Scottish Parliament, 11 September 2013

218 contributions from 60 members. The official report.

Portfolio Question Time

John Scott (Conservative, Ayr)

Good afternoon. The first item of business is portfolio questions. So that I can get as many people in as possible, I would prefer to have short and succinct questions, and answers to match, please.

Red Meat Levy

James Dornan (Scottish National Party, Glasgow Cathcart)

1. To ask the Scottish Government what recent progress has been made in discussions with the UK Government on repatriating the annual £1.4 million of red meat levy income paid by Scotland’s farmers. (S4O-02352)

Richard Lochhead (Scottish National Party, Moray)

Given that this serious issue has been going on for far too long, the First Minister recently wrote to the Prime Minister to seek his support for repatriation of the levy that rightly belongs to Scotland. I inform members that the Prime Minister has responded to the letter but has declined our request, which is unfortunate. I know that that decision will disappoint the whole of the Scottish red meat industry, which is unanimous in the view that Scotland’s producers are being short-changed.

Quality Meat Scotland has cautiously accepted an invitation from the Department for Environment, Food and Rural Affairs minister of state to join a forum to determine spending priorities for the disputed levy income. However, I hope that members agree that rather than make the new and spurious argument that the lost levy somehow benefits the Scottish industry, the United Kingdom Government would do better to focus on putting right the wrong.

James Dornan (Scottish National Party, Glasgow Cathcart)

Given the UK Government’s negative response on this important issue, on which the Scottish Government has the support of Quality Meat Scotland and NFU Scotland, does the cabinet secretary share my disappointment at the Prime Minister’s unwillingness to change tack, although Scotland is so clearly losing out?

Richard Lochhead (Scottish National Party, Moray)

I think that there will be a huge degree of anger throughout the livestock sector in Scotland, particularly at a time when the levy income is desperately needed to promote the Scottish brands, so that producers can have a greater return from the marketplace.

As James Dornan said, it is estimated that we are losing £1.4 million of red meat levy over the border every year. The promotional levy in relation to animals that were born and reared in Scotland is being used to promote produce from outside Scotland, because the animals were slaughtered over the border. That is ridiculous, unacceptable and indefensible. I am very disappointed by the Prime Minister’s response, as are the First Minister and the Scottish Government.

Claire Baker (Labour, Mid Scotland and Fife)

There is certainly a need for discussions on the distribution of the red meat levy. However, if we are looking for a solution, we surely need to understand how the situation has come about. The availability of abattoirs in Scotland and competitive trading in livestock are key factors. What can the Scottish Government do to make available more viable options in Scotland?

Richard Lochhead (Scottish National Party, Moray)

Claire Baker made an important point. Because of the reduction in concentration and capacity of processing throughout Great Britain, more animals are going south of the border to be slaughtered. A number of moves are afoot to try to increase processing in Scotland, but as the member knows, those moves largely relate to sheep—we have very little processing capacity in Scotland for lamb. That is a long-standing issue, unfortunately.

As a result of a number of other factors, such as the closure of Vion, there are moves afoot to address the problem in relation to the pig sector.

We are working closely with the red meat sector to see whether we can increase capacity in Scotland. However, a very flawed formula is putting Scotland at an unfair disadvantage; that is what should be fixed.

Alex Fergusson (Conservative, Galloway and West Dumfries)

I am broadly in favour of the principle behind a review of how the levy is deducted and distributed, but I think that the cabinet secretary has been tempted to go for headlines without thinking through the full consequences, which could include losing the benefit of up to £7 million that is ring-fenced for promotion and research on British meat.

The cabinet secretary mentioned the forum that the UK minister offered to set up, which will include all the meat-levy-raising bodies. Can he say why he has so robustly dismissed the forum’s benefits, given that its remit would be to look at all the issues and to determine priorities in the UK?

Richard Lochhead (Scottish National Party, Moray)

I point out to Alex Fergusson that there have been reviews in the past. There was a review several years ago, and it is unfortunate that its recommendations were not acted on.

A spurious new argument came on the scene a few months ago, although there have been disputes and debates about the issue for several years. The UK Government is trying to defend the status quo for the levy arrangements by suggesting that somehow Scotland benefits from UK spend.

We want to promote the Scottish—not the British—brand and to secure the Scottish premium for red meat. That is why the current arrangements are flawed.

On the proposed new forum, I said at the time and continue to say that I would be very concerned if the forum was another fudge and simply a talking shop to soak up time and allow the current arrangements to stay in place a bit longer, to Scotland’s disadvantage.

Scotch Beef (Japan)

Nanette Milne (Conservative, North East Scotland)

2. To ask the Scottish Government what discussions it has had regarding calls to reopen the market for Scotch beef in Japan. (S4O-02353)

Richard Lochhead (Scottish National Party, Moray)

Last November, I led Scotland’s biggest delegation of food and drink businesses to Japan and China to promote our fantastic larder to those exciting and lucrative markets. However, I was extremely disappointed to hear from the United Kingdom embassy that gaining access for Scotch beef to the Japanese market was not a priority at the time for the UK Government.

I have since written to the UK Secretary of State for Environment, Food and Rural Affairs to ask him to prioritise that, but hope that we will see more progress in the near future. Of course, if Scotland was an independent country, we would be able to decide our own priority markets and take the necessary actions to help our red meat sector.

Nanette Milne (Conservative, North East Scotland)

The potential beef market in Japan will be significant if the import ban is lifted. Early moves to promote our world renowned Scotch beef there could significantly benefit farmers here.

The Japanese Food Safety Commission has recommended the easing of restrictions on beef imports to allow animals of 30 months and younger to be imported from this year. What further steps will the cabinet secretary take with his counterparts in Japan to try to secure that market? What preparations have been made by the beef industry to promote Scotch beef in Japan?

Richard Lochhead (Scottish National Party, Moray)

When I was in Tokyo—a city of 30 million people—I spoke to a top chef who told me that he believed that the best beef in the world comes from Scotland. He wished that he could source it so that he could serve it in his restaurant in a top Tokyo hotel. There is certainly a demand for the Scottish product, which is why I have been doing what I can to make representations to the UK Government to make that more of a priority.

A questionnaire from the Japanese authorities has been with the UK Government for some time and requires to be filled in. I hope that it will be returned very soon and that we can get the ban lifted and get Scotch beef on to the top restaurant tables in Japan and elsewhere in Asia.

Financial Support for Farmers (Extreme Weather Losses)

Alison McInnes (Liberal Democrat, North East Scotland)

3. To ask the Scottish Government what progress it has made in distributing financial support to farmers who experienced losses due to extreme weather earlier this year. (S4O-02354)

Richard Lochhead (Scottish National Party, Moray)

The Scottish Government has made available a total of £6.5 million in compensation. I confirm that more than £730,000 has been paid to around 4,100 farmers. That will meet almost half the costs incurred in the collection of fallen stock that died because of the severe weather in March to May this year. The remainder will be used to meet eligible claims arising from more than 1,000 applications received under our weather aid scheme, with payments starting in the next 10 days.

Alison McInnes (Liberal Democrat, North East Scotland)

I am glad to hear the cabinet secretary suggest that the payments will start in the next 10 days, but there has been a sense that he has been dragging his feet a little. We are approaching winter. I am sure that the cabinet secretary would agree that it is vital that the Government process the weather aid scheme payments without any further delay and gives farmers that certainty. Can he give me some idea of what percentage of payments will be made in the next 10 days?

Richard Lochhead (Scottish National Party, Moray)

I am happy to send the member some of the rates that were in the application documents, because every case will be different. The compensation scheme will cover all livestock species affected so that people can claim for cattle and sheep and so on.

I have to pick up on the member’s comment that the Scottish Government is somehow dragging its feet. We are dealing with a complex and difficult situation faced by many farming businesses and we also have to meet state-aid rules. The industry is very understanding of the time taken; indeed it is a steering group involving industry members that is driving the weather aid scheme forward. If the member thinks that we are not doing enough in Scotland, perhaps she should look south of the border at the anger among farmers in England about the lack of support that they have received from the Conservative-Lib Dem coalition Government in that country.

Marine Protected Areas

Fiona McLeod (Scottish National Party, Strathkelvin and Bearsden)

4. To ask the Scottish Government what mechanisms are available to enforce nature conservation legislation regarding marine protected areas. (S4O-02355)

Richard Lochhead (Scottish National Party, Moray)

A marine planning consultation is under way and that includes proposals for marine protected areas and details of how MPAs might be managed to protect habitats and species.

The main legislation for designation and management of MPAs is the Marine (Scotland) Act 2010 for inshore waters and the Marine and Coastal Access Act 2009 for the offshore area.

The Marine (Scotland) Act 2010 includes powers to make marine conservation orders to ensure that the conservation objectives of an MPA are met. The act also includes powers to set up management schemes to help to ensure that everyone knows which features are being protected through either statutory or voluntary measures.

Fiona McLeod (Scottish National Party, Strathkelvin and Bearsden)

Does the cabinet secretary believe that the development of new technology will play an important role in helping Marine Scotland and enforcement officers to ensure that there are continuously effective compliance and enforcement arrangements?

Richard Lochhead (Scottish National Party, Moray)

Fiona McLeod raises an interesting point. Marine Scotland is taking seriously the issue of how new technology can be used in relation to the marine protected areas. Of course, with regard to fisheries management, Scotland has helped to blaze a trail in terms of the use of closed-circuit television on fishing vessels, sensors on equipment and so on. We are giving a lot of attention to the issue.

Claudia Beamish (Labour, South Scotland)

Can the cabinet secretary explain why activities that have been identified as having a negative impact on the protected features of an MPA can still be allowed to happen within some parts of that same area? How will that facilitate recovery of our seas? The proposed Clyde sea sill MPA is one such example, as demersal fishing may continue in some parts of the site.

Richard Lochhead (Scottish National Party, Moray)

In each case in which a new marine protected area is proposed, there will be a management plan, which will have to be proportionate and effective and will be based on scientific evidence. I would welcome more information about the member’s concerns about the particular proposal that she mentions, but I assure the chamber that we are taking a sensible way forward to ensure that we balance the impact on marine industries with the need for the MPAs to do what they need to do, which is to protect the marine environment.

Jamie McGrigor (Conservative, Highlands and Islands)

How do ministers ensure that the needs of fishermen are fully considered when MPAs are proposed?

Richard Lochhead (Scottish National Party, Moray)

The way in which Scotland has approached the identification of marine protected areas, through the Marine (Scotland) Act 2010, has been highly praised, especially when contrasted with the situation south of the border. Stakeholders feel that Scotland is going about this the right way and that there are perhaps lessons to be learned by the authorities down there.

I am confident that the interests of fishermen are being taken into account. Indeed, they have been fully involved in the consultation process to get us to where we are today.

Air Pollution

Anne McTaggart (Labour, Glasgow)

5. To ask the Scottish Government whether it is meeting its targets to reduce air pollution. (S4O-02356)

Paul Wheelhouse (Scottish National Party, South Scotland)

Although there are still some hotspots of poorer air quality in a number of urban areas, we are meeting domestic and European air quality targets across much of Scotland.

The Scottish Government is working closely with the Scottish Environment Protection Agency, local authorities, Transport Scotland and other partners to address the issues. We recognise that we must build on achievements to date and continue to take action to improve air quality.

That is why I welcome the report on Scottish emissions of several key air pollutants that was published today. It shows substantial reductions in emissions for all the pollutants since 1990. That is further confirmation that we have made significant progress in addressing poor air quality, but we are committed to continued action to ensure that that positive trend continues.

Anne McTaggart (Labour, Glasgow)

The cabinet secretary will be aware that recent studies of the subway system in Glasgow have highlighted dangerously high levels of air pollution and a concentration of tiny metallic particles that is well in excess of recommended safety limits. In light of that discovery, what action has the Scottish Government taken to reduce levels of pollution and increase air quality for commuters in Glasgow?

Paul Wheelhouse (Scottish National Party, South Scotland)

The member raises an important point. Clearly, we have an objective to try to ensure that all of Scotland meets the required standards. Glasgow is not expected to comply until after the 2015 deadline, as I am sure the member knows. The whole of Scotland is expected to comply with the limit values by 2015, based on a combination of current and planned measures, with the exception of one road stretch—the missing link of the M8 between Newhouse and Baillieston, to the east of Glasgow. Within the Glasgow city area, there are expected to be no exceedances of the limit values by 2015, so we are making progress.

We have to deal with that one stretch of road, which affects commuters to Glasgow, but we are planning to tackle that. Transport Scotland estimates completion of that stretch of road in 2017-18. Once the upgrade is complete, emissions along the road will also comply with the limit values.

Alison Johnstone (Green, Lothian)

Edinburgh’s air quality management areas were extended this year because pollution targets are not being met. The City of Edinburgh Council now has a plan to cut pollution on Leith Walk by investing in walking and cycling, and it has asked Transport Scotland for a £3 million contribution. Will the Government contribute an appropriate portion of the Forth road bridge underspend to tackle the air pollution that the new bridge will cause?

Paul Wheelhouse (Scottish National Party, South Scotland)

I run up against portfolio boundaries in terms of allocating spend from the Forth bridge. However, I take the serious point that Alison Johnstone makes and I am happy to meet her to discuss the issues and determine how we can progress action to tackle the AQMAs in the Lothians. I can always make representations to my colleague Keith Brown about the use of the funds.

Food Recycling

Richard Baker (Labour, North East Scotland)

6. To ask the Scottish Government what action it is taking to promote food recycling. (S4O-02357)

Richard Lochhead (Scottish National Party, Moray)

Since 2011, our zero waste programme has provided £20 million to councils throughout Scotland to support the roll-out of food-waste collections. That action means that, by February 2014, 1.2 million households will have access to a food-waste collection service.

In addition, the waste regulations that the Parliament passed last year will mean that the majority of households and businesses in Scotland will have access to a food-waste collection by the end of 2015, with many receiving the service by the end of this year.

Richard Baker (Labour, North East Scotland)

As the cabinet secretary said, the zero waste action plan identifies the contribution that food recycling can make to reducing landfill usage and greenhouse gas emissions. Will he tell me what national targets have been set to increase food recycling, what monitoring of progress towards any goals that have been set is being made and what action ministers are taking to increase food recycling not only in individual households but throughout the public sector? There is huge capacity for increased food recycling in those areas.

Richard Lochhead (Scottish National Party, Moray)

The overall target for recycling is 70 per cent by 2025, and food waste has a contribution to make to that. There are no specific targets for food-waste recycling but, as I indicated in my answer, there are regulations in place that mean that, by 2016, all local authorities in Scotland will have an obligation to provide a waste collection service to non-rural homes. Therefore, I expect all local authorities to play a role in collecting food waste.

Of course, the best way that we can all contribute towards the target is just to finish the food on our plates, as I have done regularly throughout Scottish food and drink fortnight.

Gull Management Guidance

Jamie Hepburn (Scottish National Party, Cumbernauld and Kilsyth)

7. To ask the Scottish Government what guidance it provides to local authorities on gull management. (S4O-02358)

Paul Wheelhouse (Scottish National Party, South Scotland)

Like all wild birds, gulls are protected by law. However, the law provides for licences to be granted to manage birds where there is a need to do so for reasons including the protection of public health and safety and preventing the spread of disease.

The Scottish Government recognises that urban gulls can pose real problems for residents and businesses, and it works with local authorities to try to develop solutions. That work has included commissioning a report on managing urban gulls from the British Trust for Ornithology, which is available on the Scottish Government website; setting up a taskforce to examine innovative solutions in the Dumfries area, including the use of falcons to displace nesting gulls, which is covered in “Use of Falcons to Displace Nesting Gulls from an Urban Area: Final Report”, which is also available on the Scottish Government website; and providing direct advice on gull management through Scottish Natural Heritage, as was done with Highland Council in 2012.

Jamie Hepburn (Scottish National Party, Cumbernauld and Kilsyth)

In the Carbrain and Greenfaulds area of Cumbernauld, people’s lives are being made a misery by the presence of a significant number of gulls. Some constituents report that they have been attacked.

The minister mentioned the Dumfries initiative. Does the Scottish Government share my regret that North Lanarkshire Council has refused to consider implementing such a scheme or any long-term strategies to deal with the issue despite the concern of a considerable number of my constituents?

Paul Wheelhouse (Scottish National Party, South Scotland)

I certainly recognise the distress and disquiet that it can cause members of the public when such incidents occur. There is currently no requirement for local authorities to have an action plan in place to deal with problem gulls, but it is expected that local authorities throughout Scotland will be able to implement the recommendations of the Dumfries gull report to help to reduce the problem. I encourage the local authority in the case that Jamie Hepburn mentioned to take up that opportunity.

North-east Fishing Representatives (Meetings)

Maureen Watt (Scottish National Party, Aberdeen South and North Kincardine)

8. To ask the Scottish Government when it last met fishing representatives from north-east Scotland and what issues were discussed. (S4O-02359)

Richard Lochhead (Scottish National Party, Moray)

While I was in Fraserburgh for the Cabinet meeting on Monday 2 September, I jointly hosted a fishermen’s surgery, which was attended by around 50 vocal fishermen and industry representatives. We discussed a wide range of issues, such as the reform of the common fisheries policy, the allocation of fishing opportunities, the current state of the stocks and details of the £6 million support package that I recently announced to help the industry during these pretty tough economic times.

Maureen Watt (Scottish National Party, Aberdeen South and North Kincardine)

The cabinet secretary may be aware that Aberdeen City Council is undertaking redevelopment plans that would result in fish processors moving out of the Union Square area with no clear indication of where they should move to. That may impact on the critical mass of fish processing companies in the city and disproportionately on the community of Torry, where there are many other processors and where the vast majority of workers live. Does the cabinet secretary agree that fish processing plays, and should continue to play, an important role in Aberdeen’s economy?

Richard Lochhead (Scottish National Party, Moray)

The great city of Aberdeen was of course built on its relationship with the sea. I believe that fish processing has a role in the local economy in Torry and throughout the city of Aberdeen, and I certainly hope that it will continue to have a role.

The relocation of the existing businesses is primarily an issue for Aberdeen City Council, but if Maureen Watt feels that there is a role for me or input required from me as fishing minister, I ask her to contact me.

Solemn Procedure Recommendations

Jenny Marra (Labour, North East Scotland)

1. To ask the Scottish Government how many times a procurator fiscal’s recommendation to proceed on solemn procedure has been rejected by the Crown Office since 1999. (S4O-02362)

Jenny Marra (Labour, North East Scotland)

If I understand the Lord Advocate correctly, such negotiation between local procurators fiscal and the Crown Office occurs very frequently. The Lord Advocate cited figures that were between 1,500 and 2,000. What are the criteria for a local procurator fiscal’s decision to be reviewed by the Crown Office?

Margaret Mitchell (Conservative, Central Scotland)

Is it not the case that, regardless of what procedure is used for domestic abuse cases, zero tolerance of domestic abuse is being let down by zero sentencing? Does the Lord Advocate consider it acceptable that nearly a third of those who were convicted of domestic abuse in 2011-12 were admonished in court and 12 per cent were handed a custodial sentence, which in the vast majority of cases was for less than six months, especially given the concerns that Jenny Marra has raised?

Chief Constable (Meetings)

Paul Martin (Labour, Glasgow Provan)

2. To ask the Scottish Government when the Cabinet Secretary for Justice last met the chief constable of Police Scotland and what matters were discussed. (S4O-02363)

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

I met the chief constable on Monday, when we both spoke at the Alcohol Focus Scotland national licensing conference in Glasgow. However, the last formal meeting was on 22 August, when we discussed a number of issues relating to the policing of Scotland.

Paul Martin (Labour, Glasgow Provan)

Following the cabinet secretary’s discussions with the chief constable, can he advise me how many registered sex offenders remain unaccounted for in Scotland?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

I do not have that information. As Mr Martin will know from previous discussions, the number varies on a weekly if not daily basis. However, these matters are monitored by the police. I will ensure that full and detailed information is sent to Mr Martin.

Court Capacity

Alex Johnstone (Conservative, North East Scotland)

3. To ask the Scottish Government what assessment it has made of court capacity following the implementation of its court closures policy. (S4O-02364)

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

The assessment of court capacity was made by the Scottish Court Service, which is now an independent body corporate under the leadership of the Lord President. The SCS consulted on a range of proposals to use its estate more efficiently. Proposals to close courts required the approval of ministers and were considered by the Justice Committee.

The sheriff courts that have been scheduled for closure account for only 5 per cent of the overall business in sheriff courts, and the Scottish Court Service is satisfied that the business can be readily accommodated in the receiving courts for all those courts that are being closed. The SCS has assured me that it has done a thorough review of business trends. The service and the Lord President are confident that the court closure programme will provide a court structure that is fit for the 21st century and which supports the reforms that are being done now and those that are planned for the future.

Alex Johnstone (Conservative, North East Scotland)

The forthcoming courts reform bill will transfer significant business from the Court of Session to sheriff courts, which will put even greater pressure on the courts that have survived the Government’s cuts programme. How will the Scottish Government ensure that access to justice is maintained in the north-east, given that Forfar and Aberdeen sheriff courts, which are already busy, will have to absorb business from Arbroath and Stonehaven as well as significant extra work from the Court of Session?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

Those matters have been fully factored in by the Scottish Court Service. When the Lord President appeared before the Justice Committee, he made that clear in his answers. On the transfer of business from Stonehaven to Aberdeen, it might be useful if I remind Mr Johnstone of the business at Stonehaven. In 2011-12, there were four jury trials, 11 civil ordinary actions in which a debate on legal matters proceeded or evidence was heard, and two summary cause or small claims proofs. There is capacity at Aberdeen, and the Scottish Court Service has considered its approach on that basis and in the face of the unprecedented budget cuts that are being forced on the Scottish Government and which impact on the Scottish Court Service. Efficiency is required and action must be taken, and the Scottish Court Service is satisfied that, notwithstanding the financial constraints, Aberdeen and Forfar will be able to cope.

Graeme Pearson (Labour, South Scotland)

The cabinet secretary has discussed the programme of court closures. Would he be good enough to share with us whether he is aware of any on-going conversations about a new phase of future closures under consideration?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

No.

Margo MacDonald (Independent, Lothian)

Will the court closures have a knock-on effect on the number of hours that police officers will be expected to attend court as potential witnesses or for any other reason? I imagine that that would not help their morale just now. Will he also say whether he has had any reports of morale being not what it should be in the old Lothian and Borders Police area?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

I assure Margo MacDonald that the Scottish Court Service discusses such matters with Police Scotland. Trials are scheduled, and the officers’ availability is factored in, so matters are being dealt with in that respect.

I am certainly not aware of any concerns about the morale of officers in Lothian and Borders. I meet officers on a regular basis—not only the local inspectors but any officers whom I happen to bump into—and I will raise the issue with the Scottish Police Federation, with which I am meeting tomorrow. It seems to me that morale in Police Scotland so far is remarkably high.

Cycling Accidents (Dangerous Driving)

Kezia Dugdale (Labour, Lothian)

4. To ask the Scottish Government what steps Police Scotland is taking to reduce the number of accidents involving cyclists that are due to dangerous driving. (S4O-02365)

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

That is an operational matter for the chief constable of Police Scotland, who has confirmed that he is committed to improving road safety and reducing road casualties. It is one of the force’s top five priorities, and more emphasis than ever before is being placed on pursuing that aim throughout Scotland.

Kezia Dugdale (Labour, Lothian)

Is the cabinet secretary aware of the Edinburgh cycling community’s deep and widespread concern about the Government’s “nice way code” campaign? Given that concern, and the high number of cycling fatalities in the past few months, will he, along with the Minister for Transport and Veterans, meet activists to discuss the campaign and perhaps review the nice way code?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

The transport minister and I discuss those matters regularly, and we recently met the Association of Scottish Police Superintendents.

I am aware of the concern among Edinburgh’s cycling community. In my capacity as justice secretary, I met people who had recently lost a loved one in a high-profile incident in the city, and another constituent who had lost a relative in an incident that happened outwith Edinburgh. I am aware of the huge grief and trauma that is caused.

I know that my colleague Keith Brown views the issue as significant, and he and I—together or individually—will doubtless discuss it with the chief constable and with Superintendent Murray, who is in charge of the road policing unit, which has primary responsibility for the matter.

I assure Kezia Dugdale that the Government and the police acknowledge the tragedies that have happened. Work must be undertaken, and it is already on-going.

Sarah Boyack (Labour, Lothian)

What advice has been given to ensure that sentencing policy is appropriate, given the rise in the number of accidents that have resulted in the deaths of cyclists in the past year?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

It would be inappropriate for me to give advice on sentencing until the sentencing council is up and running. The decision is entirely for the court to take.

As Sarah Boyack will be aware, there is an on-going case—which is sub judice—in which an appeal was heard by the Crown because it was felt that a sentence was unduly lenient. I fully support the Crown and endorse its actions in that regard, and the court will deliberate and make a decision in that case shortly.

“Inspection report on Lanarkshire Area of Crown Office and Procurator Fiscal Service”

John Wilson (Scottish National Party, Central Scotland)

5. To ask the Scottish Government what issues were identified in the latest “Inspection report on Lanarkshire Area of Crown Office and Procurator Fiscal Service” and what progress has been made on those. (S4O-02366)

John Wilson (Scottish National Party, Central Scotland)

I thank the Lord Advocate for his response. What is being done to deal with the problem of “continuations”, which was identified in the 2010 report? Is management dealing with that in an appropriate manner?

Police Stations (Police Scotland Review)

Drew Smith (Labour, Glasgow)

6. To ask the Scottish Government which police stations are being considered for closure or a reduction in counter opening hours in Police Scotland’s review of police station service delivery. (S4O-02367)

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

The issue is an operational matter for the chief constable of the Police Service of Scotland.

The Government is committed to protecting and supporting front-line services: 1,000 more officers have been recruited, recorded crime is at a 39-year low, and crimes of handling an offensive weapon are at a 27-year low and have been reduced by 60 per cent since 2006-07.

The new 101 telephone number is operational for the reporting of non-emergency incidents and, of course, 999 remains available for serious incidents and emergencies. Contact can also be made through email, social media and call points.

Drew Smith (Labour, Glasgow)

I thank the cabinet secretary for that comprehensive answer, including the information on using social media for reporting crime.

Over the summer, the chief constable wrote to members about Police Scotland’s review of the number and opening hours of police counters in police stations. The chief constable specifically highlighted the budget that he has been given by Mr MacAskill. Given the concerns about backfilling, which have been well aired in the Parliament on previous occasions, can the cabinet secretary confirm whether any Glasgow police stations are on a list for reduced services? Can he tell us what his priorities are, since they appear to be neither the back room nor the front counter?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

Our priority is maintaining the 1,000 additional officers and continuing the outstanding record of a 39-year low in recorded crime.

I think that Mr Smith forgets that the review is looking at the level of public service that occurs at police offices, and not necessarily at closure of police stations. However, that will be a matter for Mr House to consider and will ultimately be a matter for the Scottish Police Authority. In the interim, the Government will continue to provide support to ensure that we have that visible police presence in our communities, thereby making Scotland safer than ever before.

John Pentland (Labour, Motherwell and Wishaw)

Can the cabinet secretary guarantee that, when proposals come forward, consultation will take place? Will previous consultations be borne in mind? Will local people be given the opportunity to voice their concerns at public meetings?

Kenny MacAskill (Scottish National Party, Edinburgh Eastern)

I recognise that Mr Pentland has not been a member of the Justice Committee and is not sighted on justice matters, but those are now matters for the chief constable, who is ultimately held to account by the Scottish Police Authority. If Mr Pentland or the Labour Party wish to change that constitutional structure, Parliament could doubtless review it, but I have no rights or powers over such matters, at present. I believe that Parliament made the right decision in that regard, and I stand by that. Mr Pentland may care to raise the issue with the Scottish Police Authority.

Draft Budget 2014-15

Tricia Marwick (None, Mid Fife and Glenrothes)

The next item of business is a statement by John Swinney on the draft budget 2014-15. As the cabinet secretary will take questions at the end of his statement, there should be no interventions or interruptions.

Cabinet secretary, you have 20 minutes.

John Swinney (Scottish National Party, Perthshire North)

I am pleased to set out today the Scottish Government’s draft budget for 2014-15 and indicative spending plans for 2015-16.

This budget is focused on delivering investment, protecting household incomes and creating jobs. It values our public services, the people who work for them and what they achieve. It provides opportunities for our young people and security of care for our older people. Most of all, it demonstrates the benefits of decisions being made here by those who care most about the future of the people of Scotland.

Scotland is a wealthy and a productive nation. In each of the past 30 years, we have paid more in tax per head than the rest of the United Kingdom. Excluding oil, our national income is on a par with the UK; including oil, our gross domestic product per head is 18 per cent higher than that for the UK. When compared with the Organisation for Economic Co-operation and Development countries, our GDP per head would be the eighth highest. We have a highly skilled workforce, a long-standing reputation for innovation, a respected and recognisable brand, world-class universities, and sectors and companies competing at the highest level across international markets.

With the full decision-making powers of independence, I would, today, have been able to present a budget that would have put all that economic strength to use in building a more prosperous and more just Scotland. Instead, as a result of Westminster’s decisions, I must today present a budget constrained by significant cuts.

The UK spending round reduced the Scottish Government’s fiscal departmental expenditure limit by 10.9 per cent in real terms over the period from 2010-11 to 2015-16, with further cuts expected for 2016-17 and 2017-18. Within that, our conventional capital budget will be reduced by 26.6 per cent. Westminster’s programme of welfare cuts is taking money out of the Scottish economy, adding to the burden on our public services and hitting household budgets.

Despite that, the decisive and distinctive measures that we have taken in Scotland are delivering results. Since my last budget, Scottish GDP statistics have shown growth in each quarter, with annual growth of 1.2 per cent compared with just 0.3 per cent for the UK as a whole. Employment has risen by 45,000 over the year and our employment rate of 72.4 per cent is higher than the UK rate of 71.6 per cent. Unemployment is down 19,000 and our unemployment rate at 7.4 per cent is lower than the UK rate of 7.7 per cent. Youth unemployment is down 12,000 over the year and our youth employment rate of 57.2 per cent is higher than the UK equivalent at 49.8 per cent. The Bank of Scotland purchasing managers’ index for August indicated that private sector output has expanded for the 11th month and is rising at the fastest rate since the survey began. Scotland’s recovery is not, as the Chancellor of the Exchequer claims, happening because of austerity—it is happening in spite of austerity.

However, we cannot take recovery for granted and must be focused on addressing real challenges in the economy. We will face these challenges from a position of strong financial management and responsibility. Each year since 2007, I have brought a balanced budget to Parliament, meeting our commitments and delivering value for money for the taxpayer. We continue to drive efficiency with the Scottish Futures Trust helping to deliver savings in our capital programme and public bodies expected to deliver annual efficiencies of 3 per cent. In 2015-16, we will use our capital borrowing powers of up to £296 million to support our investment programme. We will apply the land and buildings transaction tax and the landfill tax, which I hope Parliament will agree this session. For 2014-15, I have made provision for the costs of the referendum on independence and the costs of implementing the Scotland Act 2012.

I will now set out for Parliament the actions that we are taking to deliver economic recovery, reform our public services and support Scotland’s people, businesses and communities. Our spending plans are focused on accelerating economic recovery through investment. To tackle Westminster’s cuts to capital spending, we are switching funding from resource to capital, utilising capital receipts and pursuing revenue-funded investment through the non-profit-distributing programme and the regulatory asset base rail enhancements. We do so while committing no more than 5 per cent of our future total DEL budget on the costs of our revenue-funded investment programme.

I have published today an update on the projects and the expected investment from this year through to 2022-23. In the short term, NPD investment is lower than was originally forecast. That is for two reasons. First, some NPD projects are being concluded at lower cost. [Interruption.]

John Swinney (Scottish National Party, Perthshire North)

Secondly, some projects are taking longer to be prepared and planned. The benefit of taking time to properly prepare projects is clear from the example of the Queensferry crossing, which will be delivered on time and within a cost estimate that has reduced by £145 million since 2011.

Work continues on time and on budget on the £842 million new south Glasgow hospitals project and on major refurbishment programmes across the health service. The schools for the future programme will deliver 67 new schools across Scotland, 11 of which are already complete and operational. Construction is under way on the City of Glasgow College and Inverness College developments. Almost £2 billion of projects are in procurement and more than £500 million of those projects are expected to begin construction this financial year—they are the Ayrshire College project, the M8, M73 and M74 project bundle and a range of schools and community health projects.

The effects of the recession are still being felt in the housing market, and the Government is determined to do all that it can to help. We will support the construction industry and private house building through a range of schemes, including the MI new home mortgage indemnity scheme and our £120 million help to buy Scotland scheme, which will provide access to affordable mortgages for home buyers.

We are on track to deliver 30,000 affordable homes by 2016, of which at least 20,000 will be for social rent. When Parliament passed the Budget (Scotland) Bill in February, I set out plans to invest £859 million in affordable housing over the period 2012-13 to 2014-15. I will revise those provisions today.

Over the three years to 2014-15, we now plan to invest not £859 million but £970 million. In 2015-16, we will invest a further £390 million. I therefore confirm to Parliament that, over the four years to 2015-16, the Government will drive investment in affordable housing of more than £1.35 billion. Together with the other elements of our programme, we will secure total investment of more than £8 billion in Scotland’s infrastructure over the next two years.

The budget takes action to boost employment, create economic opportunities and enhance business confidence. Our plans are supported by the unique opportunities that will be presented next year, when Scotland will welcome visitors from around the world to the Commonwealth games, the Ryder cup and the second year of homecoming. We will invest £24 million in 2015-16 to establish a national performance centre that will help us to sustain the legacy of the Commonwealth games.

Those events will benefit Scottish businesses. We are taking significant steps to support private sector growth and to ensure that we offer the most business-friendly environment in the UK. All our communities benefit from the small business bonus scheme and the most generous set of business rates reliefs in the UK, which are worth more than £560 million each year. Our enterprise bodies will support business growth, including through the Scottish Investment Bank and the small and medium-sized enterprises growth fund, and we will resource innovative measures to encourage a new age of entrepreneurship across Scotland.

Digital technologies offer huge potential to improve productivity and open up new markets. The budget confirms a range of investment in digital technologies, including more than £280 million in two major contracts with BT to ensure that 95 per cent of premises in Scotland have access to superfast broadband by the end of 2017-18, which exceeds our earlier target.

The transition to a low-carbon economy is a key theme of our economic strategy. We will provide £200 million over the next two years for schemes such as the national renewables infrastructure fund. Given the impact on investment of uncertainty over UK energy policy, I will extend the renewable energy investment fund by a further year to 2015-16.

In launching the second report on proposals and policies in June, the Minister for Environment and Climate Change told Parliament that we would use the budget to boost investment in meeting our world-leading climate change targets. The budget confirms that we will maintain the sustainable action fund for the next two years; invest an additional £15 million in peatland restoration; deliver more than £50 million of investment in the warm homes fund a full year ahead of previous plans, which will enable faster progress to be made in delivering greater energy efficiency; and work with the private sector to secure around £200 million for measures to tackle fuel poverty.

The budget also confirms that we will deliver around £40 million of investment in sustainable transport through the future transport fund over the next two years. We will increase funding to support active travel. That will see an additional £20 million being invested in cycling compared with the last budget. In total, our support for active travel over the next two years compared with the last two years will rise from around £40 million to around £60 million.

A focus on education and training is fundamental to our efforts to support the economy and create the conditions for growth. We will extend funding for the 25,000 modern apprenticeships per year into 2015-16. We will continue to fund opportunities for all, which guarantees support for all of Scotland’s 16 to 19-year-olds who are not currently in education, employment or training. Free higher education will continue for Scottish students as part of annual investment of more than £1 billion in the sector.

In addition, the budget secures the position of our colleges for the remainder of the parliamentary session. In February, I confirmed to Parliament that we would provide resource funding of £522 million for colleges in 2013-14 and maintain that level in 2014-15. The budget delivers on that commitment, but it also goes further. I confirm that the colleges resource budget will increase to £526 million in 2015-16, which will enable it to support full-time courses and to equip Scotland’s students for the world of work.

We will act to remove barriers to the labour market, particularly for women. We will invest more than £190 million in the next two years to fund the Children and Young People (Scotland) Bill. That will provide an additional 125 hours of early learning and childcare for all three and four-year-olds, and looked-after two-year-olds, which will be worth around £700 to a family. Real practical help is being offered to hard-pressed families who are making their way in the world.

Our support for households is an integral part of our support for the economy. It is an approach that is in line with the values of the people of Scotland and which demonstrates the priority that we attach to helping the most vulnerable.

Despite the financial pressures that we face, I can give a clear and unequivocal commitment that national health service prescriptions, eye tests and personal care will remain free; that the concessionary bus travel scheme will be maintained; that the education maintenance allowance—and, from 2014-15, a minimum income for students—will be available; and that access to higher education will remain based firmly on the ability to learn, not the ability to pay.

Our public services are vital to the people of Scotland. We value the NHS, just as we believe that local government should be properly funded to deliver local services. In delivering in full the Barnett consequentials for the NHS revenue budget in 2014-15 and 2015-16, the draft budget secures continuing improvement in the quality of service that the NHS provides.

In England, the Chancellor of the Exchequer’s austerity drive has seen the local government settlement hit with a real-terms cut of 18.6 per cent since 2012-13. That reduction is passed on to Scotland through the Barnett formula. In contrast, local authorities in Scotland will see their resource funding from the Scottish Government maintained in 2014-15 and 2015-16, which will enable them to maintain teacher numbers in line with pupil numbers and to deliver the council tax freeze, just as the Government promised that it would do.

As well as protecting our vital public services, we are intensifying our approach to public service reform. Alongside the draft budget, I am publishing an agreement on joint working, which places clear expectations on the public sector to work together to ensure that resourcing decisions are focused on the local priorities of each community planning partnership and that budgets are shared.

In 2014-15, we will fully fund the three change funds that were announced in the spending review, thereby supporting efforts to reshape care for older people, to drive progress in the early years and to reduce reoffending. We will support the crucial role that the third sector can play in each of those areas.

Next year, we will invest £8.5 million in the fourth year of the early years change fund, and we will extend for a further year the reducing reoffending change fund, which is helping to deliver the lowest reconviction rate in 14 years. We will build on the reshaping care for older people fund by allocating £100 million through NHS boards, which will be accessible to local authorities, the third sector and others, to drive the shift towards prevention in 2015-16.

We will also deploy £20 million to support national initiatives, meaning that we will invest £120 million in 2015-16 to assist the integration of adult health and social care services.

Our public services and reform programme depend on the hard work of public sector workers. Since 2010, they have been subject to pay restraint. I am publishing today a pay policy for 2014-15 and 2015-16 that sets out distinct differences from the approach that has been taken by Westminster, particularly in relation to low-paid workers.

We will implement the Scottish living wage and we will uprate it annually. We will increase the minimum uplift in basic pay for employees who earn less than £21,000 from £250 to £300 each year. As a result, some staff will receive increases of up to 2 per cent. We also flatly reject the chancellor’s threat to end pay progression. The Scottish Government will retain our existing policy, leaving public sector employers with the discretion to reach their own agreement with staff and trade unions and to do so outside the 1 per cent cap that will apply to basic pay increases.

The costs of Westminster’s approach to public finances are increasingly borne by the most vulnerable in our society. From 2010 to 2015, its cuts to welfare benefits will take an estimated £4.5 billion out of the Scottish economy, widening the gap between rich and poor. The Scottish Government has neither the legal powers nor the financial resources to meet every cut or to mitigate all the damage done by Westminster.

Last year, I announced that, working with our partners in local government, we would act to protect over 500,000 people in receipt of council tax benefit who would otherwise have struggled to pay their bills each month as a result of a Westminster decision to cut funding for successor arrangements to council tax benefit by 10 per cent. In 2014-15, the Scottish Government will again contribute £23 million to mitigate the funding gap, and we propose to continue to work with our partners in local government to bring that support up to £40 million. That will ensure that we are able to maintain support for vulnerable groups through our council tax reduction scheme.

In 2013-14, we set up the Scottish welfare fund and provided funding for one year. As people continue to struggle, I can confirm that we will maintain the fund at £33 million in both 2014-15 and 2015-16. We have already provided funding of £7.9 million for advice services to meet the additional demand that Westminster’s cuts have caused, with £2.5 million to help social landlords to provide support to those who are affected by the bedroom tax. We will provide a further £2.5 million to build the capacity of local communities and the voluntary sector to respond to the worst effects of welfare reform.

This Government will use the resources that we have—resources intended for devolved public services—to invest £68 million in each of the next two years to limit the damage of Westminster’s welfare cuts.

Today, the United Nations special rapporteur, who is investigating housing in the United Kingdom, has called for the bedroom tax to be abolished

“in light of its dire impacts”.

We agree, and with independence we will abolish the bedroom tax. In the interim, we will continue to press the UK Government to abolish the tax and to increase the support for those who are hardest hit. We do not have legal or financial powers over welfare benefits, but neither are we a Government that will walk by on the other side.

Last week, Shelter Scotland put forward a proposition that focused on the problems that people are facing as a result of the bedroom tax. The start of next year’s budget would be too late for many of those who are currently struggling to make ends meet. I intend to take immediate steps to deal with the iniquitous effect of the bedroom tax. I have considered Shelter’s proposal and looked at what capacity there is in this year’s budget to meet that need. Using resources from savings in my own enterprise portfolio budget and underspend on home energy efficiency in the fuel poverty budget that was caused by delays with UK energy schemes, I can confirm that the Scottish Government will invest up to £20 million this financial year to help those who are struggling the most with the costs of the bedroom tax. That funding will enable local authorities to add to their own provisions to increase discretionary housing payments to meet some of the implications of the bedroom tax.

Our action on the bedroom tax shows the values and priorities that matter in the Parliament. Where Westminster decisions have cut spending, this budget supports investment and job creation. Where Westminster decisions have reduced incomes, this budget delivers a social wage that supports our people. Where Westminster decisions are driving the privatisation of public services, this budget protects our NHS. When Westminster targets the most vulnerable as part of its austerity drive, we will do all that we can to protect them.

This budget makes clear the benefits of decisions being made in Scotland by those who care most about our future. That is the opportunity that is on offer to the people of Scotland in 2014.

I commend the budget to Parliament.

Iain Gray (Labour, East Lothian)

I thank the cabinet secretary for the early sight of his statement. Indeed, even earlier than that, the cabinet secretary had sent his spin doctors out to brief that the budget would be a budget for independence: honesty, at last.

We then heard that an extra 10,000 Scots and an extra 32,000 young Scots have just joined the dole queues. Even the cabinet secretary realised that a budget for independence was the wrong priority, so he dropped the slogan, but it is the same budget. It is a budget for independence—a “Don’t rock the referendum boat” budget for a Scotland that is at a standstill and on pause. It is the wrong priority.

Yesterday, a committee of the Parliament heard first hand about the hardship that is faced by tenants who are victims of the bedroom tax. I agree with the cabinet secretary on the iniquity of the bedroom tax, but I think that those tenants’ priority might have been a budget that would banish that tax from Scotland. Instead, Mr Swinney has found less than half the funds that are needed for the bedroom tax this year in order to hide the fact that his budget has no provision at all to help next year. That means that councils will have to prioritise between “deserving” and “undeserving” victims of the bedroom tax. Those are the wrong priorities. There is currently no promise of further help next year.

This is the first draft of Mr Swinney’s budget. Will he take the budget for independence away and bring back a real budget for jobs that will banish the bedroom tax from Scotland this year, next year and the year after that, as well?

John Swinney (Scottish National Party, Perthshire North)

I always find myself pointing out the fundamental incoherence of the arguments that Iain Gray puts forward. I do not understand how Scotland can be “on pause” when we have taken action to do what we can within our powers to deal with and tackle the bedroom tax. Iain Gray would serve his party better by unreservedly welcoming what the Government has set out today. The reason why there is no provision in the 2014-15 budget for dealing with the bedroom tax is that I have absolutely no intention of letting the Westminster Government off the hook in 2014-15. It is the Westminster Government that has legislated for the bedroom tax.

On whether the Labour Party is committed to getting rid of the bedroom tax, I watched two television programmes on Thursday night: one Labour spokesman said yes and the other said no. So, before the Labour Party comes here and tries to lecture me about the bedroom tax, I suggest that it gets some coherence into its argument and backs us in the steps that we are taking to tackle the iniquitous effect of the bedroom tax on the people of Scotland.

Gavin Brown (Conservative, Lothian)

I, too, thank the cabinet secretary for advance sight of his statement. Today’s budget should have been about the economy—particularly on a day when we find out that 10,000 more people are unemployed in Scotland.

However, as far as the economy is concerned, this is a budget that has both underpromised and underdelivered. There has been some encouraging news on the economy over the past couple of weeks. That, coupled with today’s announcement, means that there should have been a direct focus on the economy in the budget.

So, why does the cabinet secretary penalise business? Tucked away at the back of his budget document, on page 163, is the information that business rates will go up from £2.4 billion this year to over £2.8 billion in 2015-16, which means almost £460 million extra coming out of the pockets of business. Is that an example of the benefits of decision making being done here? How does he explain that on top of the retail levy and the empty property tax that he brought in?

The cabinet secretary talked about colleges. They used to get £560 million; this year, they will get £522 million. That is a pretty big drop. However, because the amount will go up to £526 million the year after that, he says in his document that the “funding floor” has been increased. How on earth does going from £560 million to £526 million amount to an increase?

How does the cabinet secretary justify, in these difficult economic times, giving £115 million to Scottish Water in 2014-15 and £120 million in 2015-16? That £235 million could be far better spent on capital projects across Scotland. Today’s budget is a big disappointment. If it was a film, it would have gone straight to DVD.

John Swinney (Scottish National Party, Perthshire North)

If that was meant to be funny, it did not impress anybody. I think Mr Brown will have to keep practising.

I find Mr Brown’s narrative on the economy quite surprising, because I went through with considerable care in my statement some objective data, from the 12 months since I last delivered a budget to Parliament, on the performance of the Scottish economy.

I will just reinforce the point. Scottish GDP is growing at a higher rate than that of the rest of the United Kingdom, employment here is at a higher rate than that in the rest of the United Kingdom, unemployment here is lower than that in the rest of the United Kingdom, and the youth employment rate here is higher than that of the rest of the United Kingdom. Further, a Bank of Scotland purchasing managers’ index that was published on Monday was—I thought—a very encouraging indication of the attitudes of people in the business community to conditions in the Scottish economy. I would therefore have thought that with all that evidence, Mr Brown would have given due credence to the fact that the Government’s economic strategy is having the effect that we set out 12 months ago it would have in the circumstances.

On the question of business rates, I simply ask Mr Brown whether he has forgotten about the concept of inflation. Business rates are uprated every September, in line with inflation. If he needs an explanation about the increased business-rate take that is happening in Scotland and wants a comparator for that, he need look only at the rest of the United Kingdom, where business rates are rising in largely the same kind of fashion, because of the inflation uplift, as is happening in Scotland.

On colleges, Mr Brown frequently comes to Parliament and argues that we should reform the public sector. When we do that, what does Mr Brown do? He complains about it. When we are saving money as a consequence of reforming the college sector, while still providing the same full-time equivalents and the courses that people require to get into the labour market, I do not know what he is complaining about.

Finally, on Scottish Water, I know that sometimes when Mr Brown comes to Parliament he is driven by the ideological arguments of his side of the debate. There is an ideological argument for privatising Scottish Water, but I do not accept it. I am on the other side of the argument, because I look at the benefits that customers the length and breadth of Scotland have experienced through improvements in the quality of service and reductions in cost, which are good for the charge payers here in Scotland. We have the right approach and strategy, and the enormous capital investment that is happening the length and breadth of the country, not least in the city of Glasgow, which the Deputy First Minister represents, is a tribute to the capital investment programme of Scottish Water.

Kenneth Gibson (Scottish National Party, Cunninghame North)

I welcome the cabinet secretary’s statement and the £68 million that the SNP Government will allocate in each of the next two years to mitigate the adverse impact of welfare reform. It is clear that the Government is working hard within its limited powers to protect the most vulnerable Scots from UK Government welfare policy.

Kenneth Gibson (Scottish National Party, Cunninghame North)

I ask the cabinet secretary whether any party has put to him specific proposals to increase funding in relation to welfare and, if so, whether that party has indicated how such an increase would be funded, bearing it in mind that such a proposal must be accompanied by a reduction within the same portfolio.

John Swinney (Scottish National Party, Perthshire North)

As always, Mr Gibson, as the convener of the Finance Committee, gets right to the heart of the matter by asking people the hard question about where the money will come from in order that we can afford the propositions that they bring forward.

Mr Gray is correct; this is a draft budget and it is here for discussion. We are perfectly happy to have that discussion, as I have done with parties every year in the parliamentary budget process. However, it is important that when people want us to spend money on different and additional priorities, they come here and tell us where the money will come from to do that.

Willie Rennie (Liberal Democrat, Mid Scotland and Fife)

I thank the finance secretary for early sight of his statement. He knows that we will work with him in a constructive way to amend his budget.

Remarkably, in his statement today he made no mention of the rise in unemployment. Instead, he calls it a budget for independence. It has the wrong priorities and contains the wrong choices, and it is an inadequate response.

Let us look at colleges. Since 2009, 80,000 part-time places have been cut, but his budget goes nowhere near repairing that damage. Fewer businesses in Scotland have apprenticeships than anywhere else in the United Kingdom. The UK Government’s £2,000 cut in national insurance should be promoted by the Scottish Government in order to recruit more apprentices.

I have repeatedly been disappointed by the finance secretary’s stubborn refusal to adopt our costed plans for 24,000 families with two-year-old children. The Education and Culture Committee heard yesterday about the benefits that that could deliver for families.

On colleges, apprentices and two-year-olds, will the finance secretary agree to look again at his plans?

John Swinney (Scottish National Party, Perthshire North)

Again, I am a bit surprised by Mr Rennie’s observations about unemployment. The explanation that I give on the unemployment situation today is this: if colleagues look at the detail of the statistics, there is a substantial fall in economic inactivity in Scotland and people have gone back into the labour market as a result of being successful in securing employment. A large number have not been successful, but over 12 months, unemployment is down by 19,000. I would have thought that that would be welcomed. Indeed, the Secretary of State for Scotland—who, the last time I looked, was a colleague of Mr Rennie’s—welcomed the unemployment position in Scotland today. Perhaps Mr Moore is slightly more authoritative than Mr Rennie on such questions.

On college places, I make the same point that I made to Mr Brown. We have maintained the full-time equivalent numbers because the courses that we are supporting and providing in the college sector are designed to enable people to get back into employment. That is why we have had a rise in employment in Scotland and that is why we have had a fall in unemployment over the past 12 months.

I just announced the extension into 2015-16 of funding for 25,000 modern apprenticeships. Such things become familiar because the Government keeps delivering them, but when Mr Rennie’s colleagues left office and we came into office there were not 25,000, but 16,000 modern apprenticeships. We have increased the number substantially and have sustained that increase over many years.

On promoting UK schemes, I work collaboratively with the Secretary of State for Scotland on such promotion in the Scottish employability forum. I am unaware of any complaint from him about how the Scottish Government supports joint working on employment. In fact, after last week’s employability forum meeting, the Secretary of State for Scotland issued a tweet about how constructive his meeting with me at the forum had been. I was delighted to see his little tweet, which was more encouraging than Mr Rennie’s question.

On childcare, the Government has just announced a significant expansion in provision, with funding of £190 million. Does not Mr Rennie have the good grace today in Parliament to welcome that investment?

Jenny Marra (Labour, North East Scotland)

Presiding Officer, let me tell the cabinet secretary—[Interruption.]

Jenny Marra (Labour, North East Scotland)

Who thinks that Scotland is on pause? Is it the 32,000 extra young people who have become unemployed this summer? What is the cabinet secretary’s budget doing to address that?

John Swinney (Scottish National Party, Perthshire North)

The Government’s budget is providing 25,000 modern apprenticeships. As I just said to Mr Rennie, that is a significantly higher number than we inherited from the Government that Ms Marra would have supported all those years ago, and which was defeated in 2007. We have also put in place the opportunities for all guarantee, which assures every 16 to 19-year-old of a training or education opportunity, if they have been unable to find such an opportunity.

That is what the Government is doing to support young people. We are putting in place steps and measures that ensure that young people can access the labour market and fulfil their potential.

Aileen McLeod (Scottish National Party, South Scotland)

We know now that a majority of Scots want the Scottish Parliament to have control of decisions over the economy and welfare—

Aileen McLeod (Scottish National Party, South Scotland)

Will the finance secretary say what he would have been able to do differently with the budget if he had had those powers?

John Swinney (Scottish National Party, Perthshire North)

Aileen McLeod made an important point about the flexibility and powers that we would have if we were an independent country. For one thing, we would not have legislated to have the bedroom tax; we would never have brought that forward. Secondly, the Scottish Government would have taken a different approach to capital expenditure from that which the UK Government is taking, in order that we could have ensured that we did not have the economic difficulties—extended as they have been—that have resulted from the current UK Government’s failed economic policies. Those are just two examples of what the Government would have done.

James Kelly (Labour, Rutherglen)

Can the cabinet secretary confirm that the cut in rail services that is detailed on page 128 of the draft budget is the result of the delay to the Edinburgh to Glasgow rail improvement project that was identified in the recent Audit Scotland report, “Scotland’s key transport infrastructure projects”?

John Swinney (Scottish National Party, Perthshire North)

There is no change to the capital programme in relation to EGIP or what the Government has announced previously. The funding settlement in the budget provides fully and adequately for the Government to support financially the running of rail services in Scotland, and to invest in the programmes to which we have committed.

Chic Brodie (Scottish National Party, South Scotland)

Will the finance secretary join me in welcoming today’s Office for National Statistics figures, which show that Scotland—

Chic Brodie (Scottish National Party, South Scotland)

I am coming to it, Presiding Officer.

The ONS figures show that Scotland has higher youth employment than the UK. Does the cabinet secretary agree that that is further proof that the Scottish Government is doing the best that it can do with the economic powers that it has, and that only a yes vote next September will give Scotland the chance to break away from the Chancellor of the Exchequer’s austerity programme?

John Swinney (Scottish National Party, Perthshire North)

I tried in my statement to give Parliament some dispassionate context based on factual information about what has happened since I last came to Parliament with a budget 12 months ago, when I said that my priority was to improve economic conditions in Scotland. Twelve months on, any dispassionate observer of the statistics that I have given to Parliament would see that the Government has made progress. It is not the end of the journey; it is what the Government is able to do.

Of course, if we had the full range of economic and fiscal powers—

Duncan McNeil (Labour, Greenock and Inverclyde)

Oh!

John Swinney (Scottish National Party, Perthshire North)

If we had those powers we would—I say to Mr McNeil—be able to do a great deal more than the Government is able to do with the constraints under which we operate today.

John Mason (Scottish National Party, Glasgow Shettleston)

This year, the UK Government cut the budget by £107 million immediately before it was implemented. Has there been any explanation about that and any guarantee that it will not happen again next year?

John Swinney (Scottish National Party, Perthshire North)

Mr Mason will be aware that during the financial year 2013-14, we have had an in-year reduction in our budget. That has never happened in any year in which I have been the finance minister; when I think about it, I cannot imagine that it has ever happened under devolution. The UK Government also applied a reduction of £125 million in our resource budget in 2014-15.

I decided that I would not pass on any of the financial impact of that to local government in Scotland, so the local government settlement that I proposed in 2013-14—which I have set out as an indicative plan, for example, for 2014-15—has been fulfilled by the statement that I have made to Parliament today. That is the appropriate way for us to deal with such questions.

As for guarantees about future reductions, I can make no such guarantees. It has happened already and I cannot rule out its happening again. It is clear from the spending round announcement in late June that there will be further reductions in public expenditure in 2016-17 and 2017-18.

Neil Bibby (Labour, West Scotland)

Mr Swinney said that he is increasing the budget for colleges in 2015-16. Will he confirm whether that represents a real-terms cut to college funding in 2015-16?

John Swinney (Scottish National Party, Perthshire North)

If Mr Bibby will recall, I gave a guarantee to the Parliament that a funding arrangement of £522 million would be put in place for 2013-14 and 2014-15. I have fulfilled the terms of my commitment and I have increased that to £526 million in 2015-16. Mr Bibby would be well served to welcome the increased resources that the Government is putting into the college sector.

Maureen Watt (Scottish National Party, Aberdeen South and North Kincardine)

Can the cabinet secretary confirm that the Scottish Government will continue its commitment to 1,000 extra police officers on the street, helping to deliver record low levels of crime?

John Swinney (Scottish National Party, Perthshire North)

That remains a commitment of the Government. The visible and strong police presence around the country has contributed significantly to the reduction in crime levels in Scotland. The Government’s commitment is fulfilled by the financial settlement that we have put in place as part of the budget today.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

Will the cabinet secretary explain why, in the sections of his speech on economic recovery and support for business, he omitted to mention that the enterprise, energy and tourism budget will decline from £479 million this year to £444 million next year? Since our next debate is about enterprise bodies, will he tell us how the focus of those bodies will be affected for good or ill by the transfer of £41.8 million from resource to capital?

John Swinney (Scottish National Party, Perthshire North)

The budget line that Mr Chisholm refers to contains the expenditure on the enterprise networks and on energy projects. As I explained in my statement, I have extended the national renewables investment fund for an extra 12 months because of the fact that it has been difficult to get renewable energy projects agreed as a result of the uncertainty over UK energy policy.

The factor that accounts for the decline in the budget in 2014-15 that Mr Chisholm highlights essentially arises out of a change to the energy line within that overall line. The enterprise networks are broadly consistent between 2013-14 and 2014-15. There is an increase in energy expenditure in 2015-16 representing the fact that projects are taking longer to be agreed because of the uncertainty over UK energy policy.

In relation to the wider role of the enterprise networks, as I am sure that Mr Ewing will set out in the next debate this afternoon, they are focused in a positive way on providing support to the company sector for the development of companies and to ensure that the Government’s objectives on internationalising business, on securing the opportunities in the low-carbon economy and on the work in the key sectors—about which we saw some good evidence this week in relation to the success of the food and drink sector—can be fulfilled.

Annabelle Ewing (Scottish National Party, Mid Scotland and Fife)

The savings that are being delivered by the Queensferry crossing project are welcome. Can the cabinet secretary expand on the continued opportunities for local businesses as part of this vital infrastructure project for the kingdom of Fife, and can he provide some detail on how the savings could be reallocated?

John Swinney (Scottish National Party, Perthshire North)

The revised estimates that we published arose out of the fact that the project is progressing well and that the contract was structured around a level of contingency risk that ran alongside a fixed-price contract. As the elements of risk are being addressed and dealt with—as I saw yesterday at the Queensferry crossing—we are able to release those savings, and our latest estimate is that the savings will total £145 million.

We have, of course, allocated some of those resources already, in two tranches totalling £45 million. Other reallocations have been undertaken to support the infrastructure priorities of the Government, which, of course, extend across a range of areas, particularly the very substantive push to the housing sector, which I am sure is welcomed around the country.

Mary Scanlon (Conservative, Highlands and Islands)

The college sector pension deficit was £115 million last year—an increase of 93 per cent on the previous year and more than 10 times the deficit in 2007. What assurances can the cabinet secretary give to staff in the college sector who are, rightly, concerned about their pensions?

John Swinney (Scottish National Party, Perthshire North)

The issues in relation to the management of college pensions are entirely a matter for the governing bodies of individual colleges, which must exercise prudential judgment and management around the sustainability of the pension funds. That is their responsibility, constitutionally.

Claudia Beamish (Labour, South Scotland)

Although there is some additional funding for peatland and active travel, what assurances can the cabinet secretary give that all the proposals and policies in the second report on proposals and policies that are relevant to this budget are fully costed, so that we can move forward incrementally, and that he has secured further funding for the carbon assessment tool, so that a more effective carbon assessment of the budget can be conducted to include second-round emissions?

John Swinney (Scottish National Party, Perthshire North)

I did not refer to it in my statement, but the carbon assessment of the 2014-15 budget has been published. Patrick Harvie and I have discussed this issue several times over the years. It is an innovative area of policy making and assessment, so the Government is open to suggestions from across the chamber about how we can strengthen the carbon assessment of the budget. The approach is getting stronger and more effective over time. However, as I said, I am happy to engage in discussions about how we can strengthen that.

On the issue of financial commitments and policy commitments, the commitments that I have set out in the budget are the funding commitments of the Scottish Government; they emerge out of the report on proposals and policies. Of course, Paul Wheelhouse told the Parliament that the Government would boost the financial support for RPP measures, and that is exactly what we have done this afternoon.

Patrick Harvie (Green, Glasgow)

If the Government intends to raise active travel up its agenda, which would be welcome after the many tragedies that we have seen, what are we to make of the fact that the statement commits £60 million to active travel over the next two years while the budget line on sustainable and active travel commits only £44 million, along with other opaque budget lines such as the future transport fund line? Is it not time for a single, clear and transparent budget line on active travel, so that everybody who is looking at these documents knows what the Government intends to spend public money on?

John Swinney (Scottish National Party, Perthshire North)

I have some sympathy with the position that Mr Harvie articulates. I accept that, in the budget documents, elements of expenditure can appear in different policy areas. I have to try to manage a balance between that and ensuring that the Parliament can see the structure of the budget on a comparative basis year by year in a fashion that the Parliament generally believes to be acceptable. The portfolio approach is, by agreement with the Finance Committee, the way in which the budget should be set out.

On other occasions and in light of the point that Mr Harvie has raised with me, I am happy to marshal some of the information in a clearer fashion that identifies the support that is in place on cycling, to provide it to him and to place it in the Scottish Parliament information centre, because elements of budgets that come in from different portfolios contribute to a stronger, better and more effective approach on cycling than in the previous provisions that I brought to the Parliament.

I acknowledged and accepted that we needed to do more to encourage cycling. We have done that in the budget and I will happily share the evidence and analysis with Mr Harvie and the Parliament.

Kevin Stewart (Scottish National Party, Aberdeen Central)

The cabinet secretary pointed out that Westminster is imposing a cut of more than 18 per cent on local government south of the border. I welcome the fact that the Scottish Government recognises the need to protect local services. Will he expand on how local government spending is being protected in the budget, including through additional funding for early years provision?

John Swinney (Scottish National Party, Perthshire North)

The Government has set out the funding priority that it attaches to early years education. The measures that we have in place to extend the number of hours of early years education and support that three and four-year-olds, and looked-after two-year-olds, are able to access are an important part of ensuring that the provision is in place.

We will also look at working with our local authority partners on the implementation of the Children and Young People (Scotland) Bill to find the best and most effective way to ensure that that investment can be deployed to create the two outcomes that I suggested: improved early learning opportunities for young people and encouraging greater participation in the labour market by more and more women.

Anne McTaggart (Labour, Glasgow)

The budget represents another significant real-terms reduction in the resource grant for local government. Will that not inevitably result in more job losses on top of the 37,000 jobs already lost under this Government?

John Swinney (Scottish National Party, Perthshire North)

I can appreciate the issues that Anne McTaggart raises. I simply point out to her that local government in Scotland has been treated fairly by the Scottish Government compared to local government south of the border. Until 2012-13, the Government had received an increase in its budget of about 6.4 per cent and local government got an increase of 8.9 per cent. That indicates that local government did better out of the budget than the Scottish Government did.

Of course, Anne McTaggart is free to argue that local government should get more money, so I look forward to the Labour Party making a budget proposal that says how much more money local government will get. However, I gently point out that, every year that the Labour Party has come to the Parliament and complained about the level of funding for local government, it has never, in private to me or as part of the budget negotiations, advanced an argument for giving local government more money. I look forward to that changing this year, but I point out that, in all the years that I have been finance minister, the Labour Party has never asked me to give more money to local government as part of the budget negotiations.

Kenneth Macintosh (Labour, Eastwood)

Will the cabinet secretary provide the Parliament with further information on what is included in the 5 per cent cap on his revenue-funded investment programme? For example, would the local authority contribution to an NPD schools project be included in that 5 per cent cap?

John Swinney (Scottish National Party, Perthshire North)

Comprehensive information is available in the budget document. I have put two new annexes into the budget document that give a whole host of information. Annex A starts on page 168 and annex B starts on page 171 and there is substantive information that sets out what is in the Government’s 5 per cent framework. I certainly would be very happy to discuss those issues with the Parliament, but the information is in the budget document.

Margo MacDonald (Independent, Lothian)

I was glad to hear the cabinet secretary give such a whole-hearted endorsement of the public ownership of water. Could we have a hint in the next draft of the budget as to how he feels about the ownership of the renewables industries that are now being developed? Will they also be in public ownership?

John Swinney (Scottish National Party, Perthshire North)

One of the aspects of the legislative changes that we are bringing forward in relation to the water industry is to enable Scottish Water to be a more active player in the development of renewable energy measures. As a consequence of Scottish Water’s ownership by the Government, those investments will clearly be part of the public assets of the Scottish Government. In that respect, I can give Margo MacDonald some comfort.

Clearly, a lot of other investment in the renewable energy sector is undertaken by private companies. The Government has no proposals to change that arrangement, but having a strong and positive policy framework that supports the development of the renewable energy industry in Scotland is a strong advantage for the Government of Scotland.

Jim Eadie (Scottish National Party, Edinburgh Southern)

Does the cabinet secretary agree that the additional £20 million investment in cycling will be widely welcomed by cycling organisations throughout Scotland? That increase is not an accident but has come about as a result of a Government that is willing to listen and act upon the concerns that were expressed by cyclists in Scotland.

John Swinney (Scottish National Party, Perthshire North)

I appreciate Mr Eadie’s comments. Mr Eadie has been vociferous—along with Alison Johnstone—when coming to see me about cycling and cycling investment issues and I am glad that we have been able to make some progress on that question in the budget settlement. There are opportunities for us to ensure that that money is used effectively to strengthen cycling infrastructure in Scotland and I assure the Parliament that ministers will be keen to do so as part of the discussions around the budget and the implementation of the commitments that we have made.

Enterprise Networks

Tricia Marwick (None, Mid Fife and Glenrothes)

The next item of business is a debate on motion S4M-07643, in the name of Fergus Ewing, on enterprise networks. I call Fergus Ewing to speak to and move the motion. You have 13 minutes, minister.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I warmly welcome the Cabinet Secretary for Finance, Employment and Sustainable Growth’s announcement on the budget. As he outlined, the Government continues to make sound financial investments in Scotland’s future despite the on-going and unprecedented tight budget settlements that are being handed to us by the Westminster Parliament.

We can see positive signs of global economic recovery gaining traction, such as growth in emerging markets. We have also had recent positive developments in the Scottish economy. For example, youth unemployment has fallen by 2 per cent over the year and there have been positive business surveys, such as the Ernst and Young 2013 United Kingdom attractiveness survey, which showed that, in two of the past three years, Scotland has been the top-ranked country or region outside London for securing foreign direct investment—FDI—projects. In 2012, Scotland’s FDI projects were up by nearly a half from 2011 to 76 projects, which is the highest number in 15 years, whereas the number of FDI projects that most English regions, excluding London, secured declined in 2012. Investments in England outside London were 24 per cent below their 2010 level, a decline that has coincided with the closure of the regional development agencies and the switch to local enterprise partnerships. In contrast, Scotland, Wales and Northern Ireland recorded large rises.

Our performance and economic recovery can be clearly linked to the actions that we have taken. We are investing decisively in Scotland’s economic growth. We are working through our enterprise and skills agencies and closely with our partners in local government to support businesses to help them grow, internationalise and export, while helping our people to take advantage of the opportunities that will follow. For example, a Ross-shire business that began life in a garden shed has signed a deal with China’s largest online training provider. The directors and founders of Dingwall-based TEFL Scotland, Joe and Jennifer Hallwood, who now employ 13 staff, will be working with the Zhi Bo Hong Yuan Co Ltd—I hope that I have pronounced that correctly—to develop and promote distance and classroom training as well as international cultural exchanges for English teachers across China.

The role of our enterprise agencies is a key element of the distinctive approach that we take in Scotland. Their work in supporting Scottish businesses aims to increase exports and productivity and to ensure that Scotland continues to have sustainable economic growth. A comparison with recent developments south of the border, where the coalition Government has abolished the regional development agencies, shows that our approach is the right one. Further, we understand that the return on investment for every £1 spent by the enterprise network is approximately £6. Scottish Enterprise anticipates that, over the next decade, the net additional return on gross value added from its proposals will be about £5.75 billion.

Some of those statistics are estimates, so they might be right and they might be wrong, but it is clear that, overall, the performance thus far has been strong, and we are reasonably entitled to assume that the agencies remain on the right track and that their performance will be equally good in future.

Tavish Scott (Liberal Democrat, Shetland Islands)

While the minister is on the subject of statistics, one statistic that his Government is using at the moment is that 75 per cent of people in the Highlands and Islands will benefit from the investment in broadband upgrades that is to take place next year and the year after. However, does he accept that it is more important to invest in the 25 per cent of households and businesses that do not have access to broadband or that are on dial-up speeds? Will he bring his office to bear on that subject, rather than just ensuring that those who already have broadband get something better?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Tavish Scott raises a significant point that takes up a lot of time and consideration. I recently met with the Highlands and Islands Enterprise team that is involved in the broadband exercise and with representatives of BT. The issue is close to the heart of all HIE officials, as they are all citizens, too. As Tavish Scott well knows, particularly in tourism, it is difficult for a business to be successful if it is not on broadband. Ten years ago, broadband might have been a luxury or add-on, but now it is a sine qua non of success, if I may use a Latin phrase, so we will certainly be pursuing those matters.

Our success has been recognised in not altogether likely places. The Financial Times ran an editorial that said:

“The ‘Team Scotland’ approach adopted by the devolved Holyrood government and its enterprise agencies has helped to attract high-profile investments over the past year in spite of the tough economic environment ... While parts of England are still struggling to adjust to the abolition of the regional development agencies, Scotland has benefited from stability and continuity offered by Scottish Enterprise”.

In October 2012, following a regional analysis report into UK public expenditure, one of the report’s authors said:

“An investor looking at the North East”

—the north-east of England, that is—

“has to traipse round the whole of the North East knocking on a variety of doors. They go up to Scotland, they go and see Scottish Enterprise, it sorts out grants for the land, it sorts out grants for training, it sorts out all of the support that they require and that obviously makes it a whole lot easier for them.”

Scottish business supports our approach, too. Iain Pitman, the chairman of Arran Aromatics, said that his company has

“enjoyed fantastic support from Highland & Islands Enterprise, Scottish Enterprise and Scottish Development International over the past years and we hope these positive working relationships will continue to support further international growth and help take Arran Aromatics from a £5.2m business to a truly global brand.”

The role of account management is important, and I want to showcase that in the debate, with—I hope—support from colleagues across the political spectrum. Scottish Enterprise works with approximately 10,000 Scottish businesses, providing support to help them to grow through innovation, access to finance, exporting, leadership and other key business support areas.

More than 2,000 of those companies are account managed, which ensures an approach that is focused on and targeted at those that can deliver the greatest growth. It makes sense to focus the greatest attention—and taxpayers’ cash—on those companies that have been identified as having the greatest growth capacity. Plainly, we cannot support every company with grants, so we have used that method of prioritisation, and I hope that we can, together, endorse that methodology once again today.

Over the period from 2008-09 to 2011-12, it is estimated that 1,120 companies took part in the evaluation. They achieved a net additional increase in turnover of £1.45 billion, contributing net additional gross value added of £575 million to the Scottish economy. Multiplier effects through supply chains and spending by employees are estimated to have contributed an additional £535 million GVA. The total net additional GVA over the period is therefore estimated at £1.1 billion—£1,100 million—which was generated as a result of account management activity. That is pretty significant.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I am grateful to the minister for giving way. We heard some interesting evidence this morning at the Economy, Energy and Tourism Committee—I am referring not to the minister’s evidence, which was interesting in itself, but to the evidence that we heard later from those who are involved in the entrepreneurial arena on the question of account-managed companies.

The witnesses were full of praise for Scottish Enterprise and account-managed companies, but they said that there was an issue with the selection of companies for the programme. Would the minister care to tell us something about how that process might be improved? It is very easy to say that we should select the companies with the greatest potential, but who does the selection, and how does the minister ensure that he always gets the right people into the pipeline?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

That is a perfectly valid point, and I am keen—or at least willing—to look at the process again. Plainly, any gatekeeper process must be fixed and certain; if it is too vague, it is not much use. On the one hand, fixing an amount of turnover is open to criticism for being arbitrary—which it is; on the other hand, that gives an element of certainty and clarity, so that endless arguments do not arise about who is entitled to be in and who is not.

That said, turnover is not the only yardstick. Some companies with no record of profits and growth in turnover—in the area of life sciences, for example—are accepted for account management where they plainly have a potentially world-beating product. There is, therefore, an element of flexibility.

This is perhaps not the time to go into all the details, but I am happy to work with members in all parties to look at the issue. My feeling is that we have got the process right, but if there has been criticism from business in committee this morning, my officials will look at that evidence. I am happy to come back to members if they have any specific suggestions in that respect.

Over the period of the evaluation, 6,800 net additional direct jobs were created, with 8,330 created through multiplier effects. The total net extra jobs was therefore 15,130—the fact that more than 15,000 people have a job at least in part because of SE’s account-management services merits mention in the debate—which suggests a GVA return of around £5 for every £1 of SE spend over the four-year period. Account-managed companies currently employ 300,000 people. In the first quarter of 2013, 43 per cent of those companies reported that they had recruited more people, including young people.

Regarding the employers’ views of account management, the evaluation found that 90 per cent of the employers were satisfied or very satisfied with the support that they received; 80 per cent did not think that they could find that support elsewhere; 80 per cent said that the support had increased their level of turnover; 40 per cent said that SE support had helped them to increase international sales; 50 per cent said that the support had helped them to enter new international markets; 75 per cent said that their innovation spend had increased as a result of SE support; and 70 per cent reported that their productivity had improved. Those are good results.

Elaine Smith (Labour, Coatbridge and Chryston)

Minister, you are approaching your last minute.

Jenny Marra (Labour, North East Scotland)

Will the minister take an intervention?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Sorry, I have oodles—to use a non-ministerial technical expression—of my speech left.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Looking north, I should point out that, over the past five years, Highlands and Islands Enterprise has built a portfolio of accounts comprising 596 business and social enterprises in 50 communities. HIE has also achieved great success, as has VisitScotland, to which I will perhaps return in my closing speech.

To conclude, let me pay tribute to every single person who works in our enterprise agencies. I have met a great many of them in my visits with them to companies in all parts of the country—just about—and they do a great job for Scotland. Today is an opportunity for us to thank them, to pay tribute to them and to see how, through positive suggestions, we can perhaps do even better in future.

I move,

That the Parliament notes the challenging economic conditions of recent years, the emerging signs of the global economic recovery and the vital role that Scotland’s enterprise agencies play in ensuring that its economy responds to these challenges and opportunities; supports the enterprise agencies in their role of delivering the Scottish Government’s purpose of sustainable economic growth, and recognises the importance of the account management and other direct support that they provide to businesses and key sectors across the country to help them grow, create employment, increase exports, boost innovation and help Scotland become more globally competitive.

Jenny Marra (Labour, North East Scotland)

Like the minister, I put on record the Labour Party’s support for the work of Scottish Enterprise and all our enterprise networks in developing Scotland’s businesses and economy. When I had the pleasure of meeting Lorne Crerar of Highlands and Islands Enterprise just a couple of weeks ago, I was impressed to hear about HIE’s on-going work and its ambitions for the future.

The evaluation that is the subject of today’s debate highlights much of the good work that Scottish Enterprise and our other enterprise agencies undertake and the rewards that they bring to our economy. In particular, the creation of new jobs and the increase in turnover by Scottish companies will be warmly welcomed by members across the chamber. However, it is important to sound a note of caution that we cannot be complacent, especially in the current economic environment. I am sure that the minister would agree with me on that.

The Government’s motion rightly points out that Scotland has not been immune to the global recession. With long-term youth unemployment remaining stubbornly high, unemployment among women rising and part-time, temporary or zero-hours jobs becoming an increasingly common feature of our economy, we on the Labour benches believe that now is perhaps the right time for the Government to review how our enterprise agencies interact with each other and with local and national Government in order properly to assess how they are delivering against our shared aim of building an economy that is equitable and sustainable and that consists of a skilled workforce doing high-quality jobs under good contracts.

Maureen Watt (Scottish National Party, Aberdeen South and North Kincardine)

What the member has just suggested was very much a feature under the Labour/Liberal Scottish Executive, when Scottish Enterprise had no clear direction. Since the Scottish National Party Government came to power, there has been very clear direction on where Scottish Enterprise should go. Is that not why Scottish Enterprise has been successful?

Jenny Marra (Labour, North East Scotland)

I had hoped to strike a conciliatory note—

Jenny Marra (Labour, North East Scotland)

I was about to go on to propose a review of the agencies. Since 1999, Scottish Enterprise has operated effectively, but it has perhaps not always been as effective as we would like.

As I have said, we cannot be complacent; we must ensure that the money that we spend on our enterprise agencies works to its full potential, expands our economy and gets people the best jobs. That is what I am proposing this afternoon.

When the Scottish National Party came to power in 2007, it announced reforms to the operation of our enterprise agencies that resulted in a number of changes to Scottish Enterprise’s governance and remit, including the transfer of its skills activity and Careers Scotland to Skills Development Scotland and responsibility for business gateway to local authorities. However, since 2007, we have had very little analysis of the effectiveness of those changes, particularly in the light of our challenging economic—[Interruption.]

Jenny Marra (Labour, North East Scotland)

We need to examine the impact that the reforms have had on workers and business and we believe that now is the right time for a pulse-check.

As well as noting the increased turnover and jobs growth for businesses that are account managed by Scottish Enterprise, the evaluation that was published on Monday also noted that more than 300 companies have been stuck in transition between business gateway and Scottish Enterprise’s account-managed process, having been unable to access the intensive support to be able to grow. Although Monday’s report concluded that the pipeline is not working as effectively as it could be, it could not say whether the problem lay with the kind of companies that are being put forward or the kind of support that they were being offered. A Government review of its 2007 reforms could help to clarify such identified areas for improvement and make it easier for the right businesses to get the right support.

Our enterprise agencies provide a powerful combination of support for business and support for workers. Although the creation of Skills Development Scotland removed the skills function from Scottish Enterprise, the move was designed to bring even greater focus to providing workers with the knowledge and ability that our industries require. The modern apprenticeship scheme, in particular, was designed to allow the Government to deliver on its youth employment strategy and opportunities for all commitment. However, we know from a report published last week by the Equality and Human Rights Commission that those opportunities could be more equitable. The report concluded that less than 0.5 per cent of modern apprenticeship schemes are being taken up by disabled people in Scotland, despite the fact that 8 per cent of 16 to 24-year-olds have a disability, and that less than 2 per cent of modern apprenticeships are being taken up by ethnic minorities, despite the fact that 4 per cent of 16 to 24-year-olds in Scotland are from an ethnic minority background. Finally, it concluded that there is no evidence of women entering traditionally male apprenticeships, despite the many more males who are taking up traditionally female apprenticeships.

Such analysis is important because it shows whose skills we are developing and the kind of labour force we are building. The modern apprenticeship scheme is just one example of our enterprise agencies, our local authorities and our businesses working in partnership to deliver on key Government pledges, and we believe that a review of that partnership working, in which lessons can be learned from good practice, could lead to a workforce where opportunities are available for every person.

That recommendation was reinforced in a 2011 Economy, Energy and Tourism Committee report on the purpose of our enterprise networks, which stated:

“It is of critical importance at this early stage of economic recovery and for the future that industry is able to articulate its needs and receive a joined up skills response, based on local, regional and national mapping of need.”

Presiding Officer, can you tell me whether I have seven or nine minutes?

Jenny Marra (Labour, North East Scotland)

Thank you.

The Economy, Energy and Tourism Committee report examined our enterprise networks as a whole, the gaps in partnership working and the proactive steps that Government could take with local authorities and enterprise agencies themselves to improve their working. It concluded by saying:

“The Scottish Government now needs to give serious thought to what shape enterprise and regeneration support in the future might take.”

Our future challenges for growth and regeneration are clear. We have a workforce that relies increasingly on part-time, zero-hours and temporary work. We have unaddressed long-term youth unemployment, and women are still bearing the brunt of the recession.

Enterprise networks have a significant role to play in overcoming those challenges, and the report that was published on Monday shows that the networks can be successful, but we need to ensure that the Government, local authorities and businesses work together as efficiently and as effectively as they can, so that we spend the public money as effectively as we can and get the right support to those who need it.

I am sure that the minister agrees that there is no room for complacency. A Government-commissioned review of our enterprise networks could present significant opportunities to promote a sustainable and equitable economy that is equipped for further growth.

I move amendment S4M-07643.1, to insert at end:

“, and calls on the Scottish Government to conduct a review of the work and functions of enterprise agencies, including the work of Business Gateways in local authorities, and how they support and enhance its economic strategy and, given the current economic climate, how enterprise agencies are contributing toward sustainable economic growth”.

Murdo Fraser (Conservative, Mid Scotland and Fife)

It was in 2007 that I previously held the economy and enterprise brief for my party, but it is almost as if nothing has changed in the interim. Here we are, back debating Scottish Enterprise again. I well remember all the debates that took place years ago in which Scottish Enterprise was regularly a kicking boy. I confess that I did my fair share of kicking in those days, and I was not alone in that. Front-bench spokesmen from the minister’s party, which was then in opposition, were more than happy to put the boot in regularly.

However, times have changed and the enterprise networks have changed with them. We now see much slimmed-down organisations that have smaller budgets, fewer responsibilities and a much more focused approach.

The debate is held in the week when a new study has come out about Scottish Enterprise’s account-management approach. The study is largely positive, although it highlighted concerns about the low level of churn in the account-management portfolio, a slow transition from the business gateway growth pipeline to account management and shortages of management and performance data for account-managed companies.

At this morning’s Economy, Energy and Tourism Committee meeting, we heard evidence from WeDO Scotland that there is a lack of information about who can apply to be part of Scottish Enterprise’s high-growth programme and that account managers with relevant experience and expertise need to be aligned with the high-growth companies that are accepted on to the programme. Companies to which account managers from relevant backgrounds are assigned have had positive experiences, but that has not always been the case. We also heard evidence about the disconnect between business gateway and the transition to account-managed programmes, which Jenny Marra picked up on, and about a general lack of knowledge of the help that is available to small and medium-sized enterprises.

There are improvements to make, but they should not detract from what is a positive story overall. There remains a deeper philosophical issue about picking winners, which I debated with the minister a few moments ago. I am sure that that debate will continue.

In her amendment, Jenny Marra makes the case for a full review of the enterprise agencies’ work. I listened with great interest to the case that she made, but I am not convinced at this stage that a review is the right thing to do. We had a major restructuring and upheaval in the enterprise networks not long ago. That has had time to bed down and, overall, the change has been positive. We should keep a close watching brief on that, but I am not sure whether a full review to dig that up and examine the roots is the right way to go at this stage.

My amendment raises a specific issue in connection with Scottish Enterprise—that of the intermediary technology institutes. Members with long memories will recall that, in 2002, the then Scottish Enterprise chief executive, Robert Crawford, set up the ITIs with the laudable aim of helping to commercialise research from Scottish universities. Three ITIs were established—in life sciences, energy and digital media—with offices in Dundee, Aberdeen and Glasgow respectively.

The then First Minister, Jack McConnell, was fulsome in his support of the new initiative. He said:

“Scotland’s Technology Institutes will have a crucial role in making the giant leap to more world-beating companies and high-quality jobs.”

It was not just members of the then Scottish Executive who were supportive. Alex Neil, the then convener of the Enterprise and Lifelong Learning Committee, said:

“they play a vital role in creating the industries of tomorrow”.

Sadly, the ITIs had a chequered history. In the first two years, there was a high level of turnover of senior managers, amid complaints that Scottish Enterprise was cutting back on its initial funding promises. There was a major restructuring in 2007, and in 2009 the operation of the ITIs was brought back in-house. In 2010, Scottish Enterprise took the decision to stop investing in new projects altogether. The total spend over that period was some £231 million. The value of the intellectual property that has been generated to date is assessed to be a mere £600,000. On any measure, that represents a spectacular failure.

This week, I asked the Auditor General, Caroline Gardner, to carry out an audit of the performance of the ITIs. When such large sums of public money are involved, it is important that we understand exactly what went wrong, not least so that we can learn lessons for the future.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I have been aware of Mr Fraser’s concerns about the matter since yesterday, when his amendment was lodged. I would be more than happy to facilitate a meeting with Paul Lewis of Scottish Enterprise, at which Mr Fraser would have the opportunity to discuss his concerns and the detail of them at some length.

Of course, the Auditor General is independent of the Scottish Government and will make her own decision on how to pursue the matter.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I am grateful to the minister for that helpful offer, and I look forward to engaging directly with Scottish Enterprise.

I raised the issue directly with Lena Wilson, the chief executive of Scottish Enterprise, in May, when she came to the Economy, Energy and Tourism Committee, and she subsequently provided me with a study that had been carried out by the consultancy Frontline. Although it makes interesting reading, it does not specifically address the performance of the ITIs, so I think that further studies are required.

I applaud ambitious programmes and accept that, on occasion, risks will be taken that do not pay off when public money is spent. I am not looking to damn anyone for mistakes that may have been made, but I think that we need to obtain a proper understanding of what went wrong, not least so that we can learn lessons for the future and avoid the Scottish Government and its agencies repeating the mistakes of the past.

I move amendment S4M-07463, to insert at end:

“, but believes that all public agencies must be able to demonstrate good value for public funds expended; notes that around £231 million was spent on Intermediary Technology Institutes (ITI) with very little return, and calls for a full independent audit of ITIs and their investments so that lessons can be learned for the future”.

Mike MacKenzie (Scottish National Party, Highlands and Islands)

On the afternoon of the publication of the draft budget, it is entirely appropriate for us to debate a motion on the enterprise networks. It is helpful, I think, to place the motion in context. The context is that we are now, at long last, tentatively emerging from what some commentators have described as the deepest recession for more than a century.

The performance of our enterprise agencies must be considered against that background, and it is against that background that the results that they have achieved can only be described as staggeringly successful. A payback that achieves more than £5 of benefit for every public pound that is spent is a worthy achievement in any climate; in the economic climate of recent years, it is remarkable.

The Economy, Energy and Tourism Committee has had the opportunity to question senior officials from the enterprise agencies on several occasions over the past two years, and I know from those sessions that the evidence of the effectiveness of our enterprise agencies can stand up to scrutiny. I pay particular tribute to the robust methodology that Scottish Enterprise has developed to analyse its effectiveness. It takes a courageous and confident organisation to subject itself to such robust self-analysis, and I am convinced that that is part of the key to its success in recent years.

The clear goals and direction that the Scottish Government has set are another part of the reason for the success of our enterprise agencies. This is about economic understanding and competence. The great economist David Ricardo made the case very well in his theory of comparative advantage, which can perhaps be summarised as, “Do what you are good at and leave others to do what they are good at.”

In helping businesses with high-growth potential and in facilitating sectors in which we excel, we are following that wisdom. For many months now, that has been seen to pay off as a range of statistics have steadily shown that we are generally outperforming the economy of the UK as a whole. Employment is higher, unemployment is lower, growth is returning faster than it is to the UK as a whole and, over the long term, Scotland is performing extremely well indeed.

Just as the Scottish Government is following a course of economic wisdom, sadly, George Osborne is ignoring the wisdom of perhaps England’s greatest economist, John Maynard Keynes, and we are all paying for the chancellor’s economic ineptitude. Think how much more we could achieve in Scotland if Mr Osborne had not cut our capital budget by 26 per cent. Think how much better our oil industry could be performing if he had not mounted his ill-conceived tax grab.

Murdo Fraser (Conservative, Mid Scotland and Fife)

On a point of order, Presiding Officer. I understood that the topic for debate was Scotland’s enterprise networks, on which we have a motion and amendments before us. Is it in order for a member to address a subject that is completely outwith the terms of the debate?

Mike MacKenzie (Scottish National Party, Highlands and Islands)

Think how much better our renewables industry could be performing if George Osborne was not dithering over energy market reform, causing huge uncertainty and an investment hiatus. Think, too, how much better we could do if we could reduce VAT on tourism and if we could reduce air passenger duty. There would be more enterprise.

Think how much better we could do if we could work with the oil and gas industry to provide a stable and consistent tax regime. That would bring more enterprise and more success for our enterprise companies. Think what we could do with the prudent use of borrowing powers following Keynes’s counter-cyclical wisdom, boosting the economy in times of recession and leaving a lasting legacy of better infrastructure. There would be more enterprise. Think how much better our enterprise companies could do and how much more they could achieve.

Margaret McDougall (Labour, West Scotland)

Given that the economy is now in a very different place from where it was in 2007, does the member not agree that this is the time for a review of the enterprise agencies?

Mike MacKenzie (Scottish National Party, Highlands and Islands)

I disagree entirely. I think that they are doing staggeringly well. Any review—if there is one at all—should be conducted on the basis of understanding how on earth they are managing to produce incredible results against such a difficult background.

Jenny Marra (Labour, North East Scotland)

Will the member take an intervention?

Mike MacKenzie (Scottish National Party, Highlands and Islands)

The Scottish economy appears, at long last, to be on an upward trajectory. A fundamental and necessary ingredient of the growth part of the business cycle is confidence, and the opportunities of next year’s referendum are steadily becoming apparent and are a contributory factor in this growing confidence. That confidence, in turn, will help us to reach an escape velocity in which our enterprise companies will thrive and we will, at long last, throw off the drag factor of the economic incompetence of the UK Government.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

I will try to introduce a little balance to the debate, following the hyperbole of the previous speaker. In the interests of balance, I recognise and support many of the priorities and successes of the enterprise agencies. However, equally, I think that it is important to identify the problems and gaps that justify Jenny Marra’s call for a review.

I welcome many of the enterprise agencies’ activities—for example, the focus on offshore renewables, which I hope will benefit my constituency in due course. I recognise that Scottish Enterprise is making a great contribution to that. I was also happy to recognise the successes in internationalisation when we had our debate on Scotland and China.

Finally, and most important in the context of today’s debate, I and the Labour Party more generally welcome the focus on growing business and account management. One reason why we support that, of course, is that we started it; we instituted it through the smart, successful Scotland strategy of 2001, which was centred on the idea of growing businesses. We absolutely accept the principle of that. As the report that evaluated account management came out this week, it is right that we are focusing on it to a large extent in the debate.

I hope that, in winding up, the minister will answer the question on the budget statement that John Swinney did not answer. I asked him what the effect of the transfer of £41.8 million from revenue to capital would be on the enterprise budgets next year. I do not necessarily say that that is a good or bad thing, because I do not know what the precise detail of that is, but I have a suspicion that account management must have a large resource budget and worry that that transfer may have an effect on account management. Perhaps the minister will explain that in winding up.

The report that came out this week is quite a balanced document in its way. I point out to the minister that it says on page 114:

“The common perception that SE actively account manages 2000+ companies is inaccurate”.

I think that the minister will remember saying that in his speech, but that is a quibble and a detail, in a sense.

The more basic point to make is that we have to think of the context of the report. The evaluators went out to talk to the people who get a great deal of help from Scottish Enterprise. It is as if someone did a survey of my constituents and identified the people to whom I have given the most help in the past year. I am sure that 90 per cent of them would say, “He’s great.” Far be it from me to say whether 90 per cent of all my constituents would say that, but members can get the distinction. That is part of the report’s methodology. People who got support were talked to.

One of the concerns in the study from the Economy, Energy and Tourism Committee two years ago, I think, was that companies with the potential to grow could be left out in the cold. I think that Murdo Fraser made that point in his intervention. That report was especially worried about the gap that might exist between the business gateway and account management. In a way, that was picked up in the evaluation report.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

Mr Chisholm has made many good points and I am happy to pursue some of them, but I suggest to him and other members that, if they come across any company that they think should have account-managed services and they write to me, I will ensure that the matter is fully investigated.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

As ever, the minister is helpful. I thank him for that.

The next word that I had written down was “review”. The report this week that we are focusing on talks about reviewing the business gateway pipeline

“to consider whether pipeline companies have access to the level of support needed”.

That is not the only place in the report in which the word “review” is used. Therefore, I do not think that people should be so surprised by what Jenny Marra proposes. She is not proposing it just because of this week’s report, which is, in general, as I have said, perhaps too favourable to Scottish Enterprise. However, it talks about reviewing several aspects of what currently happens. Ministers and Murdo Fraser should bear that in mind.

This week’s report is worried about

“the slow transition from the Business Gateway Growth Pipeline to account management”

and about

“The limited ‘churn’ in the account management portfolio.”

It raises many issues and concerns while there are also positive reports.

A majority of the improvements are generated by a small group of companies. I was surprised to read that 10 per cent of companies deliver half of the gross value added. That is great, but it reminds us that there are many other companies that are not making the same progress or, indeed, are not being helped at all.

Malcolm Chisholm (Labour, Edinburgh Northern and Leith)

I am in my final minute, so I cannot make all the other points that I wanted to make. However, I was struck by the report’s statement that Scottish Enterprise needs to

“improve its internal data capture and monitoring systems.”

In my mind, that connected with some of the equality issues, because there is a little paragraph in Scottish Enterprise’s business plan about how it is very much focused on equality, but there is very little indication of that in either its business plan or the evaluation report. Indeed, if we were to go by the pictures in its business plan, there would be few, if any, women-led businesses in Scotland, which is not the case. I think that Scottish Enterprise needs to focus on that to a greater extent and capture that data so that it focuses on equality issues as well as the issues of growing companies and the economy.

Chic Brodie (Scottish National Party, South Scotland)

Nothing, but nothing—well, almost nothing—and I say this from years of domestic and international business experience, makes the blood flow more than entrepreneurial success. The concept, the design, the development, the making and the engineering of both hard and soft products, and, above all, the marketing, the selling and the servicing of the same are an infusion that makes you want more. Unsurprisingly, therefore, I support the main thrust of the motion. I do, however, place a question mark over the implied emergence of global economic recovery. If Mr Fraser will bear with me, I will get to the enterprise issue in a minute.

Recent predictions of a slowdown in Chinese and Indian GDP and a slowing in United States employment, aligned to inflation forecasts, puts one somewhat in the Jeremiah camp. Here in the UK, Osborne-esque ebullience on the economy is just a fig-leaf. If I may, I address that particular issue to Margaret McDougall. Total debt in the UK—personal, public and corporate—stands at £1.40 for every £1 that we earn. That is down from £1.60 over the past year, but it is set to rise again because we have house mortgage lending instead of the diversion of investment lending as intended to much needed access to finance for our SMEs. Here comes another housing bubble, just in time for the next Westminster election.

However, leaving the Jeremiah instinct aside, I think that the situation provides Scotland with a divergent economic opportunity to be realised via its various good enterprise networks after a yes vote next year. Although it will be easy to be critical, as some will be, constructive criticism should be set against a generally improving scenario because of anti-austerity actions, as were manifest in the excellent budget today. Since 2007, 18,160 new enterprises have been born; six years later 54.7 per cent of them still survive—despite harsh economic conditions—which is 2.7 per cent above the UK average.

In Scotland, there were 2,215 more new business starts in 2011 than in 2009; in Dundee, there were 10 more; in Perth and Kinross, there were 40 more; and, importantly, there were 25 more in South Ayrshire. In terms of the demise of enterprises over the same period, the number for Scotland fell from 15,085 to 14,110; in Dundee, the number fell from 320 to 300; in Perth and Kinross, it fell from 480 to 440; and, importantly, it fell in South Ayrshire from 335 to 290. In general, despite the financial environment, performance is up and recovery in Scotland is working in the face of Westminster austerity. All the data, of course, are courtesy of the Office for National Statistics.

Now, are we complacent? Of course we are not. Can the agencies deliver even greater efficiency in national economic growth? We heard this morning from witnesses at a meeting of the Economy, Energy and Tourism Committee about the need for greater localism and better communication between the business gateway and other agencies. The varied locations and organisational construction of the business gateways provides in some cases a patchy approach to cohesion and a fit with the national enterprise strategy. However, I feel sure that that will be addressed in the not too distant future.

There is little doubt, however, that both Scottish Enterprise and Scottish Development International have played a very significant part in Scotland’s current anti-austerity situation and its positive reaction to rebutting what has been the advance of industrial and commercial recession. There is also their role in raising Scotland’s international profile, underwritten by the Ernst & Young report declaring that Scotland is the place in the UK to be for inward investment. Our stock is higher, as is our profile and quality, and our export potential and performance continue to rise. The enterprise networks’ pursuit of the Government’s economic strategy, concentrating and focusing on winning sectors, is a totem to management and people in organisations and will continue to be an exciting entrepreneurial journey.

Although it is not yet a formal Government enterprise network agency, it would be remiss of me not to recognise the burgeoning social enterprise and third sector network. That important enterprise sector grew by 28 per cent in the past two years and we were told this morning that it has 335 routes to finance. It needs meaningful business support, but it is increasingly a key enterprise network. With the impending public procurement and community empowerment and renewal bills, it will be even more important as the days go on.

In the face of the most titanic of recessions, Scotland has been open for business, and the contribution of the enterprise agencies, notwithstanding their on-going review of efficiencies and organisations, has been a bulwark in that effort.

Maureen Watt (Scottish National Party, Aberdeen South and North Kincardine)

I am pleased to have been called to speak in this debate as it gives me an opportunity to highlight the huge contribution that companies in the north-east—not just in the oil and gas sector, but in the food and drink sector—make to the Scottish economy and, for now, to the UK economy, and to discuss the ways in which Scottish Enterprise has helped many of them.

The statistics that were announced over the past few weeks are impressive. Although there is still a long way to go, employment in Scotland is at its highest level in almost five years, economic inactivity dropped by 20,000 over the past quarter and we have the highest youth employment rate of any nation in the UK, at 57.2 per cent compared with the UK average of 49.8 per cent.

Scottish Enterprise has played an important role in driving economic growth in the Scottish economy, and its ambition is to grow the number of companies under its account-managed arm. Some 300 of its account-managed companies are in the oil and gas sector and about 250 are in the food and drink industry, with 46 of those in Aberdeen and Aberdeenshire.

An example of the help that Scottish Enterprise has given is its work with Hydrasun in my constituency, where the First Minister launched the oil and gas strategy. Hydrasun is a leading supplier of fluid connectors, hoses, fitting instrumentation and process control products, coupled with added-value services including integrity management, primarily to the oil and gas sector but also to a wide range of secondary sectors including the petrochemical, marine and defence industries.

Scottish Enterprise has supported Hydrasun to export to 58 different countries. Interestingly, it employs a number of linguists to help with that. Scottish Enterprise has helped with an acquisition in Brazil and has helped to drive Hydrasun not only to export but to establish operational bases and manufacturing facilities in Angola and the United Arab Emirates. The company also services the Gulf of Mexico oil industry and has partnership and distribution agreements in Egypt and Thailand. Its truly impressive growth has been helped by Scottish Enterprise.

While Scottish Enterprise has helped by account managing that company and others, it has not helped them on its own. It has worked with Scottish Development International on exports and with local universities on research and development. Many of the quarterly meetings that politicians in the north-east have with Scottish Enterprise Grampian have been at the premises of account-managed companies, and the feedback has been overwhelmingly positive. The advice that has been given has not just been sectoral. Middle managers were initially sceptical about having management skills training with colleagues from other industries, but it proved to be very “worthwhile”. I am sure that it would not have happened without the help and co-operation of Scottish Enterprise.

Work with other organisations has been particularly evident in the food and drink sector. The food and health innovation service, which is based at the Rowett institute of nutrition and health in Aberdeen, directly supports food and drink companies that seek to exploit the burgeoning market for healthy food and drink products, which is estimated to be worth £20 billion in the UK and more than £300 billion globally.

In that regard, Scottish Enterprise works with Scotland Food and Drink and, for example, the James Hutton Institute, in my constituency, and its crop research arm in Dundee, which has helped to develop soft fruit production by introducing new products. Scottish Enterprise also works with other people in the food and drink sector, of course.

I am particularly interested in how small and medium-sized companies grow their businesses, access the skills of our university graduates and take on apprentices. The Scotgrad scheme has much merit but needs far more publicity. There also needs to be more co-ordination between the business gateway and Scottish Enterprise, with a view to driving companies into greater growth, as many members said.

Scottish Enterprise is on the right track. I have met no one in the agency who is in any way complacent or thinks that it cannot continue to improve its service to the Scottish economy and Scottish companies. Is the study that has been mentioned not an independent review, on which I am sure that Scottish Enterprise can build?

Margaret McDougall (Labour, West Scotland)

Scotland’s enterprise agencies are a vital tool in helping Scotland to meet the economic challenges that we face. They are integral to the creation of a sustainable economy that fosters innovation and investment.

I welcome the publication of the “Evaluation of Scottish Enterprise Engagement with Account Managed Companies”, but the report was commissioned by Scottish Enterprise and is fairly self-congratulatory. As Jenny Marra said, Scottish Enterprise has not been independently reviewed since 2007. I support calls for such a review. If the agency was scrutinised by, for example, the Public Audit Committee, we could establish how well it is performing in delivering the Scottish Government’s economic strategy.

It says in the report that the account management model that the enterprise agencies use is effective, provides value for money and should remain largely unchanged. As the minister said, 80 per cent of people who took part in the telephone survey are not confident that they would be able to source comparable support from anywhere other than Scottish Enterprise.

An issue that SMEs raise time and again, which was raised in this morning’s meeting of the Economy, Energy and Tourism Committee, is access to finance. As it says in the report,

“It has been increasingly difficult for many companies to obtain bank loans and/or overdraft facilities to manage cash flow issues or facilitate growth.”

In the area that I represent, Sercon Support Services Ltd is a successful, award-winning small business—indeed, it is used by Scottish Enterprise as a model of best practice. Members might expect such a company to be able to get funding to expand, but Sercon struggled to find further investment funding. It is worrying that such a strong company, which has Scottish Enterprise’s support and put forward a robust business case, was rejected by funders. We must ask how many smaller, less well-established companies are being rejected.

We need to do more to ensure that support is on hand for small and medium-sized businesses, which are finding it hard to secure funding from banks as a result of stricter lending criteria or simply because banks are risk averse. Banks need to be clearer about the sectors that they will support and what they are looking for in business plans.

I am pleased to say that Sercon eventually secured funding. However, the company had to go through a protracted process, with many disappointments along the way.

The Scottish Government and the enterprise agencies need to do more to support businesses when they apply to banks for loans, particularly if the business provides a direct economic benefit to the area, as Sercon does, by safeguarding and creating employment opportunities.

Perhaps the minister will say today what the Scottish Government and Scottish Enterprise are doing to address such issues and whether it is possible to extend the lending portfolio of enterprises agencies, to ensure that companies, especially start-up and smaller businesses, can access much-needed finance so that they can grow or become better established.

It is not just financial support that SMEs need but advice on managerial issues, accountancy and a broad spectrum of other issues. There is also a need to focus on areas of high unemployment such as North Ayrshire, which, according to Scottish Enterprise’s statistics from April 2012 to March 2013, had only two companies—out of 268 in Scotland—that were considered to have growth prospects. Will more support be considered for areas that are economic black spots?

That said, according to the report, from 2008-09 to 2011-12 the account management model has contributed £1.11 billion of additional economic value to the Scottish economy and Scottish Enterprise has—as the minister stated earlier—created and/or safeguarded 15,130 jobs. We just need to ensure that that support is better targeted, perhaps towards women and minority groups and towards SMEs rather than higher growth companies.

In my area, I have seen the direct benefit of an enterprise agency’s work to safeguard jobs. Highlands and Islands Enterprise has played an integral part in stopping the closure of the university marine biological station at Millport by working with the Field Studies Council, North Ayrshire Council, Cumbrae Community Development Company and the wider community to secure its future. There is no doubt that the closure of the marine station would have devastated the local economy, with the loss of 30 quality jobs and up to £2 million removed from the local economy.

Although there is some evidence that Scottish Enterprise is supporting the economy, there remain questions on whether it could perform better, particularly in respect of support to small and start-up businesses as well as in areas of direct economic need.

I support the Labour amendment.

Kevin Stewart (Scottish National Party, Aberdeen Central)

I had the great pleasure of spending a large part of last week at the offshore Europe conference at the Aberdeen Exhibition and Conference Centre, which hosted well over 50,000 delegates and 1,500 stands, with not only multinational companies but small companies, some of which are just starting out.

I know that the minister spent quite a lot of time there—I know that because I saw him. During the two days that I managed to attend, many folk said that they had had the opportunity to speak directly to him. That was very much appreciated.

Obviously, there are the big players in the offshore energy market, but there are also the small companies that I referred to. Some companies are moving away from their former traditional markets to enter the oil and gas field.

One question that I always ask when I visit companies is what their relationship is with Scottish Enterprise, whether they have an account manager and what their relationship is with the local council’s economic development team. When I did the same thing a number of years ago as a councillor, the reports back about Scottish Enterprise were normally unfavourable. That has changed dramatically. While there is always room for improvement, the system that we have now is much better than the previous system.

I will make one plea about some of the small companies from outwith the north-east of Scotland that are trying to break into oil and gas. By doing so, I am showing that I am not completely and utterly parochial. Sometimes, account managers from elsewhere in the country do not have the oil and gas experience of those who are based in the north-east of Scotland. I would like to see better flexibility and use of resource. It would be a great boon to account managers if they were to get back-up—and an even greater boon to the companies that are trying to break out of their traditional markets and into oil and gas.

I am also enthused by the fact that the VisitScotland expo is coming to Aberdeen in April 2015. It will showcase the best of Scottish tourism and will involve tour operators and travel operators from around 40 countries—from as far afield as India, Russia and the middle east as well as North America and Europe.

Such events are often times when Scottish Enterprise comes to the fore. It may be a tourism event that is designed to boost Scottish tourism and Aberdeen as a tourist destination but, beyond that, I am sure that many folk who are there will want to do business in this country.

I have listened carefully to what others have said and I think that, sometimes, no matter what side of the constitutional argument they are on, people in this place can sometimes downplay how well we are doing. There was an article on foreign investment in The Economist on 31 August, entitled, “Catching the Scots—why England trails the Celtic fringe”. It is well worth a read.

Speaking about the situation south of the border, the article states:

“Ernst & Young blames government policy. In 2010 the coalition announced that England’s nine regional development agencies would be replaced by 39 local enterprise partnerships (LEPs), voluntary consortiums of local councils and businesses. This was done two years later. It seems to have made things worse.”

It also states:

“In Scotland, Wales and Northern Ireland, where devolved administrations run economic development, the agencies are undisturbed.”

It continues:

“Scotland is simply better at co-ordinating different arms of local and central government to deliver what inward investors want—roads for new factories, planning permissions, training packages for workforces and the like. A Scottish government minister cracks the whip at any laggards.”

I do not know whether that last sentence is true, but I hope that the minister will confirm it when he sums up the debate.

Jenny Marra (Labour, North East Scotland)

Will the member give way?

Kevin Stewart (Scottish National Party, Aberdeen Central)

I am in my last minute—I am sorry.

The article concludes:

“Edward Twiddy, chief executive of the North East LEP, covering Tyneside and Durham, enviously admires his northern counterparts ... But his Celtic competitors are well ahead, and they show no sign of slowing down.”

I think that we could power ahead even further in that regard if we had the full levers of power of a normal, independent Parliament. I am quite sure that, if the minister had that power, we would be doing even better than we currently are.

Tavish Scott (Liberal Democrat, Shetland Islands)

I gently point out to Kevin Stewart, after his great tribute to The Economist, that the magazine once published another article about independence, which was featured on the front page. He might not have been so keen to quote that article in the context of his exposition of what a wonderful magazine The Economist is. Perhaps we should always take these arguments in the round.

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will the member give way?

Tavish Scott (Liberal Democrat, Shetland Islands)

No, you have had your say, Kevin. We listened with great interest but did not give a lot of thought to what you said.

Tavish Scott (Liberal Democrat, Shetland Islands)

A lot of speakers on Mr Stewart’s benches have run down England this afternoon. That is a bit of an unfortunate side to this debate, but I suppose that we will just have to put up with it for the next year. We have heard the independence budget and this is a debate on the independence aspects of the enterprise networks—that is what it is going to be like.

What Maureen Watt said about a clear direction being given to the enterprise networks is absolutely true, which is why I think that the Labour amendment misses the point of the debate. There has never been clearer direction for all the quangos and agencies in Scotland: they are told what to do by the Government of the day.

Like it or not, that is the nature of the quango state that we have in Scotland today—it is absolutely controlled from the centre. The challenge function of the Highlands and Islands Enterprise board and the Scottish Enterprise board that I recall from my time as a minister does not exist in the same way today. That is not just my assessment; it is what board members have told me privately—of course, they could not possibly say those things publicly.

Jenny Marra (Labour, North East Scotland)

Does Tavish Scott agree that the point of my amendment is not to make a point about whether the agencies are Government led but to say that a robust institution that is performing well, such as SE, should not fear further scrutiny to check that public money is being spent most effectively and to support the businesses that need it the most?

Tavish Scott (Liberal Democrat, Shetland Islands)

Let me make a parliamentary point to that reasonable argument from Jenny Marra. The last thing that Scotland should do at a time of difficult public spending cuts is to spend yet more money on consultants and big KPMG-type organisations, who would undoubtedly be commissioned to do the work.

I am not about to say that Mr Fraser’s committee is not doing its job properly, but Parliament’s job is to scrutinise such matters. If people want parliamentary reviews of the structure of the enterprise companies, they should get the parliamentary committees to take it on and conduct a full and proper investigation into the matter.

In fairness, that is what happened in the past. If Parliament did not do much of a job with that, perhaps we should examine ourselves rather than always assume that the right thing to do would be to employ expensive external consultants to examine other areas of public policy.

Mike MacKenzie (Scottish National Party, Highlands and Islands)

Will Tavish Scott give way?

Tavish Scott (Liberal Democrat, Shetland Islands)

No—although I will come to Mr MacKenzie, because he made some really silly points to which I want to reply.

Mr Ewing was looking for ideas, which is a good principle. Let me give him an idea that relates to Scottish Enterprise. As I am sure he is aware, there is a considerable movement worldwide to invest in high-speed rail. The interesting aspect from a Scottish perspective is not so much the track but what the track sits on. In Scotland, at Heriot-Watt University, we have a centre of world excellence in that, which Scottish Enterprise has had a small look at. I thank it for that interest.

Our challenge is not in how to engineer a train that goes much more quickly; it is in the existing track testing. There is a track-testing station at Heriot-Watt University that is a global centre of excellence. The university has just signed a memorandum of understanding with Atkins—the major international engineering business—that can take the work into a new dimension. Indeed, the chief executive officer of Atkins said at the signing of that memorandum on 19 July:

“With 15,000 miles of new high speed track due to be laid in the next decade … we have a Centre of Excellence which is a ‘go-to’ place for design and testing of new ideas such as design of new shape of embankments.”

I hope that the minister will encourage his ministerial colleagues to visit the centre and take an active interest in it. As yet, that has not happened at ministerial level. It has happened at Scottish Enterprise level and I am grateful for that, but the centre needs similar ministerial interest for the simple reason that—the nationalist case is always running down England and I must bring this piece of news to the SNP’s attention—in its most recent regional growth fund the UK Government awarded moneys to the University of Huddersfield and its institute of railway research to create a centre of innovation in rail for exactly such work.

SNP members always say that nothing good ever happens in England. There is an example of investment in rail in England. We could do the same in Scotland. Scottish Enterprise has shown some interest in it, but we have not had any ministerial involvement in the centre of excellence here in Scotland’s capital city. I plead with the minister that he show some leadership where his colleagues have not and that he have a close and encouraging look at the centre.

Tavish Scott (Liberal Democrat, Shetland Islands)

I will make one other point on oil and gas. I do not think that Mike MacKenzie ever listens to anything that Fergus Ewing says because, when Oil & Gas UK published the latest investment figures, the first press release that I saw that morning was from Mr Ewing, saying what an outstanding success it was and that it was all down to the considerable work that was being done—

Mike MacKenzie (Scottish National Party, Highlands and Islands)

Will Tavish Scott give way?

Tavish Scott (Liberal Democrat, Shetland Islands)

Mr Ewing said that it was all down to the useful work that the Scottish Government and the UK Government had been doing. He was at pains to press that point and I applaud him for that, so I do not know where Mr MacKenzie was when those world-leading UK investment figures were announced and I do not recognise his description of the UK oil and gas industry. We should talk it up rather than use the kind of examples that he used in his arguments.

As the decommissioning round that is going on in the northern North Sea continues, I hope that Mr Ewing and his ministerial colleagues will concentrate hard on the supply chain, because that is where there is great potential for Scottish jobs in both the Highlands and Islands Enterprise and the Scottish Enterprise areas.

Christian Allard (Scottish National Party, North East Scotland)

I will comment on some of the speeches that members have made.

I disagree with most of what Tavish Scott said, but there is something with which I agree. Why have a review? It seems to me that, as Mike MacKenzie said, such a review would serve only to help other nations in the United Kingdom to understand how well we are doing here in Scotland. I am a bit dubious about what the purpose would be.

I am delighted to be speaking in the debate because it gives me another opportunity to promote my own region, North East Scotland, even if Maureen Watt and Kevin Stewart have already done a lot to promote it. It is really astonishing to see the improvements that have been made over the years to support the many businesses that make the north-east such a fantastic place to live and work.

Many of the speakers today—some of them on other parties’ benches—told us that we can do much more. I agree that we must always strive to do better in this global economy, but the place that Scotland occupies in the world today is truly astonishing. We are recognised and appreciated in many sectors and we are punching well above our weight.

From personal experience, I can illustrate that that was not true 25 years ago. Picture this: a young Frenchman in his 20s decided to offer a new seafood haulage service from Scotland to Spain—an opportunity for many small and medium-sized seafood companies across Scotland that wanted to open up new markets.

To my surprise, the promotion of the new service was led by Food from Britain. I was asked to come down to London to launch the service—a service that had nothing to do with London. I spoke at the event but struggled to recognise any faces and was introduced to people who had no interest in the project. FFB was created in the 1980s to promote the export of UK-produced food and drink, and it lost all its funding from the Department for Environment, Food and Rural Affairs back in 2008—rightly so.

Today, it is a different picture. Scotland’s enterprise agencies are playing a vital role in building the capability of Scottish producers. The food and drink steering group led by Scottish Enterprise—with representation from Scotland Food & Drink, the Scottish Government and VisitScotland—is ensuring that the food and drink offering is a priority at events such as those surrounding the Commonwealth games, the Ryder cup and the year of homecoming. The result of those efforts is clear for all to see, and the boom in the Scottish food and drink sector looks set to continue with the help of those agencies.

The north-east is at the heart of the sector, producing a fantastic array of food and drink products. Again, that was not always the case. On Monday, I was in Oldmeldrum in Aberdeenshire, visiting a vibrant distillery that is run by someone who understands better than most how much Scotland’s exports should be celebrated. If members visit the distillery, they should be sure to pronounce “Glen Garioch” correctly; otherwise, Kenny, the manager, will be quick to correct them and to point out that it is the name of one of Scotland’s oldest distilleries.

Kenny told me that, in the mid-1990s, the distillery had to stop production and shut down as it was unable to sell its stock. Now the distillery is booming, helped by a lot of the Government agencies. It is producing and exporting like never before, filling about 100 casks per week with the finest malt whisky.

We are truly moving forward as a nation. Scotland as a brand is now being used in everything that Scotland’s enterprise agencies do—with great success. It is not by accident that figures published this week show that the Scottish food and drink industry has met its turnover goal six years ahead of schedule, with a turnover of more than £13 billion in 2011 against a target of £12.5 billion by 2017.

The plan is to do more, and 2015 will be the year of Scotland’s food and drink—another way to promote the best of Scotland. As members can see, I love food and I love it to be Scottish and bought locally. Last Sunday, I went to the Huntly Hairst food and farming festival with Dennis Robertson, the constituency MSP for Aberdeenshire West. It is another event that is promoted by Scottish Government agencies. In its fifth year, the event is a great place for promoting and showcasing local food production, and it kick-started the Scottish food and drink fortnight in the north-east.

While Dennis held a surgery in the town hall, I sat in front of a full plate of stovies at the Gordon Arms hotel. We know how to make stovies in Huntly—after all, it is where the world stovies competition takes place every year. On Sunday, for the first time, a man won the trophy.

Another highlight in the north-east this year was the Dundee flower and food festival, which came at the start of Scottish food and drink fortnight. Glen Garioch distillery participated in that well-attended event and recorded much interest for its malt whisky.

Like Kevin Stewart, I, too, went to the offshore Europe conference, where I met a lot of Government-led organisations. One of them was VisitScotland, which had a special stall for the new MyAberdeen app. I encourage any member who wants to visit Aberdeen to get that app to ensure that they find the best food and accommodation that the north-east can provide.

Christian Allard (Scottish National Party, North East Scotland)

There is a big challenge in the energy sector—

Christian Allard (Scottish National Party, North East Scotland)

Yes, thank you.

The north-east is the best place to learn, to work, to visit and to eat. Scottish Enterprise and other organisations need to be ready to do much more, because a yes vote in 2014 will open many doors for our skills and expertise, our produce and our global brand—Scotland.

Kenneth Macintosh (Labour, Eastwood)

I am sure that the minister will take heart from the fact that all members and parties will, I think, support the Government motion. Few people in Scotland, let alone in Parliament, would not wish for Scotland’s enterprise agencies to play a vital role in securing economic recovery. I am sure that we are all delighted to hear that the account management system that has been introduced at Scottish Enterprise is working well.

We should say “Well done” to an organisation—and, more important, to its staff—when it does well, but given the size and scale of the difficulties that face the Scottish economy, do we want the message that the Scottish Parliament sends out today to be one of congratulation? Given that the output of our economy is still below the level of five years ago, and given the level of unemployment facing our country, particularly among young people, as well as the squeeze on nearly every family’s income through wage freezes, overtime bans and increases in the cost of living, does it not feel a little complacent, or at least a little premature, to pat ourselves on the back at this stage?

I would certainly hate to think of Mr Ewing or his colleague Mr Swinney taking a leaf out of George Osborne’s book and, after five years of recession, looking at some modest signs of recovery and thinking that they are vindicated and that their work is done. If the minister is tempted to do that, he might, rather than model himself on George Osborne, take a look at the more admirably cautious Vince Cable. If he does not want to do that, I remind him of today’s news that 10,000 more Scots are out of work.

I have no doubt that the staff at Scottish Enterprise and Highlands and Islands Enterprise are working assiduously to grow the economy and to help business and industry, but might not we in the Scottish Parliament play a more productive role if we were to examine more objectively the difference that those organisations make to the Scottish economy—the value that they add—and how that could be improved?

A quick glance at the companies that currently receive grants from our enterprise companies reveals a number of familiar names—KPMG, Honeywell and Hutchison 4G. I am sure that those are all admirable organisations, but they are also highly successful and profitable global multinationals. Is it really right that we, the taxpayers, should give financial support that is likely to end up with the shareholders of those multinational companies?

I also note that SSE received more than £1 million from the Scottish Government while simultaneously being fined £10.5 million by the Office of Gas and Electricity Markets for mis-selling. I have no particular beef with any of those companies, but I wonder whether more locally based and Scottish-owned small and medium-sized businesses might be more worthwhile recipients of our support.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I reassure Ken Macintosh that all emoluments that are paid from taxpayers’ money to any company are based on the strict application of laws and are especially directed towards job creation. In other words, the money is paid only when the jobs are created. In essence, that is the principle that applies, and it is one that I believe has created a great deal of employment. Unless Mr Macintosh can say which grants should not have been made, I wonder what the purpose of his criticism is.

Kenneth Macintosh (Labour, Eastwood)

I will give a specific example. This very week, I received a letter from Amazon. As the minister will know, many members—as well as many people who are denied full employment by the company and many hard-pressed local businesses that are faced with closure because of competition from Amazon—are dismayed that we are handing over millions of pounds to a company that does not pay its fair share of taxes.

In the letter that I received from Amazon, the company admits to having been awarded approximately £4 million of grants from Scottish Enterprise in the past five years. I am not sure whether that sum includes the taxpayer subsidy towards the cost of land, but either way it is a substantial sum of money.

My letter to Amazon asked a number of questions, including specific ones such as:

“How many staff work for Amazon in Scotland on so-called zero-hours contracts?”

My favourite sentence in the reply was:

“The vast majority of temporary associates in our fulfilment centres work a 40 hour week, and we are working with our employment agencies to guarantee all temporary associates at least 20 hours per week.”

I am sure that we all know the euphemisms that are used to disguise or temper the more brutal truth. I wonder how many of those who are working in a high-security warehouse, denied recognition of their own trade union membership, think that they are employed in a “fulfilment centre”?

I asked about zero hours contracts, which is in itself a euphemism for the denial of employment rights. The reply talks of “temporary associates”, but we must not allow ourselves to be sweet-talked into accepting jobs at any price—or worse, into paying for jobs that would have had to come here anyway. Given Amazon’s need to supply goods the length and breadth of Scotland, I cannot believe that it would not have pressed ahead with its so-called “fulfilment centre” without Government support.

Without wishing to be critical of either agency, does the minister not share the further concern that Scottish Enterprise and HIE have, between them, spent more than £50 million on severance pay over the past five years? That is £50 million that has been spent not on hiring people, creating employment or finding jobs for the tens of thousands of Scots who are desperately seeking work, but on shoving people out the door. I find it difficult to see how that vast sum of money has contributed to the sustainability of our economy.

Kenneth Macintosh (Labour, Eastwood)

Thank you, Presiding Officer.

I ask the minister whether he heard this morning about the work of the Scottish cities alliance, and whether he will comment on the work of our local cities as engines of growth. I urge him to accept Labour’s amendment to the motion.

Stewart Stevenson (Scottish National Party, Banffshire and Buchan Coast)

I have a special interest in the enterprise network, as the constituency that I represent is the only one that straddles the areas that are covered by Highlands and Islands Enterprise and Scottish Enterprise, so I have to deal with both agencies in my constituency work.

The experience is markedly different in the Highlands and Islands, where social concerns are at the centre of the agency’s activity, in contrast to the business-focused approach in the south of Scotland. I commend the Highlands and Islands Enterprise model to the rest of the country.

I have a couple of examples from elsewhere that might inform the debate to some extent. Our English friends do not necessarily get everything wrong. I have to say that because my English granny, who came from the north-east of England, would not—from up where she is—wish to hear me saying any different down here. The north-east is one of the areas of England that has suffered most from Westminster’s abolition of the regional development agencies.

One of the people with whom I worked when I was Minister for Transport, Infrastructure and Climate Change was Andrew Adonis, the Labour Secretary of State for Transport at Westminster—and a very effective minister he was. He is now working closely with a group of local authorities in the north-east of England to try to fill that gap, produce economic reports and co-ordinate activities. They are doing very well, in comparison with doing nothing, but they are denied the tools—as the report that he has published make clear—that would enable them to compete as effectively with Scotland as they wish. Many people in the north-east of England are now looking to us and considering the ways in which we could collaborate across the border, and I wish them well in that endeavour.

I will say just a word or two about Brazil, which is now part of the BRIC acronym—Brazil, Russia, India and China—that denotes the next wave of successful economies that will come to the fore in the world in the years to come. When I visited Brazil in 1982, it was in very deep difficulties indeed. In the eight days I was there, the value of the cruzeiro—Brazil’s currency—halved, and by the time I got back home and received my credit card statement with my transactions from Brazil, I actually had to pay less than one fifth of what the price had been when the transaction was conducted. That economy was in a difficult place.

However, the Brazilian Government then recognised that capital investment was essential to get the country out of the hole it was in. For example, the Government supported a university engineering course that included an exercise to design a commuter aircraft. That project led to Embraer, whose aircraft can now be seen at all our major airports—including Edinburgh, Aberdeen and Glasgow—operating regional routes around Europe. It is now a successful company. Out of adversity, the right investment policies by Government, through its enterprise agencies, can lead to successful outcomes.

Let us not imagine, however, that every investment will be successful. Indeed, it is necessary that we are not so risk averse as to invest only in certainties. We must be prepared to take some of our money and put it into projects that involve slightly higher risks than we might otherwise want. Some of those will pay off big style, but we should be prepared to carry the can for those that do not, and we should be prepared to make such investments.

Stewart Stevenson (Scottish National Party, Banffshire and Buchan Coast)

Tavish Scott took a pop at Kevin Stewart’s references to The Economist, but I must say that The Economist is an excellent newspaper. My wife used to write for it, so I am bound to say that. It was deeply offensive to Scotland for The Economist to include on its cover, in the edition to which Tavish Scott referred, a map of Scotland with the label “Skintland”. That label was actually quite disjointed from the article inside. I confess—please do not tell anyone that I did this—that, for some months afterwards, whenever I passed through a railway station, I moved The Economist behind other magazines, so ashamed was I that people might buy it.

Presiding Officer, I have—to use the minister’s word—oodles more that I could say. Would that I had the time to do so, but thank you very much.

Alex Johnstone (Conservative, North East Scotland)

The debate has been useful, in that we have skirted round many points that concern the current position of the enterprise networks and the direction in which they should go. At times, we have not dealt with issues in great depth, but some subjects have been properly aired.

Reading the motion in the name of the minister, which I will vote for later, I think that he is a bit ungenerous to mention

“the emerging signs of the global economic recovery and the vital role that Scotland’s enterprise agencies play”,

while forgetting that, in reality, we are currently surfing a wave of UK recovery. If we were not part of the UK economy, we might be suffering some of the ill effects that other European countries are suffering today.

That failure to regard the importance of that relationship has been the theme of today. Earlier today, the Cabinet Secretary for Finance, Employment and Sustainable Growth delivered his budget statement, which in my view was a responsible, balanced and—within his own policy priorities—sound statement. However, he spoiled it all by saying that he balanced the budget only because of the fiscal discipline that is imposed on him by the Scottish block grant and that if he were not subject to that discipline, he would break the bank, blow the budget and reverse every one of the hard-earned gains of the past three years. Similarly, Fergus Ewing and many of his back benchers, in taking the opportunity to take sideswipes at the UK and the UK economy, have also chosen today to destroy what could have been a reasonably consensual debate.

On the amendment in the name of Jenny Marra, I must say that we on this side of the chamber will find it difficult to support. In my view, a root and branch review of our enterprise networks would be a mistake at this stage. It is important to recognise that there have been radical changes in the enterprise networks, in which review has played a significant part. At the same time, I believe that a responsible minister—I believe that we have a responsible minister—will keep the network constantly under review and ensure that he addresses the needs of the network in a constructive manner. Indeed, in his opening speech the minister made it clear that during today’s debate and subsequently, he is seeking ideas and is willing to work together with others.

I turn to my colleague Murdo Fraser’s amendment. I have to say that there is some concern about the performance of the intermediary technology institutes, so I welcome the minister’s offer in that respect.

However, the enterprise network’s tendency over the years to indulge in the practice of picking winners was also mentioned. We do not want the network to decide who will succeed or who will fail; instead, we want it to pick the companies that will deliver the best growth, the best employment and the best long-term returns for the Scottish economy. What concerns me most about the Labour Party’s position, which was set out at some length by Margaret McDougall and supported in some respects by Ken Macintosh, is that it wants to pick companies not on the basis of potential to succeed for Scotland, but more on the basis of geography, social criteria and—I believe—even gender. It seems to be a case not so much of picking winners as of deliberately picking losers. If that is the kind of review of the enterprise network that the Labour Party wants, I am not prepared to address it.

Jenny Marra (Labour, North East Scotland)

Will Alex Johnstone give way?

Alex Johnstone (Conservative, North East Scotland)

I am sorry—I want to complete my remarks.

One or two other members who have spoken in the debate are worthy of note, not least of whom is my sparring adversary, Kevin Stewart, who began his remarks by saying that he does not want us to downplay our successes. Like John Lewis, Mr Stewart is never knowingly undersold; however, he then went on to indulge in a discourteous critique of our neighbours’ performance.

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will Alex Johnstone give way?

Alex Johnstone (Conservative, North East Scotland)

Perhaps we should recognise the importance of the relationship that we have with our friends on the other side of the border and not indulge in that sort of activity.

Kevin Stewart (Scottish National Party, Aberdeen Central)

Will Alex Johnstone give way?

Alex Johnstone (Conservative, North East Scotland)

If Kevin Stewart is not going to sit down, I will have to hear what he says—but he needs to make it quick.

Kevin Stewart (Scottish National Party, Aberdeen Central)

The article in The Economist clearly showed that people in the north-east of England are a little bit jealous of what goes on here. I think that, after independence, they will refocus their attention from London to north of the border and that, after independence, we should help them to boost their economy.

Alex Johnstone (Conservative, North East Scotland)

Kevin Stewart should, as was suggested by another member, read the whole of The Economist, not just the bits that he likes.

Alex Johnstone (Conservative, North East Scotland)

Tavish Scott offered an interesting interpretation that I largely support. However, I thought at one point that he was going to propose a high-speed railway to Shetland—a proposal that even an independent Scotland would find hard to swallow.

Alex Johnstone (Conservative, North East Scotland)

It is the Conservatives’ intention to support the Government motion and to seek support for our amendment. Unfortunately, however, we will be unable to support the Labour amendment at decision time.

Jenny Marra (Labour, North East Scotland)

The Labour Party will at decision time support the Government’s motion, our amendment and, despite Alex Johnstone’s remarks, the Conservative amendment.

Indeed, I want to clarify for Mr Johnstone that neither I nor my colleagues were advocating that Scottish Enterprise should select businesses to support based on anything other than their potential for economic growth and their contribution to our economy. Mr Johnstone made particular reference to my comments about gender, but I must draw to his attention the fact that they were based on evidence from the EHRC. The commission did not say that Scottish Enterprise should invest in businesses just to put more women into work but, according to its evidence, 0.5 per cent of modern apprenticeships are being taken up by disabled people in Scotland, despite the fact that 8 per cent of 16 to 24-year-olds have a disability, and less than 2 per cent are being taken up by ethnic minorities, despite the fact that 4 per cent of 16 to 24-year-olds are from an ethnic minority. That evidence shows that opportunities are not equal across our society, which is certainly a point to bear in mind.

The evaluation that was published on Monday goes some way to demonstrating that Scottish Enterprise adds to our economy and that it gives high levels of support to business. However, as I said, the evaluation also provides an opportunity to take a pulse check on how agencies interact with one another, with local and national Government and with business. Since 2007, when the economy was buoyant, no substantial Government-led review of our enterprise agencies has taken place, despite a rapidly changing Scottish economy and a rapidly changing economic landscape that could—although not necessarily—need new solutions. The position is worth reviewing.

As Ken Macintosh said, the long-term youth unemployment figure remains high. We heard this morning that an additional 32,000 16 to 24-year-olds in Scotland came out of work over the summer. The unemployment rate among women is rising, and workers increasingly face little choice but to take part-time or temporary work or a contract that means that they must wait for the phone to ring—a zero hours contract. Our shared aim is to get more young Scots into jobs, to support women in Scotland and to offer every person and every business the support that they need.

I will touch on some of the speeches. Margaret McDougall made a pertinent point about the plight of some small businesses that want to secure bank loans and about how Scottish Enterprise can work with them to help them in that process. Is the minister willing to address that point in closing or in a letter later?

Kevin Stewart spent time on listing Scottish Enterprise’s achievements and congratulating it on them. I agree with much of that but, as I have said in the chamber before, robust and successful institutions should not fear review, scrutiny and more suggestions on how they could operate better. Healthy organisations welcome a review process and, particularly in the changed economy since 2007, such scrutiny should be welcomed.

Tavish Scott said that, at a difficult economic time, we should not commission reviews that could be expensive. The point is well made, but I contend that it is particularly appropriate to review, assess and scrutinise an agency that is tasked with driving our economy at such a difficult economic time. We need to check that the precious public funds that are set aside for economic growth have the most impact and that we are getting the highest return for every pound that we spend.

Tavish Scott suggested that committees of the Parliament could step up and do the job. I know that the Conservatives will not support our amendment and that Murdo Fraser is sceptical about a review, but much of what he said in opening agreed with the purposes of a review. Might he undertake a review of Scottish Enterprise in the Economy, Energy and Tourism Committee?

Chic Brodie (Scottish National Party, South Scotland)

Jenny Marra has made the point about her review. What measurement parameters would she expect to come out of it? How would they interact? What assessment would she make? Would the parameters include the rate of return, employment or investment?

Jenny Marra (Labour, North East Scotland)

The parameters and measurables would be set by the experts who conducted the review. Chic Brodie knows that I am a politician; I would leave it up to the experts to set out the criteria, but that should certainly be done.

Maureen Watt asked whether the study that was published on Monday is not an independent review that Scottish Enterprise can build on. I say to her that, although Monday’s report is useful, it is—unfortunately—not an independent report. It was commissioned by Upper Quartile, which is a research group that Scottish Enterprise commissioned. As Malcolm Chisholm pointed out, many of the report’s findings were taken from businesses that receive support from Scottish Enterprise. An inquiry that Murdo Fraser’s committee led would allow us to hear from businesses that feel that they need support, start-up businesses and fledgling initiatives, to see whether Scottish Enterprise is meeting their needs.

Tricia Marwick (None, Mid Fife and Glenrothes)

The member needs to bring her remarks to a close.

Jenny Marra (Labour, North East Scotland)

In conclusion, I think that it is time for a review, and I hope that the committees will also take heed of my suggestions.

Fergus Ewing (Scottish National Party, Inverness and Nairn)

I thank everyone who has contributed to the debate and welcome Jenny Marra and Murdo Fraser—a new face and an old hand—to the enterprise portfolio.

I found the debate useful at times, and I would like to respond to some of the specific points that were made, which is what I always try to do. I will do so in no particular order.

In his speech, Ken Macintosh focused on whether grant payments should be made to some of the largest companies. I say to Ken Macintosh and other members of the chamber that regional selective assistance is not paid for zero hours contracts. Let us get that clear. No one should leave the chamber with the belief, or should draw from Ken Macintosh’s speech the inference, that RSA is paid for zero hours contracts. That is not the case, nor should it be the case.

Kenneth Macintosh (Labour, Eastwood)

Will the minister take an intervention?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

No, as I have a lot of ground to cover. I just wanted to make that point.

Kenneth Macintosh (Labour, Eastwood)

Will the minister take an intervention on zero hours contracts?

Fergus Ewing (Scottish National Party, Inverness and Nairn)

No—I want to move on. That is the rule on RSA. [Interruption.]