Scottish Parliament, 18 November 1999

364 contributions from 73 members. The official report.

Introduction

Ethical Standards in Public Life Bill

David (None, Lothians)

The first item of business is a statement by the Deputy Minister for Local Government on the publication of a draft ethical standards in public life bill. The minister will take questions at the end of the statement, so there should be no interventions.

Frank McAveety (Labour, Glasgow Shettleston)

The last time I stood at this dispatch box was on the day after the opening of the Scottish Parliament. The opening day was a great day for Scotland and, for a brief moment last night, we nearly had another great day but that delight was snatched—again—from the Scottish supporters. I want to put on public record our appreciation that at least we were allowed to dream for 90 minutes last night.

I turn to more interesting matters. I am delighted to announce to Parliament that the Executive is today publishing its draft bill on ethical standards in public life. This bill is one of the eight that Donald Dewar promised the Executive would introduce to Parliament in its first year. As with each of those bills, we are publishing a draft for wide consultation. We will take account of responses to the consultation before we introduce the bill to Parliament early in the new year.

The title of the bill is significant and appropriate. We believe that the ethic of public service extends not only to elected councillors, but to those who serve on public bodies. As I visit councils across Scotland and deal with public bodies in carrying out my responsibilities as a minister and MSP, I am impressed by the continuing tradition of public service of which we are all proud.

In June 1999 the First Minister said:

"the aim is to enhance the reputation of"

public service

"and to ensure a commitment to the highest standards".—[Official Report, 16 June 1999; Vol 1, c 407.]

Too often the reputation of the many has been undermined by the publicity given to the misdemeanours of the few who fail to come up to standard. High standards must not only be maintained, they must be seen to be maintained.

We believe that there should be equity in the application of standards in public life. Our bill will ensure that equity and fairness are enshrined in those standards. Whether it be a council or a public body, there should be a shared agenda, with shared expectations and shared standards.

Our starting point has been the Nolan committee on standards in public life, but our consultation so far has taken place within Scotland and we have produced a bill that is shaped and influenced by Scottish traditions and circumstances.

There will be an opportunity to scrutinise the draft bill in full detail. Today I will identify the key elements of the bill. In essence, the bill will provide for the introduction of new codes of conduct for local authority councillors and members of public bodies. It will give councils and public bodies a duty to help their members to comply with their code. It will also establish a standards commission to oversee the new framework and deal with alleged breaches of the codes.

On the codes of conduct, we recognise that the introduction of a new ethical framework needs to relate to the nature of the organisations that it will apply to. We are mindful of the fact that one is an elected body and the other is an appointed body. We believe that our bill is sufficiently flexible to address those concerns. The content of the codes will require careful consideration. Local government will have the opportunity to shape and influence its code before it comes to Parliament for approval. The bill provides for that.

Public bodies form a diverse group. Each has its own constitution and functions and will need a code tailored to that. Accordingly, for those bodies the bill will establish a new statutory model code for the members of public bodies and will require each body to adopt a version of that code that is suitable and customised for its circumstances. The central change is that the model code, shaped by the Parliament, will be addressed by those public bodies within three months and will also require ministerial approval.

The bill will cover, initially at least, devolved executive public bodies which have their own staff and budget, which operate solely in Scotland and which have devolved functions only or a mixture of devolved and reserved functions. Those include executive bodies, the national health service bodies and the water authorities.

The public will have the right to know—for the first time in any real way—members' interests within councils and public bodies. Members' outside interests and influences will be made transparent.

Adherence to the code will be a personal responsibility for each councillor and member of a public body. However, councils and public bodies also have an important role to play in assisting their members to uphold the code; for example, by providing clear and effective guidance, training and development, to ensure that the code is upheld. The bill will place a duty on each council and each body to promote its members' observance of high standards of conduct and to assist them to observe their code of conduct.

We welcome the creation of local standards committees and recognise that they can assist in the maintenance of public confidence in elected members in councils. We welcome those initiatives that signal that a council is taking responsibility for standards. In fact, I pioneered one of the first such initiatives in Scotland, in the most difficult of circumstances. The fact that all-party consent was achieved on that in Glasgow—a unique achievement, given the politics of that city—indicates the importance of the good ethic of public service for elected members.

We also consider it essential, however, for the public and members of councils to have confidence that every allegation will be subject to a consistent process and will be dealt with thoroughly and fairly. If that confidence is to be achieved, all allegations of breaches of the code should be dealt with by an entirely independent body. The bill will therefore provide for the establishment of a standards commission for Scotland, which will have responsibility for dealing with all allegations of breaches of the codes.

Never again do we want the conduct of an individual to affect the reputation of an institution or a council. Our public bodies should have robust and clear codes that have public confidence. Those codes should be applied clearly and effectively. It is not for those who run public bodies, as members or officials, to become the personal gatekeeper of the conduct of an individual in their organisation. It is for the establishment of the standards commission to create an authoritative and independent scrutiny of conduct in all public bodies. In the new Scotland, with the creation of the Parliament, we are beginning the modernisation of our democratic structures. The Parliament is not the end but the beginning of that process. The standards commission will be the gatekeeper to the establishment of high standards and best practice in public bodies in Scotland.

We will ensure that investigations of alleged breaches of the code will be carried out swiftly and accurately. It is important for the individuals concerned to know that the allegations will be dealt with quickly, to reassure the public and to clarify the personal circumstances for that individual. An independent person—the chief investigating officer—will be responsible for investigating alleged breaches of the code and reporting to the commission. Where appropriate, the chief investigating officer will be able to refer matters to another body; for example, the ombudsman, an auditor or, in the most extreme cases, the police.

For local government, if the commission finds that a councillor has breached the code, it will decide what sanction would be appropriate. Sanctions may range from censure of the individual concerned to temporary suspension, or, in cases of significant violation, disqualification of the individual from being, or being elected, a member of a local authority for up to five years.

The chief investigating officer will also investigate alleged or suspected breaches of the code by members of relevant public bodies and will report such breaches to the standards commission. Sanctions open to the appointing body would be similar to those proposed for the local councillors, ranging from censure to suspension and, in extreme cases, removal from public office in public bodies.

Those are the central provisions of the bill: a commitment to equity and fairness; a commitment to a Scotland with high expectations of public service; and a commitment that the citizen is at the forefront of our considerations. How we serve our citizens and reflect their needs and aspirations is at the core of our legislative programme. We can lead Scotland in Britain in the development of ethical standards in public life. We can do the same for equality and social inclusion.

We have an opportunity, in the bill, to address the commitment we made in our programme to building a Scotland on the principles of social justice and fairness—a Scotland of equal opportunity and inclusion. We intend to repeal section 2A of the Local Government Act 1986, commonly known as section 28 of the Local Government Act 1988.

Our view is that that legislation was, and remains, ill conceived. We believe that it has served to legitimise intolerance and prejudice. It has acted as an unhelpful constraint on the ability of local authorities to develop best practice in sex education and to tackle bullying in schools. It has also reduced the capacity—a central capacity, in my opinion—of local authorities to respond to the needs and aspirations of the people they serve, which includes the gay and lesbian community and communities throughout Scotland. We believe that repeal of section 2A will enable the gay and lesbian community to be full participants in the building of a socially diverse and equitable Scotland.

Regarding education, we believe repeal of section 2A will assist in allowing schools to provide a balanced, coherent and responsible approach to the nurture of personal and social development. I have more than 13 years' experience of teaching in Glasgow and beyond, and I believe that teachers will continue to develop in a sensitive manner, as good professionals do, an understanding of personal values and respect for others of different creed, different race and different sexual orientation.

The issue of sexual orientation is also central to tackling the problems of bullying that have emerged in schools. At present, many professionals fear the possible legal consequences of tackling head on issues such as homophobic bullying. Repeal of section 2A will enable teachers to do that. It will also help voluntary groups who work within the gay and lesbian community to work with councils and it will help them to feel that when they make applications, those will be considered according to the quality of the group's work rather than according to sexual orientation.

We believe that our bill will enhance and reinforce high standards in Scottish public life. We believe that it will create a Scotland that puts citizens and public interest first. It will address the unfairness of the restrictive legislation in section 2A and it will show that Scotland is leading Britain in ensuring that those who govern do so by the consent of the governed, and that the principles of fairness, transparency and social justice are at the heart of our programme for this Parliament.

David (None, Lothians)

Many members wish to speak in the economic debate, so I will restrict questions to the minister to 20 minutes. I ask members to make their questions brief.

Kenneth Gibson (Scottish National Party, Glasgow)

I thank the minister for that statement and I commend him for providing us with a copy of it last night. With his indulgence, I will ask some brief questions for clarification.

First, what does the minister propose will be the mechanism and criteria for the selection of the chief investigating officer for Scotland's standards commission?

Secondly, the Executive has had time to consider the workings of existing standards committees, such as the one that is established at Glasgow City Council—on which the minister and I both served—and the Parliament's Standards Committee. What lessons can we learn from the workings of such committees?

Finally, will the minister clarify, for some sections of the media, that the repeal of section 2A of the Local Government Act 1986 does not involve the promotion of one lifestyle over another, but is simply the end of legal discrimination against lesbians and gay men?

Frank McAveety (Labour, Glasgow Shettleston)

I thank Kenneth Gibson for those questions. The first question was about consideration of the selection of the chief investigating officer. That officer will be someone who understands the workings of public bodies in local authorities throughout Scotland. It will be someone who has credibility in the role that he or she must play and who will set examples on the key issues that will underpin the standards commission. I will welcome suggestions from all members of all parties as to how we can arrive at a firm conclusion regarding the criteria that we want to apply.

The second question was about the functioning of the standards commission. The establishment of standards committees in some authorities has helped to address issues of public concern in those local authority areas. The fact that there was all-party consensus in the example with which we are most familiar signifies that we in public office recognise that a small minority can affect the majority who execute their public duties with great diligence and effort. It is important that we learn from that experience when we set up a standards commission. That experience indicates that there should be clear guidance and codes of conduct. We must also make it clear that all are responsible for their actions and that effective sanctions will be applied to ensure minimisation of misbehaviour. The establishment of standards committees has led to a significant diminution of the criticisms levelled at local authority members in many parts of Scotland. That is testimony to the fact that we should have such standards committees.

I also welcome Mr Gibson's comments regarding section 2A and I agree with his remarks relating to the repeal that we are putting forward. It is a pragmatic response to the issue of developing understanding and knowledge of personal and social development in schools and it will help to ensure that all participants feel that they have a role to play. We do not recognise the caricature that some have drawn of the issue of repeal of section 2A.

David McLetchie (Conservative, Lothians)

As we said when the First Minister announced the legislative programme, the Conservatives have no objection in principle to this bill. It starts the long process of restoring public confidence in our local authorities—confidence which is sadly lacking. The minister is to be commended for that, but the fact that the bill is necessary at all is a damning indictment of the unacceptable face of the Scottish Labour party in local government in Scotland. If the Labour party had put its house in order, legislative time would not be required for this purpose.

I notice that the minister proudly referred to the standards initiative taken by Glasgow City Council that had all-party support. Does Mr McAveety agree that the miracle in George Square was not that the initiative commanded all-party support, but that it commanded the support of one party—his party?

I want to ask a few specific questions about the bill. The idea of a standards commission is fine on its own, but the minister also referred in his statement to the local government ombudsman and the Accounts Commission for Scotland. Are we not, perhaps, in danger of duplication and overlapping of functions between those bodies and the proposed new commission? Should not we be looking to rationalise the number of scrutinising authorities? How will overlaps between the standards commission, the Accounts Commission and the ombudsman be dealt with within the framework that the minister envisages will develop through this legislation?

The repeal of section 28, or section 2A, has been tacked on to the ethical standards bill. The Conservatives regard that as yet another example of the perverse priorities of the Executive. That part of the bill has nothing to do with ethical standards and everything to do with political correctness. Will the minister explain what local authorities are currently constrained from doing that they would wish to do when section 2A is repealed? I found his justification for the repeal somewhat unconvincing. If local authorities plan a range of new activities after the repeal of section 2A, how much does the minister envisage that such activities will cost, and what local services will be cut to pay for them?

Finally, does the minister's postbag make him aware, as mine does, that there is concern among parents regarding the content of sex education and social education classes in our schools? Those classes might not conform to the parents' wishes or to the family values that they wish to promote. In those circumstances, will not repeal of section 2A add to their anxieties, and does not the minister agree that, at this time, it would be more appropriate to set out and to agree curriculum guidelines on such sensitive issues—guidelines to which all parties could agree before taking the steps proposed in the bill?

Frank McAveety (Labour, Glasgow Shettleston)

I thank Mr McLetchie for his breathtaking arrogance in lecturing anyone in this chamber on standards in public life, given the Tories' record at Westminster. He claimed that he is willing to listen to the people of Scotland. The people of Scotland made their point about the conduct of the Conservatives in public office quite clear at the election in 1997.

All parties consented to the setting up of a standards committee in Glasgow City Council. That was not a priority of an individual in the majority group on the council. John Young, who is now a Conservative member of the Parliament, welcomed the initiative as a remarkable breath of fresh air in municipal government in Glasgow. I welcomed John's support for that initiative because he recognised it for what it was: an effort to ensure that there are high standards applied to public life and that people are reassured that that is done. That underpins what we have laid out in the bill.

The ombudsman is not an enforcer and it would, therefore, be inappropriate to put the ombudsman in the role that we foresee for the chief investigating officer of the standards commission. The Accounts Commission looks at the finances of local government. If there are grey areas in the bill, those issues should be addressed at the committee stage of the bill and we will welcome suggestions at that stage.

David then moved on to repeal of section 2A. I do not think that Mr McLetchie's use of the phrase "perverse priorities" was a Freudian slip. It was deliberate use of language to suggest and connote something that is not necessarily the case. The truth is that evidence indicates that teachers are inhibited, by the existence of section 2A, from giving the full professional advice that is appropriate to particular circumstances. In my teaching career, I have been prohibited from intervening and assisting youngsters in understanding their own complex personal and social development. I would not wish that on any future children in Scotland. I hope that the teaching profession will have the opportunity to operate as it always has in Scotland, in a sensitive and understanding manner, and to intervene in these matters.

Parental consent is essential for any programme for personal and social development. There is nothing in the bill, or in the intentions behind it, which will not allow parents to be involved in the negotiation and consultation with teachers and care agencies on the way in which programmes for personal and social development are delivered. The issue is to put on a relatively equal footing all approaches to life, and to support people in our communities throughout Scotland. I do not think that that is unreasonable. I remember the point of view that was expressed by William Hague only three or four months ago, when he said that caring Conservatism was about to re-emerge. It is a pity that that point of view has not yet permeated the Scottish Tory party.

Donald Gorrie (Liberal Democrat, Central Scotland)

On behalf of the Liberal Democrats, I welcome the general tenor and purpose of all parts of the bill and its proposals. We will work in this Parliament, and in local government, to make the bill as good as possible.

Will the minister allow councillors and MSPs to play a vigorous role in drawing up clear-cut rules? That seems to be the essence of the matter. Declarations of interest, and so on, are a bit peripheral. We need absolutely clear-cut rules for elected people and officials, and I hope that he will consider local government officials, civil servants, MSPs, people on quangos and councillors. For example, when I refused an offer of a freebie to go to Hampden, was I daft or was I being sensible? I want to know the rules that set that out. The rules are absolutely essential. If a council produced a robust system of dealing with first-line complaints, would the minister consider building that into the system, allowing that those complaints would have to be reported to the central body? Quite a lot of problems could be sorted out locally, while retaining public confidence.

Finally, what level of proof does the minister think that the standards commission will require? I got into great trouble with esteemed former council colleagues for making the obvious point to the Nolan committee that corruption takes place privately. If a developer gives an envelope full of used notes to a councillor, he does so in a darkened room and with nobody else present, so that his actions cannot be proved. The level of proof that is required is an interesting point.

Frank McAveety (Labour, Glasgow Shettleston)

I reassure Donald Gorrie that we will consult throughout Scotland on the codes, and that we will welcome contributions from MSPs. It is also important that local government shares this agenda. For too long, councillors have felt that they were not being considered in this debate. It is important to recognise that they have a contribution to make to the development of codes. Without the active consent and support of local government, such a principle cannot be maintained.

Donald Gorrie asked whether he was daft or sensible. If he had gone to Hampden, he would have been daft; if he had gone to Wembley, he would have been absolutely sensible. It is a matter of judgment, depending on the circumstances at the time. I firmly believe that some matters can be dealt with quickly and efficiently locally, and that reassurance can be given to the wider public. There will be an escalating level of severity, according to the nature of the case. That can be discussed at stage 1 of the bill.

Donald Gorrie said that corruption cannot be proved, as deals take place in private rooms. At the moment, we do not have the benefits of "The Truman Show", in which everything is recorded for public consumption. That is why we need a framework for this code for ethical standards in public life. This is Holyrood, not Hollywood, and it is important that that issue is addressed. We must ensure that there are clear guidelines for its effective operation.

I assure Donald Gorrie that we take those matters on board, and that they will influence some of the debates through the Local Government Committee and through the Convention of Scottish Local Authorities.

Andy Kerr (Labour, East Kilbride)

I welcome the minister's announcement, particularly on the repeal of section 2A. I ask for further explanation of the rationale behind the inclusion of quangos. If someone who is a member of both a local authority and a quango is found guilty by the local authority, how does that affect their membership of the quango?

Frank McAveety (Labour, Glasgow Shettleston)

We hope that, at the various stages of the bill's scrutiny, those matters will be addressed in a coherent and sensible way. It strikes me that the way in which someone operates in one public body cannot be separated from the way in which they operate in another. If someone errs in their behaviour in one public body, that can impact on their credibility within another. It must be recognised, however, that one body is elected and the other is appointed. The chief investigating officer's recommendation should be passed on to the appropriate public body. If action is not taken by that body, the matter could be raised before the Parliament for further consideration.

There should be equity in all public bodies, whether they are local authorities or quangos, which Mr Kerr mentioned. My experience in local government leads me to believe that people would welcome that, as part of a shared agenda of high public standards for both elected and appointed officials.

Alex Neil (Scottish National Party, Central Scotland)

Will the minister follow the practice that he adopted in the City of Glasgow Council, by ensuring political balance in the standards commission and by rotating the chairmanship? Furthermore, will local enterprise companies be included in the scope of the bill, and will the bill deal specifically with problems of lobbying and lobbyists?

Frank McAveety (Labour, Glasgow Shettleston)

The role of the organisations that Alex Neil mentions has already featured in other discussions that have taken place in the Parliament.

The form and approach that I might have undertaken in the context of the administration in Glasgow would not necessarily be welcomed in this Parliament. Therefore, I would not necessarily want to use that council as a slide rule. It would, however, be interesting to find out how decisions could be executed fairly quickly, in the face of opposition.

Two other issues are important. First, we should have a debate on the role of the standards commission. That, and other aspects of the bill, might be influenced through discussions in the Local Government Committee. I welcome contributions on that issue. I have no fixed view; therefore that could be developed over the next two or three months.

Secondly, as LECs are private companies, they are excluded from the provisions of the bill, although certain regulatory responsibilities may intervene in the issues that Alex Neil has raised. That matter might be considered by the appropriate committees of the Parliament. However, we believe that this bill will address those concerns as far as they affect the bodies for which we have responsibility: local councils and other public bodies.

Karen Gillon (Labour, Clydesdale)

Does the minister agree that the bill sets out a path to a greater public confidence in those who are elected, and that that is to be welcomed? Will he indicate the way in which the repeal of section 2A will affect those in wider education—in community education, for example—and what impact it will have on them?

Frank McAveety (Labour, Glasgow Shettleston)

The bill will reassure people and reinforce the general public confidence in those who operate in our elected and appointed bodies. In his assessment, Nolan found very little evidence of what the tabloid press might call allegations of the misuse of public office. We want to set a standard, from the outset of this Parliament, that is of such a high level that the public will be reassured that we are operating in the public interest rather than from self-interest.

I accept what Karen Gillon is saying about others who are involved in education. Many people who are involved in care provision or youth provision would welcome the opportunity for the flexibility that the repeal of section 2A would provide, to address many of the concerns that young people themselves have raised. Only recently, it was found that, within the gay and lesbian community in Glasgow, almost 60 per cent of people had been threatened or physically attacked in the past year on the grounds of their sexual orientation. Youth workers on the streets would pick that up in debates and through sharing experiences.

There is a need to respond to that in a sensitive and understanding way, which the repeal of section 2A will allow to a greater extent. That will be welcomed not only by the gay and lesbian community, but by everyone in Scotland who believes that we should use community education and youth work to assist young people in the difficult choices that they face.

Dorothy-Grace Elder (Independent, Glasgow)

I welcome any measure that seeks to improve standards in public life. However, I heard no proposal to stamp out that continuing and insidious threat to equality that is known as cronyism. The appointment of friends, relatives, placed people and councillors from only one party—guess which—to public bodies has become a traditional form of what might be called cosy corruption. Brown envelopes are not necessarily involved, but there may be a web that controls many areas of Scotland, particularly in the west. I would like to hear Frank McAveety's view on what can be done to stamp out cronyism. I would also like to hear his view on people in public life taking a full public oath against cronyism and against corruption in any form whatsoever.

Frank McAveety (Labour, Glasgow Shettleston)

There is a remarkable symmetry in Dorothy-Grace Elder being cheered by the Conservatives. After the Tories' track record, there is some remarkable surrealism in this chamber.

Dorothy is wonderful at tabloid-speak and at linguistic caricaturing. I appreciate the fact that she has spent many years—that is the best euphemism that I can find—engaging in that sort of use of language. However, if she wants to raise those matters, she will have the opportunity to influence the debate during the progress of the bill.

We recognise the issues that Dorothy raised. We want to reassure individuals throughout Scotland that those of us who are in public service operate in the public interest rather than with self-interest. I cannot remember her ever writing positively about the creation of a standards committee in Glasgow.

My main reason for addressing that question is that I want to reassure people, irrespective of their political stance or party, about people in public office. I caution Dorothy against playing the game of claiming that one party is intrinsically morally superior to the other, when individuals in all parties have erred. That would put us on shaky ground. We should recognise the broader picture.

Dorothy can raise the issues that she has mentioned during the discussion of the general principles of the bill. I welcome a learned and intelligent contribution from her at that stage.

Bristow Muldoon (Labour, Livingston)

As we are talking about a bill on ethical standards, I ought to declare an interest. My wife is a serving councillor—placed there not by cronyism, I have to add, but by the good people of Broxburn.

Given that the minister has commended some of the councils, such as Glasgow City Council and West Lothian Council, that have established standards committees, why has he not compelled all local authorities to establish standards committees? What role does he see the councils that do establish such committees playing with the standards commission?

Frank McAveety (Labour, Glasgow Shettleston)

If local authorities feel that it is appropriate to establish local standards committees, I encourage them to do so. However, we felt that the introduction of an all-Scotland standards commission would address any issues that were raised and would allow for consistency throughout the country. I recommend that local authorities consider establishing standards committees, and I understand that many authorities are doing so, which will reassure the public.

David (None, Lothians)

I apologise to the four members whom I have not called, but we will be returning to this subject again.

Scottish Economy

David (None, Lothians)

This morning's main debate is on the modernisation of the Scottish economy. I call Henry McLeish to speak to and move the motion.

Henry McLeish (Labour, Central Fife)

I hope that you will not mind, Sir David, if I reinforce in passing Frank McAveety's comments. The late, great Bill Shankly, when asked whether a football match was a matter of life or death, said that it was far more important than that. That is why football is still important for the Scottish psyche.

The Parliament should record its genuine appreciation of the dignity, style and flair of the Scottish football team, as well as the fact that we simply out-classed the English at Wembley yesterday. We won the battle; unfortunately we did not win the war. Nevertheless, it is important to recognise that we have the best fans in the world. Some day the team will have the success that it and the fans richly deserve. This Parliament should record a big thank you to Craig Brown, the team and the back-room staff, who made us very proud of yesterday's result.

John Swinney (Scottish National Party, North Tayside)

I associate the Scottish National party with the minister's remarks about the fine performance of the Scottish squad last night. Does the minister speculate that, if his playing career were still active, he might have been able to take that final step and secure a victory for Scotland last night?

David (None, Lothians)

I hope that this exchange will be brief. It is all out of order, but very interesting.

Henry McLeish (Labour, Central Fife)

Because it is out of order, I will not respond to Mr Swinney's question. Suffice to say, if I were at least five stones lighter, I might have been able to run a bit, but I could not have compared with the stars whose talents were on display yesterday.

Turning to the real business of the morning, I want to use the opportunity that this debate offers to outline the Scottish Executive's vision of a modern, vibrant and successful economy. We have come a long way in the past 100 years. The Scottish economy has evolved and diversified and it continues to do so. A snapshot of the structure of our employment shows that the heavy industry that once dominated our economy now sits alongside manufacturing, construction, agriculture, energy-supply industries and utilities, financial and business services, public services, retail and tourism, with nearly 200,000 people self- employed. This is a modern economy, but we cannot stand still against the challenges of global competition. As a nation we must continue to drive forward technological boundaries and embrace new ways of doing business, such as e-commerce and the internet.

There is no simple solution to the challenges that are thrown up by global competition and we must tackle this issue on many fronts. Modernisation cuts across whole areas of society and the economy, and is largely dependent on our ability as a society to change our attitudes and expectations, and to be receptive to learning new skills. It is natural to want to hold on to familiar ways, but if we are to remain successful we must not stand in the way of progress. Yes, we must learn from the traditional industries and help them to develop, but we must also be prepared to look forward and to innovate. If we can do that, we can all look forward to higher standards of living and a society in which there is opportunity for everyone to benefit.

The economy has already undergone enormous change in the past few decades and that is a tribute to the resilience and adaptability of the people of Scotland. We are already used to the process of change, but perhaps not to the accelerating rate of change.

The challenges that we face are largely to do with developing our responsiveness to new global market trends. With our exports dominated by just three sectors—electronics, chemicals and drinks—we need to innovate and diversify into new growth sectors to keep up with our competitors. We need to address our below average company formation rate. We need to boost company spend on research and development. We must also ensure that there is a greater spread of wealth across Scotland in both urban and rural areas so that we can create a truly inclusive society and counter the significant variations in gross domestic product and unemployment.

An overarching aim of this Parliament and of our nation must be to create a high and stable level of employment. Our goal must be job opportunities for all people, throughout their working lives. I hardly need to remind Parliament of the intensity of the competitive pressures that are now a feature of trading in a global marketplace. The harsh reality is clear. The recent decision by Marks and Spencer to source more of its clothing ranges from offshore producers is an example of that. Business is now being done globally in many sectors and we should acknowledge that reality.

Not only are we under pressure from low wage costs overseas, but the quality of the production processes that can be managed overseas is also improving. Globalisation is being fuelled by advances in information and communication technologies, which make it much easier to control quality remotely. E-commerce is also becoming an ever more attractive way of doing business. It will no doubt feature in the debate this morning. Modern knowledge and information technology based industries are location neutral and therefore have the potential to compensate for Scotland's peripherality and distance from some markets.

Virtually every sector of our industry will be affected by this new industrial revolution and by increased international financial flows. We must accept and acknowledge that basic manufacturing operations in advanced economies will continue to evolve, and we should recognise both the challenge and the difficulties involved. We need to consider the opportunities for our nation in research, design and the development of innovative products.

I shall touch briefly on the economic backdrop to this debate. The economic climate for bringing about change has never been better. I am confident that Scotland is already involved in leading-edge technology in a number of areas, such as biotechnology. My recent visits to Remedios in Aberdeen and to Cyclacel in Dundee confirmed that opinion. We need to continue to capitalise and expand on the success of such firms.

Thanks to the chancellor, we have economic stability with low interest rates, low inflation and sound public finances. Many commentators have noted the growing confidence of employers. The Confederation of British Industry recently reported that optimism among manufacturers has continued to grow and is now at its highest level since April 1995. The Bank of Scotland's October survey reported that manufacturing output rose at the fastest rate since January 1998.

Our electronics sector continues to burgeon, with output in electrical engineering continuing its almost inexorable rise over the last six years—about 9 per cent in the latest four quarters. Service sector activity rose for the 12th consecutive month. There are opportunities for employment growth in the newer sectors, including biotechnology, software development, multimedia and call centres. Since 1 April 1999, 16 companies have announced plans to create nearly 8,500 jobs in Scotland. Yesterday we had further good news on unemployment. The trend remains firmly down, with the lowest claimant count for nearly a quarter of a century. As was mentioned by the chancellor last week, this is a wonderful opportunity for us to see employment rise and unemployment fall over the next months and years.

The chancellor's pre-budget speech last week showed the Government's intention to provide the right conditions for speeding up the modernisation of the UK economy by stimulating enterprise and entrepreneurship—a factor mentioned in the Conservative amendment.

John Swinney (Scottish National Party, North Tayside)

Will the minister tell Parliament what consultation the Scottish Executive had with the chancellor prior to the preparation of the pre-budget report?

Henry McLeish (Labour, Central Fife)

John Swinney will know that contributions were made to the Executive from the political parties in the Parliament on, for example, the climate change levy and the fuel escalator. All of those issues were raised in Scotland and have been discussed in this Parliament. As part of the normal machinery of government there has been dialogue with the Treasury and the Department of Trade and Industry on those and other issues. Even on matters reserved to Westminster, this Parliament has real power and clout and the Executive will use it at every opportunity to ensure that Scotland's interests are represented, whether on devolved or on reserved matters.

John Swinney (Scottish National Party, North Tayside)

I will pursue that point a little further in relation to the enterprise-friendly measures announced by the chancellor. A number of them are very welcome, but I am not sure that they are all tailored to the requirements of the company sector in Scotland. Does the minister have the discretion to tailor initiatives launched by the chancellor that apparently have a pan-UK dimension but which would better suit the company base in Scotland so that companies can maximise the benefits provided by those opportunities?

Henry McLeish (Labour, Central Fife)

I am happy to confirm that what John Swinney said is correct. The chancellor introduced a number of excellent measures on entrepreneurship, on small businesses and on the enterprise economy, as well as incentives for research. I will be happy to show the report to John Swinney when we receive it. We are now looking at the proposals to ensure that they are fine tuned for Scotland. In other areas, we are developing our own policies and initiatives and we have the funding to do so. It is important that the interface between what we do here and London is close so that Scotland gets the benefit of both.

Tommy Sheridan (SSP, Glasgow)

Is the minister aware of the recent Joseph Rowntree Foundation report that shows that the pressure to boost performance and cut costs has led to a serious intensification of work and has pushed job insecurity to its highest level since the second world war, causing health, family relationships and the long-term future of the economy to be put at risk because of the increased push on competitiveness? What is his response to that report?

Henry McLeish (Labour, Central Fife)

I am aware of the report but I do not recognise the interpretation that Tommy Sheridan has put on the findings— [Interruption.]—a view that is perhaps shared by the baby in the gallery. I agree that the basic economic foundations are there and that we are rapidly modernising. Unemployment is at the lowest level for a quarter of a century; we have all the ingredients for economic success. As an Executive we believe—and I am sure the Parliament agrees—that one of the ways in which to tackle social exclusion is to ensure that people have access to employment opportunities and to training and education in the learning society that we are trying to develop. Tommy has an over-pessimistic view of what is happening, but there are nevertheless real challenges in the UK and in Scotland and on that I am sure he and I can agree.

The chancellor announced new measures that will help to raise our productivity faster than that of our competitors, including the reform of capital gains tax and new incentives for corporate ventures and share ownership. The chancellor gave the clearest signal yet that this is a business-friendly Government that recognises that investment and risk taking must be better rewarded. I associate myself with his comments and I hope that they will be endorsed by the Parliament. We must look at new models to help the economy.

Alex Neil (Scottish National Party, Central Scotland)

Does the minister realise that Scotland's share of the benefits from the chancellor's pre-budget speech is outweighed by a factor of five as a result of the interest rates announced by the Bank of England? Any benefit to Scotland from the chancellor's measures has already been wiped out. Additionally, the increase in interest rates maintains a pound overvalued by about 20 per cent, with a devastating impact on our export industries.

Henry McLeish (Labour, Central Fife)

The latter comment on the impact on exports is simply untrue—the volume of exports in the second quarter of 1999 is up by 6.4 per cent. That suggests to me that rather than bemoaning the conditions that beset the economy, our exporters are working very hard to ensure that they win exports and prosperity and, more important, keep jobs throughout Scotland. Calculations based on the fantasy figures that Alex Neil has used produce fantasy results. The pre-budget report identified the key areas that will help us win success. No one in this Parliament should be decrying the chancellor's right to do that in the interests of the UK and Scotland.

The Scottish Parliament can help to fine tune our resources to fit the needs of Scotland, and it is helping to bring about a new confidence in our ability to determine our economic future. New models of working with business are taking shape.

That must be set in the context of the economic framework that is being developed by the Scottish Executive under the direction of the chief economic adviser, Dr Andrew Goudie. The framework looks at how economic progress can be accelerated while meeting our commitments on social justice and the environment. We are beginning a major process of consultation and I encourage members who would like to participate in this effort to make contact with Dr Goudie, who will be happy to meet them. I add, for John Swinney's benefit, that we want to have serious discussions on the new framework with the Enterprise and Lifelong Learning Committee.

Companies must tap into the latest ideas and markets and produce innovative products for them. That is what greater entrepreneurship is about. It is a risky process; it requires vision and courage to enter new markets, which may not in the short term produce the returns that the company would like. It is instructive that many of the new, highly valued, internet-based companies have yet to produce a profit. The UK generally lags behind our main rivals in this kind of entrepreneurship, but there are some very good role models. In recent years, huge successes have been chalked up in telecommunications, the utilities, financial services and transportation. We need to tilt the balance towards risk taking so that we are more often the first to benefit from new trends. We need a cultural shift towards greater acknowledgement of risk takers and the economic benefits that they can bring; towards not always rushing to condemn the risk that went wrong; and towards providing better rewards to those who harness the new ideas that are ultimately translated into employment. I think that that captures the spirit of the Conservative amendment. I have no hesitation in saying that entrepreneurship is a key issue for Scotland. We must build a national mood that values modernisation, seeks success and is confident and always aspirational.

So what do we need to do to accelerate the modernisation of the Scottish economy? First—and I hope that there is complete agreement on this—we must raise productivity across all sectors. We must build what has become known as a knowledge economy where we compete with the world on the basis of knowledge, ideas and innovation. We are currently drawing up an agenda for the new knowledge economy task force, which will help me to prepare further work plans early next year focusing on the key themes of business innovation and skills.

Secondly, we need to adopt a strategic approach. Tinkering simply will not be good enough. We need a coherent, comprehensive approach to the economy. That is why we are looking at manufacturing, tourism, the commercialisation of science, skills development and small businesses, because small firms are crucial to the Scottish economy. In that way we aim to bring all of that work together in the overall economic framework that I mentioned earlier, but we must also recognise the importance of modernising our transport, telecommunications and educational infrastructure.

Murray Tosh (Conservative, South of Scotland)

Will the minister say when the Government will make a statement on its strategic policy for Scotland's port developments, what it will do about Scotland's strategic rail freight developments, and when it will address the problems of the interface between England and Scotland—the M6 and M74 and the comprehensive upgrading of the A1—all of which are critical to Scotland's long-term transport infrastructure?

Henry McLeish (Labour, Central Fife)

That was a long contribution and I could reflect on it further. I take those points seriously. Scotland's infrastructure needs to be invested in and modernised. Indeed, Sarah Boyack has started to do that with her statement on the strategic roads review. All of those developments are part of the framework. There is no point in aiming for a sound, prosperous economy if we do not have the infrastructure to back it up. In Sarah's absence I am happy to pass on Murray Tosh's comments and, of course, they will appear in the Official Report .

Kenneth Gibson (Scottish National Party, Glasgow)

Is not it the case that the Minister for Transport and the Environment has not accepted that the M74 northern extension is a strategic road, despite the fact that the "Complete to Compete Report on the M74 Northern Extension" suggests that failure to accept the fact that the M74 northern extension is a strategic road and must go ahead will cost Glasgow between 6,100 and 6,800 manufacturing jobs?

Henry McLeish (Labour, Central Fife)

There is widespread agreement in Scotland about the importance of that link. Sarah reflected on the strategic roads review in her statement. Certain schemes are going ahead, while other big schemes are being developed further. There is no point in distorting the argument. Scotland wants a modern infrastructure and will get it, but some of the political parties have to face up to the fact that finance cannot be plucked out of thin air. We have to deal with harsh priorities and realities.

Thirdly, we must do more to create an entrepreneurial culture and new businesses. The document "Making it Work Together" sets targets: we want 100,000 new Scottish businesses by 2009; the establishment of a Scottish institute of enterprise by 2001; the introduction of a new business mentoring scheme by April 2000; and the rapid acceleration of technology transfer, including the commercialisation of science. Those are just a few examples of what we are doing.

Fourthly, we must broaden and raise our skill levels. If we are to embrace the lifelong learning revolution, we must connect resources and efforts in order to improve our education system at all levels. That is why we are committing resources to enable 42,000 more students to enter further and higher education by 2002. That is why we are setting up the Scottish university for industry and supporting the University of the Highlands and Islands. That is why we are going to create a further 10,000 modern apprenticeships and 100,000 individual learning accounts. Finally, underpinning all of those initiatives, that is why our universities and colleges will be at the core of our new economy.

Margaret Ewing (Scottish National Party, Moray)

Have all the University of the Highlands and Islands courses been ratified? If not, can we expect an early decision on any of them—they affect areas in my constituency?

Henry McLeish (Labour, Central Fife)

I am pleased to say that I was in Inverness yesterday having discussions with Inverness College and the University of the Highlands and Islands. Tremendous progress is being made in developing the programme. I am pleased to say that a number of courses have been approved, and more are in the pipeline. I would be happy to give Margaret Ewing an update on my visit.

Fifthly, we must embrace new technologies. It is all too easy to be overwhelmed by technological advances. It is even easier simply to ignore everything that is going on, or to decide "it's not for me". That is the way to economic ruin. We must embrace new technologies, such as e-commerce and biotechnology. All Scottish companies must be alive to the opportunities that exist and, even more important, to the threats that they present if competitors steal a march. We must empower ourselves to compete with the best in the world.

The new economy must be based on an inclusive approach. We will be able to make progress in Scotland if we focus our social inclusion strategy alongside our new economy proposals. Through new deal and area-based strategies we must stamp out the inequalities caused by deprivation and poverty. Access to jobs and education is the long-term key to solving those problems, and the Executive is committed to tackling them.

Unemployment is a subject that has raged in debate for nearly a century. Today, the rate of unemployment, as measured by the International Labour Organisation, which was over 15 per cent in 1984, is 7 per cent on a seasonally adjusted basis. The rate has halved, but it is still too high.

The seasonally adjusted claimant count of 5.2 per cent is the lowest rate since 1976. Reforms since 1997 have cut numbers in the youth and long-term unemployment new deal target groups in Scotland by 58 per cent and 36 per cent respectively. This is a wonderful opportunity for the country. The Chancellor of the Exchequer referred to it in his statement on the pre-budget report last week. For the first time in the past quarter of a century we have the prospect of employment opportunity for all, based on a clear definition of rights and responsibilities.

Unemployment rates are the lowest for a generation, but we can do much better. Measured unemployment in the 1950s and 1960s was always below 5 per cent. Indeed, it was below 3 per cent in some years. Even after allowing for changes in definition and other statistical health warnings, it is clear that there is further scope for employment in Scotland to rise and for unemployment to fall. The Scottish Executive's policies on the modernisation of the economy will help to take us in that direction.

Much activity is under way, but we are far from complacent. We must identify new ways of improving our productivity and competitiveness. Today, therefore, I am announcing our intention to identify and help develop centres of excellence for the industries of tomorrow. We already have a number of emerging centres of excellence, such as Prestwick for aerospace and Livingston for semiconductor research. Those centres not only provide local employment, but represent best practice in collaboration between companies, education institutions and the public sector. They have the potential to be important not only to the local economy, but to the Scottish and UK economies.

Over the coming months, we will identify further opportunities for developing centres of excellence. I can confirm press speculation from earlier this week that the Executive is working closely with interested bodies to develop a centre for engineering excellence at Rosyth. I hope to be able to announce more details on that matter early next month.

We want to create a truly modern economy that also promises full employment. We will need to ensure that the transition is handled sensitively and positively. People must be helped to find new jobs and skills. There is a crucial role for the Executive and for all of the economic agencies. It is in the nature of change in the global economy that there will be gains and losses. The task for Government and business is to be smart and focused and to use change to our national advantage. If we do that, there is no reason why full employment should not be possible. That is a sensible objective, and I look for the support of the Parliament in achieving it. I look forward to the debate.

I move,

That the Parliament acknowledges the very real progress being made to prepare the Scottish economy for the next century, but recognises the growing global competitive pressures it faces, that as a result modernisation of every sector of the Scottish economy will need to be accelerated and that public support is best targeted on initiatives which encourage modernisation.

John Swinney (Scottish National Party, North Tayside)

I welcome this debate on modernising the Scottish economy. It gives Parliament the opportunity to test effectively how the Executive is performing in leading the development of the Scottish economy to face the challenges of the future.

Having listened to what the minister said about modernisation, and having studied the points that are made in the Conservative amendment that stands in the name of Annabel Goldie, I am confused. The minister talked about the need to have a culture that embraces modernisation. If I interpreted him correctly, he seemed to be embracing the Conservative amendment, which would delete a reference to modernisation from the motion and insert in place of it some specific commitments in relation to the Government's work. I am sure that the deputy minister will clear up that point later.

As I listened to the Queen's speech at Westminster yesterday, I was struck by the defining characteristic. It had clearly been written by a Labour spin doctor. Her Majesty was almost unable to complete a sentence without using the word modernise. Of course, the speech was consistent with so much of the Government's rhetoric at Westminster and in Edinburgh. It seems that simply mentioning the word modernise solves all the challenges that we face—but what does modernise mean?

I suppose modernise means equip for the future and the challenges that lie ahead; being ready for change and embracing it rather than being fearful of it. I suppose it means responding to the Government's clarion call for action, or the support that is required will not exist.

I am concerned that that is not what the Government is offering today. I hope that this debate is not just another Executive time filler, with the danger that it confuses rather than clarifies the way ahead for Scottish companies. I fear that what we now hear from the Government on the debate about modernisation is another feature of its wanting to be seen to be doing things rather than getting on with doing them.

One of the criticisms that the SNP has regularly made of the Executive is that ministers continue to announce a range of initiatives that lack cohesion. It is nice in politics when somebody makes a point that enforces our arguments. I was intrigued by an article in the Sunday Herald at the weekend. Alf Young, who is one of Scotland's most distinguished economic commentators, opened his article with these words:

"Scotland's enterprise and lifelong learning minister Henry McLeish was complaining about 'initiative overload' on Friday . . . In the week when the chancellor's pre-budget report heaped even more enterprise initiatives on the already groaning pile, Mr McLeish was candid enough to admit that the plethora of agencies, task forces, programmes, initiatives and incentives clustered loosely under the enterprise banner is, in large measure, down to politicians anxious to be seen to be do something positive."

That is an admission if ever there was one.

I reiterate one of the SNP's criticisms of what the Government is doing and how it is going about policy making in this field. It must move away from this cluster of initiatives, programmes and press announcements. The cluster strategy seems almost to come from the number of announcements that are being made. We must have a comprehensive economic strategy for Scotland. I am often staggered by the fact that we do not already have one.

Henry McLeish (Labour, Central Fife)

I am willing to enter into a deal with John Swinney, which is that in my efforts to cut down initiative overload he promises in the debate today to give us one scintilla of an SNP proposal to improve the Scottish economy that is not about the waffle of macro-economic strategy or its obsession with interest rates. If he agrees to that deal and specifies the SNP's policies for improving the Scottish economy, I will be delighted to go further on my activity overload.

John Swinney (Scottish National Party, North Tayside)

The minister will not be surprised to hear that I will address that point later in my speech and give him some specifics that he can chew over with his extensive range of advisers.

I notice that the SNP's pleas for a comprehensive economic strategy for Scotland have reached the ears of the First Minister. He is going to make a speech tonight about the launch of the economic strategy for Scotland.

Nicol Stephen (Liberal Democrat, Aberdeen South)

No he is not.

John Swinney (Scottish National Party, North Tayside)

I read those reports in the newspaper and assumed that there was a vague element of truth in them. I am told that briefings were made to journalists yesterday about the fact that the economic strategy was going to be launched and that there was a lot of covering up for the fact that we did not have a strategy beforehand.

If the strategy is launched, it is important that it is brought before this Parliament. I would like to think that what the Minister for Enterprise and Lifelong Learning has told us this morning has been designed to give us a hint of what might be drawn together into that economic strategy and what it will tell us about the future direction of the Scottish economy.

We must ensure that the Parliament, and the Executive on our behalf, is truly in command of the direction of the Scottish economy. Ministers must have a vision of the type of economy that we are trying to achieve in Scotland. To do that, the economic strategy, upon which the Executive must consult widely and attempt to secure a broad consensus across the parties and across Scotland to support those objectives, must give clear strategic direction to all the partners in our society.

An implicit part of the minister's message this morning was the need for us to be technologically equipped for the future, yet the way in which the minister has handled it means that we are having this debate on a compartmentalised subject and we will have the debate about digital Scotland this afternoon. If digital Scotland is not at the heart of the debate about the modernisation of the Scottish economy, what on earth is?

I admire Mr McLeish's enthusiasm for the economic regeneration of Scotland and I support many of the initiatives that he produces because they are, in the main, good ideas about developing the Scottish economy. However, he does not run the whole show on this policy area as, for example, policy on digital Scotland is in the custody of the Deputy Minister for Children and Education.

Excuse me for asking silly questions, but I do not understand how this hangs together. If we are going to modernise the Scottish economy, we should give responsibility to the ministers who are responsible for the modernisation of the Scottish economy and give them the equipment to get on with it. We should not compartmentalise vital aspects of policy. I have been asking for weeks why Mr Peacock is in charge of digital Scotland policy. I have yet to get an answer.

Alex Neil (Scottish National Party, Central Scotland)

He has nothing else to do.

John Swinney (Scottish National Party, North Tayside)

That was a helpful comment from Mr Neil. I will move on.

A comprehensive economic strategy for Scotland, designed to develop and equip our economy for future challenges, would take many of the issues raised by the "Pathfinders to the Parliament" document—on electronics, transportation, manufacturing, textiles, tourism and the small business sector—to heart and build a coherent picture of what we are trying to achieve.

The points that Murray Tosh and Kenny Gibson made about the transport infrastructure are vital. We must draw those aspects together into a cohesive strategy for the future of the Scottish economy. That strategy must also have strong linkages to the existing tenets of economic development strategy in Scotland, particularly the cluster strategy that Scottish Enterprise has launched.

I notice that the First Minister is making his speech tonight at the Bank of Scotland dinner in Glasgow. I hope that the evening gives him an understanding of the need for the Scottish Executive to consider seriously the involvement of the financial services sector in the cluster strategy. That sector has developed enormous competitive strength for the Scottish economy over many years.

The Scottish Executive should not just build on the professionalism and high-quality employment that exists in the financial services sector in Scotland; it should provide an engagement between the enterprise agencies, the Scottish Executive and that sector to entrench our global position in financial services and build a powerful set of companies with professional expertise at their disposal. That sector is a prime target for the development of dynamic thinking about how to adjust our economy to new challenges and methods of generating wealth. I hope that the Executive takes that message on board.

In searching for this economic strategy for Scotland, we must be aware that not all of the devices that we need to use will be at our disposal. We are a devolved Parliament and to create that economic vision we must be able to use macro-economic powers.

Last week, the chancellor announced his pre-budget report. He called for a range of measures to stimulate an entrepreneurial culture in the UK. He concentrated on creating the right incentives for entrepreneurs and ensuring that young people learn the right skills to take advantage of a more entrepreneurial Britain. He called for the promotion and growth of business in deprived areas. He announced a huge programme of investment in the Massachusetts Institute of Technology and Cambridge University partnership. He talked of tax incentives and tax reliefs.

If those initiatives are not at the heart of the use of macro-economic powers to change, modernise and reconfigure the economic base of a country, I do not know what are. That is why our amendment refers to the need for the Scottish Parliament to be able to use macro-economic powers to deliver measures and initiatives that will be right for the Scottish economy.

I asked the minister what consultation there had been with the Scottish Executive about the contents of that report and what attempt there had been to secure synergy between the chancellor's announcements and the work of the Scottish Executive. Other than "on-going discussions", there was not an awful lot in the minister's answer. We have often found out that the use of macro-economic powers is of enormous influence in the pattern of the Scottish economy.

As we found with interest rates, those powers are not often used in the best interests of Scotland within the context of UK macro-economic policy. The minister made a comment about the formidable performance of our exporting sector. I would be the last person to decry the exporting sector in Scotland, other than saying that it is too narrowly focused, which is a real issue that we must wrestle with.

It is hardly surprising that, over the past few months, there has been an improvement in our export performance, given the seriousness of the problems with which the export sector has been wrestling over the past two years because of high interest rates.

As we consider the degree of change the Scottish economy requires, we must have confidence that the Executive has in place the measures to manage transition away from our traditional manufacturing base. We need to hear from the Executive how its approach to managing that transition differs from the economic dislocation that the Tories brought about in the 1980s. Measures need to be taken to ensure a smooth transition from dependence on the older, heavier industries to reliance on the newer, growth industries.

When considering how to modernise the Scottish economy, we must, as the Executive's motion suggests, be clear about what we are encouraging Scottish companies to do. The SNP supports encouraging companies to befriend information technology, to improve their business and manufacturing processes, to invest in new technology and new plant, to empower their staff and motivate them in a culture of lifelong learning, to change arm's-length suppliers into committed partners, and to embrace e-commerce. All those initiatives are important, but they are not enough.

I am happy that the Scottish Executive and the economic development agencies are advocating modernisation and pointing to the advantages that will accrue to companies that adopt modern practices and technologies to meet customer needs, but effective business people will modernise only when it will make their businesses more profitable and competitive. If they see clear-cut advantages in doing so, it will be hard to stop them modernising. As a result, they should be able to gain access to the finance that is needed to support that.

If we are setting out a comprehensive strategy for modernising the Scottish economy, we must relate to the real issues that face business as it tries to change, to achieve more sustainable profitability and to deliver competitiveness. We must be aware of three key issues that impact on business profitability and competitiveness: education; retained earnings; and research and development. With those in mind, I will set out our views on the challenges that we face.

In my opinion, an economic development strategy must encompass the three key factors that I have mentioned. Our European partners in Ireland have taught us how to modernise by investing heavily in education over a period of not a couple of years, but 20 years. Ireland is now winning new inward investors and experiencing high levels of indigenous business growth as a result of that 20-year investment. Most serious business people in Scotland now recognise their absolute need for educated staff and the benefits that flow from motivating and rewarding them. Investment in education is a vital component in creating the base on which we can build.

The second issue is retained earnings. In last week's The Economist, I noticed an advertisement that had been placed by the Austrian Government, stating that Austrian companies retain 83 per cent of their profits after total corporate taxes. That gives Austria the third lowest level of corporate tax in western Europe, behind Ireland and Portugal. The experience in Austria has been that lower corporate taxes encourage new businesses to start, foreign business to move in and the reinvestment of profits. If we in Scotland had access to macro-economic powers, we could deliver competitive advantage to our companies and to companies interested in building their activities base in Scotland by offering flexibility on business taxation, which is currently outwith the powers of this Parliament.

On research and development, we have some stiff lessons to learn. The Scottish Enterprise network strategy document that was published in January this year included a graph showing the amount spent on research and development as a percentage of gross domestic product in Scotland in 1996. The graph shows that Scotland invests less than half as much as a percentage of GDP as England, and less than a third as much as Japan. That looks bad, but when we take into account the fact that Japan's GDP per capita is approximately twice that of Scotland, it becomes clear that we are investing at less than one sixth of the Japanese level. If the minister tries to quieten my fears by saying that those frightening statistics reflect the fact that many Scottish businesses are owned from outwith Scotland, he will fail to reassure me. We need a secure headquarters base in Scotland for our businesses, with high value-added posts, so that real decisions can be taken here on investment in the future of individual companies.

We need an economic strategy to modernise the Scottish economy that draws on three fundamental strengths: investment in education; a competitive business tax regime; and the capacity of companies to invest in their organisations here in Scotland.

I am pleased that the Government is coming forward with an economic strategy for Scotland—if that is what it is doing—because such a strategy is required to draw together the proliferation of initiatives. However, it will face many challenges because of the limitations on this Parliament's powers to reduce the burden of business taxation and to take the quantum leaps that are required in investment in education and research and development. I fear that too much of the thinking that goes into the Executive's strategy will be directed from London and will lack input from this Parliament, our ministers and businesses in Scotland.

As the Government mulls over its economic strategy, I hope that it will have the vision that is required to assess the pace of change that we are experiencing. We may applaud jobs in new call centres—and I do. We may appreciate and admire the technological advances that are being made—and I welcome them. We can see that new jobs are being created, but we must realise that the pace of change is so fast and fierce that the perspective of any economic strategy must span more than two, three, five or even 10 years. It must equip Scotland for a reconfiguration of our economy that will last us for the truly revolutionary period to which the minister referred. It must last us well into the next millennium, to ensure that we do more than just catch up—as I fear we are doing at the moment—with the economic forces and powers that are at work in other fast-growing economies around the world. The strategy should allow us to lead that process with dynamism and vitality, as many sectors in Scotland have done in the past. We can do that if we harness the powers of this Parliament and acquire for it the power to shape the macro-economic future of Scotland, on which our prosperity will be built.

I move amendment S1M-296.2, to leave out from "encourage" to end and insert:

"will create new wealth and sustainable employment but regrets that these ambitions will be difficult to realise due to the absence of macro-economic powers from this Parliament."

Annabel Goldie (Conservative, West of Scotland)

I welcome the Executive's motion for two reasons. First, it offers for debate a subject that is of vital interest to Scotland. Secondly—and refreshingly—it does not seek to slaver fulsome praise and adulation all over the Executive. From Mr McLeish, I would expect nothing less. Those two features of the motion are innovatory, and I hope that they will become the hallmarks of future debates.

Mr Swinney referred to the Conservative amendment. We did not excise support for the concept of modernisation—that is specifically retained—but we framed our amendment as we did because we detected something of a tautology in the motion. If the amendment is read with the motion, it is clear that we embrace the need for modernisation.

The Conservative party is glad to contribute to a meaningful debate but finds the motion unexceptionable. Indeed, it is so anodyne as to be almost soporific—along the lines of a fireside chat. We want to amend the motion to focus attention on specific areas that, if they are not dealt with, will not only obstruct the modernisation of the Scottish economy but set us back from where we are.

Before discussing the motion and the amendment in more detail, a quick spring clean round the Executive's cupboard marked "Business" would be timely, because I see in there some items that should head for the skip without delay. They include excessive rolls of red tape—as the minister knows, a favourite theme of mine. There have been 2,600 new Labour regulations since May 1997, which represents grim news for business.

Joining the red tape is the box marked "No new roads", to which passing reference has been made. As an item in the Executive's enterprise portfolio, "No new roads" has no place in a modern enterprise economy. In the current economic climate, asking local authorities to assume responsibility for matters such as the M74 extension is like asking granny to take part in the 400 m hurdles. The Scottish Executive should not hide behind the skirts of local authorities, but examine the current enterprise budget and, with the private sector, identify funds for the improvement of our roads infrastructure. That is synonymous with sound business investment, as business cannot function without an adequate roads infrastructure.

Well worth taking out of the Executive's business cupboard and dusting down are two boxes marked "Education" and "Training". It might even be worth while looking in those boxes to see what they contain. If our education system and training schemes are driven by a vacuum of provision, rather than by the demand-led needs of business and industry, we shall end up hitting a wall at the end of a cul-de-sac.

In the recent debate on the Scottish university for industry, I asked the minister what consultation had taken place with industry and how industry had responded. Answer came there none. Inquiries that I have made from business about the Scottish university for industry have not elicited a flattering response. Such initiatives, if not validated by demonstrable business demand, are at risk of damaged credibility and dismissal as tokenism, which would be unfortunate, as there is merit in the concept of a Scottish university for industry.

If, in the Labour business cupboard, there is a shelf creaking with the burden that it bears, it is the shelf marked "Tax". That shelf is in danger of coming away from the wall. The Conservative party is calling on the minister and the Chancellor of the Exchequer to lighten that burden. I do not share Mr Swinney's observations on the merits of macro-economic decisions being taken exclusively in Scotland. I am a supporter of the United Kingdom and a firm believer in the union, particularly in the advantages that it has brought to our trading position.

Andrew Wilson (Scottish National Party, Central Scotland)

Leaving aside Miss Goldie's romantic attachment to the outmoded idea of Westminster, may I ask whether she agrees with Mr Swinney and the SNP that it would be useful for Scotland to be able to lower corporate tax to the Irish and Austrian levels? Would not she rather have the power to make such changes than the romance of Great Britain?

Annabel Goldie (Conservative, West of Scotland)

I get the feeling that Mr Wilson sees only the sweeties in the jar while I see their cost. My concern is that he talks about the merits of independence and ignores the possible disadvantages. We will never agree on the matter. I have confidence in the structure of the United Kingdom and I am in no doubt that it has brought immense trading advantages to Scotland.

Tommy Sheridan (SSP, Glasgow)

Will the minister give way? Sorry, I mean the member.

Annabel Goldie (Conservative, West of Scotland)

Married one week, promoted the next. Heady stuff, Mr Sheridan.

Tommy Sheridan (SSP, Glasgow)

I thought that flattery might help my chances of being allowed to intervene.

Does Miss Goldie agree that new Labour's credentials in supporting big business are impeccable, given that the rate of corporate taxation in Britain is lower than in any other European country?

Annabel Goldie (Conservative, West of Scotland)

I favour low taxation—Mr Sheridan will have his reasons for disputing that that is a respectable agenda. If new Labour has lightened the corporate tax burden, that is because it stole the idea from the Conservative manifesto, which I applaud.

The minister and the Chancellor of the Exchequer must consider ways of further lightening the burden of tax on business. I say that as someone who believes in the union but sees no paradox in discussing macro-economic matters in this chamber. An escalation of business tax equals regression, lack of growth and recession. The omens under new Labour—despite Mr Sheridan's comments—are not auspicious.

Alex Neil (Scottish National Party, Central Scotland)

Will the member give way?

Annabel Goldie (Conservative, West of Scotland)

I have a lot to get through and I want to make progress.

Tommy Sheridan (SSP, Glasgow)

You did not flatter her enough, Alex.

Annabel Goldie (Conservative, West of Scotland)

He has tried in the past, but to no avail.

An Organisation for Economic Co-operation and Development report published on 3 November shows that Britain has the fastest-rising tax burden in Europe. The tax burden is rising 30 times faster than that of France and 10 times faster than that of Belgium. We pay more tax than Ireland, Spain, Portugal, America and Japan. For the first time in a generation, we are paying more tax than Germany.

I do not list those statistics as a sterile litany of criticism of the Labour Government. I state them as evidence of the chilling reality of the situation. They are indicative of precisely the climate that business does not need. In relation to the motion, I suggest that careful note should be taken of the level of taxation.

If I find an unlikely ally in Mr Sheridan, I find an even more improbable one in Mr Livingstone, who, on 7 November, was honest enough to say

"we haven't increased the standard rate, but we have increased a lot of other taxes . . . we have done it with all these stealth taxes. I just think it would have been better to have honestly told people beforehand".

The fact of increased taxation is without dispute.

I have listed several areas in which the Government is impeding the growth of a healthy enterprise economy. However, this debate also provides an opportunity to think positively and adventurously. I hope that our amendment reflects that.

We are considering the motion and the amendments against an alarming backdrop—given the wording of the Executive's motion, it is also a perverse backdrop. According to the Scottish new business statistics, published by Scottish Enterprise on 12 November, 5,064 businesses were started in Scotland during the second quarter of this year, which is a decline of 12.9 per cent from the second quarter of 1998.

That is not the evidence that we want to have before us, but it leads to the text of our amendment, which is an attempt to broaden the debate and to make the phrase "modernisation of the Scottish economy" meaningful in the best sense.

The key is an expansion of the Scottish enterprise base. We lag behind the rest of the UK in terms of business start-ups. It is difficult to procure data, but I have been able to secure some information that suggests that the ratio of Scotland's business birth rate to that of the UK average improved during the five years to 1997. Although I recognise that there has been a modest reduction in the gap between Scotland and the rest of the UK in terms of business births, I have a document that says that the data

"merely underlines what was said in the Business Birth Rate Strategy when it was originally published in 1993: that closing the gap with the rest of the UK in terms of new business starts is a long-term task, requiring sustained effort by many people and organisations."

If asked about the most likely deterrent to the creation of a new business, any businessman will say that it is difficulty in securing finance. Scottish Enterprise says that

"the evidence certainly seems to suggest that problems in securing finance are seen as the biggest obstacle to start a business."

It also says that

"making it easier for people to gain access to finance, helping people to understand more about how to go through the process, could have a significant impact on the number of businesses that are created."

Access to finance is a problem that also dogs businesses that seek to expand. We need to encourage a change in lenders' attitudes from risk aversion—to which the minister referred—to an acceptance of risk as an investment. In Scotland, the trend is to leave as much risk as possible with the borrower. That contrasts sharply with attitudes in other countries, particularly the United States of America.

It is time for the Government to engage in a dialogue with the enterprise agencies and Scotland's major lending institutions to consider ways of changing attitudes and transforming our economic culture to one in which failure is not a stigma. In the USA, failure is regarded as a sign of having tried; in Scotland, it is a stigma. Our culture must change so that risk assessment is seen as respectable economic judgment.

Kenneth Gibson (Scottish National Party, Glasgow)

Would the member give way? I note that she is wearing a very beautiful jacket.

Annabel Goldie (Conservative, West of Scotland)

I cannot be seen to be bought by anyone. Sit down, Mr Gibson.

I suggest that we widen the debate, with our colleagues in Westminster, to consider fiscal encouragement to allow prosperous businesses to invest in other businesses. In America, that is succeeding well, because the Americans have a far broader enterprise base than we do.

Henry McLeish (Labour, Central Fife)

Will Miss Goldie give way? I ask without offering compliments.

Annabel Goldie (Conservative, West of Scotland)

Of course I give way.

Henry McLeish (Labour, Central Fife)

I wish to reinforce the point that Miss Goldie makes and to pose a question. Will she welcome the fact that Cyclacel in Dundee, which is working at the frontier of new technology in cancer treatment, received £4 million of its £8 million capital investment from Brian Souter and Ann Gloag? We want present Scottish success to invest in future Scottish success. Practical demonstrations of that illustrate the need for a change of culture.

Annabel Goldie (Conservative, West of Scotland)

I welcome a very helpful intervention by the minister, which well illustrates the point that I seek to make. In entrepreneurial terms, I wish that there were more Brian Souters and Ann Gloags in Scotland. We do not have enough of them; that is why we cannot generate self-expansion in the enterprise base, which is what we desperately need.

Whatever happens, we must recognise that the number of businesses does not increase because Government so commands. Yes, I applaud the minister's initiative of seeking to have 100,000 new businesses by 2009. However, in terms of a Government edict, that may sound praiseworthy, but it will not happen unless some dramatic changes begin to take place in Scotland.

I genuinely believe that we have an opportunity to do things for Scotland—we should seize it. I move amendment S1M-296.1, to leave out from "initiatives" to end and insert:

"improving our education system and our transport infrastructure; and in particular urges the Scottish Executive to promote an expanded enterprise base by encouraging a new culture of risk management in Scotland to enhance the opportunities for new and young entrepreneurs."

George Lyon (Liberal Democrat, Argyll and Bute)

On behalf of the Scottish Liberal Democrats, I welcome this important debate, which raises an issue that the Parliament should address.

As John Swinney said, there is similarity between what we are discussing now and what we will be discussing in the debate this afternoon on digital Scotland. There is a fair bit of overlap; that could have been thought through a little better.

The Liberal Democrats—like, I am sure, all members—welcome the decrease in the unemployment figures that were announced yesterday. Those figures demonstrate that we have a stable economy that is delivering real benefits: growth and a fall in unemployment.

What are the difficulties that face Scotland? They are the challenges that the Scottish Parliament has to take head on: we are a small, peripheral economy on the edge of Europe, which gives us severe disadvantages in some areas. We are remote from our major markets, highly reliant on exports—

Lloyd Quinan (Scottish National Party, West of Scotland)

Does George Lyon agree that, far from being a peripheral economy on the edge of Europe, we are the largest energy producer in the European Union?

George Lyon (Liberal Democrat, Argyll and Bute)

We are still on the periphery. If Mr Quinan had taken geography at school, he might realise that.

Fifty-two per cent of our exports are to the UK market and 29 per cent are to Europe. We are very much an export-driven economy. Another major problem that our economy faces is that we have a narrow base, in terms of spread and diversification; that has to be tackled over the longer term.

Previous speakers have alluded to the fact that we seem to lack a spirit—or culture—of enterprise. Again, any change will not occur by an edict of the Parliament. There is a severe cultural issue that we must try to address, not by stigmatising failure, but by praising those who have tried, failed and tried again, and have been successful the second time round.

As has been said, our business start-up rate is significantly lower than that of many other countries. The start-up figures in Scotland for the period 1980 to 1996 were 3.9 per 1,000 of the working population. The figure for the south-east of England was 6.9 per 1,000, which shows that we are lagging well behind. I welcome the partnership Government's commitment to creating 100,000 new businesses over the next 10 years. Again, that will not happen just through parliamentary edict. We must ensure that we establish the right climate to allow those businesses—and the jobs that they will bring—to be created.

Scotland is hampered by a lack of investment in research and development. Thirty-eight per cent of Scottish manufacturing plants carry out research and development, compared to 52 per cent just across the border in northern England. It is crucial that we address that gap if we are to develop a competitive business sector.

The Parliament must tackle all those challenges. However, Scotland has overcome massive hurdles in the past, especially in our manufacturing sector. Our manufacturing economy was wholly based on heavy engineering and metal bashing, yet we now see a complete transformation, in which the electrical sector dominates. We do not have to worry about whether Scotland has the ability to face up to change—that has been demonstrated in the past. The task for the Scottish Parliament and the Scottish Executive is to help that transformation as we face up to the new challenge of creating a knowledge-based and knowledge-driven economy.

Murray Tosh (Conservative, South of Scotland)

Will Mr Lyon acknowledge that one of the challenges that the Parliament will face is the increasing difficulty of moving our goods, whether the traditional manufactures or the manufactures of the future. I realise that he has only a little lectern today, but I hope that the Liberal Democrats have the independence to say that something needs to be done about our strategic transport links. So far, the partnership agreement has not addressed that issue.

George Lyon (Liberal Democrat, Argyll and Bute)

I do not think that we will be taking £100 million or £200 million out of the enterprise budget and switching it into the transport budget to address what Mr Tosh alludes to as a problem, as the Conservatives committed themselves to doing in the transport debate. I do not think that that is the solution and I do not think that industry thinks that it is the solution.

Annabel Goldie (Conservative, West of Scotland)

Will Mr Lyon clarify how the problem of the roads infrastructure should be addressed? That problem is what stands in the way of much of his very favourable comment.

George Lyon (Liberal Democrat, Argyll and Bute)

We will not spend £100 million of the enterprise budget to take on that challenge. As part of the strategic roads review, we have announced significant investment in new roads.

If we are serious about delivering the knowledge-driven economy and the lifelong learning agenda, it is vital that we break down the barriers between industry and higher and further education. By setting up a department of enterprise and lifelong learning, the Parliament has recognised that we need to bring those areas closer together.

In itself, however, that will not break down the barriers. If we look closely at the big company sector, we can see that it has seized the lifelong learning agenda and is starting to drive it forward. Scottish Power, for example, has spent £2 million over the past three years on promoting individual learning accounts for its employees; that should be welcomed. The company realises the benefits of investing in its work force; it realises that that is crucial if it is to remain competitive. The BP-Amoco executives to whom I spoke to last week reinforced the need to invest in human capital to remain competitive in the marketplace, and there is no more competitive a marketplace than the oil industry.

Similarly, attitudes are changing in the higher and further education sector. The agenda of commercialising the knowledge that lies within our educational institutes is being driven forward.

The real challenge, however, is how to engage the small business sector. There have been several conferences over the past few weeks on issues such as e-commerce and lifelong learning; at one or two of them, there was no representative from the small business sector, despite the fact that that sector employs 50 per cent of the working population. If we cannot engage small business in this agenda, we will fail.

Small businesses need better and easier access to information on lifelong learning. They need to understand the benefits of investing in training for their work force and to know that that will bring financial benefits. We need to bring small businesses into the lifelong learning agenda by establishing better networks between them and higher and further education.

Most important, we need fewer Government initiatives. Small businesses are bewildered by the number of Government initiatives. Mr Swinney referred to the plethora of initiatives that were announced in the chancellor's pre-budget statement last week: the national high-tech venture capital fund; the network of regional venture capital funds; the new challenge for community finance; loan guarantees; the new small business service; and the joint infrastructure fund for university buildings. I would be grateful if the minister would let us know how many of those proposals will affect Scotland, and what Scotland's influence will be on those initiatives.

Andrew Wilson (Scottish National Party, Central Scotland)

Will the Liberal Democrats support those initiatives if the minister introduces them?

George Lyon (Liberal Democrat, Argyll and Bute)

We need clarification of what they mean for Scotland and how much discretion we have in implementing them.

John Swinney (Scottish National Party, North Tayside)

I was struck by a feature—this confirms Mr Lyon's point—of the business taxation agenda in the pre-budget report. The chancellor tended to concentrate on headline business taxation for larger companies but had nothing to say on the business taxation regime as it affects smaller companies—for example, he had nothing to say on class 4 national insurance contributions. Does Mr Lyon share that view?

George Lyon (Liberal Democrat, Argyll and Bute)

I agree with some of what Mr Swinney says.

Clearly, how we help small businesses is an important matter. Small businesses employ 50 per cent of the working population. I believe that they are crucial to the further development of a competitive Scotland. Governments have to act as catalysts and enablers for change, rather than take a top-down approach. We need to examine closely the number of initiatives that are being introduced.

From the Enterprise and Lifelong Learning Committee's investigation, it is clear that there is scope for rationalisation in business advice and the enterprise network. That is a consistent message from the customers. I hope that we will make some clear recommendations on that issue.

E-commerce—I know that this impinges on this afternoon's debate—is a huge challenge for Scottish industry. We are lagging behind other countries and we must ensure that we catch up. This year, a benchmarking study by Scottish Enterprise revealed that Scotland is seventh out of the 10 countries surveyed. We have low levels of connectivity. Again, it is the small business sector that is lagging behind—we need to tackle that. Forty per cent of Canadian companies use websites, whereas only 22 per cent of Scottish companies do. It is important that the Scottish Executive recognises that and drives forward the e-commerce agenda.

Of course, there are areas in which Scotland is ahead. The Scottish Tourist Board's Ossian project is a classic example; it is an on-line tourism database that will give potential visitors to Scotland unparalleled information on events and accommodation, right down to the smallest bed and breakfasts, even in places such as Campbeltown and Tiree. That will bring real benefits to the rural economy and to small businesses. Those are tangible benefits of the e-commerce revolution.

However, if the Executive wants to set the e-commerce agenda, it must take action. We have a short time scale. I realise that the Executive will present an e-commerce strategy to involve industry and enterprise—I hope that that will happen in the new year. Last week, we heard that IBM, Dell Computer and Wal-Mart will be committed to 100 per cent e-procurement by the end of the year. The Scottish Executive, however, aims at only 25 per cent e-procurement by 2002—it is lagging well behind. The Executive must give a commitment to emulate the objective of private business. We should set our targets higher. That would result in significant savings; above all, it would demonstrate that we will lead by example. I hope that the minister will address the issue of e-procurement.

Finally, I will speak about the SNP amendment. As ever for the SNP, independence is the solution to all Scotland's problems—as modernisation is for the Labour party. The SNP seems to believe that, if it separates Scotland from the UK, the Scottish people will wake up the next morning, be seized by enterprise fever, rush out to create new businesses and discover that our financial institutions have suddenly become less risk averse. That is absolute rubbish. It is a fundamentally naive argument, which demonstrates again that the SNP's answer to every problem is the blunt instrument of independence.

Patricia Ferguson (Labour, Glasgow Maryhill)

We now move to the open part of this debate. I ask members to keep their speeches to four minutes or less.

John McAllion (Labour, Dundee East)

My hearing is not as good as it used to be, but I thought that I heard Miss Goldie say that the Tory amendment did not seek to slaver fulsome praise all over the Executive. If she did say that, I commend her for using such a good Scots word. I remind her that it is not the role of any member of this Parliament, irrespective of party, to slaver all over the Scottish Executive. I am sure that my party would be disappointed were I to seek to slaver over the Executive.

Annabel Goldie (Conservative, West of Scotland)

There is some confusion over who is slavering over whom. I was not referring to the amendment. I merely observed about the motion—and meant it—that it was refreshing to see a motion that was not fulsome in its praise and adulation of the Executive.

John McAllion (Labour, Dundee East)

I was trying to be complimentary, but obviously I have not made myself clear.

The thought that we need more Brian Souters and Ann Gloags in Scotland does not necessarily appeal to me. I do not know anything about those two people, other than that they are multimillionaires. If the argument is that we need more multimillionaires in Scotland, I disagree, as that would require a redistribution of wealth from the many to the few. I am in favour of the opposite—redistribution from the few to the many. I would like to take money off the multimillionaires and give it to other people, as part of a modern Scottish economy. That is what divides my party, or the one to which I think I belong, from the Tory party.

The Executive motion says that the way to prepare the Scottish economy for the 21st century and the competitive global pressures that it will meet is to modernise every sector of the economy. "Modernise" is a word that pops up everywhere today. All kinds of things are required to modernise: political parties, systems of education, the health service, the welfare state and even the dear old Commonwealth are told to modernise or die. People should be wary of that word and never take it at face value.

Certain questions always have to be asked: for example, what kind of modernisation, and in whose interests? In the current phase of capitalist modernisation in Scotland, and around the world, it is fairly clear who benefits most. Certainly, the equity markets around the world have never been stronger. According to the financial pages of the Scottish press this week, after the US Federal Reserve increased interest rates, Wall Street roared ahead. The sustained rise in American stock markets since 1991 has led to a series of headlines in the American financial press such as, "America is smug and prosperous" and "Fat and happy America." America has been so successful that the suggestion is that we should copy what the Americans have been doing. I remind members of the Parliament that 1 per cent of the American population owns half the stocks and shares in America; most of the rest of the shares are owned by the next 10 per cent. About 90 per cent of the American people have not benefited from the roaring ahead of Wall Street's equity markets.

This week's papers show that the same thing is happening in the United Kingdom. In one day this week in the City of London, more than 11/2 billion shares were traded for profit. We know who has profited from that trade. This week, Vodafone announced pre-tax profits of £879 million for the first six months of the year. Scottish and Southern Energy—a merger of two companies that used to belong to us all—announced pre-tax profits for the first six months of £197 million. It said that that was at the top end of its expectations.

When things go wrong, the shareholders continue to benefit. National Power has been busy selling off most of the assets that were privatised—mostly coal-fired power stations. Its share of the power generation market has declined from 46 per cent to 8 per cent, because it is selling off the assets. That is not a successful performance for a company. However, because of institutional pressure, National Power has announced a payout to shareholders of £600 million.

We know who is benefiting from modernisation: the owners, those who control capital, shareholders and the chief executives who pay themselves large salaries—they are doing very well. I am not surprised that Donald Gorrie was invited to the Scotland-England international by a chief executive, probably from one of those big multi-corporations that are doing well from the current phase of modernisation.

Who else has profited? What about the workers? Tommy Sheridan was right to ask about the increase in insecurity among workers in this country. Alan Greenspan, chairman of the US Federal Reserve, said that the miracle of the US economy is due to greater worker insecurity. Not everybody benefits from capitalist modernisation. What about the workers? When will someone in the Parliament raise that question?

There has been a massive step forward for workers in this country in the form of the national minimum wage. However, at a time when everyone connected with the boardroom is going through massive increases in salaries—

Patricia Ferguson (Labour, Glasgow Maryhill)

Will you wind up please, Mr McAllion?

John McAllion (Labour, Dundee East)

I am sorry—I did not realise that the time had gone so quickly. I had just got started.

Patricia Ferguson (Labour, Glasgow Maryhill)

I hope that you will finish quickly.

John McAllion (Labour, Dundee East)

I have been listening to all those long speeches and began to think that I had the same time, but that is not the case.

Let us think about ordinary working people. They are not benefiting from modernisation; until they do, our modernisation is not good enough.

Nicola Sturgeon (Scottish National Party, Glasgow)

Like John Swinney, I welcome this morning's debate. However, there are several points that I would like to raise. The motion talks about modernising all sectors of the Scottish economy; I hope that ministers are genuine in pursuing that objective. There is no doubt that the Executive needs a clear strategy to ease the transition from traditional manufacturing industries—where necessary—but it must not write off traditional industries that have an important role to play in the Scottish economy as we move into the new millennium.

I would like to take shipbuilding as a specific example of such an industry. There is a widespread but mistaken belief that the Scottish shipbuilding industry is a smokestack industry, struggling to drag itself into this century, never mind being ready to move into the next one. Nothing could be further from the truth. Shipbuilding is an extremely modern, high-tech industry, employing highly skilled workers. Some 4,000 people are directly employed in the industry and the work of thousands more depends on it. In recent times, the Kvaerner yard at Govan has built a prototype command ship for launching communication satellites into space and an oil drill test well vessel, for on-board drilling and processing. That is hardly smokestack—it is as high-tech as possible.

In his opening remarks, Henry McLeish asked for suggestions about centres of excellence. I suggest that there is a case for a centre of excellence in shipbuilding technology on the Clyde. I trust that the deputy minister will pass on that suggestion to the minister.

Shipbuilding is an industry under pressure. The Parliament needs to know what the Executive can do to protect and sustain shipbuilding and similar industries. The SNP amendment and John Swinney's remarks about the Parliament's lack of macro-economic powers go to the heart of the matter. I refer the deputy minister to an observation made by a Kvaerner spokesperson on 13 April 1999, the morning that Kvaerner announced its withdrawal from shipbuilding. The spokesman said that the strength of the pound had had a negative impact on our ability to be competitive. The question posed by John Swinney remains. What can the Executive do to protect the Scottish economy and its industries from inappropriate economic policies pursued by Westminster?

The experience of the shipyard workers in Govan during the campaign to secure a buyer for the yard did not do much to instil public confidence in the Scottish Executive, which was rather conspicuous by its absence. Ironically, there is a suggestion that it is the Executive that is responsible for the delays in GEC-Marconi's buyout of Kvaerner. Although we remain confident that the deal will go ahead, it would settle a few nerves in Glasgow if, in his summing up, the deputy minister reassured the workers of Kvaerner that the Scottish Executive is not responsible for any delays.

Finally, I want to refer to the external pressures faced by shipbuilding. The motion talks about global competition; the minister will be aware that the global competition faced by our shipbuilding industry is unfair. In particular, he will be aware of the allegations that South Korea is illegally subsidising its shipbuilding industry using International Monetary Fund loans to run its shipyards at a loss. That is particularly pertinent to the Govan yard as it bids for a Ministry of Defence contract, because one of the rival bidders intends to build its ferries in Korea. I would appreciate the minister's comments on that.

That matter will be pursued at the highest European levels, and rightly so. Last week, we heard about the Executive's record in pressing Scotland's case in Europe and how that record left much to be desired. The workers in shipyards in Scotland would appreciate the assurance of Scottish ministers that they will forcefully press the case for our shipbuilding industry in Europe.

We welcome the debate, but the Scottish people deserve to know that the Executive has the will, and more crucial, the power to do everything that is necessary to sustain industries in Scotland and to build a vibrant economy that is fit for the next millennium.

Rhoda Grant (Labour, Highlands and Islands)

I welcome the opportunity to debate the modernisation of the Scottish economy and the actions that we must take to ensure that that happens.

On the one hand we have enterprise and on the other we have social justice. Since 1997, the Labour Government has shown that those two objectives are not mutually exclusive. Governments can encourage businesses to be competitive but also to seek social justice.

Our society is changing beyond all recognition because of global forces. Global forces tie our economies together, which means that we cannot simply act alone. Access to information has greatly increased with the growth of the internet. Therefore, there needs to be an emphasis on giving people access to the sources of information enjoyed by many of us in the chamber.

The Executive has emphasised the need for social inclusion; part of that is about having the opportunity to engage in the knowledge economy. There are barriers to economic growth, and it is our job to address them. Having talked to constituents, I believe that there is a distinct lack of knowledge about the initiatives that are already in place. As a consequence, people do not know how to access knowledge and services.

Asking some people to draw up a business plan for a new enterprise can sometimes prevent them from putting a good idea into practice. We need facilitators based in communities to advise and assist people to develop their ideas into real initiatives.

During the past 20 years, our economy has totally changed. There has been a decline in the manufacturing sector, leaving behind much pain and disenchantment for the communities that have been affected. In its place, the service sector and the information technology sector have grown. Those sectors, with their new demands, require a re-equipping of our work force so that people can work in them.

In rural areas, we have seen the decline of traditional industries such as farming and fishing. Other types of employment are hard to find. With the innovations of modern technology, that can change. Indeed, it has already begun to do so.

I agree with the minister that the University of the Highlands and Islands is an important development. It aims to bring knowledge closer to people, by creating small learning centres in remote communities. I cannot emphasise enough the importance of that development. Communities that have previously felt neglected will have the opportunity to take part in learning. The UHI will also give our young people the opportunity to stay at home to study, rather than having to leave. That raises the prospect of young people staying and studying in the Highlands, where they will, I hope, contribute to the economy. It will stop young people being cleared from the Highlands in search of education and opportunities. Through learning, we can equip our young people with the necessary skills to play an active role in the expansion of the Scottish economy.

There is much to be done, and I am greatly encouraged that the Government recognises the specific needs of the Highlands and Islands. To ensure that progress continues, we need investment in infrastructure. Multinational companies that control the digital links must be made to address the social need of providing those services in rural areas. I urge the minister to hold talks with those organisations, to ensure that the infrastructure required does not stop in towns, but is continued into villages and crofting communities. If that happens, the geographical barrier need not be considered a major issue when it comes to equipping our rural work force with the necessary skills and knowledge to participate in the Scottish economy in the 21st century.

Lloyd Quinan (Scottish National Party, West of Scotland)

I welcome the opportunity to debate the modernisation of the Scottish economy. Unfortunately, there was only one welcome contribution from the Labour benches—the speech by John McAllion, who seems to have some understanding of history.

We have become used to hearing regurgitated statements and figures from the Labour party. As I listened to Henry McLeish, I was reminded somewhat of a speech that was given on 1 October 1963 in Scarborough, in which more or less everything that Mr McLeish said was flagged up:

"We present this document to the nation, Labour and the Scientific Revolution, because the strength, the solvency, the influence of Britain, which some still think depends upon nostalgic illusions or upon nuclear posturings—these things are going to depend in the remainder of this century to a unique extent on the speed with which we come to terms with the world of change.

There is no more dangerous illusion than the comfortable doctrine that the world owes us a living."

I quote:

"The danger, as things are, is that an unregulated private enterprise economy in this country will promote just enough automation to create serious unemployment but not enough to create a break-through in the production barrier."

I quote:

"The problem is this. Since technological progress left to the mechanism of private industry and private property can lead only to high profits for a few, a high rate of employment for a few, and to mass redundancies for the many, if there had never been a case for Socialism before, automation would have created it. Because only if technological progress becomes part of our national planning can that progress be directed to national ends."

I quote:

"That this country should not be able to provide employment for boys and girls leaving school and going out into the world for the first time is an intolerable reflection on our so-called civilisation. Galbraith warned the world a few years ago that social imbalance is the inevitable consequence of the unplanned affluent society, and we are finding this imbalance in the growing number of young people and of old people who cannot find employment. That is why we need the new industries, the revitalisation of declining industries and declining areas, to provide new hope for the nation's youth."

I quote:

"We are re-defining and we are re-stating our Socialism in terms of the scientific revolution. But that revolution cannot become a reality unless we are prepared to make far-reaching changes in economic and social attitudes which permeate our whole system of society.

The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or for outdated methods on either side of industry."

Those words were spoken 36 years ago at the Labour party conference. There was no mention this morning by Mr McLeish of the trade union movement. Only Mr McAllion talks about the modernisation of the Scottish economy and about the workers in that economy. "Access to work," Mr McLeish says to us. What about access to work for the 374 prison officers who are about to lose their jobs courtesy of the Government's cutbacks?

What has happened in the intervening 36 years, and during the three Labour Governments that have existed in that time? Why are we again discussing a keynote speech made by a socialist leader of the Labour party, who pointed out, many years ago, what needed to be done in our economy? Where in the minister's statement this morning is the planning that Harold Wilson suggested? Where is the recognition that we need macro-economic control, and that unbridled private capital must not build and run our schools, and build our bridges? There have been many questions from the Tories about the necessity for us to develop our infrastructure. Will that development come from unbridled private money?

There is nothing in the statement for the working people of Scotland. Nothing.

Nick Johnston (Conservative, Mid Scotland and Fife)

Like John Swinney, I was astounded to be told at a recent meeting of the Enterprise and Lifelong Learning Committee that Scotland has no national strategy. That view was also expressed recently by Ray Perman, chief executive of Scottish Financial Enterprise. He attacked the Government for failing to consult business on its national economic strategy.

I am always reluctant to criticise Mr McLeish—who I am sorry is not here—because to berate someone who oozes such good intentions seems somewhat churlish. However, I remind him that he is not a builder of roads to Hades, but the enterprise minister, and Scotland's economy needs more than good intent.

I welcome Mr McLeish's acknowledgement of the long haul that we face in Scotland, but surely the biggest hurdle to building an enterprise Scotland is the failure of Labour's education system to teach our young people to read and write. If we cannot teach children to read and write, what hope do we have of creating a knowledge economy? As a first step, the minister should take Scotland's excuse for an education minister by the throat and demand that he create a climate in schools where basic learning is re-established as a priority.

Perhaps then Mr McLeish would not have to face the unpalatable fact that Labour's new deal is failing miserably. He mentioned Labour's plans for job creation, but new deal is simply not working. It is failing 60 per cent of its participants, and only 7,000 of the 16,000 who have left new deal have gained full-time jobs. Recent research suggests that a large proportion of those people would have found their jobs without new deal anyway. Over a quarter of new deal successes are now back on the dole.

Perhaps when he sums up, the deputy minister will tell us how many young people are still in gateway after six months. We in the Conservative party believe that the best way forward is to provide young people with real experience, and we believe that business and industry—and not whatever approach the Government believes to be in vogue—are best placed to provide such experience. That is why we propose that all 16 to 18-year-old school leavers should be given access to a training apprenticeship through training vouchers that they can present to an employer or training provider of their choice. That would include the traditional apprenticeships such as those in the building trades, engineering and the sunrise industries.

I would like to talk about business start-ups. Research on business creation suggests that the low start-up rate in Scotland is accounted for by low rates of home ownership, low presence of professional and managerial skills, and population loss. Scottish individuals are less likely to be interested in forming their own firms and have greater difficulties in translating interest into action. That is mainly because of lower interest among Scottish women. It is interesting that in the United Kingdom, 33 per cent of business start-ups are by women, while in Scotland the figure is only 24 per cent. It is also interesting that in America 38 per cent of private companies are owned by women.

In Scotland, there seems to be a greater desire for job security, and an aversion to taking risks by individuals and by the private sector. There is a belief that family life will suffer as a result of becoming self-employed.

Scottish companies have failed to develop an innovation culture, and are much less willing—compared with the rest of the UK and with Ireland—to undertake research and development, to formalise the innovation process, and to involve key employee groups. However, we have a blueprint for the regeneration of Scotland. We should be encouraging entrepreneurial skills at school by appointing a dominie of entrepreneurship in every school. Furthermore, there should be classes in true-life business studies, and schools should be allowed to compete in running a profitable company with the incentive of a major reward at the end of the exercise.

We need a lower-value pound and incentives for start-up companies and companies in depressed areas. Furthermore, we need a lower fuel tax; a restructuring of local enterprise companies and training companies; less bureaucracy and planning; more ferry traffic between Scotland and the continent; and the strengthening and promotion of business tourism.

Fine words, computers and fine words do not create jobs; people do that. The main thrust of Scotland's economic regeneration must be encouraging people to create jobs, not just by the creation of new businesses, but by the encouragement of existing businesses—

Bruce Crawford (Scottish National Party, Mid Scotland and Fife)

rose

—

Nick Johnston (Conservative, Mid Scotland and Fife)

I must finish.

That regeneration can be helped further by the removal of onerous planning burdens, the provision of clear, unambiguous, non-confusing business advice and access to training provision that is relevant and demand led. Above all, there must be investment in Scotland's transport infrastructure. I support the Conservative amendment.

Cathy Jamieson (Labour, Carrick, Cumnock and Doon Valley)

I disagree with Lloyd Quinan's comment that there was nothing for ordinary working people in the minister's statement. Although I have reservations about some of the proposals, the clearest message from the minister was his commitment to creating employment and that our ultimate aim is full employment. That is the best message to give my constituents, who live in an area with one of the highest levels of unemployment in the UK.

I know that Henry McLeish has a great interest in my area, because he recently opened a new initiative in Girvan, which has persistently high unemployment. He spoke to people in the town and was concerned to take things forward.

Furthermore, I welcome the success of various initiatives that have brought new jobs into communities. I also welcome the motion's recognition of the difficulties of the global competitive economy and the pressures that they create in Scotland. I have already raised that issue in several parliamentary debates on the manufacturing sector, on our relationship with the European Community and on regional selective assistance.

Although we need to modernise the economy by bringing in new industries, I share some of John McAllion's reservations. As I am a member of the Transport and General Workers Union, I do not need lessons from any member from any political party about what is happening in, for example, the textile industry in my area. Some of the manufacturers and high street stores are opting to sell cheap imports from countries with working conditions and pay that would not be tolerated here.

The factories and work forces that have been affected have attempted to modernise by changing working practices and shift patterns. In some painful instances, the trade unions have been involved in discussions that have led to people taking redundancy to allow companies to survive. I can give chapter and verse of examples of that in Carrick, Cumnock and Doon Valley. The problem is that people do not necessarily receive any thanks for taking redundancy. The Christmas present for workers in one factory in my area might be their redundancy notice if there are no other orders.

There are problems with the coal industry, another of the indigenous industries in Carrick, Cumnock and Doon Valley. There is a particular difficulty with transporting coal. Members will be aware of the phrase, "coals to Newcastle". At the moment, coal is being stockpiled in the Ayrshire coalfields because cheap, imported coal is being used at Hunterston power station and at other places. For a number of reasons, we cannot implement our policy of getting coal and other freight off the road and on to rail.

Murray Tosh is right to say that we need to re-examine the transport infrastructure, although I might disagree with his proposals. If we are to compete in the global economy, areas such as Ayrshire will need to formulate plans to build on improvements that have already been announced by the Executive. Although the upgrading of the A77 will be a huge boost to the area, the A70 and other routes also need to be considered. We must build on our commitment to reduce the amount of heavy goods on the road.

Although I welcome the £2.5 million investment in a new railhead near New Cumnock that Sarah Boyack announced not so long ago in my constituency, such investment will not help if companies such as English Welsh & Scottish Railway do not have the rolling stock and Railtrack cannot shift the freight. The problem raises a number of issues that we have to address.

There are some initiatives in my area that we should be progressing, particularly the Ayrshire electronic community project, which is based in Cumnock with links to other parts of Ayrshire.

The other night in Cumnock, I spoke to a group of women whose families have been affected by drug abuse and drug problems. I asked them to tell me the most important thing that the Scottish Parliament could do to help them. Their answer was, "Give us jobs and give us some hope." The minister's statement gives us that hope, and I look forward to working with him.

Keith Raffan (Liberal Democrat, Mid Scotland and Fife)

Two sets of statistics have rightly dominated this debate. The first concerns business start-ups. In Scotland, there are 1.7 business start-ups per 100 businesses; in the UK, there are 3.4 per 100; in the US, 6.9 per 100. The second set of statistics shows that research and development spending by Scottish businesses is less than half that of UK businesses. We must continue to improve our capacity to transform ideas into successful businesses. I know from his recent article in The Herald that Mr McLeish has recently returned from silicon valley and is firmly of that view.

We must encourage and support our world-class research and develop the business application of ideas beyond the obvious existing examples. The Petroleum Science and Technology Institute in Aberdeen is a prime example of linking academia and the commercial sector. We also have the Dundee-Glasgow-Edinburgh biotech triangle. Might I add that I strongly support the plans for an applied research centre for biotechnology in Dundee to bridge the gap between the academic and commercial biotech sectors.

Several Mid Scotland and Fife MSPs, including me, were extremely impressed when, recently, we visited the University of St Andrews for the day. Bruce Crawford, who also attended, will confirm that. We visited the physics, chemistry, marine biology and health care departments, and heard about the existing and potential commercial application of academic research. It was interesting to learn that, even though health care research has been developed to such a high level at St Andrews, the department has found more business outside the UK than within, even from within Scotland. Perhaps the minister could pass that information on to the Minister for Health and Community Care. We should be the customers of our own research establishments.

Business schools have a crucial role to play in transforming ideas from a research and development base into successful businesses. However, nine of the top 10 business schools are in the US. I therefore welcome the UK Government's initiatives to establish links between British and French business schools and universities and the tie-up that Mr Swinney mentioned between the University of Cambridge's Judge Institute of Management Studies and the Massachusetts Institute of Technology's Sloane School.

I believe that that is the way forward. For example, the London Business School has set up a business incubator unit, which is modelled on a similar unit at the University of California at Berkeley. The unit holds up to 12 companies for a year each. They come to the unit with a business idea that they develop into a business plan and for which they then try to obtain venture capital. As the companies are at different stages of development while they are in the unit, they are able to learn from one another. The incubator unit has also set up Sussex Place Investment Management Limited, which is a venture capital firm that manages funds for some of the bigger venture capital firms that do not traditionally invest in smaller businesses. We should investigate the potential application of such a model in Scotland.

Henry McLeish (Labour, Central Fife)

My intervention will be brief. I endorse Mr Raffan's comments. We have an incubator unit in San Jose that allows Scottish companies to become involved in America virtually overnight. Furthermore, there are similar units in Dundee, from which Cyclacel evolved.

Keith Raffan (Liberal Democrat, Mid Scotland and Fife)

Absolutely. I am not saying that there are no incubator units here—there are, but they are not of the business kind. I think that we should, therefore, examine particularly closely the London Business School model. As the minister recently said, Scotland is third in the world for research citations, but our research and development level is half that of the United Kingdom. There is a gap between ideas and commercial exploitation—turning ideas into small, growing businesses.

As my party's social inclusion spokesman, I welcome the chancellor's initiatives to help businesses to take root in poorer areas. However, it is crucial to realise that the initiative will come to nought if there is no infrastructure support. We spend far less than other countries on transport—50 per cent less than Germany and 35 per cent less than France. Many of our poorer areas suffer from inadequate road communications. Clackmannanshire is a well-known example. Despite its central location, it has no good links to the motorway network. In communications terms, it is cut off and isolated. We urgently need the Clackmannanshire bridge—as it has now become known—the completion of the A907 and the restoration of the local rail network. For the SMART village and the social inclusion project in Alloa to be really successful, communication links must be improved.

The Government deserves credit for current macro-economic stability and for the stability in our public finances. It is right for the chancellor now to turn his attention to micro-economic reforms and initiatives. I hope that the Scottish Executive will take those initiatives further in an innovative and imaginative way. The chancellor willing, they will be backed up by infrastructure investment. We need a holistic, cross-cutting approach all the more because we are, as Mr Lyon said, geographically disadvantaged. We are situated on the periphery of Europe, the centre of gravity of which continues to move eastwards.

Michael McMahon (Labour, Hamilton North and Bellshill)

The Scottish economy is in good shape, despite the all too frequent attempts by nationalists and Tories to talk down the achievements of countless thousands of working Scots, managers, inward investors and the development agencies.

Kenneth Gibson (Scottish National Party, Glasgow)

Is Mr McMahon aware of the report on regional unemployment published by Sheffield Hallam University in July, which states that, in Glasgow, the want-to-work rate—the Trades Union Congress measure of real unemployment—stands at 30.7 per cent? Does he accept that that is a savage indictment not only of 18 years of Tory misrule, which cost the city of Glasgow 70,000 manufacturing jobs, but of the new Labour Government, which has failed to tackle the problem appropriately in the two and a half years since it was elected?

Michael McMahon (Labour, Hamilton North and Bellshill)

I am not aware of the report to which Kenny refers. We are improving on what was left to us. The situation may have been bad in the past, but things are better today. That is the point that I am trying to make. Yet again the SNP is trying to talk down the achievements of the Government. Kenny has just made my point for me.

It is clear that sound fiscal control and good economic management by the Scottish Minister for Finance and by the chancellor at Westminster have been the cornerstones of the stability that we currently enjoy. That fact goes against the grain of John Swinney's amendment and his argument about the sharing of macro-economic responsibilities between Scotland and the rest of the UK. In almost all the key areas of the economy, the news is positive. Lloyd Quinan may say that the figures are regurgitated, but why should we hide good news? Output in our production industries was up 1.8 per cent in the second quarter of 1999. The manufacturing sector, which is so important to constituencies such as mine in Lanarkshire, also showed a 1.2 per cent increase over the second quarter. Output in the electrical and instrument engineering sectors rose by 8.7 per cent in the same period. Total manufacturing exports in the second quarter of 1999—

Andrew Wilson (Scottish National Party, Central Scotland)

I am grateful to the member for giving way, given that he has only a short time. Will the member comment on the fact that that manufacturing figure is half that of the trend growth in the economy and on the fact that the manufacturing sector is falling behind?

Michael McMahon (Labour, Hamilton North and Bellshill)

We can argue about the statistics, but manufacturing is improving. The SNP does not want to see the improvements. The member can talk them down, but I want to talk up the good news in the economy.

In the second quarter of 1999, the level of export sales in the manufacturing sector increased by 6.4 per cent in real terms compared with the previous four quarters. We have low and stable inflation—the lowest for 30 years. The retail prices index is low and has varied within a tight band of between 2.1 and 2.7 per cent during the past year. The story continues.

Annabel Goldie (Conservative, West of Scotland)

Will the member give way?

Michael McMahon (Labour, Hamilton North and Bellshill)

I keep being interrupted. I have only a couple of minutes, so I hope that the member will not mind if I carry on.

The Scottish Executive is delivering a stable and modern economy that is helping to increase prosperity for everyone. For more than 200 years, Lanarkshire has been the manufacturing heartland of the nation and of Scotland's economy. The heavy industries that once dominated in Lanarkshire have been disappearing, but they are being replaced by new, modern workplaces in high-tech sectors such as engineering, electronics and services.

The people of Lanarkshire have faced many hurdles over the years in the search for prosperity—I do not want to recount them here—but those same people, whom I represent, have adapted to the new era. They have equipped themselves to take advantage of the new opportunities that are encouraged by the strong, modern economy that the Executive is delivering.

We know what businesses in Lanarkshire and elsewhere need—this may upset John Swinney, given his earlier comments—because we have listened to them. They want a modern, strong and fair economy, backed by a modern and credible Government that is committed to working with industry and to modernising the country.

Employers know that the Government strategy for economic growth is serving Scotland. The Government has delivered the lowest ever business tax rates, with the main rate of corporation tax cut from 33 to 30 per cent, small business rates cut from 23 to 20 per cent, and corporation tax for the smallest companies cut to just 10 per cent from April 2000. As a result, 11,000 companies from all over the globe and based in Lanarkshire know that they are better off under this Executive.

In Lanarkshire, as elsewhere, we know that we must not only attract inward investment—valuable though that is—but encourage indigenous businesses to flourish, which will utilise the immense talents of the people of the area. Nearly 12.3 per cent of Scotland's population lives in Lanarkshire. Those people welcome the Scottish Executive's commitment to create 100,000 new indigenous businesses by 2009. That is a promise from this Executive to Scotland's people. Businesses will be well served by a modern Lanarkshire that is home to prestigious international business locations, such as Eurocentral, Tannochside park, the Strathclyde business park and the technology park in Hamilton.

The Executive is committed to Scotland's economy. It is initiating a Scottish labour market unit, creating 20,000 modern apprenticeships and a university for industry, and introducing a new business mentoring scheme. Scotland's Executive is working with Scotland and with the UK Parliament to deliver for business and industry in Scotland. It is delivering a modern economy for our people and for the people I represent. That agenda, Lloyd Quinan, includes working with the trade unions in every sector of the economy.

George Reid (Scottish National Party, Mid Scotland and Fife)

I deplore the growing practice of members conducting private conversations during debates, especially when they turn their backs on the member who is speaking.

Brian Adam (Scottish National Party, North East Scotland)

I want to talk about how we can reinforce the success of the Scottish economy. I will address myself to particular sectors, to one of which the minister has referred several times—the biotechnology sector. The minister mentioned two companies, Remedios in Aberdeen and Cyclacel in Dundee. Those companies are at the cutting edge of new technologies and should be encouraged, but is the minister aware that there are concerns about how to make the sector grow?

One of the companies raised with me its concern that the problem in attracting similar companies to Scotland is not finding more money, but the fact that such companies must deal with a plethora of bureaucracy. I hope that Mr Stephen will give us some indication in his winding-up speech of how he intends to tackle the problem of firms that want to move to Scotland having to spend more time dealing with administration than getting on with setting up their business. I welcome the significant growth in the biotechnology sector. We want to create a climate in which not just the financial, but the administrative package that is offered means that Scotland is the first place to which any company wants to come. We must deal with the problems in that particular regard.

I also want to mention the oil and gas industries, another major success. I note that in the last week, Mr Tony Mackay, one of our economists, said yet again that those industries have reached their peak and that we can look forward to the downturn. How many times have we heard that over the past decade or longer? Nevertheless, it is a sign of mature province that such comments are made regularly.

We keep hearing calls to internationalise our industry. There are significant successes, but perhaps not nearly as many as we would like. I hope that the deputy minister will also advise us how the plan encourages the globalisation of our industry, and does not just concern other companies having success in the area.

The skills associated with the oil and gas industry have great spin-off potential. We have seen that in the software industry, a large part of which, in the Aberdeen area, has spun off from the oil and gas industry. There is a significant potential there for growth, and for the skills associated with the oil and gas industry to be used in tackling environmental problems. There is also potential for those skills to be exported and for industries to grow from that.

Margaret Ewing (Scottish National Party, Moray)

In the context of earlier points on competition law, does Brian Adam agree that one of the difficulties in exporting some of the skills gained in the oil and gas industry is the unfair competition from countries such as Korea, in fabrication for example, and that that issue should be examined by the Scottish Executive?

Brian Adam (Scottish National Party, North East Scotland)

I readily acknowledge that, and thank Mrs Ewing for her intervention.

I want to develop the point about the considerable success of what is often seen as a staid industry: our financial sector. It is a great strength in the Scottish economy and provides a large number of jobs. But it is not a staid industry; it is a dynamic industry. There have been significant innovations in the sector in recent years, including Direct Line, link-ups with various supermarkets and even aggressive takeovers being considered. I ask the deputy minister to say how the Executive will encourage the financial sector to deal with the innovation of e-commerce and the potential offered by Europe, particularly with the changes in regulatory requirements.

Bruce Crawford (Scottish National Party, Mid Scotland and Fife)

rose—

Brian Adam (Scottish National Party, North East Scotland)

I am quite happy to give way.

George Reid (Scottish National Party, Mid Scotland and Fife)

We must come to an end now if we are to include Tavish Scott.

Brian Adam (Scottish National Party, North East Scotland)

In that case, that is all I have to say.

George Reid (Scottish National Party, Mid Scotland and Fife)

I call Tavish Scott, but I am afraid that you now have only three minutes.

Tavish Scott (Liberal Democrat, Shetland Islands)

I am grateful for that advice, Presiding Officer.

I want to pick up on a couple of points on transport that Murray Tosh, Cathy Jamieson and Kenny Gibson made earlier. On modernisation—that sometimes despised word—it is important to recognise that public moneys, carefully targeted on a variety of modes of public transport, are an important investment in the future of the Scottish economy. Investment in transport unblocks the arteries of our economy and is especially needed. We need a modern, efficient and affordable transport system to move both people and goods. We must be prepared to address those needs and target our spending to meet them.

Professor McKinnon of Heriot-Watt University argued, at a transport conference in Glasgow a couple of weeks ago, that average transport costs comprise 2 to 3 per cent of Scottish companies' sales revenues. He pointed to the importance of minimising the impact of congestion to improve economic output by rescheduling deliveries. He quoted the figure of

"15% of lorry traffic between 8pm and 6am"

and mentioned the need to use

"Alternative modes and routes - north sea ro-ro links and railfreight services".

Other members mentioned those matters earlier.

Murray Tosh (Conservative, South of Scotland)

Does Tavish Scott appreciate the significance of places such as Hull for the future of the Scottish economy? Will he indicate what the approach of the partnership and the Executive is to upgrading the M74 into England and completing the dualling of the A1—from a strategic point of view?

George Reid (Scottish National Party, Mid Scotland and Fife)

You have a minute and a half, Mr Scott.

Tavish Scott (Liberal Democrat, Shetland Islands)

I will come back to Murray. We have had this discussion before, and those issues have been considerably debated. I have a minute and a half and I want to make two or three other points.

The Highlands and Islands and the Borders lack the basic transport infrastructure necessary for their economies. Airports could modernise our economy, and investment in them, to which we do not currently pay enough attention, is particularly important. Tourists can be brought in and businesses can export through them.

An extension to the runway of Sumburgh airport in Shetland, for example, would allow airlines to make better decisions. If instrument landing systems—ILS—were introduced at Kirkwall airport, that would improve the service to the Orkney tourism industry. At Inverness, passenger service charges handicap the development of the local economy. That point was made by the local chamber of commerce. Representatives of a local aviation company at Wick wrote to me recently. They claim to be handicapped by the restriction on hours of operation. Investments in the examples that I have mentioned would improve the economies in those areas.

We need to invest in air transport for the future. The Scottish Executive must reject the short-term lead of Westminster, with its ill-considered plans to sell off the National Air Traffic Services, and instead show what can be done by wise, targeted investment in our public transport systems, especially in air transport.

Tommy Sheridan (SSP, Glasgow)

On a point of order, Presiding Officer. I must, as a representative of one of the smaller parties, ask that you and the other Presiding Officers publish some transparent rules to be used when calling speakers.

I lodged an amendment to Henry McLeish's motion which was not selected by the Presiding Officer. I was not called this morning, despite trying to ask the minister questions on the ethical standards bill. I have asked to participate in today's debate, and, again, I have not been called. Some arrangement about who gets called seems to be taking place behind closed doors. I hope that the rules that I have proposed get published.

George Reid (Scottish National Party, Mid Scotland and Fife)

Order. Have you pressed your request button for this debate, Mr Sheridan?

Tommy Sheridan (SSP, Glasgow)

Yes.

George Reid (Scottish National Party, Mid Scotland and Fife)

Your request is not showing on my screen.

Tommy Sheridan (SSP, Glasgow)

It is pressed, and was activated all the way through the debate.

Kenneth Macintosh (Labour, Eastwood)

Further to that point of order. The back benchers have, I think, contributed less than 45 minutes to today's debate. This is a plea to ministers to cut back their speeches. Our rules are not quite working properly at the moment, and I think that we should examine them again to ensure that back benchers make the contributions that they want to make.

George Reid (Scottish National Party, Mid Scotland and Fife)

I will respond to Mr Sheridan first. I will consult with the Presiding Officer on the substantive points that you made. A response will be given to you. Secondly, I will arrange for the request button on your console to be checked. Your name is not showing on my screen.

I take your point, Mr Macintosh, about extended ministerial contributions at the start of debates.

Tommy Sheridan (SSP, Glasgow)

On a secondary point of order. While you were speaking, Presiding Officer, my request button was still pressed, so there is obviously a fault with my console that needs to be addressed.

George Reid (Scottish National Party, Mid Scotland and Fife)

I apologise, Mr Sheridan. If your name had been showing on my screen, I certainly would have called you in the course of the debate.

Malcolm Chisholm (Labour, Edinburgh North and Leith)

On a point of order. I suspect that when a member makes an intervention, their name is wiped off your screen. I think that members should be aware of that. It has happened to me.

George Reid (Scottish National Party, Mid Scotland and Fife)

I now call Mr Davidson to wind up for the Conservatives. I will try to give you your full five minutes.

David Davidson (Conservative, North East Scotland)

That is very kind of you, Mr Reid. I welcome today's debate, but I am a little disappointed that we did not have this afternoon's debate on the digital Scotland initiative earlier, as it would have given a good lead to this debate.

I have pleasure in supporting Miss Goldie's amendment. In doing so, I draw to the Parliament's attention the need for the Executive not only to recognise that we must urgently create a new culture of economic renewal, but to take positive action to achieve that. We are in initiative overload, and have been for some time. Many members have raised that point in this debate.

We have heard the Minister for Enterprise and Lifelong Learning state, rather cosily, in line with the Labour theme tune, that "Things Can Only Get Better". I did appreciate a breakthrough in something that he said today: that the Executive is at last prepared to address the issue of risk taking in our economy, which underpins our amendment this morning. I hope that, given Mr McLeish's kind comment to Miss Goldie, he will see fit to accept, on behalf of the Executive, the Conservative amendment as an addition to his motion.

I will move on to visions and actions. We have had an awful lot of visions from the Executive to date but little in the way of action. Indeed, Mr McLeish talked about establishing an institute of enterprise some three years hence. Time is ticking by, as are lead-in times. Mr Swinney referred to 20 years-worth of Irish activity. Frankly, I do not think that we have 20 years for the Executive to come up with a game plan. Such a game plan will obviously be devised in partnership with others, but we must press on to try to get some focus.

The rate of development of our Scottish economy is progressively falling behind that of the rest of the UK. While I have no wish to talk Scotland down, I will focus on the issues that we, in the Conservative party, believe are fundamental if we are to drive our economy into the global, modern age and if we are to be competitive in world terms. The Executive has a part to play in creating a climate within which Scottish business can grow. The areas of opportunity open to the Executive include a drastic reduction in the over-regulation of business and a defence of business against the welter of European Union regulations, which absorb time and energy that would be better spent on growing businesses and creating jobs. That is particularly the case in the small and medium business sector.

As Miss Goldie stated, we have had 2,500 new regulations in two and a half years of Blair. I presume that that will mean that we will get 1,000 a year from now. In the Conservative party's last period in Government, we disposed of 2,000 unnecessary regulations. I call on the Executive to consider doing the same.

The Government must seek incentives to encourage risk taking through creative fiscal policy. If that means that we must send a message from this Parliament to Westminster, it should be a clear message that comes from across the parties that are represented here. We must recognise the damage caused by taxes, particularly those on fuel and road haulage. My colleague Murray Tosh, in his earlier intervention, tried to get across the point that we need to move the Scottish product. To do that, we need a proper road programme with better connections to other forms of transport such as rail and shipping. We also need to develop better public transport to allow the Scottish people to access new work opportunities that may not necessarily be located in the same centres that we have today.

The secret of success in business start-up and growth is management of risk, not just by the entrepreneur, but by those who supply funding and support. Competitiveness is not just about production costs; it is about competitive advantage, product uniqueness, innovation and added value. Scotland has so many successes, some of which have been mentioned this morning and which we need to promote. Product development and support is a major issue. The minister talked of commercialisation. Fine, but when the universities seek additional funding, where does that funding come from? They find great difficulty in translating commercialisation into funding.

I am afraid that Scotland is not grasping the marketing opportunities that we should be seeking. We live in a global economy and our businesses must be supported and nurtured from the early stages of formation through the critical growth stages that are required for them to be able to compete in the world market. I think that there are common views across the Parliament on that line.

In the second quarter of 1999, new-start businesses were down 13 per cent—that is a matter of confidence. The personal enterprise shows and business shop networks produce evidence that an increasing number of people are willing to start up a business or to expand a business. The Executive must act as a midwife to the businesses of Scotland, which would be a good role to play. That is not a motherhood and apple pie notion, but a sentiment that comes across loud and clear from the people who are doing their best to start up businesses.

George Reid (Scottish National Party, Mid Scotland and Fife)

Mr Davidson, would you close, please.

David Davidson (Conservative, North East Scotland)

I will turn to the constraints on enterprise, the biggest of which is access to funding. New businesses tend to start with 50 per cent of their own funding and 40 per cent comes from the banking sector, which must be drawn into discussion with Government and business about how we can best access money where the risk is transferred in part to the investor. Mr McLeish talked about private investment. The banking system must come into that.

I wished to consider all the many things that could have been mentioned this morning but, as I am conscious of time, I will turn to comments made by the other parties.

George Reid (Scottish National Party, Mid Scotland and Fife)

I must ask you to be very brief for the sake of the two speakers who will follow you.

David Davidson (Conservative, North East Scotland)

I thought that there was a policy shift from the SNP, in that it is now seeking low taxes, rather than the high tax ideas that it favoured before the election. I welcome that shift and I hope that it will be followed through. However, does John McAllion not realise that profits produce tax, which produces the social spending that he so wishes?

I attended an event yesterday at which an American spoke about change and the rate of change and said that Government must learn to live and move at the speed that business requires. Silence greeted the remark—everyone felt it—but it is the message that we must take forward.

George Reid (Scottish National Party, Mid Scotland and Fife)

That speech was a minute and a half over time. We have already had criticisms of back benchers' speaking rights being affected by overruns at the opening of debates. We should be concerned about overruns at the end as well.

Mr Wilson, you have six minutes.

Andrew Wilson (Scottish National Party, Central Scotland)

Thank you, Presiding Officer. This has been yet another tautological debate led by the Executive, with absolutely nothing in terms of substance or ideas. The minister's speech lasted 18 minutes, yet there were no specific examples of anything that the Government is going to do.

I welcome—

Henry McLeish (Labour, Central Fife)

rose—

Andrew Wilson (Scottish National Party, Central Scotland)

I will move into my speech. The minister can join me in a second.

I welcome the—

Frank McAveety (Labour, Glasgow Shettleston)

Tautology?

Andrew Wilson (Scottish National Party, Central Scotland)

Some politeness could perhaps break out there, Frank.

I welcome the appointment of Dr Andrew Goudie as chief economist at the Scottish Executive. At least he is a man who has experience of the Organisation for Economic Co-operation and Development and of what normal countries do. Perhaps, with his experience, he will be able to give some examples of what normal countries get up to in Europe and bring some understanding of the economy. The minister—he can intervene at this point, if he wishes—cannot tell us anything of substance about what goes on in the economy. There is nothing in terms of facts or figures—

Henry McLeish (Labour, Central Fife)

In order to facilitate a decent debate in the Parliament, I offer Andrew Wilson the same opportunity as I offered John Swinney. Can he give us some SNP policies on how to take the Scottish economy forward?

Andrew Wilson (Scottish National Party, Central Scotland)

I will repeat the points that John made on the corporate tax environment, on research and development and on education, which are key points. I wish to make this point at the beginning of my speech: as an economic minister, Henry McLeish does not know, and cannot tell us, what we export, what we import, what we save, what we invest or what the value added in the economy is at this time. He has none of the information tools at his disposal and he shows no sense of urgency about—

Henry McLeish (Labour, Central Fife)

Rubbish.

Andrew Wilson (Scottish National Party, Central Scotland)

I invite the minister to tell me what the export figures are. He cannot tell us what the economy-wide figures are. He has quoted a lot of unemployment statistics, which are at his disposal, but, as Tommy Sheridan, John McAllion and Lloyd Quinan pointed out, there are more people in short-term contracts, working part time, working longer days and under greater stress than at any point in our history.

Henry McLeish (Labour, Central Fife)

You are talking Scotland down.

Andrew Wilson (Scottish National Party, Central Scotland)

Those are quality-of-life issues that Henry McLeish must address as a minister. He has the choice of burying his head in the sand or facing modern realities. There is no sense of wealth spreading. I say to Mr McAllion that that is because we do not have the tools to deliver it within the devolution settlement. The key theme that the SNP wants to bring to this debate is that the will may be there on the part of many people in the Scottish Executive, but the tools are not. There is a role for supply-side measures, but we need the appropriate fiscal and macro-economic structures as well.

I will offer an example to the minister so that he can reflect upon it. Everyone in this chamber agreed this morning that there is a need to promote export diversification. The fact of the matter is that the policy of high interest rates and a high pound exacerbates the problem of one or two sectors dominating the export market. For example, the electronics sector imports most of the inputs that it then manufactures and exports, so it is cushioned from the high pound. That makes it impossible for new firms and new sectors to enter the export market. When the minister reels off a load of misleading, volume-based export statistics, he should reflect on the fact that nothing in the Government's approach is helping to improve that situation. Indeed, he appears to be seeking to deny that it exists, which is all the more damning.

As I said, Mr Swinney focused on three key initiatives: education; how to tackle retained value in earning for investment; and research and development. It would be interesting if Nicol Stephen, when he sums up, could provide a view of the Government's position on those issues. Education is key. Everyone agrees with that. Why, then, is the Government investing less of the nation's wealth in education than at any point in the last quarter of a century? That fact must be addressed.

On retained earnings, our key point draws on European examples such as Austria and Ireland, as John Swinney said. It may be news on the Conservative benches, but the SNP has been advocating that approach for some years—the tools of a normal country would be at our disposal if we had the same status as a normal country. However, we do not. The key questions to ask are, "Why not? Why reject it?" I ask Miss Goldie why she has that romantic, misty-eyed attachment to the UK Parliament, when we could be getting on and doing the business for ourselves. Perhaps a little more hard-headed, rational analysis on what we could do for the economy would be useful. The Conservative spokesperson called for fiscal incentives to be used. Why go cap in hand to Westminster, when she could get on with the business of doing that here? That is the view of many senior Conservative members; it would be nice to hear it reflected in the chamber.

John Swinney also made the key point that research and development investment is half of that of our competitors south of the border. What is the minister's strategy for tackling that? We have heard nothing about that. Japan is more peripheral to the European market than Scotland but has three times as much investment in R and D. We must address those key facts if we are to be serious about what we do. To improve investment in R and D, we have to use fiscal incentives, yet the Executive has none at its disposal. We will achieve an innovative policy only if we take the chance, as a small country, to do what small countries can do—to innovate and use the tools that are at our disposal. Nothing that we heard from the minister today will allow us to do that.

The wider cultural issue of how to institute a sense of entrepreneurialism, or get up and go, in our economy and society has been raised. I offer a thought to the Conservatives, because it is a difficult one for policymakers to lay their hands on. Perhaps the fact that people in Scotland have been told for the past 30 years that they were too daft, poor and retarded to take decisions for themselves has instituted a feeling in Scottish culture of "Why get up and go when someone else will do it for you?" If, as we have been told, there is something odd about Scotland, that might constrain people's self-confidence and sense of enterprise. Perhaps the constitutional arguments should concentrate on what is positive and can be offered. What has been damaging is dependency culture.

Nicol Stephen (Liberal Democrat, Aberdeen South)

I will move on quickly from some of Andrew Wilson's more extreme comments and start on a positive note.

Of course we are in a period of accelerating progress and change. Our task will be constant; it will not be a question of catching up and, one day, succeeding. There is much to do and that will never change. However, we are ahead of the field in areas such as biotechnology, with companies such as Cyclacel, Quintiles and Scotia Pharmaceuticals, which this week received an important US drugs approval. We also have PPL Therapeutics. In semiconductor design, we have Project Alba, with Cadence and now Epson, which will open next month. Job gains currently outweigh job losses. New jobs, increasingly, are being found in modern service and high-tech industries.

We are making good progress in expanding sectors, which use the latest in communications technology. The digital revolution is very much part of Scotland. Glasgow, with more than 10,000 call centre jobs, is one of the European centres for that sector. Financial services, software development—

Brian Monteith (Conservative, Mid Scotland and Fife)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I want to make progress. I have limited time.

All those examples are, in a sense, location neutral. They could be located in many places, but we have them here in Scotland. In a sense, we have overcome peripherality, but I do not want to make too much of that. Look at Japan and its successes in recent decades. One wonders whether Japan would have been chosen as a location to tackle the North American and European markets.

Brian Monteith (Conservative, Mid Scotland and Fife)

Will the minister give way?

Murray Tosh (Conservative, South of Scotland)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I will give way now.

George Reid (Scottish National Party, Mid Scotland and Fife)

Brian Monteith. No, I am sorry. Murray Tosh.

Murray Tosh (Conservative, South of Scotland)

Thank you very much. Is the minister aware of Scottish Enterprise's projection that ports in the south-east of England that are critical to our economic competitiveness will face 32 per cent undercapacity by about 2010? Is the Executive prepared to consider a strategy for developing Scotland's oceanic links with the European Community?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I will cover the transport issue later. I apologise to Brian Monteith; I thought that I was giving way to him rather than to Murray Tosh.

E-commerce is a key element in the changes that face the global economy over the next few years. The Scottish Executive has strongly supported e-commerce and Scottish Enterprise has a major e-commerce strategy. A great deal was done just last month: a directory of all the companies that do business on-line was published and local LEC-based advisers are assisting companies to plan for new e-commerce systems.

We are starting to see an increasing uptake of internet use among Scottish companies, of which nearly 60 per cent use the internet while 7 per cent sell on-line. But—and it is an important and big but—in the United States, the figures are still much higher. That problem is driven, at least in part, by low computer and internet usage by Scottish consumers. A special problem is low usage by small and medium companies. We have to do more on that. We also have to do more on commercialisation of research at our universities and colleges. Cyclacel is a great example, but we must never be complacent and must give continuing support.

I will mention briefly Annabel Goldie's remarks, to which my reaction could be summed up by the simple statement, "Don't believe what they say, believe what they did." Annabel had the chance to do all the things that she spoke about, over many years. Actions are more powerful than words.

Brian Monteith (Conservative, Mid Scotland and Fife)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

No, I want to finish my point. Annabel was factually inaccurate about the Scottish university for industry. Widespread consultation has taken place in Scotland with industry. Thousands of documents relating to that university have been circulated to our businesses and there will be continuing consultation—I give Annabel Goldie this guarantee—led by the university's new chief executive, Frank Pignatelli.

Much was made of the changing economic culture. Annabel Goldie, Keith Raffan and David Davidson mentioned that that culture is essential if we are to create a more entrepreneurial spirit in Scotland. The Scottish Executive agrees with that. We agree that we must be more entrepreneurial and that the attitude to failure must change. More must be done in terms of business mentoring and business angels—large companies giving support to smaller ones. However, more risk taking is not just about individuals taking risk. It is about learning entrepreneurial, management and financial skills.

Other nations, such as the United States, are passionate about management. Boston alone has the Harvard Business School, the Massachusetts Institute of Technology, the Sloane School of Management and the Media Lab. People in the United States care deeply, discuss a lot and are highly skilled and trained in entrepreneurial, financial and management pursuits. I am very pleased that there is an initiative to bring some of that to Gleneagles. More details of that will be announced in the coming weeks.

Keith Raffan is absolutely right about the venture-capital community and our approach to management and risk taking. We have a great deal to learn. It is not all about heroic individuals. That links to another important point, made by George Lyon. He said that change would not come about by an edict of the Parliament. I absolutely agree with that. Companies such as Scottish Power are investing in individual learning accounts and the Government will support that. However, companies themselves must embrace the new approach to lifelong learning and skills. That is crucial. George Lyon mentioned that BP-Amoco is putting that at the centre of its strategy. In the small business sector, companies do not have the same scale of resources. The Scottish Executive is determined to give more support to that sector so that those companies can engage in that agenda.

John Swinney (Scottish National Party, North Tayside)

In the remaining minutes of his speech, I hope the minister will address the points on which Mr Lyon and I managed to find common ground. Will the great fiscal and macro-economic measures that the Chancellor of the Exchequer took last week in relation to the companies sector touch in any way the small business sector that, he has just told us, is uppermost in the Executive's mind?

Nicol Stephen (Liberal Democrat, Aberdeen South)

Of course they will. That was the subject of my next paragraph. However, Gordon Brown's speech contained a lot of detail. I undertake to write to Mr Swinney, Mr Lyon and Annabel Goldie to bring them up to date with those details.

Nicola Sturgeon spoke about the shipbuilding industry. On Kvaerner Govan, I can assure all members that the Scottish Executive is fully involved in securing the long-term future of the yard. Efforts are being made to conclude negotiations as soon as possible. I expect that an announcement will be made before the end of this month.

Nick Johnston (Conservative, Mid Scotland and Fife)

Will the minister give way?

Nicol Stephen (Liberal Democrat, Aberdeen South)

I am sorry, no. I have very little time and I want to cover the transport issue, which was raised by Murray Tosh, Cathy Jamieson, Tavish Scott and others. The strategic roads review has announced new money and new investment. However, as was said, investment in rail, bus, air and sea links is also vitally important. We have a strong message about Scotland being a place to do business and that is underscored by the level of inward investment to Scotland. We have a strong record and we should not talk Scotland down.

Regarding Brain Adam's comments, the Enterprise and Lifelong Learning Committee is examining the advice and support structure and its complexities. As I have said, we are willing to listen to constructive suggestions for change. I am sure that Brian recognises the importance of the oil and gas industry task force and the many good initiatives in that area. If he is suggesting a centre of excellence for that industry in the north-east, as Nicola Sturgeon suggested for the shipbuilding industry, we are prepared to examine that. We want new ideas.

I will finish by mentioning John Swinney's comments, which relate to Andrew Wilson's comments. We want to hear their thoughts and we want to have an inclusive approach to this issue. We want to know about the SNP's policies. Which of the "too many" initiatives that he mentioned would he cut? What would he put in their place? There will be a Scottish economic strategy and it will be brought to the Parliament and to the Enterprise and Lifelong Learning Committee, but John Swinney said that the Scottish Executive must be

"truly in command of the direction of the Scottish economy".

I would like to let Mr Swinney into a secret—the Scottish Executive and the Parliament will never be

"in command of the direction of the Scottish economy"

nor should they be. In a modern economy government's role is to support and to assist. It is not a command structure and it is not about centralised state control.

Some of Mr Swinney's comments smack of the style of national economic strategy in which only macro-economic intervention is appropriate. His comments smack too much of the centralised state control that would stifle, not stimulate our economy. Our approach is progressive. Education is crucial and corporation tax is crucial and, particularly for smaller companies, has been reduced in recent years. We are also concerned about research and development. We are taking steps to do something about all those issues. Education is at the centre of what the Executive is determined to do.

John Swinney talks about the Government leading the process through the Parliament. It will be Scotland's business and industry and the people of Scotland and their skills, innovation and creativity that will lead the process. The Executive and, I hope, members of all parties are determined to help them succeed.

David (None, Lothians)

That concludes the debate. I would like to refer to the points of order that were raised with Mr Reid, which I heard in my office. The Deputy Presiding Officers and I will review what happened in this debate regarding speaking times. Nine members who wished to speak were not called.

Regarding Mr Sheridan's point, I am advised that his card was not properly inserted into his console. When we get to Holyrood, we hope to have a better system that will enable members to know whether they have been registered as wishing to speak. What happened this morning was an accident. You were not on the list when I was in the chair earlier. I apologise for that. It is a technical matter and not a conspiracy.

Tommy Sheridan (SSP, Glasgow)

I apologise, in that case, for my earlier intervention, but my console indicated that I had requested to speak. A number of my political opponents were even prepared to substantiate that. I will, therefore, not send to you the letter that I had written, which was extremely critical of you.

Business Motion

David (None, Lothians)

The next item of business is consideration of business motion S1M-299.

Tom McCabe (Labour, Hamilton South)

The motion is printed in today's bulletin. I would like to highlight that on Wednesday 24 November decision time has been moved to 5.30 pm. That is to facilitate an extended debate on land reform and is being done in response to requests made by members. As members will know, land reform is a very important issue and the bill will not be introduced to Parliament until next year. Members have not yet had an opportunity to discuss the issue, so I hope that members understand why decision time has been moved.

I move,

That the Parliament agrees the following programme of business— Wednesday 24 November 1999

2.30 pm Time for Reflection followed by Debate on an Executive motion on Social Inclusion Targets followed by, no Debate on an Executive motion later than 3.45 pm on Land Reform followed by Parliamentary Bureau Motions

5.30 pm Decision Time followed by Members' Business debate on the subject of S1M-250 Ms Irene Oldfather: Tobacco Sales to Under- Aged Children Thursday 25 November 1999

9.30 am Debate on a Scottish Conservative and Unionist Party motion followed by Business Motion followed by Parliamentary Bureau Motions

2.30 pm Question Time

3.00 pm Open Question Time followed by, no Ministerial Statement on later than 3.15 pm Freedom of Information followed by, no Debate on an Executive motion later than 3.45 pm on Carers' Strategy

5.00 pm Decision Time followed by Members' Business debate on the subject of S1M-261 George Lyon: The Kintyre Economy Wednesday 1 December 1999

2.30 pm Time for Reflection followed by Parliamentary Bureau motions followed by Stage 3 debate on the Public Finance and Accountability

(Scotland) Bill

5.00 pm Decision Time followed by Members' Business Thursday 2 December 1999

9.30 am Debate on a motion by the Scottish National Party followed by Business Motion followed by Parliamentary Bureau motions

2.30 pm Question Time

3.00 pm Open Question Time followed by, no Debate on an Executive motion on later than 3.15 pm Equalities

5.00 pm Decision Time followed by Members' Business

David (None, Lothians)

My screen indicates that Marilyn Livingstone wants to speak on this. Is that an error?

Marilyn Livingstone (Labour, Kirkcaldy)

I think that it is. I was one of the nine who were not called to speak earlier.

David (None, Lothians)

The question is, that business motion S1M-299 be agreed to.

Motion agreed to.

Standards Committee

Tom McCabe (Labour, Hamilton South)

Should not also the motion relating to the Standards Committee be moved?

David (None, Lothians)

You are quite right.

Motion moved,

That the Parliament agrees that Patricia Ferguson be appointed to the Standards Committee.— [Mr McCabe.]

David (None, Lothians)

The question is, that motion S1M-292, in the name of Mr Tom McCabe, on behalf of the Parliamentary Bureau, be agreed to.

Question, That the meeting be now adjourned until 2.30 pm today, put and agreed to.— [Mr McCabe.]

Meeting adjourned at 12:36.

On resuming—

Question Time — Scottish Executive

Michael Matheson (Scottish National Party, Central Scotland)

To ask the Scottish Executive what provision will be made in order to enforce any future freedom of information legislation. (S1O-648)

Michael Matheson (Scottish National Party, Central Scotland)

Last week, Jim Wallace spoke about the pros and cons of a human rights commission in Scotland. Does the Lord Advocate agree that one of the pros would be that a commission could enforce such legislation so that it actually worked rather than ending up on the shelf? Will he ensure that proper consultation takes place with Scottish bodies on freedom of information? Will he confirm that he will not take on the responsibilities or take the actions that Jack Straw proposes to take at Westminster?

James (Conservative, Lothians)

To ask the Scottish Executive how the proposed upgrading of the A8000 will be funded, what the time scale for the upgrading is likely to be and whether the A8000 will be a trunk road after upgrading. (S1O-622)

Sarah Boyack (Labour, Edinburgh Central)

The A8000 is a local road and responsibility for its upgrading therefore rests with the City of Edinburgh Council. The Executive has no plans to expand the trunk road network.

James (Conservative, Lothians)

Is the minister aware that the traffic congestion in the vicinity of the Forth road bridge is among the most intense in Scotland? Does she accept that there is widespread support for the upgrading among local motorists and from the City of Edinburgh Council? Will she also accept that it is essential that the Executive makes available resources to ensure that the matter goes ahead speedily?

Sarah Boyack (Labour, Edinburgh Central)

I am well aware of the intensity of congestion in and around the area of the Forth bridge. I am happy to say that the local authorities are working on that matter; I am meeting them in December to discuss the research that the Scottish Executive is doing and to discuss strategies for improving investment and the facilities in the area.

Tavish Scott (Liberal Democrat, Shetland Islands)

To ask the Scottish Executive when ministers last met the North of Scotland Water Authority and what matters were discussed. (S1O-630)

Sarah Boyack (Labour, Edinburgh Central)

I last met the North of Scotland Water Authority on 14 September 1999 to discuss strategic issues in relation to its corporate plan.

Tavish Scott (Liberal Democrat, Shetland Islands)

Will the minister investigate the authority's reported intention to levy the highest water charges in Scotland yet also reward its senior staff with performance bonuses? Does not the current situation illustrate the need for a root-and-branch reform of that quango, so that it becomes more responsive to customer needs?

Sarah Boyack (Labour, Edinburgh Central)

One of the key measures in the Water Industry Act 1999 was the establishment of the Water Industry Commissioner for Scotland. It will be his job to look independently—from a customer's point of view—at the investment programmes and charging of the three water authorities and to report to me. The report will then be considered by the Scottish Executive.

George Lyon (Liberal Democrat, Argyll and Bute)

To ask the Scottish Executive when it last met the chairman of Caledonian MacBrayne and what matters were discussed. (S1O-647)

Sarah Boyack (Labour, Edinburgh Central)

The First Minister, the Deputy Minister for Highlands and Islands and Gaelic and I met the chairman and the managing director of Caledonian MacBrayne on 21 September. During that meeting, a range of matters were discussed.

George Lyon (Liberal Democrat, Argyll and Bute)

In view of the likely withdrawal of Sea Containers from the Campbeltown to Ballycastle ferry route, will the minister ask Caledonian MacBrayne to come forward with proposals to take over that route?

Sarah Boyack (Labour, Edinburgh Central)

That is a commercial venture, and I know that people in George Lyon's constituency have a great interest in it. I am aware that Highlands and Islands Enterprise and the local council have provided money for a campaign to promote tourism in the area. The commercial decision is for CalMac to take. The service is not a lifeline ferry service, but I am aware of the interest in the route. I will be meeting Sea Containers on 2 December to discuss a range of issues.

David (None, Lothians)

I call Pauline McNeill.

George Lyon (Liberal Democrat, Argyll and Bute)

Can I—

David (None, Lothians)

I think not.

George Lyon (Liberal Democrat, Argyll and Bute)

Can the minister tell Parliament—

David (None, Lothians)

Order. I call Pauline McNeill.

Pauline McNeill (Labour, Glasgow Kelvin)

To ask the Scottish Executive whether it is considering options for alternatives to prison for female offenders. (S1O-625)

Jackie Baillie (Labour, Dumbarton)

The Executive is seeking other options for female offenders and an inter-agency forum has been established to identify practical alternatives to custody for that group.

Pauline McNeill (Labour, Glasgow Kelvin)

The minister will be aware that Kate Donegan, governor of Cornton Vale, said last week that the prison was being hit by a tidal wave of damaged and vulnerable women, despite growing calls for alternatives to prison sentences. Will the minister publish details of existing community service schemes and can she give a commitment today to work towards increasing the number of such schemes in order to widen the availability of alternatives to prison?

Jackie Baillie (Labour, Dumbarton)

Indeed I can, because the forum led by Professor Sheila McLean is looking at alternatives to custody and will specifically address the issue of enhanced services in the community. An immediate change that has already been implemented is the bail retrieval scheme in Cornton Vale, which allows women offenders a second chance of being released on bail and under supervision.

Shona Robison (Scottish National Party, North East Scotland)

To ask the Scottish Executive whether it will be concluding a concordat regarding the terms of the forthcoming immigration and asylum legislation with Her Majesty's Government. (S1O-

667)

Iain Gray (Labour, Edinburgh Pentlands)

We expect that the legislation will be covered by the concordat between the Scottish Executive and the Home Office. We will be evaluating the effects of the new support scheme for asylum seekers in Scotland in due course.

Shona Robison (Scottish National Party, North East Scotland)

I am sure that the minister will be aware of the controversial nature of that legislation, particularly the voucher scheme, and of the cross-party concern about it. Will he assure us that this Parliament will be able to debate the terms of the concordat?

Iain Gray (Labour, Edinburgh Pentlands)

As members will know from previous discussions, immigration and asylum are reserved matters, over which we have no legislative competence. We are determined to ensure that Scotland plays its part in fair, effective and fast support for asylum seekers. That is why I have announced today that we will review the operation of these measures some 18 months from their inception. It is important that the Executive and the Parliament concentrate on what it can do rather than on what it cannot.

Shona Robison (Scottish National Party, North East Scotland)

A precedent has been set in this Parliament that we can discuss and debate reserved matters, regardless of whether we have legislative competence over them. Will the minister give the Parliament an opportunity to debate this matter, which is of cross-party concern?

Iain Gray (Labour, Edinburgh Pentlands)

The short answer to that question is no. I reiterate that, in matters where we have devolved responsibility, we will take measures to ensure that we can give the assurance—in response to questions or in any other way—that we are playing our part in providing the support that is required for those who seek asylum on our shores. That is the correct way forward.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

To ask the Scottish Executive whether it intends to review the process which determines the level of funding made available to individual police forces in Scotland. (S1O-654)

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Will the Executive ensure that the review takes account of the fact that the criteria for funding are out of date and fail to create a level playing field? For example, the criteria penalise the people of the north-east, who have the second lowest number of police officers and the second lowest per capita expenditure of all Scottish police services, despite the fact that Grampian police have to deal with the second highest number of crimes per head of population. Will he ensure that that unfair funding mechanism is updated as soon as possible in the new year?

Brian Monteith (Conservative, Mid Scotland and Fife)

To ask the Scottish Executive when the Deputy Minister for Culture and Sport last met the Scottish Football Association and what they discussed. (S1O-658)

Rhona Brankin (Labour, Midlothian)

I will take this opportunity, as so many of the gentlemen in Parliament have done today, to congratulate Craig Brown and the team on their victory last night. [Applause.] We share their disappointment that they are not going to the finals, which is a source of great sadness to us all.

Since my appointment as deputy minister, I have met representatives of the Scottish Football Association on several occasions, most recently during my attendance at Scotland's match against the Czech Republic on 14 November. That has probably stumped Mr Monteith. How many people know about that football match, which Scotland also won? When I met the SFA, there was no formal agenda but a range of issues was discussed.

Brian Monteith (Conservative, Mid Scotland and Fife)

I welcome and concur with the minister's sentiments. I point out that the Scottish women's football team is currently leading group 6 of the Union of European Football Association's women's championship. [Applause.] Will the minister say what measures the Scottish Executive is taking to promote women's football in Scotland?

Rhona Brankin (Labour, Midlothian)

That was the match that I attended at Broadwood stadium on Sunday. Cathie Craigie, the MSP for Cumbernauld and Kilsyth, was there as was the MP Rosemary McKenna. I did not notice any male MPs or MSPs.

We support the development of women's football in Scotland. More than 17,000 girls under the age of 18 play football in Scotland. Sportscotland has made plans to develop women's football and the SFA has recently taken over responsibility from the Scottish Women's Football Association for the development of girls' and women's football. Last year, Vera Pauw was appointed technical director and coach of the national team. Women's football is something that I am keen to take forward.