt with inappropriately, does the Minister think it appropriate for RBS executives to receive lavish bonuses this year, and if not, what is he going to do about it?

As we have made clear, we have inherited an arrangement with RBS that was put in place by the last Government—the hon. Gentleman’s Government, not this one—to pay bonuses at market rates this year. We want to see bonuses lower this year than last year. That is absolutely clear-cut. As far as customer service is concerned, the hon. Gentleman makes an important point, and I am sure that RBS managers will have heard it.

With the collapse of the Bank of Scotland and the Royal Bank of Scotland, does the Minister agree that an independent Scotland would be as successful as Ireland and Iceland at the moment?

Driving Standards Agency

10. What recent discussions he has had with the Driving Standards Agency on its operations in Scotland. (35133)

I have had no such discussions with the agency. However, the hon. Gentleman will know from the Westminster Hall debate that he secured on the proposed closure of Arbroath and Forfar driving test centres that the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) has agreed to look further into the arrangements surrounding driving test centre closures.

The Minister is obviously aware that local driving test centres in rural areas such as Angus are being closed without any consultation whatever, with services moved to multi-purpose test centres. Does he accept that this is an unacceptable way for a Government agency to act? Will he press the Secretary of State for Transport, who I notice is sitting two along from him on the Front Bench, to impose a moratorium on closures until, at the very least, there is adequate consultation with local communities before the removal of such important services?

I commend the hon. Gentleman for his diligence in pursuing this issue, as he also did in his Westminster Hall debate. He knows that the Transport Minister took away the issues that he raised in that debate and agreed to look into them.

Energy Industries

11. What assessment he has made of the effects of the outcomes of the recent state visit to Edinburgh and London of the vice-premier of the People’s Republic of China on the renewable and low-carbon energy industries in Scotland. (35134)

China and the United Kingdom are key partners for growth in the future. This visit was another positive step in strengthening relationships, and it confirms Scotland’s reputation as a world leader in the continuing development and application of the new technology that helps to deliver clean green energy globally.

I thank the Secretary of State for his answer. Does he agree that investment worth £6 million in Scottish companies by the largest energy consumer in the world will provide a perfect showcase for the benefits of green technology? Does not the fact that Edinburgh seems set to see the creation of a renewable energy cluster in Leith docks further the case for the city to be the location for the new green investment bank? [Interruption.]

Order. There is far too much noise in the Chamber. That is unfair on the hon. Member asking the question, and on the Minister answering it. It also sends out a very bad signal to those listening to our proceedings.

Thank you, Mr Speaker.

On my hon. Friend’s first point, may I just emphasise what I said earlier, which was that the vice-premier was very impressed by what he saw of Scotland’s renewable energy sector when he visited Edinburgh, and not only by the presentations that he saw about the country’s potential but specifically by seeing the Pelamis factory in Leith? My hon. Friend also makes a strong and compelling case for the green investment bank, and we will announce details of that shortly. We look forward to making an announcement about its location at an appropriate moment.

I welcome the support that the Secretary of State has given to the establishment of the green investment bank headquarters in Edinburgh. Given that leading economists have said this morning that Scotland faces an even greater danger than the rest of the UK of a double-dip recession, does he accept that the decision on the location of the bank should be taken sooner rather than later? We want it to be set up so that we can have the advantage of the jobs that it will bring now, not in three or four years’ time.

Unlike the previous Government, we have actually made a firm commitment to the green investment bank, and we intend to deliver on that. We will be making further announcements on the detail as soon as possible.

Devolved and Reserved Powers

13. What recent representations he has received on the boundaries between devolved and reserved policy matters; and if he will make a statement. (35136)

The Commission on Scottish Devolution was established to look into this issue, and we are taking forward recommendations of the commission in the Scotland Bill.

Will my right hon. Friend take the opportunity to revisit the boundaries between reserved and devolved areas in farming matters? Does he believe that we in England could benefit from the way in which the common agricultural policy has been applied in Scotland?

The Calman commission looked at these issues across the full spectrum and determined that there was no need to make any changes in respect of agriculture, other than in certain aspects of animal health funding. [Interruption.]

Scottish Parliament (Financial Accountability)

14. What recent representations he has received from the Scottish Executive on the financial accountability of the Scottish Parliament. (35137)

The most recent such representations related specifically to the financial provisions of the Scotland Bill, received around the time of its introduction on 30 November 2010. Since May last year, Scotland Office Ministers have not received any representations from Scottish Ministers describing the detail or the estimated economic impact of any alternative proposals to deliver financial accountability to the Scottish Parliament.

On average, the Government spend about £7,000 a year per person in England, but they spend about £8,500 per person in Scotland. What comfort can the Minister give to my hard-pressed taxpayers in Harlow that their money is being spent wisely?

The Government understand that concerns have been expressed about the Barnett formula, but their priority is the stabilisation of the public finances. That is our priority for this Parliament.

While the VAT rise was swift, we are still waiting for the rural fuel derogation in the islands. In my constituency, fuel costs £1.45 a litre, but I have information that, in the tiny Faroe Islands, the price is 94p a litre for diesel and £1.10 for petrol. The islands control their own fuel taxation. Should not Scotland, with 5 million people, have at least the powers of an island group of 48,000?

I would have thought that the hon. Gentleman would be pleased that we finally have a Government who are taking forward the issue of fuel prices in remote and rural areas and who are looking to hold a pilot in constituencies such as his to establish how exactly it would operate in practice.

Chinese Vice-Premier (State Visit)

15. What the outcome was of the recent visit to Scotland of the vice-premier of the People’s Republic of China; and if he will make a statement. (35138)

I had a very constructive meeting with Vice-Premier Li Keqiang, which builds on the existing relationship between our countries. As I said in response to an earlier question, China and the UK are key partners in growth for the future.

While I welcome the commercial success of the Chinese deputy premier’s visit to Scotland and recognise the importance of China having good relations with Scotland, does my right hon. Friend agree that it is most important for the Government to continue to press the Chinese Government on the issue of human rights and also to call for the prompt release of the Nobel peace laureate, Liu Xiaobo?

I can reassure my hon. Friend that in the course of the extensive visit by the vice-premier, we not only focused on our important commercial ties and developing our partnership for growth, but took the opportunity to have an ongoing dialogue about human rights and other issues. We will continue to do that—and I believe we will be successful.