Scottish Parliament, 5 February 2004

487 contributions from 85 members. The official report.

Introduction

Police Accountability

George Reid (None, Ochil)

Good morning. The first item of business is a debate on motion S2M-849, in the name of David McLetchie, on police accountability, and two amendments to that motion.

David McLetchie (Conservative, Edinburgh Pentlands)

I am sure that no one in the chamber would dispute the fact that the maintenance of order and the rule of law is an essential function of the state. The police service is the pre-eminent public service, as it is the foundation on which everything else is built.

There is a clear causal relationship between effective policing and crime reduction. However, there is an equally clear public dissatisfaction with levels of crime and disorder in too many communities in Scotland. The Executive's Antisocial Behaviour etc (Scotland) Bill is, in part, a response to that dissatisfaction.

We have debated—and we will no doubt debate again—the extent to which the police need extra powers to discharge their duties; however, that is an argument for another day. This debate is about how the structure of the police service can be reformed to make it more effective in tackling crime and more responsive to public demands. Simply promising more money, more police officers and more bobbies on the beat is not enough because, if such promises are not visibly implemented and the rhetoric in Parliament fails to match the reality on the streets, that will serve only to undermine public confidence in politicians and the political process. That is the current situation and the credibility gap that we must bridge.

Accountability is one of the key issues. Currently, there is a tripartite structure that shares responsibility for our police service among police boards—which are made up of elected councillors—the Scottish ministers and chief constables. The structure gives police boards clear powers to determine budgets and police numbers and, in conjunction with Scottish ministers, to appoint senior officers.

Within that framework, the police enjoy what is known as "operational independence". Decisions about the deployment of officers, the level of community policing, whether there should be more officers on the beat in a particular area, approaches to different kinds of crime and the targeting of particular criminal activities are left in the hands of chief constables. The principle of operational independence is jealously guarded by police officers, as we have seen in their hostile response to the limited powers of direction and guidance that the Executive has proposed in the Antisocial Behaviour etc (Scotland) Bill.

Given the powers that we invest in our police forces, no one would dispute that important constitutional and civil liberties issues are involved in the relationship between the police and politicians, but that does not mean that we should shy away from reviewing or adjusting the boundary between their powers. It cannot be right that senior police officers can decide which laws of the land in respect of the possession of cannabis or street prostitution will or will not be enforced, for example. Such issues involve public policy decisions that should be taken by elected politicians who can be held to account by voters.

The public do not see more police officers patrolling their streets in many communities partly because of a lack of resources—I have some sympathy with Nicola Sturgeon's amendment in that respect—and because, from time to time, there are competing demands on the resources that are available. However, we must also face the fact that the public do not see more police officers patrolling their streets because many senior officers and chief constables do not consider that to be an effective method of policing. Indeed, such a method might not be effective in solving the most serious crimes, but it can be effective in deterring crime and antisocial behaviour and in promoting good order in many of our troubled communities.

Nicola Sturgeon (Scottish National Party, Glasgow)

Does David McLetchie agree that police independence is important? There is a debate about the issue, but it is a debate in which there is no room for shades of grey. There must be clarity.

Mr McLetchie referred to the Antisocial Behaviour etc (Scotland) Bill, in which a power of direction is given to ministers that seems to cover the eventuality of the police not implementing the dispersal powers that are contained in the bill. His colleague Annabel Goldie and I have been adamant that that is absolutely wrong and that politicians and ministers should not interfere in the operational independence of the police. David McLetchie seems to infer something different. For the sake of clarity, will he decide whether his or Annabel Goldie's view prevails?

David McLetchie (Conservative, Edinburgh Pentlands)

I do not want to get into a long debate about powers, but the dispersal powers in the section in question are unnecessary because there are adequate laws at the moment. Consequently, the subsidiary provisions in the sections that deal with the powers of direction and guidance in relation to the dispersal powers are themselves unnecessary. If one does not want the principal power, the subsidiary power is not needed. Therefore, what we have said is not inconsistent with what we are saying in the broader context of relationships between politicians at national and local level and senior police officers in police forces.

I would argue that the current interpretation of the principle of operational independence is not, in practice, delivering the police service that our public deserve, demand and pay for through their taxes. The convention needs far clearer definition and to be more strictly limited. Of course, the police should have operational responsibility without political interference in the specifics, but politicians should be responsible for more than just setting budgets and appointing senior officers. They should approve an overall policing plan and the priorities in a local area and scrutinise performance against agreed and understood objectives.

Hugh Henry (Labour, Paisley South)

David McLetchie talks about local areas, on which the Conservatives have put a great deal of emphasis. Perhaps he is developing what he is saying about powers, but I am still unclear about what he means. Does he believe that the current structures are those best suited to deliver the local accountability that the proposal to have a directly elected convener seeks? If he believes that a directly elected convener is best, why not for other services?

David McLetchie (Conservative, Edinburgh Pentlands)

We will get into a very broad area if we discuss other services. I agree that we do not need to review the number of police boards and police authorities in Scotland at this stage. However, they need to play a more prominent role in public life. There are differences between the police service and other public services, such as health and education services. I do not think that there are parallels between them—they do not read across. As I said, the police service is the pre-eminent public service and will always be delivered by the state, so accountability flows not from any consumer principles relating to purchasing power and direction of money; there must be democratic accountability. That is the basis of our proposals and of similar proposals that the Home Office has made for England and Wales.

Even if we agree—which we might not—that there is a need to redraw or redefine the boundary between public accountability and operational independence, there is still a need to decide on the balance of accountability between national and local politicians. Clear lines of accountability are essential and I do not think that the current structure provides them. Our police forces should be more accountable to elected representatives of local communities and, through them, to the public at large.

The current structure of our eight police boards is not adequate in that respect. I bear no ill will to the conveners of our boards, but I doubt whether even the famously cerebral Stewart Stevenson could name all eight or even half of the conveners. If Mr Stevenson does not know who they are, the public certainly do not.

That matters because the public need to know where the buck stops with their local police force. That is why we have proposed that police board conveners should be directly elected at the same time as we elect our councils. The boards would still be made up of councillors who are drawn from the local authorities in the police board area, but a directly elected convener would improve local accountability and increase public awareness of the performance of their police force through the regular publication of local crime statistics and other performance indicators. He or she would also be a powerful champion of the police service in negotiations with the Scottish Executive and councils over funding for the police and reforms of the criminal justice system. They would draw on local experience.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Will the member take an intervention?

George Reid (None, Ochil)

No, we are too tight for time.

David McLetchie (Conservative, Edinburgh Pentlands)

I am sorry, Mr Rumbles, but I must finish.

In my view, there would be significant benefits from increased local accountability. It would increase the responsiveness of police forces to the concerns of the communities that they serve; it would increase public confidence in our police service; and it would encourage innovation and diversity in the management of policing. Those are essential for the delivery of more effective policing, which would help to reduce crime. I believe that we all want to achieve that objective, even if we differ in how we seek to achieve it. Therefore, I move the motion in my name as a contribution to a debate that I believe is of significant importance to our country.

I move,

That the Parliament notes that there is widespread public misunderstanding of who is responsible for what in terms of policing in Scotland; recognises that there needs to be greater local involvement in policing along with a police service that is more responsive to public demands, and calls on the Scottish Executive to strengthen public accountability and involvement by considering ideas such as the direct election of conveners of police boards and the regular publication of localised crime statistics.

Hugh Henry (Labour, Paisley South)

I appreciate David McLetchie offering the motion as a contribution to the debate on police accountability. We need to have such a debate to ensure that our police service and, indeed, our other services not only deliver effectively, but are accountable to local communities and are seen to reflect their needs and interests. However, I suggest that the Conservatives' particular proposal would not take us much further forward.

I pay tribute to the Conservatives. On a number of occasions it has been said that they have run out of ideas, but today's debate shows that they are as capable as ever of putting forward pointless and ineffective ideas that have no relevance whatever to the people of Scotland. The Conservatives are nothing if not consistent.

David McLetchie probably answered much of his own argument. He said that the rhetoric in Parliament sometimes fails to match the reality on the streets. I believe that the rhetoric of what his proposal seeks to deliver would fail to match the reality on the streets.

It is fair to say that we have a specific interest in law and order in Scotland, because undoubtedly some communities are under pressure. However, we are considering ways of tackling that that go beyond simply introducing legislation. We have record numbers of police officers and record investment, and other measures are being put in place to improve matters. I believe that we have seen a significant achievement by our police. Clear-up rates are at higher levels than at any time since the second world war; prosecutions for the supply of drugs are up by 22 per cent; housebreaking is down by 28 per cent; serious road accident casualties are down by 29 per cent; assets are being seized from criminals; internet paedophile offenders are being caught and dealt with; and the Scottish Drug Enforcement Agency is doing sterling work.

Annabel Goldie (Conservative, West of Scotland)

I thank the minister for taking an intervention. If the litany he just gave us is so impressive, why are we now in a situation in which a crime is committed in Scotland every 1.2 minutes? That has never happened before.

Hugh Henry (Labour, Paisley South)

I believe that a number of factors are involved in that, one of which is that people are more ready to report crimes because they know that it is more likely that the crimes will be detected and the criminals will be caught. It is clear that there are problems in some communities, where drugs and poverty blight the community and cause people to turn to crime, but those are being dealt with.

I turn to the Conservatives' specific proposal for a directly elected convener for police boards. I believe that the argument is bizarre in its construction. The Conservatives laid great store by local accountability and bringing local services back to local communities when they wanted to abolish the administrative regions. They said that some regional authorities were too large and remote for the local communities that they served. However, if the Conservatives' proposal was implemented for an area such as Strathclyde, we would have a directly elected police convener for an area that has a population of 2,204,000 and which stretches from Oban down to Girvan.

The Conservatives talk about a local community being able to influence the police convener. In Strathclyde, about 2 million people would directly elect the police convener. That could mean that the people of Oban or Girvan would be unable to prevent a police convener from moving resources to areas such as Glasgow or Lanarkshire, to the detriment of Oban and Girvan. How would those local communities outvote other communities that might well be satisfied with their police convener?

David McLetchie (Conservative, Edinburgh Pentlands)

If our proposal is such a bizarre idea—to use the minister's expression—why is it postulated as one of a number of alternatives in the Home Office publication, "Policing: Building Safer Communities Together"? If the proposal is so bizarre for Scotland, why is it not bizarre for it to be adopted or implemented elsewhere in the United Kingdom?

Hugh Henry (Labour, Paisley South)

I do not know whether David McLetchie has noticed, but we have a different legal structure from the rest of the UK and we have set up a different political structure. We have set up a Scottish Parliament precisely to do things differently and to take account of Scotland's specific needs. The proposal that an area with the geographic diversity of Strathclyde or the area that the Northern constabulary covers, which has small communities such as Inverness and Fort William, should have directly elected police conveners is bizarre. It is bizarre to suggest that Oban and Fort William should compete with Lerwick to influence a police convener.

Duncan McNeil (Labour, Greenock and Inverclyde)

Will the minister take an intervention?

Hugh Henry (Labour, Paisley South)

No, I must press on.

The other aspect that Mr McLetchie has not articulated is what powers the conveners would have. Would they be able to influence the budget? Would they be able to set a budget for the constituent local authorities in areas in which a police board covers more than one authority? What tensions would there be if local police conveners attempted to set budgets beyond a level that had been agreed by the other members on police boards? What tensions would there be with chief constables? Who exactly would be responsible for the delivery of services? If a chief constable was not delivering, would the chief constable or the police convener be held to account? Would the police convener be able to do something about the chief constable if the convener felt that the chief constable was not delivering? Would the convener be able to take measures against the chief constable irrespective of the wishes of the directly elected board?

Mr McLetchie has not answered any of those questions. Issues that would arise from the implementation of his proposal would compromise the police's operational independence and would cause compounding problems. Mr McLetchie's proposal has been inadequately considered, is ill judged, would lead to tensions with other police board members and chief constables and would make a complete and utter mess of police services in Scotland.

I move amendment S2M-849.3, to leave out from "notes" to end and insert:

"endorses the Scottish Executive's commitment to work for a safer Scotland by reducing crime and re-offending; welcomes its commitment to enhance community accountability for policing through local police boards; endorses its promotion of responsiveness to local communities through police boards' duty to secure Best Value and to report to the public on performance, and welcomes its policy of Community Planning which is enabling police forces to improve the delivery of services to local communities through more effective collaboration with other public bodies."

Nicola Sturgeon (Scottish National Party, Glasgow)

I well understand that the Tories have to toe the London line on policy, but what we are debating today are nothing more than recycled Tory policies from south of the border. In fact, it is worse than that, because they are recycled Tory policies from the days of Iain Duncan Smith.

David McLetchie is looking confused. I am sure that he watched the UK Tory conference last year, at which Iain Duncan Smith announced those very policies. They miss the point completely. Yes, with the police as with every other public service, we should always strive for greater accountability, but electing the conveners of police boards will not put a single extra police officer on the streets of any community anywhere in Scotland.

Personally, I do not have a problem with publishing local crime statistics. Any community police officer in Scotland could tell us the crime statistics as they break down for their police patrol. However, publishing local crime statistics would itself not lead to a single extra crime being prevented or detected. That is why what we are debating misses the point. I have never heard anyone anywhere in Scotland say that the problem with policing in Scotland right now is a lack of police accountability. What they say repeatedly—day in and day out and time and again—is that the problem with policing in Scotland is a lack of police officers. We should be doing more to address that situation.

When it comes to issues of law and order, the Tories are fond of citing the New York example. I dare say that the Tories would claim that their policies were borrowed from across the Atlantic rather than from London. Certainly, New York's recent law and order experience has been positive. I believe that in the past year the reduction in crime there has been in the region of 6 per cent. However, a closer look at New York would teach us lessons beyond those that the Tories are perhaps trying to teach us today. That is, that in addition to various crime-fighting strategies—

Duncan McNeil (Labour, Greenock and Inverclyde)

If we increased police numbers without interference, which the member has said is unnecessary, how would we ensure that those extra police officers were used effectively in the community?

Nicola Sturgeon (Scottish National Party, Glasgow)

I do not know whether Duncan McNeil will make a speech later in the debate but, if he does, perhaps he will make the case that chief constables currently waste their police resources and use officers inappropriately. I will wait to hear whether he does so or not. My point is that we can have all the crime-fighting strategies we want, but if we do not have the officers to implement and enforce them, they will not make a huge difference to the lives of people in the communities we are discussing.

Returning to the New York example, I should point out that, in addition to the many strategies and initiatives that have been introduced in that city, there has been a 12 per cent increase in the number of police officers. If we did the same in Scotland, we would have an extra 1,800 police officers. We need such a substantial increase in the number of police officers if we are to have any chance of delivering the kind of zero tolerance approach to crime that many people want. The people in these communities want more officers visibly fighting crime on their streets instead of politicians having endless esoteric debates about tripartite structures and so on.

Duncan McNeil (Labour, Greenock and Inverclyde)

Communities want the police to tackle vandalism, ned culture and so on. It is clear from their actions over the past decade and from their recent evidence to parliamentary committees that the police feel that that is not their priority. There is no guarantee that an increased police force would be used in those areas.

Nicola Sturgeon (Scottish National Party, Glasgow)

No doubt Hugh Henry would say—as he does repeatedly—that we have record police numbers in Scotland.

Jackie Baillie (Labour, Dumbarton)

It is true!

Nicola Sturgeon (Scottish National Party, Glasgow)

Jackie Baillie is right to say that from her sedentary position and, given the statistics, I am happy to admit that that is the case. However, that is not the experience in communities. That is partly because, as Duncan McNeil pointed out, many more police officers are involved in specialist activities and the kind of intelligence policing that we have been discussing. Although there is nothing wrong with such an approach, it places greater burdens on community policing and means that those who are involved in such policing face more of a challenge in responding quickly and effectively to the incidents that Mr McNeil highlighted. We should be having a debate about that, not the debate that the Tories have initiated this morning.

Although it is right and appropriate to discuss the kinds of offending and crime—no matter how low-level they might be—that affect people's quality of life all over Scotland, we must not take our eye off the ball when it comes to violent crime. After all, the statistics show that such crime is on the increase.

I move amendment S2M-849.1, to leave out from "notes" to end and insert:

"believes that the public's concern about policing is less about the lack of police accountability and more about the lack of police officers; calls for an overall increase in the number of police officers to take account of the fact that many more are now engaged in specialist activity, rather than community policing; recognises the right of the police to set local priorities free from political interference; encourages an intensive targeting of crime hotspots, low-level offending that nevertheless impinges on the quality of life in communities and persistent offenders who account for a disproportionate amount of crime, but urges all those involved in the criminal justice system not to lose sight of the fact that it is serious violent crime that is on the increase in Scotland."

Margaret Smith (Liberal Democrat, Edinburgh West)

Although I certainly welcome the debate, I, like Nicola Sturgeon, would guess that the big issue for the man or woman on the Corstorphine omnibus is not police accountability but police resources and what the police are doing in our communities. The Executive is trying to tackle the problem not only through record police numbers but through some of the initiatives that have been introduced.

That said, it is important to know who is responsible for providing this very crucial service and how they can be held accountable not only for the way in which they spend their significant resources but for the results that they achieve with that investment. Some targets are easier to quantify than others. For example, the "Narrowing the Gap" report, which Her Majesty's inspectorate of constabulary published in 2002, recommended that police boards should set performance indicators for fear of crime.

However, all we have heard from the Conservatives are gimmicks. Having directly elected conveners to police boards would not improve services for the people of Scotland one iota. The minister is quite right to highlight the tensions that such an approach would throw up. For example, what powers would conveners have? Would they have greater powers than the other elected board members would have? What would happen to the operational independence of the chief constable? What powers would conveners have to dismiss senior police officers?

Moreover, the general public would feel uneasy about any move towards a situation in which politicians could interfere too much in daily policing matters in our communities. That said, it is important that the police are not seen as being above the law with regard to being accountable for the money that they spend and for their own actions. As a result, we propose the introduction of an independent police complaints body to consider accountability at that level.

The current tripartite arrangement is set out in the Police (Scotland) Act 1967 and involves the Scottish Executive, local police authorities or boards and chief constables. The service is funded by the Executive, which has provided £889 million this year, and by local authorities, through non-domestic rates and council tax. I welcome the review of grant-aided expenditure funding for police, and believe that Edinburgh—as well as many of our other cities perhaps—has a very strong case for an upgrade in funding.

The public must become more involved in the decision-making process and must have the ability to say what they want to happen on the streets. However, there is a paradox at the heart of such an approach. If we ask members of the public what they want, they will say that they want to see policemen on the beat. However, sometimes we have to be brave enough to point out that being on the beat is not always the most effective way for a police officer to spend his time. Sometimes it is more effective for a police officer to liaise with other people in the community through community planning and to try to tackle problems such as drugs and youth disorder in a much more holistic and partnership-led way.

We will all have to face the paradox between having bobbies on the beat and intelligence-led policing. It is a sad, hard fact that it is often easier for a chief constable to get results on paper from intelligence-led policing than it is to quantify what is gained from having bobbies on the beat. We all know that having police officers on the ground, getting used to their communities, building up relationships with young people and so on, has its own rewards. The police know what is going on in communities, for example. However, that is much more difficult to quantify. In a society that is led by results on paper, it is difficult to square those two aspects.

The Local Government in Scotland Act 2003, with its community planning provisions, represents a great opportunity for the police to work in partnership with other agencies. In that respect, I applaud the moves that have been made in my constituency by the City of Edinburgh Council's housing department to fund extra police officers in Muirhouse and Pilton. Elsewhere in my constituency, the West Edinburgh community planning pilot addresses local issues of service improvement and co-ordination and greater community influence on council and health services and the work of the local enterprise company and Communities Scotland. Our police can achieve an awful lot with such an approach.

We must respond at a local level to the needs of the people we represent. In a sense, I have some sympathy with what David McLetchie is getting at. How many of us have sat in our surgeries listening to people's complaints about antisocial neighbours only to hear that the police did not come when they were called? Furthermore, even when the police have responded to a call and the person in question tries six months later to build a case for evicting their neighbour to take to the housing department, he or she finds that there is no record of the fact that police officers stood in their living room. That is not good enough, but the solutions that the Conservative party has suggested this morning are not the way forward. The solutions will happen at a local level and will come with better resourcing, man management and partnership with other agencies.

Paul Martin (Labour, Glasgow Springburn)

We all accept that delivering a police service is a very complex and difficult task. I welcome the opportunity this morning to debate how we hold our police authorities to account, and in my speech I will give particular consideration to the high crime levels in my constituency.

Although I have some sympathy with today's motion—especially in relation to police accountability—I do not see the people of Red Road, Burnie Court, Sighthill and other parts of my constituency that are affected by high crime levels being excited by the proposal to have a directly elected convener in police authorities in Scotland.

The way in which police officers can best communicate with the public and best capture and clarify information on local crime statistics is important; as is the way in which that information is formatted and made available to local communities. All too often, communities receive wrong information. In the Sighthill area, before the Firsat Dag murder, the community was advised that crime levels were low. That was not the local experience. We have to consider how to take account of local perceptions of high crime levels. Unreported crimes are an issue for police officers.

I am not entirely convinced that our authorities—the police authorities in particular—interact with other agencies to find the best way of sharing information. Margaret Smith touched on that point. I welcome the interest of Strathclyde police's chief constable William Rae in community planning, but we have a long way to go to ensure that a robust system is in place for the sharing of information by police authorities. That is an accountability issue.

I have said in this chamber on a number of occasions that the Crime and Disorder Act 1998 makes it clear that police authorities can share information with other agencies. All too often, the Data Protection Act 1998 is used as an excuse not to share information. We have to ensure that our police authorities, in particular, use existing legislation on the sharing of information more effectively.

Police authorities have to be encouraged to involve themselves proactively in problem solving in local communities. All too often, police officers have not taken a problem-solving approach to dealing with crime. However, in my constituency, I know of good examples of police officers taking such a constructive approach. I welcome that, and would encourage others throughout Scotland to take that approach.

We are obsessed with police numbers, and we often hear the political slogan, "More police officers on the beat." That is the quick-fix answer to the challenges. However, we must ensure that officers are used more effectively in local communities. Officers should be deployed in areas of high crime. The number of police officers in the Ruchazie and Blackhill areas of my constituency is the same as in the leafy suburbs of Glasgow. We have to focus our police officers on areas with high crime levels, and we should perhaps find a more effective way of deploying our resources.

I welcome this debate. It should be part of a wider Executive debate to find the most positive ways of making progress.

Stewart Maxwell (Scottish National Party, West of Scotland)

I have only four minutes, so I will start by commenting on the point in David McLetchie's motion about elected conveners of police boards. As many members have said, that is a complete side issue and of no relevance to the public. It makes no difference to the public whether the police board convener is directly elected or elected in some other fashion. In any case, the police board convener is elected. He is elected as a councillor; he is elected by his council on to the board; and he is elected by that board to be the convener. That is a good method. There is local accountability. The person is elected and can be removed at any of those levels.

Annabel Goldie (Conservative, West of Scotland)

If that is the case, what power has a person living in a ward in Greenock in Duncan McNeil's constituency, for example, to do something about the police board?

Stewart Maxwell (Scottish National Party, West of Scotland)

There are several ways—they can go through their councillor, they can go directly to the police board or they can do what was spoken about earlier. How much influence would an individual member of the public in Oban have if a directly elected member was putting resources into Glasgow, Girvan or somewhere else? Very little.

Duncan McNeil's point about needing people on the streets is valid, but it is also important that we have intelligence-led policing that deals with serious crime, drugs and other issues. The balance between the two approaches is important. I accept that police numbers are higher than they have ever been, but we should perhaps consider increasing the number even further, as the SNP has said.

The Tories are very keen on the New York example of zero tolerance. There is much to be said in favour of that method of policing, but there is no doubt that problems exist. Ethnic minorities feel targeted in New York by that method of policing and communities feel that they, instead of individual criminals, are being targeted. I have serious concerns about the zero-tolerance approach.

We could consider other examples from America and around the world. In Boston, the policing strategy is community led. The police department established a neighbourhood policing strategy in 1994. There are teams involving the clergy, trade union members, police officers and social workers. There is a city-wide anti-gang unit. If we are talking about community involvement, we should perhaps consider the Boston example rather than the New York example. More than 400 Bostonians were involved in the process. They created neighbourhood strategies and public safety initiatives in their communities on issues that were important to them, not issues that were important to other people. The coalition produced a neighbourhood plan for policing—it was Boston's localised approach to cutting crime. Within two years, the number of homicides, or murders, was down by 39 per cent and the number of shootings was down by 28 per cent.

Local community involvement in policing has been effective in Boston, where neighbourhood policing is based on the development of partnerships between judges, religious leaders, business owners, teachers, young people, probation officers and the police. We should take the time to consider examples not only from Scotland but from around the world. We should not always go for headlines such as "More police officers on the beat" or "Zero tolerance is the answer". We should not just take the high-publicity headline approach of saying that zero tolerance is a quick fix; we should look at good examples from elsewhere. The Boston example of community involvement in local police forces is a good example that could fit the Scottish model much better than the New York example would.

Colin Fox (SSP, Lothians)

I will concentrate on two issues in the four minutes that have been allotted to me. The first is wider democratic accountability of our police services, an issue that the motion raises; the second is the need for an independent police complaints authority.

On democratic accountability, Mr McLetchie spoke about avoiding political interference in the operational decisions of the police. That was rich coming from the Conservatives. Next month marks the 20th anniversary of a miners' strike during which the Government used the police to pursue the National Union of Mineworkers, creating a national police service in Britain for the first time and politicising it.

David McLetchie (Conservative, Edinburgh Pentlands)

During that strike by some miners—not all miners—the role of the police was to uphold the law of the land against the thuggish and intimidatory tactics of Arthur Scargill and his cohorts, who were a disgrace to the trade union movement and who cast aside all the democratic traditions and principles of their own union.

Colin Fox (SSP, Lothians)

I am sure that the trade union movement looks forward to hearing lectures from Mr McLetchie on the values of trade unionism. Those miners were following their lawful right to picket and to strike, as Mr McLetchie well knows. The Conservative Government set up the Association of Chief Police Officers and sent hundreds of police officers from one constabulary or division to another part of the country hundreds of miles away. In ensuring that the strike was policed in such a political way, the Tory Government politicised the British police force in a way that had never been done before and created the most vicious class division of the 20th century. The Conservatives' claims about separating operational matters from political interference ought to be seen in that historical context.

Avoiding political interference in operational decisions is one thing, but I insist—as I am sure the Scottish people do—that police constabularies be fully accountable for their decisions to the communities that they police. That is a political matter. What is needed is openness, full accountability and, ultimately, democratic control of policing strategy, rather than of operational decisions.

The Tories' motion and the Executive's amendment concur on the general point of accountability, but it is ironic that it is the Tories who dissent from the status quo, in that they believe that the current set-up is not sufficiently accountable or democratic. The Executive defends the inadequacy of the current situation on the grounds that democracy is too difficult to implement or that board members are elected—by proxy—as local councillors. The Tories are right to call for a change, but they cannot bring themselves to accommodate full democracy; they want only the convener of the boards to be elected. It is time to stop patronising the public with a spoonful of democracy—the joint police boards should be replaced by community police boards whose members are elected by the community as a whole.

Members have said that the police perform an exceptional and unique role in our society and that that should be recognised by exceptional and unique standards of trust and respect. I believe, rather, that the police should meet the highest possible standards of trust, not the lowest.

The Executive has already commissioned a report to examine the public's lack of confidence in the police complaints procedure. As the 2002-03 annual report by HM inspectorate of constabulary for Scotland shows, of the 2,823 complaints that were registered in the period that the report covers, only seven were upheld—that amounts to less than 0.25 per cent. Either there are a heck of a lot of malicious complaints or there is a clear fault in the system.

I believe that the public have no faith in in-house investigations and that there needs to be a fully independent police complaints authority—perhaps the newly elected community police boards that I mentioned could also play a part in that. A modern democratic Scotland demands the highest standards of probity and integrity in all our public services. Self-examination or special status, which means that the police can shirk those standards, is not defensible if we are to go forward.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

The Tories seem to be congratulating themselves on some sort of innovative solution to the issue of police accountability. However, on closer inspection, we can see that their new proposal is nothing of the sort; it has simply been lifted from proposals at Westminster. I quote from the Home Office publication "Policing: Building Safer Communities Together":

"there is widespread misunderstanding of who is responsible for what in terms of policing in England and Wales."

Does that sound familiar, if we remove "England and Wales" and insert "Scotland"? Those are the words of the Tories' motion. Not only are the Tories incapable of thinking up their own policies, but they cannot even reword the ones that they steal.

David McLetchie certainly did not explain how having an elected convener of a police board would impact on the operational independence of the chief constable. Either the chief constable has operational independence or he does not. I was not clear about what the Tories are in favour of—they need to explain whether they are in favour of operational independence.

Nicola Sturgeon's main argument was that we need more police officers, which is an easy call to make. How many more police officers do we need? Should we enter a bidding war? I seem to recall that there was such a bidding war at the election.

Hugh Henry and Margaret Smith outlined the obvious problems and the tension that the Tory proposal would cause between the chief constable and a directly elected convener of a police board. Stewart Maxwell emphasised the point that our police board conveners are already elected, both as councillors and by their colleagues on the board.

I usually enjoy listening to Colin Fox, as he comes up with some sensible suggestions—[Interruption.] All right—perhaps I am being too generous, but I am trying to be helpful. His suggestion that all members of the police boards should be elected was not sensible.

The Liberal Democrats are committed to improving police accountability and links to communities. We have already proposed that we increase public consultation and participation in policing by giving a greater role to accountable police authorities in the preparation of the annual police plan, for example, the importance of which is not to be underrated. There were no comparably detailed proposals in the Conservative manifesto; the Tories have merely jumped on yet another bandwagon.

David McLetchie (Conservative, Edinburgh Pentlands)

If the member consults our manifesto, he will see that we called for the production of neighbourhood policing plans by chief constables, in consultation with police boards. I called on the Executive to make available resources from its safer communities fund to implement neighbourhood policing policies. If he would like the full text, I will send it to him.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Why are we not having that debate this morning, instead of—[ Interruption. ]

Murray Tosh (Conservative, West of Scotland)

Order.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Mr McLetchie can enlighten us in his summing up.

David McLetchie (Conservative, Edinburgh Pentlands)

I am not summing up.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

The Tories believe that the record number of police officers who have been recruited under the Scottish Executive is not good enough. They demand up to 1,000 more officers and claim that it would be worth the cost, even though they know that resources are limited. What is needed is an emphasis on core resourcing, as the coalition advocates.

Our partnership agreement says that we will improve the efficiency of police forces by providing more common support services, while enhancing accountability for policing to communities through local police boards. We will also increase the number of police officers on operational duty in every Scottish force and improve on the current record overall police numbers.

There are 15,560 police officers serving in the eight police forces in Scotland, as well as 6,066 civilian support staff. We should contrast that with the record of the Tories when they were in government. In 1999, my colleague Sir Robert Smith, MP for West Aberdeenshire and Kincardine, asked what the year-on-year change in funding for the police service in Scotland had been between 1979 and 1999. The answer that was given by Henry McLeish MP showed that there had been four years in which the funding in real terms was cut. Those four years were all Tory years.

The Tory motion simply represents more of the same—more empty posturing by a discredited party that is willing to jump on any bandwagon that goes by. On behalf of the Liberal Democrats, I have no hesitation in urging Parliament to reject the motion.

Michael Matheson (Scottish National Party, Central Scotland)

Of course it is in everyone's interest to ensure that we have an efficient, effective and accountable police service. In his speech, David McLetchie stated that we need the police to be more effective in tackling crime and more responsive to the local communities to which they are responsible and which they serve. I am sure that most members would agree with those objectives, but to suggest that the best way of attaining them is through allowing communities to elect the convener of a police board is just nonsense.

The reality is that police boards are already served by local councillors who represent the local communities that elect them. Those local councillors are responsible for electing the police board's convener. Therefore, it is clear that those who serve on the police board are accountable to their local communities. The Conservatives have failed to address the inherent contradiction in their proposal. How would the preservation of the operational independence of the police and the role of the elected convener of the police board be married together?

Police authorities have to be more effective in communicating with local communities about what they are doing to tackle crime. I believe that more effective community policing strategies are one of the best ways in which the police could go about doing that. Simply having another election will not solve the problem. Some members have already mentioned the police's apparent over-preoccupation with intelligence-based policing. Community policing is one of the most effective ways in which to gather intelligence on crimes that are occurring in communities.

A number of members have also highlighted concern within local communities that the police are not tackling the types of crimes that local people want them to tackle. As Duncan McNeil said, communities feel that the police are preoccupied with serious crime and are not dealing with the ned culture.

Duncan McNeil (Labour, Greenock and Inverclyde)

Intelligence does not need to be sophisticated. People in my community tell me—I am sure that people in Michael Matheson's community tell him, too—about the drug dealer who lives up their close, about the taxis that stop every 15 minutes and about drugs users lying unconscious in the common close, but where is the action? They want action on those issues and they want it quickly.

Michael Matheson (Scottish National Party, Central Scotland)

I understand, because I hear the complaints all the time, that people are frustrated and feel as though there is not enough policing in their communities to tackle simple crimes such as someone going down the street taking the mirrors off cars or breaking windows. Part of the reason for that is the gap between the political rhetoric and the reality of policing. Ministers tell us that we have a record number of police, but they do not mention the fact that the police also have a record level of responsibilities. The police have to comply with much more legislation, including health and safety regulations and the European working time directive, which all impact on the police's daily working.

We need to ensure that the gap between the political rhetoric and the reality of policing is closed. The best way in which to do that is to provide more police officers who can work within local communities where the crimes that I have mentioned are being committed and who, in doing so, can ensure that communities feel safer. That is better than the gimmicks and political rhetoric that we hear, particularly the gimmick that we have heard from the Tories of directly electing the conveners of police boards—what will that do to protect local communities that are suffering?

Hugh Henry (Labour, Paisley South)

I agree with much of what Michael Matheson said in his concluding remarks—much of what the Conservatives have proposed is political rhetoric. However, it ill behoves the Scottish National Party to complain about the gap between political rhetoric and reality, given the gap between reality and what the SNP proposes, not only on police numbers, but on health, on education and on roads and all other aspects of transport. The SNP promises everything, knowing that it will never be in a position to deliver, and has no conception of where money comes from or of living within budgets. By all means let us criticise the Tories' ill-thought-out and ill-judged proposals, but let us also have a reality check on political rhetoric, because the SNP is good at promising everything and not giving definitive answers about where resources would come from.

The debate has demonstrated that no one apart from the Conservatives is persuaded by their gimmick, as it has rightly been described. Annabel Goldie asked in an intervention what power someone who lives in Greenock would have to do something about the Strathclyde joint police board, but I ask her what power they would have to influence a directly elected convener of the police board who was failing to deliver for people who live in Greenock but was satisfying people who live in Glasgow, Lanarkshire and elsewhere in Strathclyde. What could they do about that directly elected convener? I suggest that they could do very little. The Conservatives have come up with no answers—I wait to hear what Annabel Goldie says in her closing speech—on the relative roles of the convener and the rest of the board or of the convener and the chief constable. There are huge gaps in the logic of what the Conservatives propose.

Paul Martin was right to say that, although the boards play a good role, there is always room for improvement. We should always strive for greater accountability. The way in which the police and others are responding to community planning gives some hope that local organisations in local communities can start to work together far more effectively.

I was not clear about how the democratically elected and accountable police boards that Colin Fox mentioned would operate or be structured, but he also raised issues about a police complaints body. I re-emphasise that it is right that, when things go wrong, there should be a proper mechanism for dealing with complaints. We will strengthen the arrangements for that—during this parliamentary session, we will legislate to set up a new police complaints body to deal swiftly and impartially with complaints that are made about the police, because we realise that there is an element of concern about independence and impartiality.

The Conservatives might have prompted a useful debate on accountability, but they have added nothing to it with their ill-thought-out, ill-judged and irrelevant proposal, which would be ineffective. I have no hesitation in commending the Executive's amendment and asking Parliament to reject the Conservative motion.

Annabel Goldie (Conservative, West of Scotland)

I start by referring to what Hugh Henry finished with: he used the phrase "useful debate". Indeed, it is germane to consider the validity of the debate. We know that, in Scotland, a crime is committed every 1.2 minutes and we know from HMIC's 2002 report that we have only about 140 police officers on our streets at any one time. We also know that the public have a huge appetite for more community policing and more police on the streets. Indeed, that was a top priority for respondents to a BBC survey and, interestingly, it emerged as a significant desire in the public's response to the Executive's consultation on antisocial behaviour. However, all parties accept that public demand is not being met by police supply. That is the credibility gap to which David McLetchie referred.

I was struck by some of the comments on the kernel issue of the debate's validity. The minister conceded its validity, although he rubbished the Conservatives' ideas—at least he accepted that we are presenting ideas—and Paul Martin's speech was in a similar vein. Their speeches contrasted with Nicola Sturgeon's, in which she simply said that accountability was not the problem and that there should be more police. My question to Nicola Sturgeon is, "But how?" The public want more police and have wanted them for a significant period of time. When I look at Nicola Sturgeon's amendment, I have to ask how, under the current structure, she would implement one jot or tittle of what she proposes. The dilemma is that she cannot.

Duncan McNeil also conceded the debate's validity, although he does not agree with the Conservatives' proposals. He made an important point when he intervened on Nicola Sturgeon to ask, "What will more police do? Where will they go? Who will decide that?" In essence, I think that he is saying that the public are not getting what they want.

Nicola Sturgeon (Scottish National Party, Glasgow)

Is this the same Annabel Goldie who has for umpteen weeks been going on at Justice 2 Committee meetings about the inappropriate nature of anything that suggests that politicians can direct the police to do anything, or does she have a twin sister who has turned up in her stead today? She says that she disagrees—as I do—with the dispersal power in the Antisocial Behaviour etc (Scotland) Bill and seems to have been clear that the principle of politicians directing the police is wrong, so why has she suddenly changed her mind?

Annabel Goldie (Conservative, West of Scotland)

I have not changed my mind. As David McLetchie said, the Conservative party opposes the dispersal power in its entirety—the ministerial direction power is in that part of the bill. As Conservatives, we also have a strong suspicion that ministerial direction means centralised political control, but that is not what we are talking about in the proposal.

Let me continue to examine the reasons for the apparent frustration of the public—something about which everyone in the chamber seems to agree, as far as I can gather. Those reasons are multiple. The Scottish Police Federation is saying that we need more police officers. The Scottish Executive is saying, "It is not our fault. We have an excellent record of providing police." I do not think that having 140 officers on the beat at any one time substantiates that view. The Association of Chief Police Officers in Scotland has another, starkly different view from that of the public. An ACPOS representative indicated that the association has a certain antipathy to beat patrols or, at best, a lack of enthusiasm for them.

Are the Scottish Conservatives being radical agents provocateurs for leading this debate and for suggesting that accountability lies at the heart of the problem? It seems that, in principle, the minister, unlike the Scottish National Party, is prepared to accept that that is the issue. David McLetchie alluded to the Home Office consultation that is being carried out. It is easy for Mike Rumbles to be snide and sneering about that—acting entirely in character—but that is to be entirely blind to the germane principles of what I think is a very important argument. The Government at Westminster has conceded that there is an issue. Members may talk about different legal systems and structures, but the issue remains the same.

As David McLetchie said, democratic accountability is essential. There have been challenges to that view, but democratic accountability is not political interference. A structure in which the public have a rather greater say about the provision of policing at a local level, in terms of control and accountability, does not, in my book, need to be inimical to the professional operational activity of the police force. It is important that the police authorities should respond locally to overall public demand.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

Will Annabel Goldie clarify a straightforward question? Are the Conservatives in favour of the operational independence of chief constables? Yes or no?

Annabel Goldie (Conservative, West of Scotland)

The operational independence of chief constables—which arguably exists at the moment—is, by any criteria, raising questions. We are submitting a proposal that tries to introduce greater accountability for chief constables and their colleagues. As I said, that is not, in my judgment, necessarily inimical to professional operational policing at a local level.

Jackie Baillie (Labour, Dumbarton)

Will the member take an intervention?

Murray Tosh (Conservative, West of Scotland)

The member is in her last minute.

Annabel Goldie (Conservative, West of Scotland)

As for the current structures, Mr Henry attacked the undemocratic nature of what he thinks our proposals represent. What he said posed a paradox, however. I probably know more about the dietary habits of the indigenous tribes of Papua New Guinea than I do about the convener of my local police board.

Nicola Sturgeon (Scottish National Party, Glasgow)

Perhaps that is the member's problem.

Annabel Goldie (Conservative, West of Scotland)

It is that remoteness that—

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

She did not bother to find out.

Murray Tosh (Conservative, West of Scotland)

Order.

Annabel Goldie (Conservative, West of Scotland)

It is that remoteness that gives rise to much of the public's concern about the provision of policing. Speaking of remoteness, I should add that nothing that Stewart Maxwell said would resolve that issue.

The Executive amendment dodges the issue, hiding behind the inadequacy of the current structures, while the SNP amendment simply fails to recognise the problem. I support the motion in the name of David McLetchie.

Scottish Economy

Murray Tosh (Conservative, West of Scotland)

The next item of business is a debate on motion S2M-855, in the name of Murdo Fraser, on the Scottish economy, and on three amendments to that motion. The timing for the debate will be very tight, and I am not sure whether I will be able to call everyone who wishes to speak.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I will move the motion in my name on the important subject of the Scottish economy with a sense of disappointment, not just because I did not make it on to the parliamentary "University Challenge" team, but because, despite the Executive telling us that growing the economy is its top priority, this is the first debate on the economy that we have had since the beginning of September, nearly six months ago. I can understand why the Executive does not want to debate the subject in Parliament. If it takes a Conservative debate to drag a minister, kicking and screaming, into the chamber to answer for the Executive's record, so be it.

I am pleased to see the Deputy Minister for Enterprise and Lifelong Learning in his chair, ready to lead the debate for the Executive. I have a great deal of respect for the deputy minister, who I believe is one of the more competent ministers in the Executive, with an excellent command of his brief. I see that the Deputy First Minister is here too, although I do not know whether he intends to participate in the debate. However, he is very welcome to this country.

The Executive amendment demonstrates its rather complacent attitude over the state of the economy. The Executive talks about Scotland's competitive position in the global economy. In fact, Scotland's gross domestic product lags behind that of the rest of the United Kingdom. In the year to quarter 2 of 2003—the last quarter for which we have the statistics—Scotland's GDP grew by only 0.5 per cent, while that of the UK as a whole grew by 1.8 per cent. That is not an unusual position; it has been the situation for some years.

The outlook is little better when it comes to our population. The Registrar General for Scotland has indicated that the Scottish population is likely to fall below 5 million by 2009. That has serious implications for us all. All the international evidence shows that population growth is inextricably linked to economic opportunity. If the Executive is serious about reversing the decline in population, it must be serious about improving our economic performance.

Tommy Sheridan (SSP, Glasgow)

The Conservatives often say that the way to encourage economic regeneration and population growth is to cut taxes, because high taxes lead to a fall in population. Britain has the lowest rates of corporate and personal tax in the whole of Europe. Why is that low tax rate not leading to an increase in the population?

Murdo Fraser (Conservative, Mid Scotland and Fife)

If Mr Sheridan were to check his facts, he would find that the population of the UK as a whole is on the increase. The problem that we have here is that the Scottish population is falling, while that of the UK is increasing. I will explain why I believe that that is because of higher tax rates, particularly on business in Scotland.

Bristow Muldoon (Labour, Livingston)

Will Mr Fraser give way?

Murdo Fraser (Conservative, Mid Scotland and Fife)

Not at the moment, thank you.

What is to be done about the current situation? The Scottish National Party, in its amendment, comes up with its usual solution of fiscal freedom. I am not without sympathy for the idea that the Parliament needs greater financial accountability. However, the SNP is missing the point completely. What is worse, it gets the Executive off the hook completely. We do not currently have the powers for the tax cuts to which the SNP refers, and that gives the Executive a get-out clause. As usual, the SNP's approach is tactically inept.

The Executive has the powers that it needs to deal with the problem, although it will not use them. All the international evidence says that a low tax regime and economic growth go hand in hand. We should look at Ireland, New Zealand, Estonia and the United States of America: they have low taxes and high economic performance.

Jim Mather (Scottish National Party, Highlands and Islands)

What does the member say to businessmen in Tallinn, Helsinki and Dublin, who would laugh hysterically at his inadequate proposals, which would do nothing to erode the competitive advantage that their countries hold over Scotland?

Murdo Fraser (Conservative, Mid Scotland and Fife)

Mr Mather must be aware that business rates in Scotland are higher than those in the rest of the UK. That is a business tax that we could cut now. Business rates are a more effective weapon than corporation tax. Only one in four businesses in Scotland pays corporation tax, while virtually every business pays business rates. If we must choose a weapon to use, business rates are far more effective.

We have high business costs in Scotland, and we wonder why our economic performance lags behind that of the rest of the UK. Our business rates are higher; our water charges are, in some cases, excessively higher; our businesses are more strictly regulated than businesses down south; and we have a poorer transport infrastructure. We even heard a suggestion from the Executive at the weekend that business rates might have to go up to pay for higher education spending.

We do not want to hear from the Executive that we are competitive as far as business costs in Europe are concerned. We must compare ourselves with the rest of the UK, where costs are lower and economic growth is higher. Those facts speak for themselves. The Executive should be reducing business rates at least to the uniform business rate, thus restoring the level playing field with England that the last Conservative Government established. Our ambition would be to go further and to give Scotland a competitive business rate compared with the rest of the UK. We suffer because of our geography and our poor transport infrastructure. Why not compensate for that with a lower tax regime? Why not have an Executive that really fights the corner for Scottish business and wants to give it a leg-up rather than forever trying to pull it down?

George Lyon (Liberal Democrat, Argyll and Bute)

Does the member agree with Robert Crawford, who described cutting business rates as nothing more than a red herring?

Murdo Fraser (Conservative, Mid Scotland and Fife)

The member will not be too surprised to hear me disagree with Robert Crawford on that issue, as on other issues. I wonder how many businesses Mr Crawford has run. I remind the member that, at the last but one meeting of the cross-party group on the Scottish economy, Professor Sir Donald MacKay, the former chairman of Scottish Enterprise, came along with a powerful case that cutting the business rate was the most effective tool the Executive could use to increase growth in the Scottish economy.

I will touch briefly on regulation. I call on the Executive to support my proposal this week for a new test on how legislation will affect economic growth. At the very least, that would concentrate minds within Government on how its plans will impact on the economy. If the Executive is serious about its top priority being growing the economy, it should have no problem backing my proposal.

The Scottish economy underperforms that of our neighbours in England. We are losing our population, and the Executive seems unwilling to take any action to reverse the situation. The Scottish National Party is no better, being so obsessed by constitutional issues that it cannot see real solutions. In contrast, I have set out clear Conservative proposals on business rates, on regulation and on reducing water charges. Those proposals will make a real difference to the performance of our economy, and they will help to reverse our population decline. It is time for the Parliament to treat the economy seriously, and to back measures that will see Scotland flourish once more.

I move,

That the Parliament notes with concern the consistent underperformance of the Scottish economy relative to that of the UK as a whole; recognises that the burdens of higher rates, water charges and regulation faced by businesses in Scotland are factors contributing to this underperformance, and calls upon the Scottish Executive to take immediate steps to create a more business friendly environment by reducing business rates and water charges and cutting red tape, thereby encouraging business development, improving the outlook for economic growth, and contributing to a reverse in Scotland's trend of population decline.

Lewis Macdonald (Labour, Aberdeen Central)

The debate points up some important dividing lines, and provides different views of the state of the Scottish economy, of the advantages of devolution, of the way ahead to achieve long-term, sustainable economic growth and, not least, of what economic growth is for. Economic growth is the Executive's top priority, because we recognise that only by growing the economy can we close the opportunity gap, create greater wealth to be shared more widely, and give all our people the chance to do productive work and to enjoy fulfilling careers.

Growing the economy, however, is not something that Government can deliver at its own hand. It depends on businesses becoming more innovative, more productive and more competitive. The task for Government is to create the right environment for that productive economy to flourish. That is why devolution is so important. Scotland's devolved Government can focus its efforts on creating competitive advantage by investing in skills, in knowledge and in innovation. We can do that precisely because the macroeconomic levers of interest rates and wider economic and fiscal powers lie elsewhere. That division of responsibilities has helped to deliver the lowest levels of inflation, the lowest levels of interest rates and the lowest levels of unemployment in a generation.

Richard Lochhead (Scottish National Party, North East Scotland)

Does the minister accept that it is essential to Scotland's economic growth and to achieving his aims that young people live and work in Scotland? What is the main reason that many young people leave Scotland to get their first job?

Lewis Macdonald (Labour, Aberdeen Central)

The Executive will lay out its plans to ensure that young people in Scotland can access the labour market and get the kind of jobs and careers that they want. It is by creating and increasing those opportunities that we can not only grow the economy, but grow the population and secure our long-term future.

Our job is to take advantage of the stable and strong macroeconomic circumstances by supporting those sectors of the Scottish economy that offer the best prospects of future growth and by ensuring that all our people have access to the labour market. Last year was challenging not only for Scotland, but for all the major global economies. As an open and globally connected economy, Scotland was not immune to those challenges. Despite that, the Scottish economy grew, even in the second quarter of last year, and employment remains at historically high levels.

Phil Gallie (Conservative, South of Scotland)

The minister just mentioned growth in the Scottish economy, but we all recognise that, as Murdo Fraser commented, growth in Scotland is the lowest in the UK. Why is Scotland now at the bottom of the league, when it was among the top three or four regions for growth in the UK between 1992 and 1996?

Lewis Macdonald (Labour, Aberdeen Central)

We should focus on where we are and where we are going. This point in time, when the world economy is recovering, is our moment of opportunity. There is something peculiarly perverse about a unionist party that regards economic growth in England as proof of Scotland's failure. We benefit from economic recovery elsewhere in the United Kingdom, because the rest of the UK is our largest single trading partner. All recent surveys confirm greater business activity in Scotland in the last quarter of last year, improved prospects and expectations for this year, and renewed confidence in our manufacturing industry.

The issue is how to take advantage of those improving prospects. The Tory line is to cut public investment and support for business in order to fund cuts in business taxes. We will no doubt hear the same from the SNP. The Executive would rather maintain public investment and sharpen our focus yet further, to get better value for the taxpayer's pound.

Brian Monteith (Conservative, Mid Scotland and Fife)

Will the minister take an intervention?

Lewis Macdonald (Labour, Aberdeen Central)

I am afraid that I am short of time.

It is right to listen to business concerns and to act on them. That is why we have frozen business rates and introduced water charges below the rate of the retail price index this year, and introduced a new, low-user water tariff for 20 per cent of Scottish firms. When we listen to business, however, we do not just hear about taxation. We also hear that businesses want more investment in infrastructure and in addressing market failures. That is why the Executive will have a budget of more than £1 billion to invest in our transport infrastructure. It is why we will continue to invest in our skills and training agenda through the enterprise networks; in streamlining business support through the business gateway; in supporting innovative new firms through the Scottish co-investment fund; and in bringing Scottish science to market for Scottish companies through the intermediary technology institutes.

All of that is productive investment to strengthen the Scottish economy. Cutting those investments to reduce taxes—as the Tories would do—would send all the wrong signals to Scottish business. It would say, "There's nothing more for Government to do, you're on your own, and here's a few quid in your current account to help you get by." Instead, we should say to Scottish business, "We're on your side, we're in it for the long term, we'll invest in your success and we'll all benefit if you deliver." That way, we get the growth, we get the jobs, and we get the public services too.

I move amendment S2M-855.3, to leave out from "with" to end and insert:

"the evidence of an upturn in global economic activity and the opportunities for Scottish businesses and the Scottish economy to grow; rejects the proposition that increased competitiveness is best achieved by reductions in business taxation; believes instead that economic growth and wealth creation require targeted investment in skills and learning, business growth and innovation, and global connections, and supports the Scottish Executive's strategy of sustained investment in these areas to improve Scotland's competitive position in the global economy."

Jim Mather (Scottish National Party, Highlands and Islands)

I welcome the debate as another chance for me to stake Scotland's claim of right to have the defining attribute of any economy: financial independence. The SNP is winning that argument, as with every passing day and every new retirement from public office, we see more and more converts to it. Those conversions are building up pressure relentlessly on those who continue to deny that most of Scotland's problems are caused or exacerbated by the Parliament's lack of power.

The Executive faces the invidious choice between accepting the logic of the SNP's economic case and continuing to produce more adverse data and yet more converts to our argument. Already a majority of MSPs are in favour of more powers, which mirrors the opinion of virtually everyone who has seen the SNP's economic case.

Wendy Alexander (Labour, Paisley North)

Will the member take an intervention?

Jim Mather (Scottish National Party, Highlands and Islands)

I am going to crack on and make some progress first.

Jim Mather (Scottish National Party, Highlands and Islands)

I have only four minutes.

We are getting inexorably closer to the time described by Tom Nairn, who said that

"when things do alter, the new retrospect will make it seem that the former quiescence was intolerable—indeed almost inexplicable".

With that in mind, we are positive about the gradual migration from the Tories' previous inexplicable policies. However, today's motion from the Tories replicates the SNP's desire for lower business rates, thereby exposing an important difference between the SNP and the Tories. For the SNP, it is a declaration of intent and a signal of our perpetual commitment to improving Scottish competitiveness. Sadly though, without a vision, such as that of the SNP, for a strong, distinct Scottish economy, the Tories' proposals merely tinker with our limited powers and, as such, will never be enough. They reinforce our status as a branch economy.

Nevertheless, I refuse to paint the Tories into a corner, so I will not dwell too much on that point, or on the damage that previous Tory Administrations have done to Scotland. Instead, I look forward to the Tories' conversion on financial powers. I just hope that it comes soon, because the current Government is not delivering the results that the people of Scotland need. The only thing that the Government has delivered on the economy is more and more evidence that the status quo is not working—evidence such as its continuing record of low growth, the widening gap in average incomes within Scotland and in the rest of the UK, our declining population, the dramatic economic contraction of rural Scotland, and the rapid diminution of the private sector.

Brian Monteith (Conservative, Mid Scotland and Fife)

The member mentioned that a number of Tory policies were damaging to the Scottish economy. Does the member regret any of the trade union reforms that the Tories introduced?

Jim Mather (Scottish National Party, Highlands and Islands)

Given the litany of such reforms, I will take some time to ponder that question, but I am sure that there are some.

It is time for us to take the advice of John Randall, the former Registrar General for Scotland, and the advice of Robert Crawford and William Baumol. We should take urgent steps to address the seriousness of the situation that we face rather than, to paraphrase the Executive amendment, crossing our fingers and hoping that other economies will create demand for Scottish goods and services and that Scottish skills and capital will stay here.

For our part, we can help; we can and must be non-proprietorial about the arguments that we have developed. We are keen for other people to share them as the basis for political consensus.

Wendy Alexander (Labour, Paisley North)

Will the member take an intervention?

Jim Mather (Scottish National Party, Highlands and Islands)

On you go.

Murray Tosh (Conservative, West of Scotland)

You are in your last minute, Mr Mather. You have 45 seconds left.

Jim Mather (Scottish National Party, Highlands and Islands)

Right. I am sorry.

To that end, I offer our ideas as the basis for a political consensus that will withstand audit from home and abroad. We will continue to encourage the Tories to trust their commercial instincts and to appreciate the benefits of increased autonomy. We will encourage Labour to reconnect with the principles behind Scottish Labour action, and we will encourage the Lib Dems to recognise that a federalist party should not have to consult to prove that federalism is a good thing. Otherwise, we will delay the inevitable; the cause and effect of powerlessness is self-evident and its consequences for Scotland are dire. The clock is ticking and the Parliament is serving its purpose by eliciting and recording an accurate account of the eroding arguments in favour of that delay. Please support the SNP amendment.

I move amendment S2M-855.1, to leave out from "recognises" to end and insert:

"welcomes growing calls for the Scottish Parliament to enjoy the full range of tax powers available to Scotland's competitors, and recognises that only with the normal economic powers of an independent parliament will the competitive conditions be created in Scotland to reverse low growth and population decline."

Carolyn Leckie (SSP, Central Scotland)

A couple of references have been made this morning to reality checks. Looking at the motion and the amendments, I think that we need a reality check. The Tories and the Executive kid themselves when they talk about the growth of the economy under the pitiful powers of the Scottish Parliament. We all know that the Parliament cannot make even a marginal difference to the economy, which is controlled from Westminster, Brussels and Strasbourg. Our economy is in the hands of the Bank of England, the European Central Bank, big business, the International Monetary Fund and the World Trade Organisation. We are playing games when we talk about the economy in the chamber—that is the reality check.

Our amendment is about facing reality, being honest and not pretending. To talk about growing the economy within the straitjacket of the Scottish Parliament is like lifers in Barlinnie discussing their next holiday abroad.

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

Since we want to face reality, how would the Scottish Socialist Party fund any public services at all in Scotland after it had spent the whole Scottish block several times over on renationalising Scotland's banks?

Carolyn Leckie (SSP, Central Scotland)

The Royal Bank of Scotland and the Bank of Scotland make profits that are £10 billion greater than the national health service budget alone, so I am sure that there is plenty of money in the coffers.

Members have talked about population growth, but on the tinkering that is proposed by the main parties within the Parliament's straitjacket, I must say that I have probably contributed more to population growth through the hundreds of babies that I delivered as a midwife and through having two children of my own.

The unionist parties pretend that we can create a booming economy and deal with poverty, but the Parliament cannot increase pensions or introduce a decent minimum wage above the low-pay threshold, and the jobless have swapped the dole queue for poverty pay and huge debts. The Parliament cannot force the rich to pay even what was paid under Thatcher. The SNP might partly agree with that—I will leave the Tories, the Lib Dems and Labour to explain its conjuring tricks—but what kind of independent Scotland is it talking about?

The SNP trumpets and praises Estonia, but competitiveness means cheap labour and rock-bottom business taxes. Half the population of Estonia lives in abject poverty—that is not what I want in Scotland. The SNP worships the European Union and accepts the euro and the lock, stock and barrel transfer of economic control to the European Central Bank—that is a statement of fact. The SNP wants to compete with Estonia in a race to the bottom, with low wages and cheap public services.

Brian Adam (Scottish National Party, Aberdeen North)

Will the member take an intervention?

Carolyn Leckie (SSP, Central Scotland)

I do not have enough time. I have already taken an intervention.

EU countries are leapfrogging one another to reduce corporation tax to 18, 17 or 16 per cent, and the SNP proposes an even lower rate. All four of the main parties share the philosophy of giving more handouts to big business and they all adopt the begging-bowl mentality. We reject that.

Who will pay for our nurses, nursery nurses, firefighters and so on? Why do the Tories never talk about putting more money into the pockets of pensioners, women and the low paid, who would spend it and help to grow the economy? We could do that, even within the strictures of the Parliament, by scrapping the council tax and redistributing it to those who will spend it in the local hairdressers and so on. Instead, the other parties talk about increasing the wealth of those who are already wealthy. Why do they not talk about the means testing of big business? They are happy to talk about the means testing of pensioners, single parents and the low paid.

Other measures such as free child care might help; Sweden's gross domestic product is much greater than ours and it has free child care for all. Some 2.3 million working mothers in Britain take home only 10 per cent of their salaries.

The Parliament does not have the power radically to redistribute wealth, but even within the powers that we have we could scrap the council tax, introduce free child care and pay public sector workers a decent minimum wage—that is the reality.

I move amendment S2M-855.2, to leave out from "with" to end and insert:

"the complete absence of real economic powers for example in its inability to eradicate pensioner poverty by raising the state pension, its inability to raise the taxes of the rich and its inability to set a decent minimum wage rate for all workers in both the private and public sector and believes that it will only be when the Parliament has full control of fiscal and economic policy that Scotland will be able to achieve substantial and lasting economic growth."

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

We Liberal Democrats attach great importance to growing the Scottish economy—indeed, that is the top priority in the partnership agreement and it is backed up by action on a range of areas. Our approach recognises that there is no magic bullet for economic growth, and it is in sharp contrast to that of the Conservative party, whose one-dimensional approach to the issue is reminiscent of its economic record when it was in Government. I say to Murdo Fraser than one business going bust every three minutes of every working day and two of the worst recessions since 1945 are factual examples of boom and bust economics—I say no thank you to that.

Let us examine the substance of the Conservatives' main contention. Where is the evidence for their central claim that cutting business rates is the key to unlocking growth? Robert Crawford has been mentioned; speaking on "Newsnight Scotland" on Monday, he said that, in his view, the business rate issue was a complete red herring. He noted that if we ask people whether they want any particular tax to be cut, they will of course say yes. He raised the central issue of whether a cut in business rates would make a long-term difference to our competitiveness and he said that he had seen no evidence, anywhere in the world, that such cuts make a difference.

Alf Young, writing in the Sunday Herald on 12 October 2003, pointed out:

"Between 1990-91 and 2002-03, after allowing for inflation, the real income from non-domestic rates in Scotland and England, indexed to a common base, followed an almost identical path, with the tax income in England marginally ahead for two-thirds of the time."

The Federation of Small Businesses says that it would rather that funds were spent on key areas such as transport and skills. No less a person than John Downie said, in the Sunday Herald:

"it's about getting more bang for your buck in terms of economic development."

He also said:

"The simple truth is that lower rates cannot act as a miracle growth tonic for Scotland's economy."

Murdo Fraser told us in last week's Scotland on Sunday that he wants to cut business rates in Scotland to below the rate for the rest of the UK, and he told us about that this morning, but has he taken the opportunity to clear it with his UK colleagues? Liam Fox was certainly not aware of that policy when he indicated on Grampian TV's "Crossfire" programme that the new UK leadership disapproves of moves to deliver lower taxes in Scotland than those in the rest of the UK. If Murdo Fraser has Westminster ambitions, they are finished.

Murdo Fraser (Conservative, Mid Scotland and Fife)

I am grateful for Jamie Stone's concern about my ambitions, but is he aware that we have devolution? Business rates are a devolved matter, and it is up to us in Scotland to decide how we fix them. What does he say to people such as Professor Sir Donald MacKay, former chairman of Scottish Enterprise, who says that cutting business rates is the most effective thing that the Executive could do to help economic growth?

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Let us remember that Donald MacKay is the gentleman who was appointed by the Conservatives to run Scottish Enterprise.

Here is a key, killer fact: business rates today are lower than they were at any point under the Conservative Administration. Let us contrast that Administration with the work that the Executive is doing. We are talking action in several areas. We are committed to ensuring economic growth through "A Smart, Successful Scotland" and we are addressing the challenges that are posed in skills and higher education. We are looking at innovative ways to bring together economic activity and academic research through commercialisation in our universities and the groundbreaking intermediate technology institutes; £450 million of new money will be put into research and development during the next 10 years. As Murdo Fraser knows, we are pursuing the massive opportunities that are presented to Scotland in renewable energy and green jobs.

We are listening to and acting on the legitimate concerns of business. Just this week, Jim Wallace announced that small businesses would benefit from reduced water bills through the introduction of new lower-user tariffs. That follows our introduction of the small business rates relief scheme, which the Federation of Small Businesses welcomed.

We are committed to Scotland's future. From transport to skills and training, from research and development to broadband roll-out and from promoting entrepreneurship to pursuing green jobs, the Executive is delivering economic growth through an holistic approach.

Murray Tosh (Conservative, West of Scotland)

I must hurry you, Mr Stone.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

We will not adopt the Conservative party's hotch-potch raggle-taggle approach.

Murray Tosh (Conservative, West of Scotland)

Time is very tight for the open debate, so I must ask members to interpret four minutes as meaning four minutes.

Bill Butler (Labour, Glasgow Anniesland)

When I read the Conservative motion and listened to Murdo Fraser's speech, I was reminded of the Conservative party's ability to reinvent itself and to repackage a product that the public have long since left on the shelf. That brought to mind the Tories' success in the middle years of the 20 th century in changing their public image from that of the class warriors who delivered the mass unemployment of the 1930s to that of the Butskellite consensus seekers of the 1950s and 1960s. As members well know, the Tories are nothing if not brazen. Shamelessly, they are attempting to play the same confidence trick on the public again.

To agree to the motion, we would have to be convinced that the Tories are now and always have been the party of economic prudence, growth and stability, and the party that stands up for business, especially small business. That is Mr Fraser's pitch to members and voters, with all the genuineness of Del Boy Trotter but without the laughs. I gently remind Mr Fraser that the electorate have memories. They will not find his sales patter particularly funny.

The people of Scotland and of the rest of the UK remember only too well the true face of Britain under the Conservatives. They know that the Tory party was and remains the party of high inflation and soaring interest rates. They understand well that the Tories used mass unemployment as an economic tool. They have not forgiven and will not forgive the wanton destruction of whole industries and the communities that depended on them. They have not forgotten the heartache endured by thousands of ordinary householders who were trapped in negative equity. They are not unaware that the instability of the Tory years led to an abnormally high failure rate in the business sector, especially the small business sector. What is most damning for the Conservatives is the fact that the public know botched cosmetic surgery when they see it.

I will deal with some aspects of the Conservatives' effort this morning to reinvent themselves. Mr Fraser made great play of the necessity to reduce the burden of business rates, as he says that they contribute to what he calls

"the consistent underperformance of the Scottish economy relative to that of the UK as a whole".

What do seasoned observers make of that bold and radical proposal? Not much, it seems. We should listen to Mr Robert Crawford, who is late of Scottish Enterprise.

Murdo Fraser (Conservative, Mid Scotland and Fife)

We have already heard from him.

Bill Butler (Labour, Glasgow Anniesland)

This is a different quotation. He said:

"'The question is whether or not in cutting business rates you are likely to make a long-term difference to the competitiveness of the Scottish economy.

'Answer - there is no evidence that I've seen anywhere in the world that that makes a difference.'"

What of Mr Fraser's charge of consistent underperformance? No serious commentator doubts that our economy has problems, such as those in manufacturing. Alf Young recently noted the fact that those problems are caused largely

"by the rapid contraction of output from the silicon-based industries like computer assembly."

No serious politician in the chamber would argue that we should not strive consistently to encourage more economic growth and the jobs that would flow from that. That is the Executive's position, which is correct.

The Tory argument of consistent underperformance does not bear scrutiny. As Mr Alf Young said in his recent epistolary exchange with Mr Monteith,

"in terms of GDP per capita, Scotland is still more prosperous than Wales, Northern Ireland and six English regions. Only London, the south east and the east of England score better."

Too many people in Scotland in constituencies such as mine had their hope of a better life for themselves and their families extinguished in the Tory years. The people of Scotland will not buy the Tories' latest attempt to dress themselves up in a new political suit. What people will see is what we witnessed today—naked political opportunism. I am convinced that they will reject that at future elections, as members will surely reject it today.

Richard Lochhead (Scottish National Party, North East Scotland)

There is a growing consensus in Scotland. The sooner the Executive takes its head out of the sand and gets behind that growing consensus, which has not gone far enough but is increasing, the sooner Scotland can move on. Consensus is growing behind the fact that the Scottish economy cannot continue to lag behind that of the rest of the UK and behind the fact that the decline in Scotland's population is becoming a national crisis.

Lewis Macdonald (Labour, Aberdeen Central)

Does Mr Lochhead accept that the population decline to which he has—rightly—referred is a consequence of a decline in the birth rate rather than net migration?

Richard Lochhead (Scottish National Party, North East Scotland)

I agree that that is one factor.

I was told this morning that Aberdeen city, which includes the minister's constituency of Aberdeen Central, expects a decline of 40 per cent between 2000 and 2016 in the number of residents aged 30 to 44. That will cause enormous problems for the minister's city and constituency. The consensus is growing on that issue and on the fact that Scotland needs more powers to address such issues.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

I would like one question to be answered. In Mr Lochhead's dream scenario of independence, with Jim Mather's attachments and all the rest of it, who would pay to decommission Dounreay?

Richard Lochhead (Scottish National Party, North East Scotland)

I am thankful that some dreams come true and independence for Scotland is one dream that will come true soon. As an independent country, Scotland will be much wealthier. In the world wealth leagues, the best standards of living all belong to small independent countries in northern Europe, such as Sweden, Denmark and Norway. Surely it is ambitious of the SNP—other parties should share that ambition—to try to emulate that success.

If the Scottish Executive were not weak, it could boost the Scottish economy. We know that our fishing communities are suffering because the Executive allows the UK to lead in negotiations on fishing issues, when the Executive has full powers to take charge on those issues. Our fishing communities cannot exploit healthy fishing stocks in their traditional fishing grounds, 30 miles off their own shores.

The minister apparently takes a keen interest in the offshore industry, which is huge. It is the most valuable value-added industry in Scotland and is worth 130,000 jobs. It has capital expenditure of £3 billion a year, not to mention the multiplier effect of the 130,000 people who are employed in it. Despite that, the minister and the Executive never discuss the offshore industry in the chamber, although it faces massive challenges. The minister is vice-chair of PILOT, which is a joint industry-Government initiative, but we never have feedback on that. The subject is important.

Lewis Macdonald (Labour, Aberdeen Central)

rose—

Richard Lochhead (Scottish National Party, North East Scotland)

I will give way in a second.

The minister can help the offshore industry on the huge issue of the downturn in drilling activity, which has led to considerable job losses in recent months and may store problems for the future. Of the 39 semisubmersible drilling rigs in the North sea, 19 are stacked—that means that they are not working. Of those 19, 11 are cold stacked, which means that they are blocked up for the foreseeable future and are not expected to be used. The minister is doing nothing about that huge issue and the UK Government will never do anything about it. The minister must put pressure on the London Government to introduce measures to stimulate drilling activity if we are to protect those 130,000 jobs.

The minister and his colleagues are fond of producing many glossy documents. We have never had one on the offshore industry, yet it is one of Scotland's most important industries. When will he intervene to address that? When will Jim Wallace or the First Minister, Jack McConnell, end the platitudes, demand action from the UK Government and produce a Scottish Executive strategy? After all, the Scottish Executive is responsible for economic development, education and training, all of which are big issues that can help the industry.

In a previous debate on the economy, Wendy Alexander said that the only factor that influences the offshore sector is the price of oil. I sent the Official Report of that debate around the industry, with which her comments went down like a lead balloon. She does not know what she is talking about.

Wendy Alexander (Labour, Paisley North)

Will the member take an intervention?

Richard Lochhead (Scottish National Party, North East Scotland)

The Executive must start taking an interest in the offshore sector and do something for it, because it involves 130,000 jobs.

Wendy Alexander (Labour, Paisley North)

Will the member take an intervention?

Trish Godman (Labour, West Renfrewshire)

I ask Wendy Alexander to sit down, please.

Richard Lochhead (Scottish National Party, North East Scotland)

The Executive must do that to boost the Scottish economy.

Bristow Muldoon (Labour, Livingston)

A debate on the Scottish economy is welcome and worth while. Sadly, however, the debate has so far resulted in the Opposition parties' getting into their entrenched positions and not taking the opportunity to talk about the strengths of the Scottish economy and the ways in which we can help to improve the economy further.

Bill Butler rightly pointed out that Murdo Fraser had some brass neck to criticise the current economic record of Scotland, given the Conservatives' record of failing Scotland over 18 years. Back in the 1980s, when the Conservatives were in power, unemployment in my constituency hit 20 per cent. It is currently below 3 per cent because of the successful economic management of Labour in Government.

Brian Monteith (Conservative, Mid Scotland and Fife)

Will the member give way?

Bristow Muldoon (Labour, Livingston)

I have only four minutes. I will, perhaps, give way later.

In revisiting the constitutional settlement, Jim Mather stuck to his usual position that the answer for Scotland is to cut the levels of taxation, especially business taxation. However, I challenge him and his colleagues on that point. We cannot have Scandinavian levels of public expenditure based on Irish levels of taxation.

Jim Mather (Scottish National Party, Highlands and Islands)

I ask the member to tell us when Scottish growth will match that of the UK under the current policy agenda. If he cannot tell us that, can he tell me how long he is going to tolerate the continuing and widening gap between growth here and growth in the rest of the UK?

Bristow Muldoon (Labour, Livingston)

The signs of growth in the Scottish economy, based on recent figures, are encouraging. Bill Butler pointed out something that is often ignored by members. Although Scottish economic growth has been poor in recent years, overall Scottish GDP is still ahead of the GDP in most of England and in Northern Ireland and Wales. That fact is often ignored by members of the Opposition parties.

Even within Scotland, there are distribution issues around economic success, as Edinburgh and the Lothians are achieving a far higher degree of success than other areas. That is one of the issues that I wanted to raise with Murdo Fraser. If the way to population growth and economic success is lower levels of taxation, why are Edinburgh and the Lothians such a success at the moment? Edinburgh has economic growth and population growth although it is under the same taxation regime as the rest of Scotland.

The Tory motion is based on the false premise that, overall, Scottish businesses are taxed at a higher level than businesses in many of our competitor countries.

Murdo Fraser (Conservative, Mid Scotland and Fife)

In England.

Bristow Muldoon (Labour, Livingston)

Well, that is false as well. That may be the case for non-domestic rates, but if all business taxation is taken into account—including taxation on transport—the taxation level in Scotland is exactly the same as it is in England and is still well below the taxation level in countries such as Belgium, Finland, France and Sweden.

Alex Johnstone (Conservative, North East Scotland)

The taxation rates in England are equivalent; however, if we add up the costs that are involved and the fuel that we use because of the miles that we have to travel in Scotland, our costs are astronomical compared to those in the south.

Bristow Muldoon (Labour, Livingston)

The overall taxation rate for all businesses in Scotland as a proportion of GDP is exactly the same as it is in England and, as I said a moment ago, it is well below the taxation levels in France and in Belgium, Finland, and Sweden—some of the small, independent countries that SNP members often cite. It is, therefore, a false premise to say that businesses in Scotland are taxed at a significantly higher level than businesses in England or in our major competitor countries.

The approach that the Executive is following, in continuing to invest in transport, skills and the strategy of "A Smart, Successful Scotland", is the correct policy for economic growth in Scotland. I encourage the Executive to continue with that strategy. It will be successful and will result in economic growth in Scotland, as exists across the rest of the UK. The policies of the SNP and the Conservatives are a distraction from the debate. If they want to have a serious discussion in future, they should take a more informed and constructive approach to the issue. I support the amendment in the name of the minister.

David Mundell (Conservative, South of Scotland)

I am disappointed that we have lapsed back into the same old routine of having to hold such debates in Opposition time given Mr Wallace's so-called Mansion House speech in September, in which it was stated that the economy would be a priority. It is all just words. I admire the Deputy Minister for Enterprise and Lifelong Learning, who is a true expert in filling a set amount of time with words; however, that is all that they are.

In previous debates, many issues have been talked about with the prospect of some immediate action, but nothing has happened. What better example of that can be cited than the improvements that Waverley station requires? That work is widely recognised as the single most important thing that could be done to the Scottish rail network to increase capacity; yet, nothing is happening. When Sarah Boyack and I questioned the First Minister on that matter, he gave no hope of that project actually getting under way. That is the reality of Executive policies.

Bristow Muldoon (Labour, Livingston)

Perhaps Mr Mundell can tell us about the reality of Tory policy on the railways. How long would it have taken for the work on Waverley station to have been completed under the Tories, under whom investment in renewals and track fell to 1 per cent a year? Under the Tories, it would have taken 100 years to replace the track in the UK.

David Mundell (Conservative, South of Scotland)

If Mr Muldoon looks back at the Tory Government's record on transport, he will see that when we said that we would do something, we did it. When the Executive says that it will do something, it just keeps on re-announcing it and coming out with study after survey after study. We did it; the Executive does not: that is the difference.

The difference in relation to the economy is the reality that people face in communities such as Sanquhar in Dumfriesshire, where, this week, 76 jobs have been lost at the Hydro Aluminium Extrusion plant. What better example can there be of the issue that Murdo Fraser raised in his opening speech of communities being affected by poor transport links? In an area such as Dumfries and Galloway, where the difference between business rates in England and Scotland really counts, that 9 per cent differential is the reality for people.

Elaine Murray (Labour, Dumfries)

I am sure that David Mundell, as a member for the South of Scotland and as a Westminster aspirant, is well aware of the need for investment in infrastructure. If the Tories intend to cut business and water rates, are they advocating an increase in income tax to pay for that investment?

David Mundell (Conservative, South of Scotland)

No. As I have made clear, I am happy for Scottish Enterprise Dumfries and Galloway's budget to be spent on the vital infrastructure that we need in Dumfries and Galloway, such as the A75 and the A76. I am happy to tell the electorate that, unlike some constituency members who go around defending Scottish Enterprise's unwillingness to fund the Clip ICT centre in Annan, which is vital to the community and provides the lifelong learning that we talk about so often in the chamber. The reality is that the budget of Scottish Enterprise would be far better spent on transport infrastructure and focused on developing the skills that we need. If we listened less to the likes of Alf Young and more to Murdo Fraser, the economy of this country would be in much better shape.

Helen Eadie (Labour, Dunfermline East)

I am grateful for the opportunity to speak in the debate on a morning when every news report on the radio and television has talked of an upturn in the economy being reflected in the fact that the interest rate will have to be increased by 0.5 per cent to cool down that growth in the economy. That is a good background against which to have this discussion.

The USA and Japan have been recovering during 2003, and growth in our biggest trading area—the euro zone—is expected to be just 0.5 per cent, with growth rates of 0.4 per cent in Italy, 0.2 per cent in France and zero in Germany. In the context of the UK economy, Scotland benefits from the fact that it is not just about setting business rates, but about creating the whole economic background and taking a holistic approach. The Chancellor of the Exchequer has ensured that the British inflation rate has been at its lowest for 30 years and that interest rates have been at their lowest since 1955.

Right now, more people in Britain are working than at any other time in our history and economic growth is strengthening. While America, Japan and half the countries in the euro area have suffered recessions, the British economy has uniquely grown uninterrupted, free of recession, every quarter and every year since 1997.

Scotland benefits from the fact that, in Britain, growth this year is expected to be 2.1 per cent. Since 2000, Britain's cumulative economic growth has been stronger than that of Japan, the euro area and the USA. Scotland has now enjoyed the longest period of peace-time growth since the records began in 1870, more than 130 years ago. Looking forward, we expect Scotland's economic growth to increase by between 2 per cent and 3.5 per cent next year and to increase again by 3 per cent to 3.5 per cent in 2005.

During a world downturn, Scotland and Britain have achieved growth, with low inflation and high unemployment. Since 1997, inflation has averaged 2.3 per cent and the number of jobs that have been created now exceeds 1.7 million. In America, the unemployment rate is 6 per cent. In Germany, Italy and the euro area, the rate is 9 per cent, although in France, it is 10 per cent. In Britain, the unemployment rate is 5 per cent: for the first time in 50 years, unemployment in Britain is lower than it is in the euro area, Japan and America, which are our major competitors.

The reality is that we have clear evidence of growth. The unemployment gap between the UK and Scotland is narrowing and is currently at its lowest since the mid-1990s. The survey that the influential Fraser of Allander Institute carried out on behalf of the Scottish Chambers of Commerce showed that, in the last quarter of 2003, Scottish manufacturers reported their biggest increase in orders and sales since 2000. Almost half of those who were surveyed were confident that that encouraging trend would continue through 2004, with exporters expected to make the biggest gains.

More evidence of economic growth is provided in the briefing that MSPs received from the Scottish Retail Consortium. According to the briefing, retail is hugely important to Scotland's economy and is one of Scotland's most successful sectors. The sector employs one in 10 of the work force, with 230,800 people working in 28,700 outlets across Scotland. Of particular note is the fact that Scotland's retail sector has shown consistent real growth, year on year. In 2003, retail sales in Scotland grew faster than those in the rest of the United Kingdom for the first time. That culminated in December, when total retail sales grew by 5.6 per cent in Scotland while they declined by 2.3 per cent in the UK as a whole.

Sustained growth in Scottish retail sales through the summer months and into September supports other evidence of growth in the Scottish economy. Scottish house prices, buoyed by favourable interest rates, continue to grow. In 2003, Scotland's house prices grew faster than those in the UK for the first time since 1995. Scottish house prices rose by an average of 17 per cent, compared to an average rise of 15.3 per cent in the UK.

I support the amendment in the name of Lewis Macdonald.

Brian Adam (Scottish National Party, Aberdeen North)

It is notable that the Executive has once again declined the opportunity to set a target for economic growth in Scotland, despite the fact that growth is its number 1 priority. I do not doubt that the Executive has growth as a priority, but I have doubts about its capacity to deliver on that. Perhaps the minister will now tell us what the growth target is.

Lewis Macdonald (Labour, Aberdeen Central)

Actually, I am curious to know what growth target the SNP would set if it were in a position to do so.

Brian Adam (Scottish National Party, Aberdeen North)

Our growth target, which has been published on many occasions, is to be in that group of small independent nations within the European Union that, over the past quarter of a century, have successfully outperformed the UK and have significantly outperformed Scotland.

If we are to have a successful economy, we need to address a number of areas.

Bristow Muldoon (Labour, Livingston)

Will the member take an intervention?

Brian Adam (Scottish National Party, Aberdeen North)

No, thank you.

It is fair to say that the Executive has addressed some of those areas, but by no manner of means has it addressed them all. We need to tackle infrastructure problems. The Executive has done that to some extent, but it has not done so as well as it might. For example, transport is key to the area that I represent, but the arrangements that were recently announced by the Strategic Rail Authority involve a reduction in the maintenance of and future development plans for the lines north of Aberdeen. That will be a significant disincentive for people to move from using roads to using public transport.

I hope that, when the Parliament's overall powers and fiscal powers are reviewed, the Scottish ministers will try to retrieve the Parliament's transport powers. One of our previous First Ministers, Mr McLeish, told the Westminster Parliament that the Scottish Parliament would have control over railways, but that disappeared at the last minute when the Parliament was set up. Perhaps the minister will address that point.

I am also concerned that we have significant deficiencies in training and skills. The Executive has tried to tackle the issue by providing targets for new apprenticeships and by encouraging enterprise and innovation education in partnership with Tom Hunter. However, there are two areas in which we have significant weaknesses. First, 30 per cent of our young people leave school with virtually no qualifications. Many of those young people live in areas of poor economic activity, the problems of which the Executive has tried to tackle by providing deprivation funding. However, there appears to be no mechanism for measuring the effectiveness or otherwise of that funding.

Secondly, at the other end of the scale are our entrepreneurial skills. Those might be best measured by the activity of our business schools, but our business schools have a very poor performance. The tables that were recently published in the Financial Times show that, of the world's top 100 business schools, Scotland has only one, which came 93rd—a position that had dropped over the past three years.

I ask the Executive to consider those issues. We need seriously to address the shortfall in skills, especially in some of our more deprived communities, where many people receive no training and are unable to take advantage of any opportunities that might come along. Why are we not encouraging more entrepreneurial development?

Finally, I want to mention the population situation. I know that the First Minister has approached the Home Secretary to seek a relaxation of the requirements for foreign students who come to Scotland, so that such students can stay here. Will the minister provide us with an update on where we are with that? In particular, I am concerned that, even if we did have such a scheme, those students would just follow our other young people by, as Richard Lochhead mentioned, going south as soon as they have the opportunity to do so.

Shiona Baird (Green, North East Scotland)

I welcome the opportunity to speak on the Scottish economy. Greens are sometimes portrayed as luddites who are anti-growth and anti-economy. Once again, let me put the record straight. Such a claim is absolute nonsense. Those who argue that case simply refuse to take the greening of the economy seriously. Economic growth can be a good thing, but not at any cost and not in any direction. Greens have always argued that there need be no contradiction between a healthy economy and a sustainable future. Indeed, it can be shown that economic policies that do not take account of sustainability are bad for business in the long term.

Growth in GDP is often used as an indicator of quality of life, but that assumes that all economic activity is good for us. The reality that must be acknowledged is that our economy is responsible for many of the environmental problems that affect us all. The biggest of those is our dependence on fossil fuels, which is driving climate change. Greens want to see economic progress that benefits all and safeguards the environment. That is a very different view of the economy from one that wants economic growth at any cost.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Will the member take an intervention?

Shiona Baird (Green, North East Scotland)

I will not take any interventions. I feel that it is time for other folks to listen to what we have to say. We have a positive contribution to make on how we should grow the economy.

Richard Lochhead (Scottish National Party, North East Scotland)

This is supposed to be a debate.

Shiona Baird (Green, North East Scotland)

I realise that, but we need to get our point over.

Surely there must be more imaginative and effective ways for us to measure the quality of life in modern 21st century Scotland. An improved quality of life is the measure that will help to reverse the population figures.

There are many reasons to be optimistic. The remediation of the very problems that I mentioned provides real opportunities for Scottish businesses and industries. The recent WWF report showed that areas such as waste reduction, renewable energy, public transport and energy efficiency could create 50,000 jobs in Scotland over the next 10 years. That is the economic growth that Scotland needs. A recent members' business debate in the chamber heard how jobs in heavy engineering are being created by the offshore renewable energy industry. The potential for Scotland is enormous and is being noticed in the oil industry in Aberdeen. I am very encouraged by that.

A zero waste policy in Scotland could create 10 times more employment than the current landfill and incineration-based waste policy. Zero waste is being embraced as an opportunity by some of the most successful, innovative businesses around the world. What do they know that we do not know?

Scottish Enterprise is Scotland's economic development agency, tasked with developing a modern economy that is competitive at a regional and an international level. Unfortunately, its remit and performance indicators pay scant regard to environmental factors that we cannot ignore. It is time that Scottish Enterprise joined the 21st century and recognised both the threats and, importantly, the opportunities to be faced in developing an environmentally sustainable economy. The Scottish Executive must provide strong leadership on this matter.

The motion that we are debating condemns regulation as a millstone around the neck of business. That is true luddism. As long as businesses prioritise the interests of shareholders above all else, they will need effective, responsible regulation to ensure legal, social and environmental accountability. We need look no further than the examples of Enron and WorldCom to see the disastrous consequences of ineffective, weak business regulation.

Des McNulty (Labour, Clydebank and Milngavie)

I welcome Murdo Fraser's motion, especially the departure that it marks from what Brian Monteith said this time last year. One assumes that Michael Howard has cracked the whip as far as fiscal freedom is concerned and recognises that that way lies an economic abyss. We can now welcome the Conservatives back to real-world economics.

The only way the SNP can bring together the opposing strands of its economic strategy is by looking through the wrong end of a telescope. It prefers to talk about small independent countries and different parts of the world, rather than pick up on the issues that Bristow Muldoon very properly raised. There are different countries, with different kinds of policies that have different sorts of outcomes, but the SNP groups all those countries together and says that they are all doing better than we are, although when one examines what the SNP says, it can be seen that that not true.

However, the SNP does not want to talk about Scotland in reality. It wants to talk about its vision of Scotland, but it does not want to talk about what we do now in the real-world Scotland and about what the real economic strategies are. That indicates a genuine lack of self-awareness, which was displayed very well by Fergus Ewing in his answer to Carolyn Leckie's question. How does Jim Mather intend to deliver the existing level of public services if, by separating Scotland from the rest of the UK, he will be starting with minus £2 billion?

Jim Mather (Scottish National Party, Highlands and Islands)

We would do that by creating the virtuous circle of having a bigger tax take, paying less in benefits and being able to fund public services so that we invest in development, rather than simply handle failure. Given Des McNulty's touching faith in the status quo as a formula for economic governance, can he say which countries are queuing up to emulate Scotland?

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Wales. [ Laughter. ]

Des McNulty (Labour, Clydebank and Milngavie)

Scotland does pretty well—Wales is a very good example of a country that is seeking to emulate it. Regions of England are examining the arrangements that we have in Scotland and the ways in which devolution might deliver greater economic scope for them. I return to the Tories, whose motion I am addressing. I do not want to deal with froth, which we get from the SNP week after week. We get the same stuff.

It is possible to argue that reducing business rates is the key to economic growth. Unfortunately, there is not much evidence to support that proposition: Murdo Fraser attended Paul Krugman's lecture a few weeks ago and Paul Krugman made that point very clearly.

When representatives of the Confederation of British Industry Scotland appeared before the Finance Committee in the previous session and were asked what their priorities were, they said that they were better transport, enhancing skills and there being no significant variation between the financial and economic arrangements of Scotland and those of the rest of the UK. The CBI Scotland wants the most level possible playing field. We can talk about how best to achieve that and there is a real debate to be had between Labour and Liberal Democrat members and the Conservatives. I welcome Brian Monteith back to that debate—I am delighted that he is here.

Brian Monteith (Conservative, Mid Scotland and Fife)

The member says that there is little evidence to suggest that cutting business rates will improve economic growth. Does he agree that there is a significant body of evidence to show that increasing business rates damages economic growth, which is what the Government has done?

Des McNulty (Labour, Clydebank and Milngavie)

Brian Adam will confirm that our economic experts indicated that the evidence does not suggest that and that marginal tax rates were not the key issue in determining business performance. In my view, the key issues are the level of innovation, the kind of thinking, the types of skills that we have, the infrastructure that we can put in place, our confidence in ourselves and the way in which we integrate ourselves into the UK and Europe, which are the real markets in which we operate. That is the vision and the task that exists for Scotland. If we walk away from that and engage in a theoretical process, we will not deliver for the people whom we represent.

My area of Scotland needs Scotland to grow. I want us to focus on the real tasks that lie ahead, rather than engage in a silly knockabout.

Carolyn Leckie (SSP, Central Scotland)

One issue that I did not mention in my opening speech was the artificial depression of Scotland's gross domestic product by the billions of pounds in corporation tax that are paid to London, on the back of work that is done by workers here. For example, BP's annual profits are £6.9 billion. It pays corporation tax on that and that goes to London. The annual profits of Sainsbury's are £677 million and, again, the corporation tax on that goes to London. That creates an artificial depression that does not reflect the contribution that workers here in Scotland make to the economy—we do not see that money back in Scotland.

I have some sympathy with small businesses. Business rates are not progressive and should be based on ability to pay. I would like bigger businesses to pay more as a proportion of their profits. Smaller businesses, such as hairdressers and chip shops, pay far more than big businesses as a proportion of their profits.

Lewis Macdonald (Labour, Aberdeen Central)

Will the member give way?

Carolyn Leckie (SSP, Central Scotland)

No. I do not have enough time.

It is a bit of cheek for the Tories to talk about progressive forms of taxation when they gave us the poll tax and the Tory council tax and it is a cheek for them not even to acknowledge that. It is also a cheek for the Executive not to have any proposals to abolish the Tory council tax. The Executive defends the council tax—in fact, Andy Kerr even defends the poll tax.

Our proposals would boost the economy. Under a Scottish service tax, 77 per cent of Scottish people would be better off, 7 per cent would pay the same and 16 per cent would pay more. There is no problem with that, because the 16 per cent of people who would pay more can afford to do so. The introduction of a Scottish service tax would free up money to invest in the Scottish economy and it would be spent, rather than hoarded by a tiny clique that has far too much already.

The minister referred to the fact that the transport budget is £1 billion. What a laugh—he proposes to spend £0.5 billion of that money on 5 miles of road. For whose benefit will that be spent? It will not benefit the vast majority of Scotland's population.

The low pay that is endemic in this country is an absolute scandal. Ninety per cent of the jobs that are advertised in job centres are advertised at £5.55 an hour or less. In 1994, 33 per cent of the poor were in work. Now, 41 per cent of the poor are in work, which is an absolute shame. An increased minimum wage, set at two thirds of male median earnings—the low pay threshold—would save money on council tax rebates, which would not be necessary if we abolished the tax. That would also save money on housing benefit and Department for Work and Pensions payments and lead to lower health expenditure by seriously reducing poverty, rather than just playing at doing so.

Parliament has fewer powers than even the Isle of Man. Let us wrest power from the Bank of England and from Westminster, so that we can seriously redistribute wealth, boost our economy and means-test big business in order to put more money into the pockets of the majority of people, who will spend it, rather than into the pockets of a tiny clique, who will hoard it.

George Lyon (Liberal Democrat, Argyll and Bute)

The debate has been good and constructive.

I will deal with a couple of points in my wind-up speech. The Tories' motion calls for cuts in business rates and water rates. That is a perfectly credible position to take and this morning the Tories have argued vehemently that that is the right way to go. It is surprising, however, that in their 2003 manifesto the Tories did not even mention water rates, never mind refer to cutting them, and that they proposed only a small reduction in business rates in order to restore the UBR. Murdo Fraser went much further in today's debate.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Does Mr Lyon appreciate that at the time of the elections in 2003 the vast increases in water charges that have taken place since then were not the political issue that they are now? What does he propose to do to reduce the burden of water charges on small business? The Executive's proposal is described by Bill Anderson as

"the sort of thing that gives politicians a bad name".

George Lyon (Liberal Democrat, Argyll and Bute)

I am sorry, but if Murdo Fraser did not understand that there was an issue in the business community about water rates at the time of the election he must have been asleep.

As my colleague, Jeremy Purvis, said last week during the budget debate, if Scotland's business community are to take the Tories seriously they must produce an alternative budget that details where and by how much they would cut from our schools, hospitals, police forces and roads to fund their proposals. It is clear that if they are not honest enough to show us how they would fund their spending plans, the business community will conclude that the Conservatives are indulging in gesture politics.

Brian Monteith (Conservative, Mid Scotland and Fife)

The member is right to suggest that we should publish such details; they were published during the Scottish Parliament elections of 2003. Funding for cutting business rates and for investment in roads was readily explained but, of course, the cuts in education and health spending were not explained because none was proposed.

George Lyon (Liberal Democrat, Argyll and Bute)

The Tories' position then and their position as outlined today are fundamentally different. In the middle of a budget debate, it would do the Tories good to explain where they would make cuts in order to give back the savings to industry. That would give them a much more credible position.

Murdo Fraser perhaps gave the game away on "Newsnight Scotland" on Monday night, because he promised that the Tories would turn Scottish enterprise into a training agency. Even more bizarrely, he claimed that the private sector would set up and pay for its own enterprise agency to replace it. Is that really credible? Are a number of Scots companies really willing to put their own hard cash into helping to set up new companies and start-up operations, to invest in bringing broadband to all Scotland—when the private sector cannot currently deliver that—and to fund ITIs to improve our woeful research and development record? I do not think that such companies are out there. Perhaps Murdo Fraser, Brian Monteith or whoever winds up for the Tories will name them. Under the Tories' plans, it is clear that in Scotland we can forget about broadband being rolled out throughout the country, we can forget about improving our R and D record, we can forget about there being any help for our business start-ups and we can forget about lifting Scotland's economic performance.

Let us remember that Scottish Enterprise was born under the Tories. It was their baby, but they appear to have turned against their adolescent offspring. Scottish Enterprise has undergone substantial change in the past four years: it has refocused its role to try to face up to the challenge of a knowledge-driven global economy. It has slimmed down, squeezed out costs, introduced performance audit where previously there was none and pulled together the autonomous local enterprise companies to ensure that they are all rowing in the same direction. That has all happened in the space of four years. I would have thought that the Tories would have lauded that type of action in a public sector body. I hope that colleagues in Parliament from all parties agree that now that a new chief executive and chairman are in place at Scottish Enterprise it is time to step back and let them get on with the job. I support the amendment in the minister's name.

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

I start on a consensual note by saying that it is a pleasure to see Bill Aitken back in harness.

It is perhaps unfortunate for his party that he did not contribute to the debate, and that we had the ambitious proposition put forward in the motion by the Conservatives that high rates are disastrous. I say "ambitious" because although the Tories are now in a state of permanent opposition—assisted by the proportional representation system that they oppose—they behaved slightly differently when they had the opportunity in power. For 16 out of the 18 years in which the Conservatives were in power, business rates in Scotland were higher than those in England. Not only that, but Craig Campbell computed over-taxation in the period 1990-95 as being £1.2 billion. That money came out of the Scottish economy from Scotland's businesses. The Conservatives are attacking that which they applied in Government—they say one thing in opposition and they do the opposite when they are in power.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Does Fergus Ewing appreciate that throughout the 1990s we steadily reduced the business rate year on year until we achieved a level playing field with England? Will he give credit where it is due?

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

No I will not, because it is a matter of fact that, for 16 out of 18 years, business rates in Scotland were higher than they were in England. I am glad that Murdo Fraser asked the question—I had thought that he would, so I have an answer ready.

In 1995, when Ian Lang was setting the rate for that year and for the first time bringing Scotland's rates down to the English levels, he said that he could have set the rate lower than that in England. Do members know why he did not do so? He said that if his Government did so, another Government in 2000 might come along and continue decoupling business rates. Of course, that is exactly what Jack McConnell did with Jack's tax, by giving Scotland's businesses more. What Ian Lang predicted came true, but instead of getting the lower business rates that we should have had in 1995, we achieved balance and equivalence in the level of business rates only in year 17 of 18 years of the Conservatives being in power. The little word that "starts with 'h' and finishes with 'y'", —[Official Report, 15 Feb 2001; Vol 10, c 1300.] and is not Henry is one that the Conservatives should take care about.

We are also concerned about the burden of regulation. I am glad to see that Mr Wallace is back, so I will highlight an issue about regulation that was raised by the Sunday Herald and, in particular, I will mention the comments of Peter Hughes, the chief executive of Scottish Engineering. He spoke about the Scottish Environment Protection Agency, which in Scotland charges £7,500 for a licence under the control of pollution regulations, as compared to a charge of £2,000 for such a licence in England. The article states that Mr Hughes compared SEPA to

"a mosquito sucking the life blood out of the Scottish economy and picking over its bones."

That may be going over the top—I am never one for hyperbole myself. However, it seems to me to be an illustration of a very serious problem in Scotland.

Carolyn Leckie (SSP, Central Scotland)

Will the member take an intervention?

Fergus Ewing (Scottish National Party, Inverness East, Nairn and Lochaber)

No.

That quotation illustrates that the quangos are out of control.

I will close by asking whether, in replying to the debate, the Deputy Minister for Enterprise and Lifelong Learning can explain the point of the enterprise team's existence when it cannot remove such an obvious unfairness as businesses in Scotland paying a levy that is about 400 per cent higher than the same levy in England.

If he cannot deal with the unfairness that Mr Hughes has identified and that the Sunday Herald rightly publicised for two weeks running, what is the point of the so-called minister for enterprise in Scotland? More and more businesses want to see all parties standing up for enterprise—that is not happening under the Executive.

Lewis Macdonald (Labour, Aberdeen Central)

Growing the economy is not just about statistical indicators going in the right direction. It is about real people, real jobs and real businesses.

We recognise that the best way out of poverty is work and that the best way to tackle disadvantage is to create jobs and give people the opportunity to take up those jobs.

The idea that Government can support business growth and improve skills and enterprise while cutting our enterprise budget simply does not add up. Of course, Government can reduce the burdens on business and it can support the small firms for which business rates and water charges are proportionately more significant: that is what we have done.

However, to take millions of pounds away from public support for business for a bit of short-term popularity is no answer at all. Our focus must be on the long term.

John Swinburne (SSCUP, Central Scotland)

Will the minister take an intervention?

Lewis Macdonald (Labour, Aberdeen Central)

No.

The usual red herrings about red tape have been trotted out—if that is the appropriate phrase—in the debate. Nobody would argue with the proposition, for example, that regulations should exist only if they serve a purpose. However, no responsible business seriously wants health and safety, consumer protection and employment rights to be thrown away in pursuit of an easy life with fewer forms to fill in. Responsible businesses want less duplication and they want processes to be speeded up. That is what local economic forums have told us since their recent establishment and that is what we are enacting through the single business gateway, which is a single entry point for businesses in the Highlands and Islands.

Businesses also want the planning system to be brought up to date and we intend to do that in order to reduce the burden of bureaucracy in the planning process, while maintaining a balance that protects the interests of the environment and of communities. It is interesting that Murdo Fraser says that he wants fewer burdens on business, given that not very long ago he argued in the chamber that the hurdles in the planning system should be made higher and harder for Scottish companies that are developing wind energy projects. The Tories offer less red tape in theory, but more red tape in practice.

Murdo Fraser (Conservative, Mid Scotland and Fife)

Does the minister think that a third party right of appeal would make the planning system more or less business friendly?

Lewis Macdonald (Labour, Aberdeen Central)

We are listening carefully to business on all the issues that relate to the modernisation of planning and we will consult on all those issues. We will seek to strike precisely the right balance between the interests of business and development and those of the environment and communities. We do not intend to follow the suggestion that Murdo Fraser made to create additional hurdles in the planning system.

The Tories also argue that we are wrong to pick winners in the Scottish economy. That fits with their philosophy and their track record: keep out of the way, let the market pick the winners and there will be no skin off the Tory nose if the result is that local economies collapse and millions become unemployed. That simply will no longer do.

The enterprise networks have put in place ITIs in energy, life sciences and information technology. We are backing those with £450 million of public money over the next 10 years. We are picking winners: we are supporting industries in which Scotland is already strong, and we can achieve a world market advantage if we back Scottish companies that are commercialising Scottish science and research. The energy industry is one such example—I remind members that we have debated in Parliament an Executive motion on oil and gas, which recognised that the last thing that the oil industry wants or needs is one fiscal regime in Scotland and another in England. The economic and political stability of the United Kingdom is the North sea's greatest strength in attracting mobile corporate oil industry investment.

We also pick winners through the small firms merit awards for research and technology—the SMART awards—which I announced earlier this week, through the pipeline of support for innovative Scottish companies and through the £43 million pounds of public money that is rolling out enterprise education in our schools, levering in private funding, giving young people the opportunity for hands-on skills and supporting a culture of problem solving, enterprise and initiative.

We have the highest-ever level of investment in our transport infrastructure and we are rolling out broadband connections. We have a target of 30,000 modern apprentices in training, but the Tories left apprenticeships pared to the bone. Do not tell the Tories, but ours is the kind of investment that Scottish businesses want.

We are also funding the trade union learning fund. In recent months, I have spoken at two training days in my constituency, which were organised by Amicus and the Graphical, Paper and Media Union. Those training days were not just about trade unionists who wanted to improve their skills and learning; they were about employers, who were there to work alongside their employees and to share our agenda of training in partnership as the best way to grow their companies, their industries and the economy as a whole.

No doubt that is a bit too much modernising for the Tories. They would rather stay behind the old ramparts and argue that business and the public sector should not get involved with each other. They argue that everything will be fine if we just cut the tax bill a bit. Maybe in the concluding speech we will hear what investment they would abandon to pay for their tax cuts—but maybe not. Either way, they are the same old Tories making the same old mistakes and the Scottish people will not be fooled.

Brian Monteith (Conservative, Mid Scotland and Fife)

I think that the debate has been very useful. It makes a change to have a debate on the economy and I am sure that we will have many more such debates—we certainly will if the Conservatives have anything to do with it.

The debate has been particularly useful because it has flushed out the Scottish Government's real views on economic policy. The minister talks about growing the economy, as if it were something in a flower pot that just needs us to add some Baby Bio for it to grow a little more. Of course, things are not quite that simple. The Government's amendment betrays its conceit that politicians can, with the munificence of Government, direct, plan, manage and indeed grow the economy. The amendment takes no account of international experience or of Scotland's relative uncompetitiveness, and it relies on world economic growth to bring about Scottish economic growth. Thereby lies the folly of the failure to understand what Scottish business needs: Scottish business needs to prosper in every market, irrespective of the economic conditions.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Will the member take an intervention?

Brian Monteith (Conservative, Mid Scotland and Fife)

I must make progress. I might come back to Mr Stone later.

Of course, one of the central debates today has been about business rates. Murdo Fraser was correct to point out that one in four businesses in Scotland pays corporation tax, but that practically all businesses pay business rates. Business rates are important because they hit the bottom line. They are a fixed cost that the many businesses that have to make investment decisions—and are cash strapped, under pressure or in a difficult economic position—cannot do much to change. Businesses can, however, change their investment decisions and they can change the number of their employees. The reduction of the business rate is one important change that Government can make to help business.

Jamie Stone (Liberal Democrat, Caithness, Sutherland and Easter Ross)

On the record, on "Newsnight Scotland", Murdo Fraser said:

"Businesses can pay for an enterprise agency."

That would be an additional tax and an additional fixed cost. Does the member disassociate himself from that remark?

Brian Monteith (Conservative, Mid Scotland and Fife)

No, I believe wholly in partnership between business and Government and I have every reason to believe that businesses would look after their interests far better than the current Scottish Executive does.

One aspect of the debate has been the mention of a variety of gurus. Alf Young, that well-known physics graduate and Labour researcher, was trotted out in defence of the Executive. Robert Crawford, a former Scottish National Party researcher and a business consultant whose record of hiring other consultants is unequalled, was also mentioned. We believe that Professor Sir Donald MacKay is a far more esteemed economist and knows far better what he is talking about when he says that cutting business rates—or indeed abolishing them, as he argues—would do far more to revitalise our economy that what is being done. Why rates? Rates are important because they are one of the few levers—

Wendy Alexander (Labour, Paisley North)

Will the member take an intervention?

Brian Monteith (Conservative, Mid Scotland and Fife)

Just wait until you hear this.

Rates represent one of the few levers that the Scottish Executive has readily available at its disposal and they have the most direct impact on business.

Wendy Alexander (Labour, Paisley North)

Did Professor Sir Donald MacKay once, during his many years as chairman of Scottish Enterprise, suggest that business rates should be abolished, which is the policy that he now advocates? He was, of course, a Tory appointee throughout that period.

Brian Monteith (Conservative, Mid Scotland and Fife)

It is notable that he was sacked by Labour. I recall that Sir Donald MacKay—an economics professor—often talked in his lectures at Heriot Watt University about cutting rates and business taxes and about the ineffectiveness of Government in helping business.

During today's debate we have heard a lot of economic statistics about how good growth is and how well the UK is doing and we have sometimes even heard about how well Scotland is doing. All those statistics missed the point, which is about Scotland's performance relative to the UK.

There is no key policy. We do not say that cutting business rates is the only policy; of course there are others. However, I noticed that the SNP offered nothing on economic policy in today's debate, but talked only about how it would divorce Scotland from its most important market. There is no willingness on the part of the SNP to explain what it would cut and by how much. Bristow Muldoon was right—although it is about the only point on which he was right—to say that we cannot have an economic policy that proposes the taxation levels of Ireland and the spending levels of Sweden.

It is quite clear that there is a real choice between the Government of Labour and the Liberal Democrats and the Opposition of the Conservatives. It has been recognised today that we offer a genuine alternative; I look forward to putting that alternative to the people in the future.

First Minister's Question Time

Margo MacDonald (Independent, Lothians)

On a point of order, Presiding Officer.

George Reid (None, Ochil)

I would prefer to take points of order at the end of First Minister's question time. Is the point absolutely essential?

Margo MacDonald (Independent, Lothians)

No. In fact, the guidance that I sought was whether the point of order would be more convenient now or at the end.

George Reid (None, Ochil)

It would be more convenient at the end.

John Swinney (Scottish National Party, North Tayside)

To ask the First Minister when he next plans to meet the Prime Minister and what issues he intends to raise. (S2F-599)

Jack McConnell (Labour, Motherwell and Wishaw)

I expect to meet the Prime Minister later this month and I expect that we will have a lot to discuss.

John Swinney (Scottish National Party, North Tayside)

I may add one other issue to the discussions. Given that people in Scotland have been hit by huge increases in their water bills, was it a wise decision by the Government to remove from Scottish Water's 2002 budget the sum of £100 million?

Jack McConnell (Labour, Motherwell and Wishaw)

Some claims that have been made about the financial arrangements at Scottish Water have been rightly pointed out by the minister involved as being untrue. Fergus Ewing's extravagant claims about the accountancy at Scottish Water and the Scottish Executive have yet again been shown to be not just exaggerations but diversions from the important debate that we should have. It is important that we invest in water and sewerage services in Scotland to get them to the quality that they need to be at, not just because of European regulations but because it matters that we have clean water in Scotland. That is the reason not only for the investment that we put into Scottish Water but for this week's increases in charges, which are regrettable but necessary.

John Swinney (Scottish National Party, North Tayside)

I am puzzled by the First Minister's answer because the source of my point about the removal of £100 million from Scottish Water's budget was not Fergus Ewing—reliable source that he happens to be—but the Minister for Finance and Public Services, Mr Kerr, who told Parliament on 26 June 2002:

"I have more good news to report."—[Official Report, 26 June 2002; c 13041.]

He said that he had removed £100 million from Scottish Water's budget.

Since 1999, water charges have risen by 89 per cent in the east of Scotland; by 79 per cent in the west; and by 63 per cent in the north. At the same time, the Government has removed significant sums of money from Scottish Water's budget. In the light of those enormous increases in water bills, how can the First Minister justify the removal of £100 million from Scottish Water's budget?

Jack McConnell (Labour, Motherwell and Wishaw)

Scottish Water's investment programme is not affected in any way by that decision. The investment programme is vital, which is why charges for next year have been increased in parts of Scotland. Mr Swinney seems to live in an imaginary land where money grows on trees and people do not have to raise money from somewhere or make choices and priorities. In the past week we have heard claims about amounts of money, such as the £47 million for higher education; the £18 million that Fiona Hyslop's opposition to charges at the Scottish Qualifications Authority would cost; or, today, the £100 million for Scottish Water. Choices have to be made and the right choices are being made. We are spending money on education, health, tackling crime and, as was announced yesterday, housing and regeneration. Those are the real priorities.

More and more in the water industry, water and sewerage charges are paying for improvements in water services. That is a tough and difficult decision to make, but it is the right one and one that will result in improved water and sewerage services in Scotland in the years to come.

John Swinney (Scottish National Party, North Tayside)

Again, I am puzzled by the First Minister's answer. At Tuesday's meeting of the Finance Committee, the former minister with responsibility for water, Wendy Alexander, said that "very little" of the income from the sharply rising charges since the establishment of Scottish Water "was spent on infrastructure". The First Minister had better get his story right about how the Government spends its money. Does he accept that there is growing anger about the massive increases in water charges; about the fact that, as we are beginning to see, money is not being invested; and about the £100 million that has been taken away from Scottish Water's budget to pay for Labour's election pledges last May? Would it not be better to use the £100 million to give much-needed relief to Scottish Water's customers rather than to squander it on the Labour Government's pet projects?

Jack McConnell (Labour, Motherwell and Wishaw)

Mr Swinney might think that schools and hospitals are pet projects, but I have to take a slightly different approach.

I ask Mr Swinney to get his facts right. Wendy Alexander might well once have been offered the post of minister with responsibility for water, but I do not think that she became the minister with responsibility for water. Of course, she was influential in all our discussions then and remains so.

It is important to be consistent from week to week. Only last week, senior figures in the nationalist party—in particular, its finance spokesperson Fergus Ewing—called for reductions in business charges for water services in Scotland. This week, we announced an increase in business charges by less than the rate of inflation and we recently announced that the same will happen with business rates. The SNP cannot even welcome that and support something for two weeks in a row. A decent increase and a new tariff for low users are important for Scottish businesses.

There is a big but. There was an important decision for us to make, although it was not easy. There has been as much anger in Scotland about the quality of our water as there has been about increases in water charges. If we want to increase the quality of our water and sewerage services and deliver the investment that will ensure that we have the housing programmes and developments that we need throughout Scotland, investment must be made and paid for and charges must increase. That is regrettable but necessary and will be good for Scotland in the long term.

David McLetchie (Conservative, Edinburgh Pentlands)

To ask the First Minister what issues will be discussed at the next meeting of the Scottish Executive's Cabinet. (S2F-609)

Jack McConnell (Labour, Motherwell and Wishaw)

Next week, the Cabinet will again discuss our progress towards implementing the partnership agreement to build a better Scotland.

David McLetchie (Conservative, Edinburgh Pentlands)

The Cabinet might also like to reflect on the Chancellor of the Exchequer's pre-budget statement in December, in which an additional £340 million—free of ring fencing—was allocated to councils in England. The Treasury calculated that that would lower the average band D council tax bill by £19. We received our Barnett share of the money that was allocated—some £47 million—which was enough to lower band D bills in Scotland by £25. As the council tax in Scotland has increased by 42 per cent since Labour came to power—which is double the rate of inflation in that time—I am sure that our hard-pressed council tax payers look forward to that money leading to a reduction in their bills. Will the First Minister advise us what is likely to happen to council tax bills in Scotland when they are set next week by our councils?

Jack McConnell (Labour, Motherwell and Wishaw)

I am pleased that, since devolution, one result of the partnership Government in Scotland has been that council tax increases have been significantly less in Scotland than they have been in England over the same period. This year, they will again be significantly less in Scotland than in England—I believe that the figures are 3.9 per cent for Scotland and 12.9 per cent for England and I remind Mr McLetchie that that is largely the result of decisions that have been made by Tory councils. I believe that the figure for Wales is 9.8 per cent. Over the piece, not only have council tax increases in Scotland been less than in England, they have been significantly less than they were in the final years of the Conservative Government in the mid-1990s. The figures relating to increases in council tax that the Conservatives regularly quote usually take the whole 10-year period into account—they do not point out that increases in the past five years have been considerably less than in the previous five years.

We will carefully consider the money that the chancellor allocated to councils in England. However, money will be allocated to priorities in Scotland and will not be used as a one-off symbolic gesture, as Mr Swinney has proposed; it will not all be spent on higher education as a one-off payment that can never be repeated and that would not deal with higher education finance issues. Moreover, it will not simply be given to councils without any requirement relating to how it should be spent. We will base our decisions on priorities and spend money wisely to achieve best value.

David McLetchie (Conservative, Edinburgh Pentlands)

Is it not extraordinary that, faced with any given opportunity to reduce the burden of tax on the people of Scotland, the Executive is certain to decline such an opportunity and adopt a course of action that will lead to tax increases instead? Is it the case that what unites the Executive parties—whether in relation to council tax, the favoured local income tax, business rates, water charges, the so-called graduate endowment or road tolls—is the instinct of both parties in the Administration to tax and charge people more? When will the First Minister and the Scottish Executive give the taxpayers of Scotland a break that they richly deserve?

Jack McConnell (Labour, Motherwell and Wishaw)

As I said, council tax increases are substantially less in Scotland than they are in England. The money in England has been allocated largely because of the ridiculous decisions of Tory councils to escalate the council tax right across England. The chancellor has taken action, rightly, to try to ameliorate that situation. However, here in Scotland we have a sum of money available for one year, which we should spend wisely. I assure Mr McLetchie that when we introduce our proposals for spending that money, he will see that it will be spent to give real value for money for taxpayers and to serve the long-term interest of achieving efficiencies and a decent level of charging in our services. At that stage, I hope that he will be gracious enough to congratulate us on those decisions.

George Reid (None, Ochil)

There are two urgent constituency questions from Scott Barrie and Bristow Muldoon.

Scott Barrie (Labour, Dunfermline West)

The First Minister will be aware of the 90-day notices to 550 employees of Castleblair Ltd in Dunfermline and Glenrothes. Given that that is another result of the continuing cut-throat competition among high street retailers, can he assure me and, more important, the workers who are affected that he and the Scottish Cabinet will endeavour to do all that they can to preserve manufacturing and textile jobs in Scotland?

Jack McConnell (Labour, Motherwell and Wishaw)

Clearly, we are doing all that we can not only to preserve existing jobs but, more important, to secure new jobs for Scotland in the longer term. We will do that by competing in new markets with high-value products, using the high levels of skills that exist in Scotland. We will do that more effectively by improving our transport and communication systems and by improving skill levels. That is why we continue to agree that it is better to invest in transport and skills, and communications infrastructures than to cut budgets in the way that the Opposition parties seem to want us to do.

Bristow Muldoon (Labour, Livingston)

Does the Cabinet intend to discuss the financial crisis that is being experienced by Scottish professional football, as witnessed this week by Livingston Football Club being moved into administration? Does the First Minister intend to ask the Minister for Tourism, Culture and Sport, Mr Frank McAveety, to convene meetings with the Scottish Premier League and other relevant bodies to discuss the way forward for our national sport?

Jack McConnell (Labour, Motherwell and Wishaw)

Clearly, we are in regular conversation with football bodies about the future of the national game. The financial circumstances of individual clubs such as Dundee, Motherwell and Livingston—and even the situation facing Heart of Midlothian—are serious challenges and are regrettable, but they are the responsibility of the individual clubs. I hope that they will be able to solve their difficulties and remain successful clubs in the future.

It is more important for us to prepare for the future of the game in Scotland. We want to create the McCoists and Dalglishes of the future and ensure that youth football is more successful in the early years of the 21st century than it was in the latter years of the 20th century. That will be a big challenge. Mr McAveety is taking that forward in discussion with the Scottish Football Association and we hope to make an announcement soon.

Tommy Sheridan (SSP, Glasgow)

To ask the First Minister what the Scottish Executive's current highest priorities are. (S2F-621)

Jack McConnell (Labour, Motherwell and Wishaw)

As stated in the partnership agreement, our top priority is to grow the Scottish economy more effectively than has been the case in the past. However, our immediate priority is to tackle crime and antisocial behaviour.

Tommy Sheridan (SSP, Glasgow)

I suggest that honesty in politics, particularly in government, should be a high priority. I know that the First Minister has a problem with honest answers but, in light of the recent comments from David Kay of the Iraq survey group, Colin Powell and even George Bush, in relation to weapons of mass destruction in Iraq, will the First Minister now be honest and mature enough to admit that he was wrong in March last year when he told the Scottish Parliament that the invasion of Iraq was justified because Iraq was unwilling to give up its weapons of mass destruction? We now know that it was unwilling to give up something that it did not have. Will the First Minister apologise now for misleading the Parliament and recognise that the Iraq war had nothing to do with weapons of mass destruction and everything to do with access to cheap oil for the United States of America?

George Reid (None, Ochil)

The question refers to a matter that is not within the First Minister's responsibility. I will leave it to him as to what response he gives.

Jack McConnell (Labour, Motherwell and Wishaw)

I am happy to state again what I have stated a number of times on the public record. I believed last year and still believe that Saddam Hussein and the Iraqi regime were evil and dangerous. I believe that the Iraqi people would have been unable to remove them by themselves and that they needed and rightly demanded international support to do that. I am proud that Britain was part of the international effort to achieve that end and believe that, as a result, Iraq is and will be a better country.

Tommy Sheridan (SSP, Glasgow)

The problem with the First Minister's answer is that, as usual, he has avoided the question. In his statement to Parliament, he said that the invasion of Iraq was justified because Iraq was unwilling to give up its weapons of mass destruction. If he believes that we should invade all the world's tyrannical regimes, it would be worth while to suggest to him that we should not invite representatives of tyrannical regimes to sit in the Parliament, which is what we did last week with the Saudi Arabian ambassador. Will he apologise for misleading Parliament, or does he think that lying in Parliament is now an acceptable practice? He did so last week in relation to the SSP's drugs policy and again in trying to justify the illegal and unnecessary invasion of Iraq.

George Reid (None, Ochil)

I again leave it to the First Minister to decide whether he wishes to respond.

Jack McConnell (Labour, Motherwell and Wishaw)

I think that I have clearly stated my position on the war and note that Tommy Sheridan would be happier if Saddam Hussein were still in power. I am also happy to leave the current inquiries in London to examine some of the other questions that he has raised. Indeed, I am also prepared to accept the outcome of an inquiry, unlike some people over the course of the past week who had problems with doing so.

I want to pick up Tommy Sheridan's final point. In letters to my office over the past week, he has accused me twice of lying. He has accused me of doing so again today. I have to tell the chamber that I regret that I got one fact wrong in a comment that I made last week. I said that Rosie Kane, who does not hold a senior position in the SSP, had made a particular comment about the party's drugs policy. I regret that, because my point would have been more effective if I had known that the person who made the comment was Frances Curran, who is a much more senior figure in the party.

I have before me the article that I quoted last week and that Tommy Sheridan has accused me three times since then of lying about. His photograph is beside the article, which is written by Frances Curran, a senior international member of his party. The SSP's drugs policy is quite clear and is written down. As a result, I hope that Tommy Sheridan will withdraw his allegation that I lied to the Parliament.

Patricia Ferguson (Labour, Glasgow Maryhill)

On a point of order, Presiding Officer.

George Reid (None, Ochil)

I would like to take any points of order at the end of First Minister's question time, if possible. I would like to move on.

Patricia Ferguson (Labour, Glasgow Maryhill)

That is fine, but I reserve the right to make a point of order at the end of First Minister's question time.