Scottish Parliament, 5 February 2009

378 contributions from 76 members. The official report.

Official Report 5 February 2009

Borrowing Powers

Alex Fergusson (None, Galloway and Upper Nithsdale)

Good morning. The first item of business is a Liberal Democrat debate on motion S3M-3383, in the name of Tavish Scott, on borrowing powers for the Scottish Parliament.

Tavish Scott (Liberal Democrat, Shetland Islands)

This debate is not about constitutional change; it is about Scotland having powers for a purpose. We face a recession, rising unemployment and the worst gross domestic product figures in recent times. The lack of fiscal powers confines the Scottish Government's ability to respond to changing circumstances. With no borrowing powers and a total budget determined at Westminster, the options for change are limited. The choice between making tax reductions for low and middle-income families, increasing public spending or bringing forward public sector investment needs to be fully available to this Parliament. There can be no doubt that additional powers would enhance the Parliament's autonomy and accountability.

Today, we Liberal Democrats have initiated a debate in our time to develop those political and economic arguments so that we can tackle the recession and find new ways to fund the Forth estuary crossing and further road and rail investment across Scotland. I recognise the Scottish Government's welcome change of position, not on powers but on how to get there. This week has been politically significant and economically progressive. The First Minister, the Cabinet Secretary for Finance and Sustainable Growth and their colleagues have recognised that being part of a coalition for change, and arguing the case through the Calman commission, is the best way to deliver the additional responsibilities that we need.

I hope that Labour and Tory members will raise their game from yesterday's pitifully low level. They appear to be impaled on the fence of conservatism. [Interruption.] There is no better example of that than Mr Whitton. However, there are voices of reason and change in those parties. Wendy Alexander and Murdo Fraser have much to contribute, which I entirely welcome. I hope that the breadth of their approach rubs off on their colleagues. As always, I live in hope.

Borrowing powers would give the finance minister of the day more fiscal latitude and more political and economic choice. How would additional borrowing powers work? The Treasury could agree specific applications for borrowing consent, which would amount to the same prudential borrowing regime that is used by local government in Scotland. A better approach would be for the Governments of the United Kingdom to agree a framework of rules and broad principles for the use of borrowing powers. By definition, a Scottish Government cannot bankrupt the UK. There needs to be a broadly defined and agreed fiscal approach, but the rules must be agreed by the national states of the UK; they must not come through Treasury diktat.

John Swinney (Scottish National Party, North Tayside)

I am grateful for Mr Scott's recognition that, as part of the debate on borrowing powers, there must be a fundamental change in the dynamics of how devolved Administrations interrelate with the UK Government and, in particular, with the Treasury. Does he accept that the devolved Administrations need to be viewed as being in a different category from Whitehall departments? Unfortunately, that is not how they are currently viewed.

Tavish Scott (Liberal Democrat, Shetland Islands)

As a politician who believes in a federal approach to the United Kingdom, I fully agree—acceptance of that point is implicit in the Liberal Democrats' approach to change. I am sure that the cabinet secretary deals with the present position, day in and day out, just as former finance ministers in previous Scottish Governments did. As a former junior finance minister, I acknowledge the point that the cabinet secretary makes about the manner in which that engagement takes place. There are a number of mechanisms that we could work through in the coming years to enhance and improve that relationship. I do not think that that is a constitutional point in particular, although it involves a bigger and broader constitutional issue. There is a practical element to the approach that we must adopt.

We favour the Governments of the UK working together to agree a framework on the use of borrowing powers. It is inevitable that there will be disagreements—that is the nature of such debates. We advocate the setting up of a finance commission for the nations and regions, which would not be a UK Government body but would be created from the constituent parts of the UK. It would be jointly owned by the nations of the UK on a federal basis. That might not happen immediately following the recommendations of the Calman commission, but it is the approach that we should seek to adopt in the longer term.

Borrowing powers must be additional to the Scottish budget and should not be used to fill any funding gap. What should they be used for? It would be reasonable to borrow for current expenditure on capital projects, but there should be flexibility. As Chancellor of the Exchequer, Gordon Brown said that his golden rule was unbreakable, but first he changed the cycle over which it was judged and then, in the face of financial meltdown and recession—among many other factors—he ripped it up completely. Although it was the current chancellor who had formal responsibility for that, it was Gordon Brown's golden rule that was shattered beyond redemption. As the nations of the UK negotiate the operating parameters with the Treasury, flexibility must be built in. The argument that such golden rules are sacrosanct is not credible.

Where would a Scottish Government borrow from? Again, there are two choices. It could approach the international finance markets through the UK Government, or it could approach the markets directly.

Derek Brownlee (Conservative, South of Scotland)

Do the Liberal Democrats propose to allow the Scottish Government to issue bonds, such as patriotic bonds?

Tavish Scott (Liberal Democrat, Shetland Islands)

I am not into the application of patriotism to matters of finance, although I am sure that Mr Brownlee makes a serious point about the bond market. That is an aspect that would be explored through the structure that we envisage.

The proper answer to the borrowing question is that both avenues would be open to the Scottish Government. It would be necessary to adopt the approach that provided the better deal for the taxpayer, and flexibility would have to be enshrined in whichever approach was adopted.

Yesterday, I held discussions with the German ambassador—I am sure that you did, too, Presiding Officer—in which I asked about the Länder system. He pointed out that the German Länder have no borrowing limits but are limited by their ability to cover their borrowing proposals financially. In other words, there is a market discipline. The ambassador observed that that can lead to the Länder having more financial discipline than the federation. Some say that if the Parliament had borrowing powers, the reality would be profligate borrowing, but I counsel against such scaremongering.

There would be a significant international upside to the adoption of a prudent and careful approach in Scotland.

Alex Fergusson (None, Galloway and Upper Nithsdale)

You must close, please, Mr Scott.

Tavish Scott (Liberal Democrat, Shetland Islands)

I will be blunt: this country must rebuild its shattered reputation for financial expertise, probity and integrity in international circles. The banking crisis has seen to that.

The approach that I have outlined is the right approach. I hope that it commends itself to other parties, and I commend it to Parliament.

I move,

That the Parliament believes that the acquisition of borrowing powers would enhance the autonomy and accountability of the Scottish Parliament and improve the Scottish Government's ability to respond to changing economic circumstances; notes that borrowing powers would allow the Scottish Government to phase the funding of major capital projects such as the new Forth Replacement Crossing sensibly and efficiently, and therefore welcomes the Scottish Government's commitment to give permission for civil servants to engage fully with the Commission on Scottish Devolution to assist the delivery of borrowing powers for the Scottish Parliament.

David Whitton (Labour, Strathkelvin and Bearsden)

I speak in favour of the amendment in the name of my colleague Andy Kerr.

At the outset, it is fair to say that we in the Labour Party are interested in discussions on borrowing powers for the Scottish Parliament. Indeed, one reason why we established—with the support of the Conservative party and the Liberal Democrats—the Calman commission was so that it could consider how this institution, which is now in its 10th year, is funded. I suppose that I might be accused of being tongue in cheek when I say how delighted we are that the Scottish National Party has now abandoned its ideological opposition to the concept of strengthening devolution, given that, as of yesterday, it will participate in the work of the Calman commission.

John Swinney (Scottish National Party, North Tayside)

It is clear that Mr Whitton has not raised his game.

David Whitton (Labour, Strathkelvin and Bearsden)

Oh dear. A night's sleep has not done much for Mr Swinney.

John Swinney (Scottish National Party, North Tayside)

Nor for Mr Whitton.

David Whitton (Labour, Strathkelvin and Bearsden)

Touché.

Furthermore, Scottish Government civil servants will be allowed to engage fully with that work, which is a good thing.

Devolution has delivered for Scotland, as has the Barnett formula. As we celebrate the Scottish Parliament's first decade, it is a good idea to review how it is working and to find out whether any adjustments are needed, particularly in how it is funded.

As I mentioned, Labour has engaged positively with the Calman commission from the outset. I was particularly intrigued by the report of the independent financial experts group, which is chaired by the eminent professor, Anton Muscatelli. The group made it clear that as the Parliament's powers, including its financial powers, are intertwined with its accountability, they should be considered together rather than in the piecemeal fashion that the Liberal Democrats are suggesting today.

A key observation from Professor Muscatelli's group, which also includes Professor David Bell, the adviser to the Finance Committee—

Tavish Scott (Liberal Democrat, Shetland Islands)

When does the Labour Party in Scotland plan to submit any evidence to the Calman commission?

David Whitton (Labour, Strathkelvin and Bearsden)

I am interested to hear that Mr Scott takes such a keen interest in the workings of the Labour Party. We will make our observations known to the Calman commission in due course.

John Swinney (Scottish National Party, North Tayside)

Shortly or soon?

Alex Fergusson (None, Galloway and Upper Nithsdale)

Order.

David Whitton (Labour, Strathkelvin and Bearsden)

Shortly or soon—Mr Swinney can use whichever word he likes. He will no doubt read with interest all the observations when they arrive.

Professor Muscatelli's group said that the powers of an institution—the Parliament, for example—are fundamentally connected to the constitutional model that one believes in. The Liberal Democrats are federalists: that is a perfectly reasonable position to take, but it has always been a minority view in Scotland. Labour believes in strengthening devolution within the union, and as such we want to identify the principles that should underpin any financial changes that the Calman commission might come up with.

The debate that the Liberals have brought to the chamber today is taking place too early. It is about only one element of potential financial powers for the Parliament, and as the Calman commission's final recommendations have not been published, the Liberal motion puts the cart before the horse.

During various debates and at question time, we have of late heard a growing chorus of members who highlight the fact that the Northern Ireland Executive has borrowing powers—

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Will the member give way?

David Whitton (Labour, Strathkelvin and Bearsden)

I ask Mr Purvis to allow me to finish.

The Northern Ireland Executive has borrowing powers, as do Scottish local authorities. My colleague Peter Peacock will say more about local authorities in his speech.

As Mr Purvis has my sympathies following his change in policy yesterday, I will give way to him.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Will the Labour Party make a submission to the Calman commission before it makes its final recommendations, or would that be jumping the gun?

David Whitton (Labour, Strathkelvin and Bearsden)

I will just ignore that point, which I have answered. Mr Purvis's intervention is a reworking of Mr Scott's intervention, just as Mr Purvis reworks Mr Scott's policies.

The cry is that if those powers are good enough for another devolved Administration in Northern Ireland, why are they not good enough for us? Keith Brown—who I see is in the chamber—and Alex Neil both made that point in yesterday's debate, and if Keith Brown speaks in today's debate, he will no doubt make the same point. However, they did not mention the fact that the Northern Ireland Executive has to pay back what it has borrowed from its annual budget. It is not really extra money, and the Northern Ireland Executive's borrowing powers—such as they are—simply reflect the different constitutional arrangements that exist there. The Executive may have borrowing powers, but local government in Northern Ireland has very limited powers and responsibilities: it is a case of horses for courses.

It is wrong of the Liberals and the SNP to present the idea that granting the Scottish Parliament borrowing powers would somehow be a silver bullet that would resolve not only the current economic challenges that Scotland faces, but the issue of constitutional change. Labour is interested in debating borrowing powers as part of the Calman commission's deliberations—[Interruption.] It is amazing to get applause from the Opposition halfway through my speech.

We will not support parties that want to divorce borrowing powers from the wider debate. There are attractions attached to the Parliament having borrowing powers, but there are wider implications. As in Northern Ireland, any money that was borrowed would have to be paid back, unlike what happens under our existing capital arrangements, which are supported by the Barnett formula.

Paragraph 6.81 of the Calman commission's first report states:

"Borrowing is sometimes suggested however simply as a way in which to add to the spending power available to Scottish Ministers. This needs more careful thought."

A bit more careful thought from the Government and from Liberal members might do wonders.

The Muscatelli report considers case studies involving sub-national finance in five countries: Australia, Germany and Canada, which have federal systems, and Switzerland and Spain, which are unitary states that have decentralised government. Members will be pleased to hear that time does not allow me to go through each of those in turn, but I am sure that any members who have an interest in the matter will have read the report carefully.

I commend the Muscatelli report to Mr Swinney, if he has not already read it, but for now it is sufficient for me to say that the key lesson is that most systems in other countries are more complex and often blur lines of accountability. As we know, the financial arrangements for Scottish devolution broadly continue the pre-devolution system, with the addition of tax-varying powers.

The Liberals should, by all means, make a contribution to the Calman commission, but the time to have a proper debate about borrowing powers is when the final outcome of the commission's work is known.

I move amendment S3M-3383.2, to leave out from "believes" to end and insert:

"welcomes the examination of the use of borrowing powers by all the parties and the Scottish Government's willingness to engage with the Commission on Scottish Devolution."

Derek Brownlee (Conservative, South of Scotland)

As we see at a United Kingdom level, borrowing is not the answer to every problem—indeed, it is the cause of many of them. In the context of the management of public finances, borrowing can play an important part in providing flexibility for the public sector, but if it is overused or mismanaged, it can prove to be a millstone.

The Conservatives do not believe that borrowing powers are a panacea, nor do we believe that they should be ruled out. They ought to be considered seriously by the Calman commission as part of the review of devolution, but such consideration would be more sensible if it was carried out in the context of the broader review of other financial measures that the commission is considering, rather than in isolation.

Alex Neil made that point in yesterday's budget debate, when he said:

"the debate on borrowing powers is not a naked debate, because it relates to powers over taxation."—[Official Report, 4 February 2009; c 14685.]

He was making a serious point, which the Muscatelli report also raises. The report makes it clear that a Government that is more dependent on tax revenues and less dependent on block grant is automatically more likely to need borrowing powers. The scope and scale of borrowing powers will inevitably be set in some context by the other financial powers that are available to the Scottish Government. It is right that we consider those issues in the round, because it is clear from the report of the independent financial experts group that the Calman commission is, at the very least, considering issues that relate to fiscal powers.

We have heard mention of the borrowing powers that are available to the Northern Ireland Assembly, which are set at £200 million a year for 10 years. In addition, provisions in the devolution legislation grant a power for temporary borrowing—albeit at the discretion of the relevant secretary of state—at a level that is set for Northern Ireland at £250 million and for Scotland and for Wales at £500 million.

The £2 billion borrowing powers have various strings attached—as far as I recall, they are linked in some way to the flexibility in the regional rate in Northern Ireland. However, they show that there is scope for different arrangements within the UK and the devolution framework, and I concede that there is scope for borrowing powers to be granted without any other change being made to the fiscal arrangements for Scotland. Nevertheless, as the Calman commission is considering broader changes, it is sensible to consider everything at the same time.

As Tavish Scott conceded, there are other issues around borrowing powers. For example, would external borrowing be permitted, or would the money come from the UK Government? Would the borrowing be restricted to borrowing for capital investment, or would it cover the ability to borrow for unexpected pressures on spending or a decline in revenues? A Parliament that had a greater dependence on fiscal measures would arguably have a greater call on borrowing to cover any shortfalls.

Mr Scott also raised the issue of the limits that the UK Government could or should be able to impose on the level or the terms of borrowing. I was interested to hear what he said about the German Länder, but even if we get past the hurdles of the legal power to borrow and Treasury controls, there is a further issue. In the current climate, we need to consider what scope there is for borrowing, on what terms we can borrow, and how borrowing ranks in relation to other financing options. We need to address those fundamental questions.

Our amendment invites the Government to make a submission to the Calman commission not only on borrowing powers, but on all the aspects that are under consideration. We are concentrating on the financial aspects, but I extend an invitation to the Scottish Government to include consideration of the non-financial aspects, on which it could make a useful contribution. Mr Swinney, in his intervention on Mr Scott, raised the idea that the Scottish Government is treated as merely another Whitehall department. That is, in the context of Mr Swinney's statement of funding policy, an area in which the Scottish Government can make a valuable contribution to the Calman commission, and I strongly encourage it to do so.

I move amendment S3M-3383.1, to leave out from "would enhance" to end and insert:

"could enhance the autonomy and accountability of the Scottish Parliament and improve the Scottish Government's ability to respond to changing economic circumstances; notes that borrowing powers could allow the Scottish Government to phase the funding of major capital projects such as the Forth Replacement Crossing sensibly and efficiently and therefore welcomes the Scottish Government's commitment to give permission for civil servants to engage fully with the Commission on Scottish Devolution on the issue of borrowing powers for the Scottish Parliament; also notes the consideration by the commission of other financial and non-financial powers that might be made available to the Scottish Government, and calls on the Scottish Government to confirm that it will permit civil servants to engage with the commission on all such matters."

John Swinney (Scottish National Party, North Tayside)

In my constant role as the most generous-spirited member of the Government, I say to Mr Whitton that he should listen carefully to the way in which I approach these issues, so that he can broaden his perspective to include other members' views.

As I listened to Mr Whitton's speech, I heard all the usual excuses being trotted out about why we should not do something and why there are so many obstacles and barriers to overcome before we have an open, commonsense and—as Mr Scott said—practical debate about whether the Parliament has all the responsibilities and the powers that would allow it to operate in an efficient and effective financial fashion.

I welcome the Liberal Democrats' motion on borrowing powers. On many occasions, the Government has made clear our belief that there is a compelling case for greater fiscal autonomy for the Scottish Parliament, and that the ability to manage our own budget is vital in ensuring that we are able to respond swiftly and effectively to changes in economic circumstances.

I part company with Mr Brownlee on his point that we should consider such powers only in the context of the action that we could take in the current economic downturn, or in any other economic scenario. He misses the point about Parliament being equipped to deal with whatever emerging economic situation presents itself. Obviously, we are presented with a particularly acute scenario today.

I was pleased with our discussions with the Liberal Democrats in recent days on how we can make progress on the question of borrowing powers, on which the Government will, of course, submit material to the Calman commission.

When we discuss borrowing powers, we have to look at the financial framework within which we operate. Unless we get the arrangements for borrowing powers correct within existing United Kingdom financial frameworks, they will not deliver the flexibility that we require. If, for example, the Treasury were to maintain the same approach that it takes today to constructing the departmental expenditure limit on the total financial commitments of the Scottish Government and the Scottish public sector, there would be enormous constraints on the effective use of borrowing powers.

There are other examples. Members have cited the situation in Northern Ireland and have referred to the prudential borrowing regime in local authorities, which provides greater flexibility than the Scottish Government has at its disposal. The key point, however, with reference to Northern Ireland or local authorities, is that there is an obligation on the relevant authority to act prudentially and with wise financial judgment in exercising its borrowing powers.

David Stewart (Labour, Highlands and Islands)

What is the minister's assessment of current borrowing powers under section 66 of the Scotland Act 1998? That provides for the exercise of £0.5 billion of borrowing powers, with the agreement of the Secretary of State for Scotland and the chancellor.

John Swinney (Scottish National Party, North Tayside)

The value of those powers is to provide cover for

"a temporary excess of sums paid out of the Scottish Consolidated Fund over sums paid into that Fund".

It is a completely limited cash-flow power that does not allow us to use it to invest in capital infrastructure, which would be the wise and sensible thing to do, or —if I may deal with the lofty economic analysis that Mr Whitton gave a few moments ago—to commit ourselves to pay back a sum of money over the longer term. I do not think that those powers are effective; we need additional borrowing powers. I welcome the Liberal Democrats' contribution to the debate.

Malcolm Chisholm (Labour, Edinburgh North and Leith)

As I said in the economics debate two weeks ago, although I support the introduction of borrowing powers for the Scottish Parliament, we have to consider them as part of the more general debate on fiscal powers. We also have to beware of regarding them as a panacea.

There are two obvious but important reasons why borrowing powers cannot be a panacea. First, we would have to pay back any borrowing from what will inevitably be tighter budgets over the next few years. Secondly—the SNP might not be happy about this—any borrowing that we undertake would be part of UK borrowing, which cannot expand without limit, partly because of our membership of the European Union and partly for sound macroeconomic reasons.

We benefit substantially from UK borrowing at the moment. It is important to say that in this debate because the impression might be given by some people that because we do not have borrowing powers we cannot benefit from borrowing. The reality is that because of the UK Government's borrowing, which the Conservatives have been so critical of, Scottish consumers, Scottish banks and Scottish public services are benefiting, as we heard once again in the budget debate yesterday.

The Liberal Democrats will be pleased to hear that the Scottish Labour Party will make a submission to the Calman report, so they do not need to intervene during my speech to ask about that. My view is that we should support borrowing powers for Scotland, but only as part of a package of fiscal changes. Individuals can contribute their views to that debate, but I believe that we need a combination of fiscal changes that would involve some assigned taxes, some devolved taxes and some remaining grant for this Parliament. If Calman produced a package of that kind, we would need borrowing powers to smooth over revenue fluctuations. Obviously, one of the purposes of borrowing powers even at the UK level is to deal with declining tax revenues.

As the Calman report implies quite clearly in the section on borrowing powers, the main purpose of borrowing powers is to benefit capital spending. The Forth bridge is the example that has been quoted most recently. The debate is important in the context of public-private partnership projects going on balance sheet, but the effect of that move on the Scottish budget is perhaps not as simple or as stark as the Scottish Government has been saying. We have not yet had the Treasury guidance on that, but it would be helpful if it were produced as quickly as possible.

John Swinney (Scottish National Party, North Tayside)

I am grateful to Mr Chisholm for his acknowledgement that it would help the Government if the Treasury were able to share with us not just the rules on how the international financial reporting standards will be treated but the implications that that will have for the structure of the Government's budget. That is the material piece of information that we still require.

Malcolm Chisholm (Labour, Edinburgh North and Leith)

I agree that that guidance would be helpful, but the corollary is that the Scottish Government should not speak publicly as if it knows for certain that the move will have the drastic effect that it has described.

I have only half a minute left in which to say that there has been a significant change since 1998. David Stewart referred to the limited provisions in sections 66 and 67 of the Scotland Act 1998. Since then, the growing awareness of the need for more financial powers for this Parliament and other, related developments, such as prudential borrowing for local authorities, mean that the time is right for the Parliament to have some limited borrowing powers. However, they must be considered in the round and in the context of the Calman commission.

Rob Gibson (Scottish National Party, Highlands and Islands)

I had hoped that this morning's debate would be the start of a new chapter in the development of Scottish democracy. It is long overdue and, having waited during 10 years of devolution, we have to move on more rapidly than at the pace set by the Calman commission, which is sending out mixed messages.

The basic right to democratic borrowing powers should be available to all levels of government. That is a natural condition in most countries—except this one. Although such powers would be constrained by our ability to meet the overall borrowing requirements and constraints of the state in which we work, it is essential that we are able to deploy them at this time.

Yesterday John Swinney said in his budget speech:

"Challenging economic times require a country to draw on all the mechanisms at its disposal to assist recovery."—[Official Report, 4 February 2009; c 14652.]

We have only a few of the mechanisms that we require to assist the full recovery of Scotland—or, indeed, to run the country in normal times.

I will offer a couple of examples that concern me and demonstrate the problem. This morning, I read that Councillor David Alston, the Liberal finance spokesperson in Highland Council, deplores the potential need for 111 job cuts in the council due to budget constraints. He said that he would prefer a "modest increase" in the council tax, although that goes against the historic concordat to which he agreed. Nevertheless, those budget constraints are due to the excess charges for PPP that were racked up by a system that was forced on the council by the forms of borrowing used by central Government. That is the real culprit in this case.

Another example is the debate on the Forestry Commission's estate and our need to contribute to tackling climate change. The Minister for Environment has proposed that we raise money by letting out parts of the estate to bring in cash for planting new trees. That is a classic case of the constraints of devolution forcing us down a route that we might not have wished to take, but which could be productive. Nevertheless, it is a problem.

There has been so much misinformation about the Scottish Futures Trust that we ought to look at it again in the context of today's debate. We must have aggregated borrowing requirements that make it possible to deploy our borrowing ability in the best way that we can. That part of the debate about borrowing requirements will not go away.

Although the SNP believes ultimately in tax-raising powers—natural borrowing powers are part of that picture, too—we recognise that the public sector has triple A credit ratings. If that is so, it need not be a constraint; indeed, it is a great benefit to be able to use that as the means to move forward.

The wider debate on the constitutional future of our country has taken place—through Calman, to an extent, but to a greater extent through the national conversation. There has been huge public involvement. People want us to have more powers so that we are able to live a normal life. As it is, having one hand tied behind our back every time we go out in the morning to try to deal with the government of Scotland makes the task very difficult indeed. That is why I am keen for non-profit distributing models to be part of the debate on borrowing powers.

The Scottish Parliament should have borrowing powers; we should build on them from the base up. That would be a strong step forward for the democracy of Scotland. It is essential that we move forward as fast as possible.

Helen Eadie (Labour, Dunfermline East)

I welcome the opportunity to contribute to the debate. My mind is open to all the arguments that will be expressed as the debate develops both in the Parliament and throughout Scotland.

I am always interested to learn how other major nations deal with such issues and I note that the expert group headed by Professor Muscatelli has studied Austria, Spain, Germany and Canada.

The Barnett formula gives Scots £1,600 per head more of public spending than the UK average. I am concerned to learn what impact any financial changes might have on the formula. Until now, the block grant has provided certainty and unparalleled levels of public spending. Would that be affected in a way that was detrimental to the people of Scotland?

In our response to the Calman commission, we will have particular regard to opinion throughout Scotland, especially from the trade unions, such as the GMB, Unite and Unison, the Scottish Trades Union Congress, the churches and the voluntary sector.

We all know that when we borrow we sacrifice future spending opportunities in the requirement to service the debt. That means that the funding to build new homes and hospitals and carry out other public sector works would have a question mark against it. The benefits and disbenefits need to be weighed carefully in the balance.

Robert Brown (Liberal Democrat, Glasgow)

Will Helen Eadie's version of the Labour Party's contribution to the Calman commission be the same as Malcolm Chisholm's version?

Helen Eadie (Labour, Dunfermline East)

The Labour Party will make its response and we, as individual members of the Labour Party and MSPs, are also able to submit our views—indeed, I have already made known to the appropriate people some of my views on particular aspects of the Calman commission's work.

I am interested to learn why the SNP wants borrowing powers, instead of using the Scottish Futures Trust, which it trumpeted so much in opposition over the years. Why is the SFT disappearing like snow off a dike at the first opportunity—the need to finance Scotland's biggest project in recent decades? We agree that a new Forth crossing is badly needed. Why, then, has so much effort been put into pursuing borrowing powers to finance the project and why has so little effort been put into discussing funding from Europe? At a recent meeting with Fife Council, John Purvis, the Tory MEP, explained that when he asked Scottish Government officials why they had not discussed European funding for the project, they replied that it was not worth the effort. I cannot believe that someone could say that discussing financing one of Scotland's biggest projects for years through European funding, as part of the trans-European road network, was not worth the effort.

I have a major problem with the proposition that the Labour Party is not open-minded on this subject. We have an open mind and we want to hear people's opinions. I will listen to those opinions before I reach a conclusive view on where we go.

Bill Wilson (Scottish National Party, West of Scotland)

I apologise for missing the first couple of minutes of the Liberal Democrats' opening contribution. I welcome the motion but, at the risk of offending the Lib Dems—something I should never dream of doing—I point out that the Proclaimers put a similar message rather more effectively in their song "Cap in Hand":

"I can't understand why we let someone else rule our land We're cap in hand We fight—when they ask us We boast—then we cower We beg For a piece of What's already ours".

How is it possible that we can let someone else rule our land even to the extent of denying us borrowing powers? That the Northern Ireland Executive is better trusted to look after its finances is, at the very least, anomalous. That local authorities in Scotland should be trusted to control their borrowing, but the Scottish Government is not, is peculiar. That English parish councils should be allowed to borrow, but the devolved Government of a nation is not, is ludicrous.

Would any other nation or people tolerate such a situation? Could we imagine asking a Norwegian or a Swede, "Do you think that your nation should be allowed borrowing powers?" It wad gar ye gyte. Of course, I do not suggest that the superior economic performance of Sweden and Norway is solely a product of their borrowing powers. After all, the UK has borrowing powers and, if the International Monetary Fund is correct, the UK has the worst-managed economy in western Europe.

On consideration, perhaps my earlier comments were a little unfair. Perhaps it is not peculiar that councils and the Northern Irish Assembly can borrow. Perhaps the only peculiarity is that Westminster can borrow. Look what it wastes the money on: foreign wars, nuclear weapons and building large data sets that it promptly loses.

I am a reasonable man, so let me suggest a compromise. In order to avoid the proliferation of borrowing powers, let Westminster surrender the power to borrow to the Scottish Parliament and the National Assembly for Wales.

The truth is that the present situation cannot be described as anything other than bizarre. Not only are we not allowed to borrow on our own account, the UK Government appears to take a perverse pleasure in turning down our requests to spread the costs of borrowing on major infrastructure projects. Who benefits from its refusal to let Scotland spread the costs of a new Forth road bridge over 20 years? More bizarrely, it not only refuses our request for public borrowing but suggests that we should use PPP. Yes, we might still be able to spread the cost over 20 years, but it would be at a much higher rate of interest than would otherwise be necessary. It is irrational to refuse us borrowing powers and then decide that we can borrow, but only if we accept an obscenely expensive option such as PPP.

The UK Government's response is even more incomprehensible when we consider the effects of the change in financial rules that will come into play in April. The UK Government's attitude looks rather like childish gamesmanship. Westminster should cease to seek conflict with the Scottish Government and, instead, start to work with the Scottish people for the well-being of the Scottish people.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Will the member take an intervention?

Bill Wilson (Scottish National Party, West of Scotland)

No, sorry, but I have only a short time.

A Scottish Government with borrowing powers might be able to work to reinflate the economy without lining the pockets of the already wealthy, which is the primary purpose of PPP and the private finance initiative. However, a Scottish Government without the powers of taxation, the powers to amend the social security system and the powers of an independent nation cannot truly tackle poverty and its resultant ills.

In the past 50 years, 17 European nations have declared independence. In the past 50 years, 17 European nations have taken control of the basic economic levers, such as the power to borrow. In the past 50 years, not one European nation has surrendered its independence or its power to borrow.

It is anomalous, peculiar and irrational that Scotland cannot borrow. The only problem with that statement is that, having used the words "anomalous", "peculiar" and "irrational" to describe Scotland's lack of borrowing powers, it is difficult to find suitable words to describe Scotland's lack of independence.

Peter Peacock (Labour, Highlands and Islands)

I will make my speech from the perspective of someone who has had the opportunity in his political career to be a council leader, a finance convener of a regional authority, and a finance minister for about three years. As a council leader, I had borrowing powers but, as a finance minister in the Scottish Executive, I did not. Some might find that entirely paradoxical, but I did not, for reasons that I will set out. I do not approach this argument from a constitutional perspective, as Bill Wilson does, but do so from a purely practical perspective.

When I was a local authority leader with borrowing powers, there were the heavy controls of borrowing consent. There was a process of constant debate and negotiation with the central Government of the day to extend those borrowing powers. They were never sufficient for all that we wanted to do, partly because we wanted to do more, but also on occasion because we had huge items of expenditure that created a bulge in our pattern of expenditure and we required additional borrowing consent to overtake it. We even got into the system of trading consents with some authorities that were underspending their borrowing consents while others were overspending them. The situation was dynamic and fluid and we were in constant negotiation.

My point is that any system of borrowing involves limits and controls, whether the borrowing powers rest with local or national Government. In Germany, although there are no specific limits for the Länder, as Tavish Scott said, consensus has been reached between the Länder and the federal Government about that. In Switzerland there is a form of the golden rule. In Australia there is a loan council of the six states. In the context of the Maastricht agreement and the convergence criteria that were thrashed out in relation to the euro, there are in effect borrowing controls on every national Government in the EU.

There is no escaping the rules. Borrowing powers are not a panacea and do not produce extra cash; they permit a drawing forward of cash, which must be paid back, with interest, and interest payments eat into capacity on the revenue side of the account and affect services. No one should think that borrowing powers offer a free ride.

When I was a minister I never felt the need for borrowing powers. The issue did not arise in the context in which we were operating, so I was not bothered about it. That was partly because local authorities, which were delivering a large part of the services and infrastructure, had borrowing powers so that they could build schools, roads, social work establishments and so on. It was perhaps also partly because we did not have to find a huge sum of money for a large national project. Situations in which sums for such projects are needed highlight the practical challenges to do with the instruments that are at ministers' disposal.

Tavish Scott (Liberal Democrat, Shetland Islands)

Does Mr Peacock accept that, when he was a finance minister, public expenditure was rising remorselessly, which affected the circumstances of his tenure?

Peter Peacock (Labour, Highlands and Islands)

I absolutely accept that.

In the context of a large national project or a series of such projects, borrowing is just one potential solution. We must also consider how public expenditure is scored and whether it all counts in one year, irrespective of when borrowing took place. There are many nuances and subtleties that must be addressed.

Is what I have said an argument for having no borrowing powers in the Scottish Parliament? Absolutely not. It is clear that there is an argument to be made for borrowing powers for the Parliament and that there needs to be a debate on the matter. We need to keep an open mind—that is true of my party as much as it is true of the nation as a whole. We must also enter into the debate with our eyes open. Borrowing powers are not a panacea or a free ride and we cannot escape control systems. However, it is worth having the debate.

Gavin Brown (Conservative, Lothians)

The debate has been interesting and members of all parties have made intelligent speeches. Peter Peacock's speech, in particular, was thoughtful.

Derek Brownlee outlined the Scottish Conservatives' approach: we are open-minded on and have no strong ideological objections to borrowing powers. Derek Brownlee also said that in the context of the Calman commission, which is considering the devolution settlement, borrowing must be considered in the round. As Alex Neil said in the Parliament yesterday, the debate on borrowing powers should not take place in isolation.

The Conservative amendment would replace the word "would" in the motion with "could". The difference might seem small to some members, but it is important. The acquisition of borrowing powers has the potential to lead to better accountability but would not necessarily do so.

A number of members said that, given that councils can borrow money and the Northern Ireland Assembly has borrowing powers—albeit that there are the caveats that members mentioned—the Scottish Parliament's inability to borrow money is an anomaly. The Chartered Institute of Public Finance and Accountancy made that point in its submission to the Calman commission. It is a fair point and a reason for considering the situation. The Liberal Democrats have made a fair point in raising the issue.

The timing is apposite, as I think that Mr Scott said during an intervention. We had double-digit growth for quite a long time after the devolution settlement and the budget doubled over eight years, to the extent that the Scottish Executive was unable to spend £900 million. We are in different times now. The financial settlement is tighter and is likely to remain so for some time. There is also the important matter of the replacement Forth road bridge, which is the most important economic infrastructure project for Scotland. I say again to Mr Swinney that the offer is open from the Conservative shadow Treasury team to discuss ways forward on the issue. Perhaps Mr Swinney will agree to a meeting when he speaks later in the debate.

I offer a word of caution. We are in the middle of a debt-fuelled crisis, so piling on more debt cannot be the entire answer. The UK Government is facing national debt of £1 trillion. Therefore, the word "could" in our amendment is important. The acquisition of borrowing powers might well lead to more autonomy and accountability, but it might well not do so—it would depend entirely on how the borrowing powers were exercised. We need only consider the Audit Scotland report "Review of major capital projects in Scotland: How government works", in which 43 infrastructure projects over a seven-year period were considered. Almost all the projects were delivered late and about two thirds of them went over budget. If we are to borrow money to fund infrastructure projects, we must do so very sensibly indeed, just as a consumer must consider carefully an offer of a credit card that would give them short-term flexibility on spending but perhaps less flexibility in the medium and long term—I appreciate that that is a crude analogy.

We have no great ideological objection to the acquisition of borrowing powers. It is critical that the issue be considered in the round as part of the devolution settlement and we wait with interest to hear what the Calman commission has to say.

Trish Godman (Labour, West Renfrewshire)

I call David Whitton.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

You do not have to say anything, Mr Whitton.

David Whitton (Labour, Strathkelvin and Bearsden)

I—

Bill Wilson (Scottish National Party, West of Scotland)

That's enough.

David Whitton (Labour, Strathkelvin and Bearsden)

That was a sedentary intervention from the "reasonable man" of the SNP, which showed how reasonable he is.

As Gavin Brown said, we have had an interesting debate, which was no doubt the first of many on the topic. I refer members again to paragraph 6.80 of "The Future of Scottish Devolution within the Union: A First Report", in which the Calman commission said:

"A number of suggestions have been made that the Scottish Government should be able to exercise borrowing powers. Some evidence on this has been drawn together by the Independent Expert Group and the Commission wishes to give further consideration to this."

Indeed. The Liberal motion is fairly unequivocal and makes claims for borrowing powers that are as yet only a matter of opinion. The claims are untested. Indeed, an eminent group of experts in financial matters would question whether the statements in the motion are accurate. The issue is a mebbes-aye-mebbes-naw question.

Let us consider some of the views that we heard in the debate. Rob Gibson seems to think that the Scottish Parliament, with its budget of £34 billion, is operating with one hand tied behind its back. Heaven knows what he would do if his hand was untied. Bill Wilson, the "reasonable man" of the SNP—heaven help us—has a peculiar take on the relationship between the UK Government and the Scottish Parliament, but I am sure that he will not be surprised to learn that I do not share his view.

The best contribution was from Peter Peacock, who explained in his wise speech what can happen and what dynamics are involved when a finance minister has to struggle with the borrowing powers of local government. I have not had the pleasure of having such a role and maybe I never will—who knows?

Some issues have been missing from the debate. The Liberal Democrats made no mention of their much-vaunted policy of a 2p cut in income tax, which was dropped so suddenly. There has been no mention of the local income tax policy, whereby a 3p tax increase would be dropped on the people of Scotland. There has been no mention of the Scottish Parliament's ability to use existing powers to raise and lower income tax. Such issues should be part of a debate about financial powers for the Scottish Parliament.

As things stand, the Scottish Parliament operates within the UK's macroeconomic framework. Our being in that framework led to the £37 billion bail-out for our two biggest banks. Questions about how to finance the building of a bridge should not be used as an excuse to force through an agreement about borrowing powers.

I assume that the Liberals agree with the findings of the Steel commission, which recognised that any Scottish Government borrowing would need to be done within the UK macroeconomic framework. I would be interested to hear what rules and limits Mr Scott would suggest for Scottish borrowing. Perhaps he will tell us in his summing up.

As I said in my earlier speech, we on this side of the chamber believe that the debate, worth while as it is, has come too soon. We will continue to co-operate with the Calman commission. No doubt, we will return to the issue of borrowing powers at a later date, once the commission's final report is published.

Jim Mather (Scottish National Party, Argyll and Bute)

I commend the Liberal Democrats for lodging the motion for debate. I note that George Soros would probably agree with it, as he said recently:

"the current system favours countries in control of the international financial institutions".

He made the point that the unfairness of the system is demonstrated by the fact that problems that originated in the US and London are doing more damage elsewhere. He went on to say that elsewhere

"Governments will also need long-term financing to enable them to engage in counter-cyclical fiscal policies."

I agree with him on that. Indeed, we can see it happening across Europe, where countries such as Portugal and Italy are giving fiscal autonomy to autonomous areas such as the Azores. It is also happening with Gibraltar. There is also the example of Northern Ireland's borrowing powers and its claim of right for a 12 per cent corporation tax, which remains to be retrieved from the long grass.

The debate continues. The Scottish Government started the dialogue with the people of Scotland on our constitutional and fiscal future through the national conversation. Our position on borrowing powers is crystal clear: we should move to a position in which the Scottish Government and Scottish Parliament are responsible for all public spending and revenue in Scotland. There is growing support across the political spectrum for greater fiscal autonomy, which would, of course, create the opportunities to give the Scottish economy a competitive edge and boost growth. For example, Scotland could lower corporation tax and respond to changes in economic circumstances such as the economic downturn.

The experience of small independent countries such as Norway and the financially autonomous areas of Spain, including the Basque Country and Navarre, demonstrate the significant advantage of fiscal autonomy. Those areas can tailor fiscal policy to enhance strengths and address weaknesses. Of course, Scotland does not have those tools, but the Government has consistently demonstrated its commitment to use all the available levers to support economic growth.

Nevertheless, it is now clear that the Scottish economy will follow other countries into recession. Scottish GDP figures for the third quarter of 2008 show that Scottish output declined by 0.8 per cent on the previous quarter. The latest labour market figures also show a decline in employment of 13,000 between September and November and a rise in the Scottish unemployment rate to 5.2 per cent, albeit that that is better that the experience across the rest of the UK. With greater fiscal autonomy, the Scottish Government could have deployed the full range of economic and fiscal levers that it needs to tackle the economic downturn in the way that is best for Scotland and without having to rely on decisions that are taken elsewhere.

The Government has agreed to submit evidence to the Calman commission on extending the powers of the Scottish Parliament. We are prepared to set out not only for the commission but for the Treasury and other bodies the unanswerable case that the Scottish Parliament needs the full range of financial and borrowing powers that would allow us to manage our finances more effectively and efficiently than we can at present. We are happy to co-operate with the Liberal Democrats on the formulation of a Scottish Government presentation to the Calman commission and other relevant bodies.

I welcome the Liberal Democrats' long-standing commitment to debating greater fiscal autonomy for the Scottish Parliament. I welcome in particular their stance on borrowing autonomy for the Parliament, which is an issue that is now of even greater significance in light of the recession and the introduction of the international financial reporting standards. We want borrowing powers not only to address whatever changes in economic climate lie ahead but to enable us to achieve our goal of increasing sustainable economic growth.

Borrowing powers would also be used to address Scotland's clear infrastructure needs more quickly; not least, they would enable us to progress with critical projects such as the new Forth crossing. If the Scottish Government had the ability to borrow, its borrowing would be cheaper and more transparent than under alternatives for funding infrastructure investment.

We believe that the case for increasing the borrowing powers of the Scottish Parliament is unanswerable. The lack of such powers inhibits transition and growth and is a glaring omission. We have to ask which successful countries and nations have not used borrowing powers to effect change. That crystallises the case. At the moment, the Scotland Act 1998 prevents Scotland from borrowing, albeit that—as Peter Peacock so eloquently said—our local authorities have the power to borrow, as do our colleagues in Northern Ireland. The Scottish Government has no such power.

The debate is an important milestone on an important journey. We have the wholesome aspiration that acquiring the power to borrow will move us yet further towards a position in which Scotland can release its full skills and assets and become a genuinely thriving, competitive and sustainable 21st century economy. It will help us to come through the recession fitter, leaner, more competitive and more able to move forward. We will do everything that we can to achieve that end, including continuing to use all the levers that are available to us. For that reason, the Government welcomes the Liberal Democrat motion and looks forward to the continuing debate on the constitutional and fiscal framework for the future of Scotland.

Robert Brown (Liberal Democrat, Glasgow)

As Gavin Brown rightly said, this has been a good debate in which many excellent speeches have been made. In closing for the Liberal Democrats, it is proper for me to say that we welcome into the debate the voices that we have heard today. However, the kindest thing that I can say about David Whitton's two speeches is that I hope that the voices that we hear in future from the Labour Party on the subject are those of Malcolm Chisholm and Peter Peacock.

There are occasions on which the subject matter, cause or issue has a wider resonance than the party divisions in the chamber, because it chimes with the public mood and hits a wider core of recognition that it is an idea whose time has come. So it was with the debates on the establishment of the Scottish Parliament, on the Iraq war and on free personal care, and so it is for today's debate. Borrowing powers for the Scottish Parliament are an idea whose time has come. A home-rule Parliament manifestly ought to have such powers in order to carry out its functions effectively. Borrowing powers are a weapon that should be in the toolbox of fiscal and economic powers, which the Liberal Democrats have rightly described as "powers for a purpose".

The immediate occasion for today's debate was offered by the challenges of the Scottish budget and the financial and economic crisis that darkens all our doors. Like the Parliament itself, borrowing powers are something that has been inevitable from the beginning. I stress that the Parliament assuming the power to borrow is neither a licence to print money nor a get-out-of-jail-free card for every project on our wish list, as others have wrongly suggested that it is. It does not provide a load of lolly for nothing. As Tavish Scott said earlier, borrowing powers must be exercised within a responsible framework and within rules about what we can afford and what we can use them for.

Borrowing powers for the Scottish Parliament are relevant to the fiscal responsibility of the United Kingdom; indeed, they would impose fiscal responsibility on us all. In some ways, their exercise would call for greater partnership with Westminster than before. We would need to jointly develop new rules on how and when they would be used. Liberal Democrats have long proposed the establishment of a joint Exchequer board with the UK Government—a finance commission, ideally of the nations and regions of the UK in a more developed federal system. However, even if that were to be a development of the current Scotland Act 1998 settlement, it must be a proper constitutional arrangement between partners and not some form of diktat from the Treasury.

I did not agree with most of what Bill Wilson said, but he made a good point in asking in whose interest it is to refuse powers to borrow for the new Forth bridge.

Of course, the strategic challenge is how to get from where we are now to a position where the Scottish Parliament acquires borrowing rights. In that respect, the bridge is the Calman commission. The Liberal Democrats, Labour and the Conservatives have already signed up to the Calman process. As part of the budget discussions between the Liberal Democrats and the SNP minority Government, we now have sign-up to the Calman process by the SNP on the objective of obtaining borrowing powers.

David Whitton (Labour, Strathkelvin and Bearsden)

If, as Mr Brown says, the Liberal Democrats are signed up to the Calman commission process, why did they not wait until it reports before coming forward with the debate?

Robert Brown (Liberal Democrat, Glasgow)

I am sorry that I gave way to Mr Whitton. He should read the motion. That is the context in which the debate is being taken forward.

It is significant and important that the SNP Government is now signed up to the Calman process. Potentially, we have a powerful coalition of the major political parties in Scotland that can give informed evidence—I use the word "informed" in response to David Whitton—to Calman, backed by the Government and the civil service, on an issue on which Sir Kenneth and his team have said they are interested in taking further evidence.

John Swinney (Scottish National Party, North Tayside)

Will the member give way?

Robert Brown (Liberal Democrat, Glasgow)

I had better make some progress.

We did not expect Labour and the Tories to sign up fully to the concept today, and the amendments that they have lodged are equivocal. As so often on the constitutional question, it falls to Liberal Democrats to be the brokers and catalysts for progress. I hope that soon we will be joined on that important journey by others and that the faint hearts in some other parties will draw vigour and inspiration from the points that have been made in today's debate. We can achieve a majority in the chamber today, but they can make that majority the voice of Scotland. That is an important point.

We Liberal Democrats are committed both to acquiring borrowing powers for the Scottish Parliament and to Calman's fundamental concept that a partnership exists between the constituent parts of the United Kingdom. I am not sure whether SNP back benchers knew that, in agreeing to give evidence to Calman on borrowing powers, they were signing up to a concept of United Kingdom partnership, but I make the point to them that that is rather better than their current policy of sticking with the pound sterling in an independent Scotland, which would tie them into United Kingdom monetary policy and the Treasury rules.

The Scottish Government has already encountered severe challenges in seeking a means of funding the new Forth bridge that does not have a damaging impact on other much-needed infrastructure projects. Paying for such projects over 30 years or so, as we would our houses, is not a particularly revolutionary idea. A united Scottish view to that effect would be a powerful and irresistible driver towards securing a positive outcome from the UK Government.

I will finish where I began. Borrowing powers for the Parliament are an idea whose time has come. A number of speakers have made the point that there is much work to do on the detail and on securing widespread political and professional sign-up to the principle. However, yesterday's agreement with the Scottish Government and the existing majority support for the Calman process are the building blocks for a process that can and must achieve success on a reasonably urgent timescale. I have great pleasure in supporting the Liberal Democrat motion this morning.

Financial Sector Jobs Task Force

Trish Godman (Labour, West Renfrewshire)

The next item of business is a debate on motion S3M-3384, in the name of Jeremy Purvis, on a financial sector jobs task force.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

It is not hyperbole to say that the banking and financial services sector in Scotland is going through the most significant period of concern in its history. The 1772 banking crisis, which led David Hume to suggest to Adam Smith that he insert a new chapter in "The Wealth of Nations", was perhaps less significant than the tumult that we have experienced since last summer—a contagion in the USA that spread across the Atlantic but which sprung from a culture on both sides of the ocean. That culture was highlighted to me best by the fact that, when Lehman Brothers went into administration, its salary bill was £4 billion but its bonus pot stood at £20 billion, skewing almost entirely not only the bank's business culture but the model of financial services in the western hemisphere, which was shared across the sector and across the ocean. Somehow, the sector had forgotten that it had the ability to say no to potential borrowers. When Lehman Brothers went down, the salary of its boss was $484 million.

In Scotland, the collapse of Lehman Brothers was matched by one of our two biggest and most socially and economically important companies, the Royal Bank of Scotland, reporting what will be the biggest loss ever in corporate history in this country. We need to look at some of the consequences of that for our local communities and for the local, regional and national economies of Scotland. The significance of the sector to the Scottish economy cannot be overestimated, whether it be in Perth, Glasgow, Aberdeen or Edinburgh. My colleague Margaret Smith will speak about her constituency, where so much of the country's financial services sector is based. Other members will talk about their local circumstances.

Given the turmoil that has affected the sector, it is critical that we look to the future. A third of financial services firms in Scotland intend to make cuts of 5 per cent or more this year, with investment operations players the most likely to reduce head count. Recruitment is not completely dead in the water. Financial services recruiters estimate that a fifth of the sector's companies in Scotland are likely to increase head count by up to 10 per cent this year, but that compares with more than half of those surveyed in 2007 and a record 82 per cent that forecast growth in 2006. The decline is stark, but the number of companies recruiting has not fallen to zero. I was interested to note that some areas in which there has been depressingly bad news, such as the insurance market and banking, have also been buoyed.

Discussing the shortages that exist, one recruiter stated:

"It's a vicious circle. Job-seekers think there are no jobs, so don't take a look at the market, in turn firms who are recruiting for niche skills can't recruit."

Such niche skills are mainly at the senior end, with companies struggling to find management-level hires. Scottish Enterprise says that there are still some opportunities across the sector. In areas ranging from distribution to senior asset management, there is considerable concern about the skills mix, as well as potential job losses.

Scotland has contributed to the world's financial sector, and now we are being buffeted by the world's financial storm. Employment in the sector has grown exponentially over the past decade. Last summer, we proposed the establishment of a proactive, fully fledged task force for the sector that included its partners—unions, local authorities, colleges and universities. Today, we seek all-party support for that proposal. The task force would play a key role not only in securing support for the sector in the future but in guarding against the significant impacts that the current situation will have in local areas. Growth in my area of Tweeddale and the north Borders has been dependent on the growth of the financial sector in Scotland.

It is not necessary or desirable to establish a new structure. The Government continues to argue that the Financial Services Advisory Board is the correct structure. FiSAB was established by Jim Wallace in 2005 to oversee the financial services strategy, but that was during the boom time. Although we welcome the fact that FiSAB will meet next week, its previous meeting was in September. We argue that now its structure should provide for a more direct approach.

Gavin Brown (Conservative, Lothians)

The member will see from our amendment that we are sympathetic to his proposal. Have the Liberal Democrats had any offline discussions with FiSAB members to seek their views on what they can do and whether the proposed task force would be an effective way of combating the downturn?

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

I welcome the Conservatives' welcome today for the establishment of a specific group—it is disappointing that yesterday they ridiculed the proposal. My discussions with FiSAB members and others who are involved in the sector have brought sharply into focus the need for a more specific grouping that would look at the skills set of existing staff, the context of unemployment in the sector and the consequences of that for local authority areas. Just before Christmas, I had an interesting discussion with a senior person in the sector in Edinburgh, which focused on the fact that this recession may be different in type from those that Scotland has experienced in the past, given the significant growth in the financial services sector that has taken place recently. In that context, an active group with clear criteria for judging its success and a proper, proactive path forward would contribute to the future success of the sector.

As I indicated, FiSAB last met in September. That is not a sufficient response to the developments in this critical sector. The sector includes a diverse range of jobs, from distribution to asset management. A more specific policy response is needed to address the impact of the current situation on higher-salaried individuals entering the labour market and its knock-on effect, both in Edinburgh and other cities and in the travel-to-work areas around them, given the discretionary and disposable income that those individuals have had. The City of Edinburgh Council and Scottish Enterprise have had discussions, but we believe that the issue must be brought into sharp focus immediately, to allow for a more proactive approach.

Scottish Financial Enterprise is also looking to a more positive future for the sector. It is seeking more proactive co-ordination of public bodies, private sector bodies, unions and councils, both as part of a preventive approach for the sector and to offset the considerable damage that will be caused if our worst fears come to fruition. The sector has a positive future, but we need a much stronger, more critical way of supporting the staff who are involved in it. That is why we have brought our motion before the Parliament today.

I move,

That the Parliament notes the importance of the financial services industry to the Scottish economy; believes that the Financial Services Advisory Board (FiSAB), set up to be the custodian and advocate of the strategy for the industry in Scotland during a time of economic boom, should now be given more powers and a new purpose to focus on protection for this major Scottish industry during the current banking crisis and recession; notes the Scottish Government's commitment that FiSAB should be adapted to deal with the challenges in the sector and should meet more frequently than the present position of twice a year, and calls for the urgent formation of a finance sector jobs taskforce within FiSAB to work proactively to help the staff with essential skills who are losing their jobs and for ministers to report to the Parliament on its work.

John Park (Labour, Mid Scotland and Fife)

It is a pleasure to speak on behalf of the Labour Party in this debate. We have debated the issues facing the financial services sector and banking on many occasions, particularly since the emergency debate on the HBOS-Lloyds merger. It is right that we do that as a Parliament, and it makes our business relevant to what is happening outside. We support the motion and the amendments.

We are now at the stage of debating what we as a Parliament can do here in Scotland, and what the Scottish Government can do under the existing structures—as well as enhancing them—to help and support the workers in particular, but also to assist the organisations in the financial services sector with the problems that they face.

The proposal to have FiSAB meet more regularly is constructive and welcome. The suggestion to create a financial sector jobs task force is also sensible, and I hope that we get some ideas from the debate about how to pull it together.

I am a little bit worried about the breaking out of consensus over the past 24 to 48 hours—although Mr Whitton tries his best, now and again, to break it. I am sure that normal service will be resumed next week. However, on important issues such as this one, we should try to work together across the chamber to find a way ahead that will make a difference for people outside the Parliament. There needs to be collaboration. We need organisations to come together in difficult times.

The motion is right to note that FiSAB was established at a time of definite growth in the financial services sector, but the challenge now is somewhat different. Our amendment seeks to highlight the role of trade unions and to complement the Liberal Democrat motion. We believe that the trade unions have a unique perspective on our financial services sector, particularly when it comes to employment. They would complement any sub-group and provide a valuable two-way conduit between the workforce and the wider industry.

I am in regular contact with Unite and Accord, and I encourage other members to speak to those unions' representatives. We must remember that, ultimately, those organisations will have to deal with the shake-out. We might think of full-time paid officials when we speak about such organisations, but, in reality, local trade union representatives are unpaid volunteers who have worked in the industry and whose own jobs might be at risk. It is they who have to do the work and deal with issues on a daily basis. I encourage members to engage with local representatives when they can.

I have seen Unite's financial charter, much of which focuses on what might be done through regulation at Westminster, but a lot of it relates to what we can do here. I raised the matter with the First Minister a couple of weeks ago, and I understand from a meeting that I had with the FiSAB member Rob Macgregor—it was one of the offline meetings that Gavin Brown alluded to in his intervention—that the board's next meeting will involve some dialogue with the First Minister on the financial charter. I also mentioned our debate today in that meeting. Such discussion is an important step forward. We should be looking for ideas not just from within the Parliament but from outwith it, too.

If we are being honest with ourselves, we should acknowledge that the issue ultimately concerns the people who are working in the sector. Understandably, they have been concerned about their job security, which is why we tried to secure measures in the budget over the past few weeks in relation to apprenticeships. We have also considered the matter of retraining. The banks are trying to take a sensible approach to employment issues. In the discussions that I have had with senior bank executives, they have indicated that they will have to reshape their businesses and to take some costs out of them. They will want to do that in a sensible way, with the minimum impact on employees. We have an opportunity to ensure that that is the case.

I support interventions from the Government, such as those on apprenticeships. The work of partnership action for continuing employment is important when people leave the financial sector and we need to find other sectors for them to move into. Mr Swinney made an announcement about green jobs this week, and I am sure that skills from the financial services sector could complement growth in that area. The creative industries is another area of growth in the Scottish economy. We need to help people to make the change. Where the financial services sector previously took up the slack from the manufacturing sector, we need to find other areas of the economy that Government interventions can help to grow so that people who come out of the financial services sector have the opportunity to work in them.

One of the key problems that we need to address is a lack of understanding in industry more widely about the skills that exist in the financial services sector. I co-convene the cross-party group on skills with Gavin Brown, and we will certainly consider that issue at the group's next meeting. We will have discussions with Owen Kelly from Scottish Financial Enterprise and Simon Thompson from the Chartered Institute of Bankers in Scotland about how we might get a structure together, how we might get people to understand the skills that are available in the financial services sector and how we might provide opportunities for people.

The Conservative amendment is sensible. We need to see the wider picture to understand where we are now, and we could use the resources of the Parliament and the Government for that. If we take a snapshot now and see where we are, the Parliament can try to complement the good work that has been done by organisations outside. We can consider how to develop FiSAB and make it responsive to the needs of the people who work in the financial services sector.

I move amendment S3M-3384.2, to insert after "year":

"and believes that there should be continued workforce representation at the meetings in the shape of the recognised trade unions".

Derek Brownlee (Conservative, South of Scotland)

John Park has just made a pertinent point about jobs. All of us know constituents, and many of us have friends and family, who work in the financial services sector. Even those who are not immediately faced with the prospect of redundancy are feeling uneasy. There is a great deal of uncertainty and concern in the industry about what the situation means for people's jobs, homes and families. That concern will remain with us for some time.

I echo what John Park said about the approach of the banks. So far, they have taken a responsible approach in dealing with the inevitable concerns. We are all realistic, particularly in relation to the banks that are undergoing strategic change, that there will be reductions in head count. That is inevitable, and it means real people losing their jobs. That needs to be handled very carefully. So far, the banks have taken a sensitive approach.

We are all aware of the importance of the financial services sector to Scotland. Even with the recession, and even if the impact of the recession on the financial services sector proves to be significant, it will be very important to Scotland in terms of employment and its contribution to the economy. It is important not to lose sight of that. I get frustrated with some of the media, and indeed some politicians, given their approach to the financial services sector. A year ago, it could do no wrong. People were lining up to heap praise on Scottish banks, saying how amazing they were and how great their strategies were. Now, in many cases, the very same people are turning tail and criticising them, pretending that they knew all along that their strategies were terribly flawed. It is a bit rich that so many commentators are happy to take pot shots at businesses that are struggling and happy to take credit when they are doing well. That said, we now need to move on and deal with the situation that we face.

When FiSAB was set up, it was undoubtedly in the context of a financial services sector that was growing at a significant rate, faster than the rest of the economy. Nonetheless, at the time, the strategy documents that FiSAB released acknowledged some of the challenges that the financial sector faced. Key among them was the fact that the strength of having a large financial sector in Scotland could be a challenge in difficult circumstances. That is exactly the problem that the Scottish economy faces now. We have become very reliant on the financial services sector because it has done well, which is positive, but when there are difficulties in the sector we are more exposed to the downturn. We are also more reliant on headquarters for other services, including professional services.

The Labour amendment is entirely sensible. FiSAB was indeed set up with involvement from the trade unions, and it is entirely appropriate, particularly when we are considering the impact on jobs, for trade union involvement to be included. I am happy, on behalf of the Conservatives, to accept the Labour amendment.

Turning to our own amendment, we think that it is important to monitor what is happening in employment in the financial sector. There has perhaps been too little emphasis on the contribution of the financial sector in the past, but it is important that we are all aware of the contribution that it makes and of changes in employment throughout the sector as we go through the recession. It might take many years to reach the end of the difficulties for the financial sector, and it is important that all of us in the Parliament are aware not just of the number of jobs in the sector but of the many jobs that rely upon it indirectly.

We should perhaps reflect on FiSAB's ability to make a significant difference. We are dealing with a major financial situation that is leading to significant changes across the sector. The Government should do what it can to help, but let us not kid ourselves that FiSAB or anyone else can wave a magic wand to get rid of the challenges. The task of Government is surely to mitigate the impact and to do what it can.

I move amendment S3M-3384.1, to insert at end:

"and for such reports to include the latest estimate of the number of jobs in the financial sector in Scotland, direct and indirect."

Jim Mather (Scottish National Party, Argyll and Bute)

The Scottish Government agrees with the motion and will propose that a finance sector jobs task force be established within the context of the existing FiSAB arrangements. That will be discussed at the forthcoming FiSAB meeting on 10 February and at the SFE dinner that is planned for 16 March. The discussions will also consider how the sector will adapt to address the current challenges. We agree that FiSAB should meet more frequently—twice a year needs to be improved on—and that the task force that is to be established should also have frequent meetings.

I congratulate the Liberal Democrats on selecting this important matter for debate and I thank Jeremy Purvis for setting the scene so well. His comments were augmented by those of John Park and Derek Brownlee, who provided a very clear idea of the challenges that face us.

The global financial services industry is experiencing unprecedented change and challenge, the scale of which few could have foreseen. Because of the effect on the banks, which have such a pivotal role in Scottish society, the changes are affecting many people in Scotland in all walks of life. The issue is personal and very close to all of us.

The key point is that the financial services sector in Scotland is resilient: it can adapt, evolve, endure and grow. I saw that personally 20 years ago, when I worked on secondment with a company called Origo Services, which was set up by the totality of the United Kingdom's life and pensions sector to manage the migration from batch processing and central quotations to broker self-sufficiency and the creation of a much more cohesive industry.

I am convinced that it is right that the Parliament contributes to a similar process now by contributing ideas and collective effort to mitigate the potential impacts of the major changes that Scotland's financial sector faces. In particular, we need to be prepared to roll up sleeves and work closely with the industry. In facing difficult times, in a situation in which no one clearly knows when the current exceptional financial instability will end, we know that things will end better if industry and Government face the issues together. We need to work to ensure that the industry comes out of the current phase tougher and more resilient by evolving to offer different and more relevant services. The industry will need to operate on a better basis, with the moral hazards, risks and rewards properly managed.

We know that we can do that in Scotland because our financial services sector—a bit like our renewables sector—is already very diverse. It covers lots of bases and all the main sectors are well represented. That diversity is strength, especially if we want to evolve and move to a better set of circumstances.

An especial strength is our unique collaborative partnership in FiSAB. The membership of FiSAB includes not only a wide range of the industry's sub-sectors but representatives from the union Unite, Universities Scotland, Scottish Enterprise and Scottish Financial Enterprise. That is what makes FiSAB a unique collaboration. The Scottish Government has shown its commitment to the industry not just by designating it as a key sector but by fully engaging in FiSAB, of which the First Minister is chair and both John Swinney and I are members of the board.

Over the past decade, Scotland's financial services industry has been highly successful. In 2006, the industry contributed approximately £7 billion to Scottish output. The industry has also maintained a good level of employment, which stood at 91,600 people in 2007. As others have mentioned, banking continues to employ a large number of people. With other parts of the sector such as life and pensions and asset management being highly material to the Scottish economy, the industry still accounts for a significant part of the picture. In 2007, banking accounted for 54 per cent of employment in the sector, with life and pensions at 15 per cent and asset management at 13 per cent respectively. Those are the major babies in the bath water.

We are determined to ensure that the impact of the current financial services crisis is handled not only with concern but with focus, so that we achieve the most positive outcome and mitigate the impact on the wider Scottish economy. That is why we have taken action to help households and businesses that are bearing the brunt of the financial crisis.

I reiterate that the Government's primary purpose remains the creation of a more successful country with opportunities for all to flourish. Increasing sustainable growth was right in May 2007 and it is even more right today. In making that statement, we recognise the difficulties that we and countries across the globe face. We are facing up to those difficulties. We have shown our willingness to work with the UK Government and Europe to maximise and guide Scotland's potential to emerge successfully and solidly from the crisis.

The cohesion that is evident in the Parliament today is also a key element. Our approach in the meantime sits comfortably with the proposed finance sector jobs task force, in as much as we seek to lift the totality of Scotland's economy by ensuring that our financial services jobs are strengthened and resilient. We want the financial services sector to emerge with greater strength that plays to the strengths of the other sectors of the wider Scottish society and economy. That will continue as we go forward.

Trish Godman (Labour, West Renfrewshire)

We move to the open debate.

Helen Eadie (Labour, Dunfermline East)

I welcome the chance to contribute to this debate. I rise to support the amendment in the name of my colleague John Park. I strongly believe that, at a time of global financial problems caused by the sub-prime mortgage market in the United States, it is vital that not only the financial sector but the trade unions are round the table with the First Minister and his colleagues.

In reading the minutes of the most recent FiSAB meeting, three things struck me. The first was the absence of trade union representation, which I have already covered. The second was that only two women were listed as members—of which only one attended—among the long list of clearly male names of the representatives of the different companies. The third was the lack of any sense of the financial crisis in the banking industry, which really amazed me. The minutes of the October meeting refer to the fresh talent initiative—an important subject—and to concerns about the impact on the industry of the bill to provide compensation for pleural plaques. However, there is little reference to the global financial crisis. In reading the minutes, I was surprised that there was no sense of urgency about the global credit crunch, the finances of all our industries and the jobs that are being lost. I hope that that will be remedied in future meetings.

I agree that there must be urgent action and that the frequency of FiSAB's meetings must be increased. It is good to hear Jim Mather confirm that that will happen. We need to review the make-up of the board's membership so that it includes not just the trade unions but, given that we are dealing with such a national emergency, the leaders of all the Opposition parties. They should be round that table, too.

On the Liberal Democrat motion, I must say that, for me, actions speak louder than words. Here in Edinburgh, there are fine words from the Liberal Democrats; where the Lib Dems have the opportunity for action, such as in my constituency, there is patent inaction. In Fife, the Liberal Democrats are in power in a coalition with the Scottish National Party. I can bear witness to the fact that the Lib Dems—in the shape of Willie Rennie, Jim Tolson and their colleagues—have blocked efforts that would generate £0.5 billion of investment in financial services opportunities at the Rosyth waterfront project, which is partly in my constituency and partly in Jim Tolson's.

I challenge the Liberal Democrats firmly to say why they are displaying such hypocrisy this morning. Why did more than 100 jobs disappear at Centron in Dalgety Bay? On behalf of my people, I am angry at the Lib Dems, and that anger is firmly and squarely focused on Willie Rennie, Jim Tolson and the precious few members who are sitting on the Liberal Democrat benches this morning. If the Lib Dems had secured that £0.5 billion of investment, Fife would have gained precious opportunities in the banking and insurance sectors of the financial services industry. My friend Jim Spowart, who founded Intelligent Finance, has spearheaded work in that connection. We have heard fine words from the Lib Dems, but they are hypocritical.

Returning to FiSAB, I agree that the board must be supported. However, the Liberal Democrats must have regard to the fact that we want not just lip service and fine words but action.

Angela Constance (Scottish National Party, Livingston)

As we have heard this morning, the importance of the financial services sector to the Scottish economy is unquestionable. Between quarter 1 of 2001 and quarter 1 of 2007, the financial services sector in Scotland grew by 60 per cent, whereas over the same period the overall Scottish economy grew by 14 per cent and the United Kingdom financial services industry grew by 47 per cent. So it is clear that the Scottish financial services industry punches well above its weight and is well worth fighting for.

The concern is that the economic downturn will impact greatly on the Scottish economy, but it is feared that the financial services sector will bear the brunt, so I welcome the motion, because it is essentially about jobs and the need to protect major Scottish industries during the current banking crisis and the worst recession in 60 years.

As has already been intimated, one in 10 Scottish jobs are in the financial services sector—up to 100,000 people are directly employed by it. However, as Derek Brownlee indicated, the approximately 100,000 people who are employed in support services are also important.

Edinburgh is, of course, Scotland's financial services centre, but financial services make a crucial contribution to local economies. That is indeed the case in my constituency, which has regrettably seen jobs contract in HSBC and Intelligent Finance—that is even before we consider the consequences of the Lloyds TSB takeover of HBOS, with predicted job losses of 3,000 to 4,000 across Scotland.

Financial sector jobs are important for two reasons. First, they mean a livelihood and survival for people. Secondly, the work is generally well paid. Across a range of roles, finance sector jobs pay up to 25 per cent more than the comparable roles in all sectors of the Scottish economy. That is particularly important for my constituency, which has seen the demise of other well-paid jobs in silicon glen. Those jobs have been replaced by jobs in McArthurGlen. Although retail growth in Livingston centre is most welcome and has transformed the town centre, I am concerned about overreliance on the retail sector, particularly at a time of recession. It is obvious that well-paid jobs do more to support the retail industry.

I hope that the task force will work well with local authorities and local economic development departments. Notwithstanding the concentration of financial services in the capital, it must be reiterated that they play a pivotal role in many local economies.

Scotland is renowned for its expertise in finance, and our financial services industry is a truly international success story. It is one of our oldest industries and still one of our most vibrant and innovative. It is vital that we protect it and support it through any changes and evolving practices. While the establishment of the task force is most welcome, we must not forget to celebrate the industry's success, because it is truly a Scottish success story.

Sarah Boyack (Labour, Edinburgh Central)

I welcome the debate. As an Edinburgh MSP, I want to say how important the issue is for the city of Edinburgh, the Lothians and the Scottish economy. There are many jobs in banking and financial services, but those sectors also support a huge number of indirect support services across the city, for example in catering and legal services. Important sectors in the city will be damaged if there are problems in banking and financial services, so I welcome today's focus on the jobs task force for the financial sector.

The support that we gave yesterday for increasing investment in partnership action for continuing employment is crucial, as is our support for modern apprenticeships. Although Edinburgh has a strong labour force and a good set of skills, we must ensure that there is re-investment for the future so that, when new opportunities come, we can seize the day and make the most of them.

Alongside the specific issue of financial services jobs sits the crucial issue of financial services investment and what the lack of confidence is doing to development in the city. There are real concerns across the country, not just in Edinburgh, that major construction developments are now not going ahead. Our last briefing from the City of Edinburgh Council focused on that issue.

In the past couple of weeks, three major announcements have been made, one of which was in my constituency—a huge Royal Bank of Scotland development in Fountainbridge has been stopped completely. As a lecturer in town planning more than a decade ago, I was able to use the Shawfair project as a student project for more than five years. For the project to fall back after it had finally reached the development stage is a major setback for the economy of the Lothians and the south of Scotland. We should not forget the restructuring of the Granton project. All those big projects had the capacity to provide more than 10,000 new houses, which would have been crucial for the financial services sector because people need to be able to afford to stay in the city.

There is a real issue for the city's wider economy so, while I support the motion and amendments, I hope that ministers will also focus on it. We need banks to continue to lend, and I ask ministers to tell us what they have done to help financial services jobs and how they have focused on the construction industry and the wider Edinburgh economy. In particular, will they focus on the £10 million that was allocated to accelerated house purchasing in the private sector? That £10 million was allocated to the whole of Scotland, but Edinburgh will now not get the 10,000 houses that it needs in the short term.

Good things are happening. Statistics show that financial sector employment has gone up during the past year. It is a very small increase—only 0.5 per cent—but banking employment is down by 1.9 per cent and is 8.5 per cent lower than it was at its high point in 2007. We have not seen the massive shake-out that we talked about in the previous parliamentary debate on the subject, but restructuring is clearly happening. John Park told us about his discussions with senior representatives from the banking industry, and we know from the trade unions that discussions are taking place.

We need talks on how to get positive support from the Scottish Government for training and apprenticeships alongside support for restructuring that creates jobs and finds opportunities for those already in the skilled sector in Edinburgh and the Lothians. We need to consider how to support the wider economy through incredibly difficult economic times, and we must consider the impact on jobs in the city. There is a relationship among the financial sector, construction, catering, hospitality and theatres, and we need to take a joined-up approach.

I support short-term action on financial service sector jobs, but I urge that it be linked to the wider economy so that we take a joined-up approach on the issue.

Ian McKee (Scottish National Party, Lothians)

It is with great pleasure that I rise to speak in support of the forward-looking initiative of the Liberal Democrats. In fact, I wish to allude to them and apologise to the chamber. For some time now, I have castigated various Liberal Democrat members as being foolish, misguided, intemperate, disorganised, confused and vapid, whereas I now realise that they are wise, scholarly, dependable and an example to us all. I hope that they will take my effort to make amends in the spirit in which it is intended.

As Angela Constance said, the financial services industry accounts for up to one in 10 of all Scottish jobs. About 100,000 people are employed directly by it, and another 100,000 work in support services. Many of those jobs are concentrated in my constituency: in 2008, five Edinburgh financial institutions employed 27,832 staff between them. The total figure for Edinburgh and the Lothians is about 40,000, although the figure is difficult to obtain with accuracy because some firms classify financial workers as computer operators, while others pay staff from outside Scotland and hence categorise those employees as being based elsewhere. That is why I have concerns about the value of the Conservative amendment.

According to the Scottish Government's 2006 annual business inquiry, a massive 31 per cent of all jobs in the city of Edinburgh were in banking, finance or insurance. Members may feel that that is a particular problem only for Edinburgh, but Edinburgh financial services account for 7 per cent of the entire Scottish gross domestic product.

Whatever the precise figure, there is no doubt that significant job losses in the industry will have a catastrophic effect on a city with a population of only 500,000 and a hinterland of about 300,000 more. The effect will not be solely in that sector. As Sarah Boyack pointed out, restaurant workers, taxi drivers, pubs and clubs, holiday firms, shops and a range of service industries will feel the pressure—less work means less profit and less employment. Edinburgh is facing hard times; it is sitting on an unemployment time bomb, the like of which it has never previously experienced.

There are some who point to the merger of the Royal Bank of Scotland with NatWest—when the joint workforce shrank by only 15 per cent—to illustrate that the potential job losses may not be as great as initially feared. Let us hope that they are right. However, there is a world of difference between job losses due to a merger when the financial sector in general is booming and those lost in mergers and downsizing when the entire banking system seems to be in meltdown. While NatWest had few branches in Scotland, the same is not the case for Lloyds TSB. The branch employees of Lloyds TSB and HBOS have cause for concern.

We in Edinburgh and the Lothians particularly welcome the initiative to establish a financial services task force to mitigate some of the harm that might be around the corner. No one can doubt that our banks have been badly mismanaged over the years. Combined with a global recession, that mismanagement has created a perfect storm in the Edinburgh and Scottish financial sector. However, the staff in that sector are well trained, enthusiastic and intelligent. If they become victims of the storm, they will be a tremendous resource for future employers.

One day, the recession will be over, and we will still need banks, insurance companies and ancillary organisations. Let us hope that the task force can come up with the policies to conserve and protect that talent so that it can again be put to use in the new financial industries that emerge from this mess. I wish the task force well.

David Whitton (Labour, Strathkelvin and Bearsden)

Like yesterday's budget debate, in which only two members voted against the motion, this is one of those rare occasions on which the whole Parliament comes together.

As is well known, during the budget negotiations, the Labour Party argued strongly for modern apprenticeship places and further investment in the PACE programme. PACE stands for partnership action for continuing employment, and it is called that for a good reason. The task of those who are engaged in PACE is not to ensure that anyone who faces redundancy does not lose their job but to encourage them to get training or find alternative employment.

As other members have put it eloquently, we face large job losses in the financial sector. That is concerning, but it is one of the main reasons why Labour argued for an increase in the PACE money. A key way to ensure that people secure continuing employment is for employers to tell the Government early enough of their intentions. The banks that face job losses should be encouraged to get in touch with the Scottish Government at an early stage and outline their proposals not just to the Government but to the workforce.

There are many people around Scotland in the financial sector who are worried about the future—and rightly so—but they could be helped a lot more if discussions with PACE were encouraged. That fact applies particularly to the Lloyds Banking Group, which has massive duplication. I think that I am right in saying that there are branches of both Lloyds TSB and Halifax Bank of Scotland in 150 towns throughout Scotland. That is certainly the case in Kirkintilloch, in my constituency. In one section of the Cowgate, the Bank of Scotland sits next door to the Clydesdale Bank, which is next door to the Royal Bank of Scotland. Two spots further along is Lloyds TSB. The Lloyds TSB branch and the Bank of Scotland branch will not both survive—one of them will close. Although they do not employ large numbers of people, to lose those jobs from a town the size of Kirkintilloch would have the same effect as the one referred to by Dr McKee, albeit on a smaller scale.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Will the member be honest with his constituents and tell them that he actively encouraged the merger between Lloyds TSB and HBOS?

David Whitton (Labour, Strathkelvin and Bearsden)

I thought that this was an occasion on which members would speak as one. There is no reason why Lloyds TSB and HBOS should not have come together. It was the right thing to do in the circumstances. The UK Government is to be commended for its investment to enable jobs in those banks, such as they are, to be saved. I do not share Mr Purvis's rather narrow view.

I welcome Mr Mather's announcement that there is to be a task force and that the issue will come up at the next meeting of FiSAB and at the FSE dinner on 16 March. All of those steps should be welcomed.

I pay particular attention to the message from Bill Jamieson, The Scotsman's esteemed financial commentator, who yesterday published a seven-point plan for the new chairman of the Royal Bank of Scotland. The key point was confidence: he stressed that the new chairman should be open and honest with his workforce and should bring them into the deliberations in the bank. By the new chairman taking staff with him, the Royal Bank would be restored to the position that it previously enjoyed.

It is not all doom and gloom. Other members have mentioned the wide variety of sectors in financial services in Scotland, some of which are doing better than banking. There are places for people who will be displaced by the banking crisis. We should do all that we can to ensure that the impact of the downturn is mitigated as much as possible. I welcome the Liberal motion.

Alasdair Morgan (Scottish National Party, South of Scotland)

We move to the wind-up speeches. Time is on members' side.

Gavin Brown (Conservative, Lothians)

Well, in that case— The Lib Dem proposition is a pragmatic one for an industry that has for some time been the jewel in Scotland's crown. I welcome the move away from what was initially a banking sector task force, as outlined by the Liberals, to a financial services sector task force. That is important, because about 45 per cent of the jobs in the financial sector are non-banking jobs. Scotland is strong on life and pensions, general insurance and asset and investment management. Those sectors could also face tough times, so it is important to consider the financial sector as opposed to simply the banking sector.

Labour members have said that they will support the Conservative amendment. We welcome that backing and will support their amendment too. Dr McKee did not think that there was much point in the Conservative amendment, but I shall explain why it is important. If ministers report back to Parliament on the number of jobs in the financial sector, it will allow all members to see the reality on the ground, and if we use one consistent measurement, we will be able to see the trends and changes.

There is big inconsistency in how jobs are measured at the moment: Dr McKee talked about a figure of 86,000 jobs, which comes from "The Strategy for the Financial Services Industry in Scotland 2008 Annual Report", yet his own minister, in the same debate, has talked about 91,000 jobs and Scottish Financial Enterprise's website mentions a figure of 100,000. There is a disparity of 14,000. Only one of the three figures can be right, which is why our amendment is phrased as it is. I do not know which figure is right, but if we have one consistent way of measuring what is happening on the ground, we will be able to see what is going on and take action.

Ian McKee (Scottish National Party, Lothians)

My point was not about the people who collect the figures but about the people who provide them. I have it on good authority that various firms change their habits from year to year. For example, the financial services figures for Edinburgh show a decline of about 25 per cent between 2003 and 2007, yet no one in Edinburgh noticed a 25 per cent loss of jobs in the sector or a diminution in the economy—it was simply that the firms changed their ways of reporting. The people who collect the figures cannot check how the firms are reporting because of confidentiality issues.

Gavin Brown (Conservative, Lothians)

Dr McKee makes a fair point. The way in which the figures were collected changed between 2002 and 2006, but that only underlines the importance of our amendment. We must have one clear and consistent way of reporting the figures. Whichever measure the Government and FiSAB choose to use is fine as long as it is consistent and the companies that collect the data do not change their methods over the course of their reporting to the Parliament. I agree with Dr McKee that such changes have been a problem, which is why our amendment is even more important today than it would have been in the past.

It is also important to talk about direct and indirect jobs. The Scottish Financial Enterprise figures refer to 100,000 direct jobs in Scotland and almost 100,000 indirect jobs. Obviously, there is a symbiotic relationship between the two figures, with one having a clear effect on the other.

The strengths of the proposal for the task force are many and varied. Having an existing body—particularly a well-respected body such as FiSAB—look at the issue will command support in the chamber, especially given the fact that FiSAB consists of a range of stakeholders including industry representatives, Government, academia and the unions.

The minutes of FiSAB meetings reveal that there is also a group called the financial services implementation group—FiSIG—which reports to FiSAB on strategy. It used to have a skills delivery group, but it completed its work and is not currently operating. That group looked into skills and may be able to use its knowledge to provide good insight. One of the proposals from FiSIG, back in September before the storm really hit, was that we should have a careers-focused financial services week. That was a sensible idea then, and it seems even more sensible now.

I was not trying to catch Mr Purvis out earlier; I was genuinely interested to know whether discussions have taken place. There are some serious big hitters in FiSAB, and I am keen to know their view on the proposal. Do they think that it is meaningful? What do they think that they can realistically give to the project in terms of their time and so on? What can they realistically do? If we set realistic aims and remain focused, it could make a difference. If what is resolved by Parliament today can provide a degree of help, it is certainly worth it.

John Park (Labour, Mid Scotland and Fife)

I welcome the consensus that we have achieved in the debate this morning. I particularly welcome Gavin Brown's and Derek Brownlee's comments about the role of the trade unions—I feel a leaflet coming on. Something political might come out of the tone that we have heard over the past week, which would do us a world of good.

As members have said, there is a lot of information out there and it will be some time before we know what impact the financial crisis will have on the size, shape and focus of Scotland's financial services industry in the future. Our financial services sector contributes about £7 billion a year in gross domestic product and grew by 96 per cent—it almost doubled—between 1998 and 2007. That is quite a frightening figure. In addition, the sector in Scotland accounted for 8 per cent of the total employment in the financial services sector in the United Kingdom with, as Gavin Brown said, life assurance and pensions in Scotland accounting for 19 per cent of all employment in those areas throughout the United Kingdom. Those figures give a stark indication of the sector's contribution to Scotland. We should not lose sight of that.

Jeremy Purvis made some good points in highlighting significant figures concerning liabilities and the strategy that has brought us to where we are. We are only now beginning to understand how the problems arose. Behind those figures are communities and workers who have benefited from the financial services sector. Today's debate is about how we can help them.

People, especially in mid-Scotland and Fife, will recall how, in the late 1980s and early 1990s, a great number of companies started up—Visa call centres and financial services call centres—which took up the slack from other areas of the economy in which people were losing their jobs, such as the defence sector. They allowed women, in particular, to work for the first time on a part-time basis so that they could contribute to their families' finances in a way that they had been unable to do in the past. Those call centres now contribute significantly to employment in Scotland, so people will be genuinely concerned about their future. Taken together as the sum of the parts they make a huge contribution to those families and their communities, which is again something that we must not lose sight of.

When the call centres were being developed, people liked the sound of a Scottish or Irish accent; however, we have since seen changes in the approach to delivery of such services, including the offshoring of jobs and the automation of services. The reality is that cost is a huge factor to those companies, and it will be a huge factor in how the sector is restructured.

I would appreciate some detail from the cabinet secretary about what is going to happen at the meeting next week. How are things going to be structured and how will the matter be raised? What is likely to come out of that meeting? We have heard some good suggestions today, especially from Gavin Brown.

My colleagues David Whitton and Sarah Boyack spoke about the importance to the sector of skills and apprenticeships, and everyone knows my interest in those areas. The skills summit that was announced yesterday by the cabinet secretary as part of the budget will consider how we can increase the number of apprenticeships. We might also want to get financial services companies and banks to look into that. People who are involved in developing skills in the sector say that there has been less emphasis on banking skills, so perhaps we could consider apprenticeships in banking as a way to improve the skills in the sector in the longer term and to restore some confidence in the banking sector, which is what the wider public would like to see.

I will conclude on the implications of offshoring jobs, which has not been mentioned so far. We have had an interesting week in which people have been on strike throughout the country because of concerns about their employment and because of wider concerns about overseas workers. That has been driven by fear. We will face the same issue in the financial services sector if jobs in that sector move overseas. In the current economic situation, people are scared of losing their employment; they are frightened about what that would mean for their quality of life and for their families and communities. We must bear that in mind.

I have enjoyed today's debate. The speeches have been good, and the issues that have been raised are relevant to the concerns and needs of the people outside Parliament.

John Swinney (Scottish National Party, North Tayside)

Margaret Smith and I have come to an arrangement about the remainder of the speaking time. I will leave it as a surprise for members to discover what the balance will be for the next 25 minutes.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Sit down now.

John Swinney (Scottish National Party, North Tayside)

I do not think that that remark from Mr Purvis is in the spirit of consensus. I shall allow him to think about it for a little longer.

The debate has been productive and consensual, with the only discordant note being struck by Helen Eadie in her assault on the Liberal Democrats for what she believes they are doing to obstruct development of the financial services sector in Fife. That apart, it has been an excellent debate—we have managed to achieve consensus even in a debate in which David Whitton has taken part. That, in my opinion, is a minor miracle.

As part of my week-long crusade to build further consensus, I am able to share with Parliament the fact that another point of Labour's 15-point plan will be progressed. Point 9 of that 15-point plan is a request that the Government act immediately to recruit representatives from Her Majesty's Treasury and the Financial Services Authority to the Financial Services Advisory Board. I have to say to the Labour Party that the Treasury has, for a long time, been a member of the FiSAB organisation, and we appreciate the attendance of its representatives at the board meetings. At the meeting of FiSAB in September, we approved recommendations that we invite the Bank of England and the Financial Services Authority to take part, and with the same adviser status as the Treasury. Another point down, a couple more to go.

Gavin Brown noted the importance of data, as does the Conservative amendment. It is important that we have absolutely robust data that we all understand and share. The data that the Government has published and which inform our thinking on the financial services sector indicate that employment in the financial services sector in Scotland stood at 91,600 in 2007. Banking accounted for 54 per cent of that employment, which highlights the scale of the issue and the dependence on the banking sector. Obviously, the recent issues around the performance of the Royal Bank of Scotland and the merger of HBOS and Lloyds TSB raise substantial uncertainties in that respect. The life and pensions sector accounts for 15 per cent of employment, asset management accounts for 13 per cent, intermediation accounts for 12 per cent and general insurance accounts for 6 per cent.

None of us can predict what will happen in the sector. However, it is worth noting that Aegon UK's acquisition of Scottish Equitable resulted in employment growth in Scottish Equitable over the years. Similarly, the organisation that I used to work for, Scottish Amicable, was acquired by Prudential, and there are now more people employed in Scotland by that organisation than was the case beforehand. Of course, we have to be careful about the quality of that employment and we must ensure that the jobs are at a level of managerial and professional expertise that is consistent with those that existed previously, but the point is that acquisitions do not necessarily lead to employment loss. We have to be concerned that it might, however, which is why the proposal in the Liberal Democrats' motion extremely relevant.

On Gavin Brown's point about the strength of the statistics that we use, I say that the Government takes that seriously and will advance the research that is required to ensure that we have strong statistics.

David Whitton (Labour, Strathkelvin and Bearsden)

I have mentioned offshoring of jobs before, and John Park mentioned it in his speech. Has the cabinet secretary raised it with the officials of the banks with which he has had discussions?

John Swinney (Scottish National Party, North Tayside)

Offshoring of jobs is of concern to the Government, and we have raised it in our general discussions with the financial services sector. Obviously, we will continue to maintain a presence in that respect. There is substantial evidence to suggest, as Mr Park said, that some offshoring activity has been unproductive in terms of the quality of customer service. It might look good on a balance sheet, but if the quality of service does not meet customers' expectations, there is a penalty to pay. Mr Whitton's point is a fair one, and the Government will take it forward.

I want to speak about how the Liberal Democrats' proposals for FiSAB could fit into the infrastructure and architecture that we have in place for our dialogue with the financial services sector. As Mr Purvis said, FiSAB was launched in 2005 as a pioneering collaboration between the financial services industry, trade unions—which are fully involved in FiSAB—the Scottish Government, Scottish Enterprise and Universities Scotland. It is the custodian and the advocate of the strategy for the financial services industry in Scotland. I pay tribute to the previous Administration for establishing FiSAB, which is an important forum for dialogue between Government and industry. The SNP supported it in opposition and has taken it forward in government.

FiSIG—to which Mr Brown referred—was established at the same time as FiSAB. Its members come from governmental, trade union and industry organisations such as Unite the Union, Scottish Financial Enterprise and the Financial Services Skills Council. FiSIG meets every two months, so the criticism that we have somehow not had enough meetings on this subject is slightly wide of the mark. Although FiSAB last met in September, and meets again next Tuesday, FiSIG has been taking forward the operational priorities that FiSAB has established.

The First Minister has discussed with John Campbell, the chair of Scottish Financial Enterprise and the industry deputy chair of FiSAB, the proposal to establish a financial services jobs task force. Mr Campbell is fully supportive of the suggestion that that should be set up within the existing FiSAB arrangements, and ministers will develop that at the meeting of FiSAB on Tuesday. That gives us the opportunity to fully integrate the working of the financial services task force into the operations of FiSAB, to ensure the strategic direction of the industry and its workings, to implement those priorities through FiSIG and to undertake any additional activity that will be required to fulfil the aims of the financial services jobs task force.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

Does the cabinet secretary accept that there might be a new role for the public sector? If the people who are leaving the financial sector with considerable skills could be recruited by the public sector, that could be of considerable benefit to public sector agencies. That might also provide Government with a different role in this situation, in not looking purely at the private sector.

John Swinney (Scottish National Party, North Tayside)

That is a fair point, which also fits into the line of argument that we were advancing in the discussions around PACE yesterday. We are all agreed about what should be done in the circumstances. If there is employment loss, the first and best thing to do is to try to redeploy. There may well be opportunities for the public sector to absorb some of the skilled people that Mr Purvis mentions.

On trade union involvement, a few weeks ago John Park asked the First Minister to meet Unite to discuss the social charter. On Tuesday, after the FiSAB meeting, the First Minister will meet Rob MacGregor of Unite to discuss the very point that Mr Park raised.

I assure Parliament of the Government's willingness, along with the various organisations that work in this area, to ensure that we progress the issues in our proactive financial services strategy and those that are being raised by the circumstances that we now face.

Sarah Boyack and Angela Constance asked me to set out some of the work that the Government is undertaking to provide support for the financial services sector and expansion of opportunities in the Scottish economy. Angela Constance made a number of points about the implications of the recent developments in the industry for her Livingstone constituency, and the importance of supporting jobs in that area. Sarah Boyack spoke in similar terms about Edinburgh—I am sure that Margaret Smith will say more on that matter, given that she represents Edinburgh West, which has a substantial amount of financial services organisations headquartered around the Gyle and Edinburgh Park.

We are working to ensure that the sector is well supported. We recognise the importance of the skills agenda, which is why it is at the heart of what we do. We also recognise Sarah Boyack's fair point that, in the current economic climate, some commercial developments will not proceed—not just in the financial services sector, but elsewhere—because it will be impossible to borrow the money or there will not be enough confidence in the markets. That is part of the general economic conditions, which the Government will, in collaboration with the United Kingdom Government, work to try to address.

This morning, we had some welcome news on the availability of finance in the markets with the Royal Bank of Scotland's announcement that it is making available £250 million of additional funding to small and medium-sized companies in Scotland as part of the UK-wide £3 billion package. The Government welcomes that. We have already engaged in dialogue with the United Kingdom Government about other issues of access to finance. Mr Mather was involved in the launch and roll-out of the measures that Lord Mandelson announced in January, and the Government is actively promoting those opportunities throughout the marketplace in Scotland.

I have been in regular correspondence with the Chancellor of the Exchequer to offer the Scottish Government's assistance, co-operation and willingness to work with the UK Government through UK Financial Investments Ltd, which is the organisation that manages the Government's shareholding in the banks. We seek to ensure that the genuinely and generally held opinion within the Parliament—that we should ensure that the investment and support that the banking sector has been given from the public purse percolates through the economy to the people whom we represent, who are facing tough times in relation to financial issues and arrangements with the banks—is properly reflected and that we get access to a climate in which the banks can lend again.

I know the importance of that from my constituency experience. I had a conversation on Friday with a company in my constituency that is finding it extremely difficult to find its way through its workings with the bank and to secure appropriate lending. If that is the case in my constituency, it will be the case around the country. We will act on that material issue as part of the Government's economic recovery programme, and I will discuss the issues further with the banks. I have already been in contact with them on that subject, but we will reiterate the messages.

The Government develops many of its interventions in the financial services sector through collaboration between our officials and the sector-specific teams in Scottish Enterprise and Scottish Development International, and there are exceptionally close ties between those organisations and the industry. I am sure that that will give members confidence that we are in a position to maximise the opportunities to ensure that we withstand the difficulties of the economic climate and secure the forward planning that will lead to investment in the financial services sector.

It is understandable that much of the debate has focused on the unease and anxiety that exists around the financial services sector, but I caution members that it is not all doom and gloom. There are difficulties, but there are also announcements of expansion. Adjacent to my constituency—in my colleague Roseanna Cunningham's constituency—in the city of Perth, Norwich Union has set out an agenda of development and expansion. That is significant, because general insurance has not been a predominant sector in Scotland; we have been more predominant in the banking, life and pensions sectors. Norwich Union has activities in Bishopbriggs, in Mr Whitton's constituency, and we welcome that.

In addition, Aberdeen Asset Management announced at the end of last year that it will become Britain's biggest independent fund manager after a £250 million deal to acquire the majority of the global fund management business of Credit Suisse.

We have many jewels in the crown of our industry. At the same time as we have had difficult news around some of the banks, some of our life and pensions companies continue to make significant contributions to employment growth and the economy. We welcome that. The Government will support the industry, and the suggestion from the Liberal Democrats will be taken forward as part of that activity.

Margaret Smith (Liberal Democrat, Edinburgh West)

We have had a good debate this morning. I welcome the general agreement about the pragmatic suggestion from the Liberal Democrats. The support of members throughout the chamber is much to be welcomed. It is a recognition of the seriousness of the situation that we face. We all face an uncertain future in the recession, but the people at the forefront of our minds today are those who work in the finance sector, for whom this is a particularly uncertain time.

I welcome the helpful contributions of the Cabinet Secretary for Finance and Sustainable Growth. In his closing remarks, he brought us up to speed with some of the partnership working that is going on with the Treasury, which is also much to be welcomed.

The debate has been quite consensual, although John Park should not worry too much about consensus breaking out everywhere while we have Helen Eadie on the back benches. Thank goodness for the words of wisdom that were spoken by Ian McKee and others.

As the cabinet secretary said, my Edinburgh West constituency includes the global headquarters of the Royal Bank of Scotland and a variety of other banks and life and pensions offices at the Gyle, Edinburgh Park and elsewhere. For the past decade, those companies have been instrumental and fundamental in building the growth and success of the city. In Scotland as a whole, there has been 96 per cent growth in the financial sector in that time. Many members made the point that, although the sector has been at the root of much of the success of the city and of Scotland in the past years, challenges arise with overreliance on any particular sector.

Some months ago, I was asked to speak at an event in my constituency about the importance of volunteering. I was introduced to a new citizens advice bureau volunteer, who told me that he had taken early retirement from a bank and was giving debt advice to local residents. He said that he was doing what he originally did at the bank, which was to give his customers advice about how they could avoid getting into debt and how they could get out of it. By the time he left the bank, that had turned around and his job was to contribute to getting people into debt through more and more credit, and keeping them there.

It seems to me that what that volunteer said encapsulates what our banking system has lost: it has lost trust, it has lost reputation, and it has lost its way. Radical measures are called for so that we can return our banking and finance sector to the position that it once held, and restore the public confidence that it once had. As a Parliament, we have only some levers to assist with that. Our suggestion today is one of the many ways in which Parliament and the Government can assist, but Sarah Boyack was right to focus on the importance of restoring confidence in the sector and, indeed, in the city that she and I represent.

The banks have a real responsibility. I agree with John McFall's comments from this morning, in which he condemned any bank that pays out large bonuses to bank executives courtesy of taxpayers, as if it is business as usual and nothing has changed.

It is estimated—depending on whom we listen to—that in Edinburgh 35,000 people are directly employed by the finance sector and a further 56,000 jobs are indirectly affected, including jobs in legal companies, advertising, independent schools, construction and a variety of retail and service industries. That is 27 per cent of the capital's workforce. Many of those people are my constituents; all of them are worried for the future of their jobs. Edinburgh is collectively holding its breath. People are concerned about the even wider ramifications of job losses on the city's council services, on support for the cultural and voluntary sectors, and on the city's international reputation, which has long been associated with finance.

Our reliance on the sector means that the loss of jobs and HQ functions will hit us hard, although I must note, as other members have, that there have been fewer job losses than we feared, and that the losses have been focused on the construction industry. There have been indirect job losses rather than direct ones, but we will have to look to the future to see how that pans out.

David Whitton (Labour, Strathkelvin and Bearsden)

I appreciate the points that Margaret Smith is making, as her area covers a large section of the financial services industry. Does she recognise—I am sure she does—that the whole of Scotland has been affected and that Glasgow has a financial services district that contains offices of many of the companies that she is talking about?

Margaret Smith (Liberal Democrat, Edinburgh West)

David Whitton has mentioned what I was coming to.

I agree with the City of Edinburgh Council's head of city development that diversification is reasonable to ensure that we are not again so exposed to a downturn in one sector, and that our main focus now must be on protecting as many jobs as we can in Edinburgh, Glasgow, Perth and throughout Scotland. So far, the restructuring has been less dynamic than was feared, but we should not underestimate the concern that exists, or what might happen.

We all know a lot of people in our constituencies, as well as the people who work in the finance industry, who have been badly affected by what has unfolded; for example, staff who have put their bonuses into shares, shareholders and pension holders. A range of people who do not have money available to spend have been badly affected, which also has an impact on our economy.

It is clear that the finance sector is so important to Scotland's economy that we must do all we can to support and maintain jobs in it. As we have heard, about 90,000 jobs throughout Scotland are directly affected. Therefore, I welcome the Government's decision to accept the Liberal Democrats' suggestion on a finance sector jobs task force and Parliament's support for it. Given that FiSAB is already in operation, it makes sense to charge it with taking on that important task. I know that the Government will make a strong case for setting up the task force when FiSAB meets next week, and I welcome the comments that John Campbell has made. I also welcome the fact that Jim Mather and John Swinney have agreed that the task force should meet regularly. It should not be a talking shop; rather, it should focus on the problems and act.

Labour's amendment is reasonable—we totally accept John Park's point about the importance of trade union representation on the body. We also think that it would be useful if colleges and local authorities were represented on it. Like David Whitton, I welcome the comments that the cabinet secretary made yesterday on extra money for PACE. There will undoubtedly be a number of relevant issues to be considered in trying to make available relevant skills training and retraining opportunities. A highly trained work force might go into new and emerging sectors such as the life sciences sector or green jobs. Gavin Brown made a good point about previous work that FiSIG has undertaken and the part that it might be able to play.

The City of Edinburgh Council has already set up a cross-party group to consider the impact on the city, and a high-level group involving SDI, Scottish Enterprise and the Scottish financial sector has been set up to provide a fast interagency response as the situation develops. I am sure that the other councils that are most affected will be doing something similar. Given the different circumstances, it might be useful for individual councils as well as the Convention of Scottish Local Authorities to take a direct part in the discussions.

Councils already face significant pressures as a result of the credit crunch. They may have already seen reductions in capital receipts because of developments—such as that at Fountainbridge which Sarah Boyack mentioned, which got a council component through EDI—not going ahead as a result of greater demands for their services. I think that there will be an impact.

In Edinburgh, one of our major concerns is obviously the lack of affordable housing. In my constituency, up to 400 people can be bidding for a single council house, which is a major problem. If people lose jobs, they will lose their houses, and there will be even more strain on an already acute situation. That is why I support the council's recent request to the Government for funding for council-house building. I ask the Government to consider the opportunities that exist to acquire 1,000 off-the-shelf homes from developers in Edinburgh.

This is a difficult time for the sector and the general economic news is not good, but we should not lose sight of the fact that almost half of Scotland's finance companies remain optimistic or very optimistic about their future, and that 20 per cent plan to recruit. The figures are down from those of previous years, but it is important that we do not lose sight of the fact that all is not doom and gloom. Announcements such as have been made by the Royal Bank of Scotland today will be welcome to businesses in our constituencies, which know that the big issue for them right now is access to funds to help cash flows, so that they can hold on to jobs and work their way out of difficulties and recession.

The Centre for Cities research group has given Edinburgh an amber risk rating for job losses, but it is worth noting that it also reported that the city is in a good position because of its strong employment rates, wide range of industries and highly skilled population. That could be said about other places as well.

It is not our job to talk down the finance industry and those who work in it.

Alex Fergusson (None, Galloway and Upper Nithsdale)

You must close now, please.

Margaret Smith (Liberal Democrat, Edinburgh West)

Our job is to support those who work in the finance industry. I welcome the speeches and comments that have been made today.

Question Time — Scottish Executive — General Questions

Christine Grahame (Scottish National Party, South of Scotland)

To ask the Scottish Government whether reported comments by an official spokesperson for the First Minister in relation to the Act of Settlement 1701 reflect Scottish Government policy and, if so, what representations it has made to the United Kingdom Government. (S3O-5831)

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

The First Minister and the Government have made it clear that the Act of Settlement is discriminatory and that it should be repealed. On 26 March 2008, the First Minister wrote to the Secretary of State for Justice, Jack Straw, to make clear the Government's support for its repeal. The Parliament's unanimous support in 1999 for a motion on the repeal of the Act of Settlement makes it clear that the issue cuts across political boundaries.

Christine Grahame (Scottish National Party, South of Scotland)

In light of the minister's full response, I ask him to continue his endeavours to accelerate matters, as the issue has been debated for a very long time. I see the Minister for Environment, Mike Russell, in the chamber. He was the first to raise the issue in Parliament. Does the minister agree that there is dismay at the lack of progress on the matter at Westminster, despite kind words?

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

I well remember listening to a slightly younger Mike Russell in 1999, when he spoke to and moved motion S1M-117, which stated:

"That the Parliament believes that the discrimination contained in the Act of Settlement has no place in our modern society, expresses its wish that those discriminatory aspects of the Act be repealed, and affirms its view that Scottish society must not disbar participation in any aspect of our national life on the grounds of religion."

I cannot improve on the words of Michael Russell.

Michael Matheson (Scottish National Party, Falkirk West)

To ask the Scottish Government whether it will consider extending the range of football clubs that can benefit from the cashback for communities programme. (S3O-5836)

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

We have already invested £2.5 million of cashback for communities funding, which is money straight out of the pockets of gangsters, in a significant programme of football activities. That funding is now giving thousands of young people more choices and chances. I will shortly announce how we will invest a further £2 million in sporting facilities that are aimed primarily at football. Every non-professional football club in Scotland was given the chance to bid for a share of that money, and I expect to see a great many clubs throughout Scotland benefiting from that significant investment.

Michael Matheson (Scottish National Party, Falkirk West)

The cabinet secretary will be aware of the valuable role that Stenhousemuir Football Club plays in providing access to sports facilities in my constituency. Between 3,000 and 4,000 youngsters use its facilities each week. However, it is prevented from bidding for money from the current cashback for communities programme. Will the cabinet secretary consider allowing small community-based clubs in Scotland to bid for money from that programme in order to enhance their facilities? That would benefit the wider community.

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

I thank Michael Matheson for bringing the matter to my attention. Obviously, I have seen the good work that is being done at Stenhousemuir.

The criteria that we set for the sporting facilities fund were considered for non-professional clubs. I recognise that something is askance. Although Stenhousemuir also acts as a community club, it is classified as a professional club and is thus precluded from applying for funding. I give the member an undertaking that we will seek to review the matter. It is clear that professional clubs that are multimillion pound organisations do not deserve the same level of public support as smaller clubs do. Such clubs doubtless have ambitions, but perhaps they are more restricted or less global. We accept that Stenhousemuir is doing good work and we will seek to try to address the issue in future funding.

Jeremy Purvis (Liberal Democrat, Tweeddale, Ettrick and Lauderdale)

The cabinet secretary will know that in the Borders and Midlothian amateur clubs have done excellent work with youth groups by taking advantage of the programme. I certainly do not oppose extending the programme to other clubs or facilities, but does he agree that there is value in sustaining support for clubs that have already received support and in allowing midnight football and other work to carry on into the future? Does he agree that sustainability should be at the heart of the funding programme?

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

Absolutely. The purpose of the cashback for communities programme is to deal with a wide spectrum of matters. We have put in an initial tranche of money to support the development of football, for example in the midnight leagues, and we intend to extend another football programme to secondaries 2 and 3. Equally, we have put in money specifically for the girls game to try to ensure that girls continue into the women's game. We have also put money into the facilities fund. It is a question of balance. We are working with national organisations so that football schemes can be rolled out in all 32 local authority areas. Equally, we are trying to ensure that we grow the game in Scotland, perhaps from the bottom up, rather than concentrating on the success of a couple of clubs at the top.

Sarah Boyack (Labour, Edinburgh Central)

To ask the Scottish Executive what financial incentives it will bring forward for householders to stimulate a mass market for microrenewable technology and energy efficiency measures. (S3O-5780)

Jim Mather (Scottish National Party, Argyll and Bute)

In addition to the continued energy efficiency and microgeneration advice and grant support that are offered through our energy saving Scotland advice network, we have put forward new proposals for home insulation in our budget.

Sarah Boyack (Labour, Edinburgh Central)

Does the minister accept that existing microgeneration measures are not sufficient to deliver a mass market, given the obstacle of planning red tape? Does he have a date for the introduction of his much-delayed statutory instrument on permitted development rights? Is he aware that renewables companies are warning that they will have to make staff redundant because of the delays? Has he decided yet whether the guidelines will be based on sensible decibel levels rather than on arbitrary distance limits, which would rule out most housing in Scotland?

Jim Mather (Scottish National Party, Argyll and Bute)

The proposals will be laid before Parliament on Monday.

Ian McKee (Scottish National Party, Lothians)

What other, non-financial measures does the Government plan to introduce to improve the take-up of microrenewable technology and energy efficiency measures?

Jim Mather (Scottish National Party, Argyll and Bute)

Those measures include the work that we are doing with the Scottish Building Federation and others to identify a strategy for the sector. We have now run two full sessions with the construction sector and we are pushing it in that direction.

Marlyn Glen (Labour, North East Scotland)

To ask the Scottish Executive when the Cabinet Secretary for Justice last met the chief constable of Tayside Police. (S3O-5789)

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

I last met Chief Constable Kevin Mathieson on 28 October 2008, when we discussed recent developments within Tayside Police and a number of other police-related topics. We also met very briefly on 16 January 2009, when I opened a new forensic teaching facility at the University of Abertay Dundee.

Marlyn Glen (Labour, North East Scotland)

Did the cabinet secretary also discuss the innovative and effective Tayside pilot that has brought medical practitioners into custody suites, under the responsibility of the national health service? Does he agree that that is an essential service for people with disabilities or for those who are on regular medication while they are in custody?

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

That particular matter was not discussed, but I am grateful to the member for drawing it to my attention. The Government takes the view that we need to ensure that agencies work together to try to solve the problem. Clearly, many people face difficulties and the police have difficulties dealing with them. If we ensure that all the organisations work together to achieve a solution to the problem, that is to be supported. I am more than happy to consider the issue further if the member wishes to make further representations on it. In the main, I am delighted that Chief Constable Mathieson is getting on and doing what is sensible.

Andrew Welsh (Scottish National Party, Angus)

In the cabinet secretary's talks with the chief constable of Tayside Police, was he made aware of the positive work that is being done in Angus, where the Arbroath task force, under the banner of operation Inchcape, is creating a highly visible police presence and working with the Arbroath community safety partnership and a range of other local people and organisations—including the national health service, community wardens and parents—to target and reduce youth crime, offending and drugs misuse? Will he consider that kind of joint, targeted, co-ordinated and highly visible strategy as a model that could be extended to elsewhere in Angus and nationally?

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

Again, that particular matter did not come up in my conversations, but I am aware of that on-going scheme. I am also aware that, for several years, Sheriff Stein has been extremely innovative in trying to resolve matters. The issue is about agencies working together to solve problems and to divert youngsters who are on the cusp of offending, but it is also about ensuring that the police are there to deal with youngsters who offend and cause a nuisance in their communities. I am more than happy to consider the scheme in greater detail. I commend the good work of the chief constable of Tayside Police, the agencies with which he is collaborating and, in particular, Sheriff Stein, who for many years has been leading the charge.

Richard Simpson (Labour, Mid Scotland and Fife)

When the cabinet secretary next meets the chief constable for Tayside Police or other chief constables, will he discuss the treatment of people with substance misuse problems in custody suites? There is still a problem with treatment being interrupted when people go into custody suites because treatments other than methadone are used.

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

I am more than happy to ensure that those matters are discussed. I discussed elements of substance abuse with Chief Constable Mathieson. I accept that there are difficulties and practical problems for the police, but there is no one simple solution that will resolve those. A lot depends on the nature of the police custody suite to which a person is taken—for example, whether it is in a large urban area with easy access to health service facilities. Given the interaction between drug abuse and offending, the problem is significant and must be considered. I certainly undertake to continue to have dialogue with the Association of Chief Police Officers in Scotland on the issue to try to ensure that our communities are made safer.

Mary Mulligan (Labour, Linlithgow)

To ask the Scottish Executive what steps are being taken to implement the recommendations of the research, "Evaluation of the National Mortgage to Rent Scheme". (S3O-5807)

Stewart Maxwell (Scottish National Party, West of Scotland)

As I announced on 21 January, the Scottish Government will revise the mortgage to rent scheme in light of the evaluation's recommendations and operational experience. The revised scheme will be open for applications from 16 March.

Mary Mulligan (Labour, Linlithgow)

The minister referred to his statement to the Parliament, in which he acknowledged that there are several challenges. Will he therefore say a little more about how the Scottish Government will ensure that there are sufficient landlords to meet demand; that we increase public awareness of the scheme; and that a framework is introduced for agreements between the Scottish Government and local authorities or housing association landlords?

Stewart Maxwell (Scottish National Party, West of Scotland)

We are making several of the changes that were recommended in the evaluation report. There were 23 recommendations, three of which were for the United Kingdom Government. Of the other 20, we have rejected only two outright—one because it would lead to increased bureaucracy for applicants, which we are trying to reduce, and the other because it would cause other difficulties. We will produce new advertising for the scheme to make people aware of the changes. We are raising awareness through the website and there will be a telephone helpline so that people can access information. We are speeding up the application process by allowing people to apply to the revised mortgage to rent scheme after three months of being in arrears, whereas at present they have to wait until a repossession order is sought for their property. All in all, the new scheme will provide a great deal of assistance to people throughout the country. We hope that about 600 people will be helped over two years.

Michael Russell (Scottish National Party, South of Scotland)

I stress that, as the member knows, we are not yet at the proposal stage. I plan to meet local fishermen and representatives of the Barra and Vatersay community to hear their concerns on the potential designation of the two locations in the coming weeks. Under European rules, designation must be based on scientific evidence alone, but our professional advice is that, were the designation to come about, it would not interfere with responsible fishing activities. Scotland is rich in natural resources, which we need to protect for this and future generations, including the communities who rely on the marine environment for their living. The rights and responsibilities of communities and how they express those are very important.

Alasdair Allan (Scottish National Party, Western Isles)

I thank the minister for the efforts that he is making on the issue. Will he agree to hold a meeting, perhaps by videolink, before the formal consultation opens, and to press home the argument that local fishing and commercial interests must be safeguarded? I will raise that argument with the European Commission on a trip to Brussels in the coming few days.

Michael Russell (Scottish National Party, South of Scotland)

I can do better than that—I can offer a physical presence as opposed to just a video presence, although some people might not think that that is a better offer. Seriously, I have said to the community that I am happy to hold a videoconference with the fishermen. I am also happy to visit Barra and will make arrangements to do so in the next few weeks.

As well as meeting the member repeatedly to discuss the issue, I have met Councillor Donald Manford, who has made strong representations on the matter, and have heard from the MP, Angus Brendan MacNeil. I very much believe that the views of the community on the matter are paramount. There is no consultation at present. I will talk to the community before any consultation takes place, should one come along. I hope that we can have a constructive discussion, both about democracy, which is extremely important, and about how the community can benefit from designation rather than see it as a burden.

Jamie McGrigor (Conservative, Highlands and Islands)

The minister might be aware that I initiated a members' business debate when a similar special area of conservation proposal for those areas emerged some years ago. That proposal was subsequently dropped. Does the minister agree that, although we must seek to protect features such as coral reefs, a total ban on all fishing would be disproportionate and would certainly not be justified by science? After all, the reefs in question have outlived many generations of fishermen. A ban on fishing would have serious financial implications for the already fragile economies of Barra, Vatersay, Eriskay and Uist.

Michael Russell (Scottish National Party, South of Scotland)

There is no question of a ban on fishing as a result of any such designation—I put that firmly on the record—but, as with all such issues worldwide, there is a question of balance. A balance must be struck between the national significance of the features that we are talking about and the socioeconomic interests of the community. As I have often said in public, it is a flaw of European legislation that socioeconomic issues are not germane when it comes to lodging objections to proposals. We need to have a balanced discussion.

I stress that there is no question of a ban on fishing or of an imposition on earning a livelihood in Barra or in the waters around Barra.

Shona Robison (Scottish National Party, Dundee East)

The Cabinet Secretary for Health and Wellbeing recently met the healthy living centre alliance and had a constructive discussion on the future of healthy living centres.

In the long term, we want to see effective healthy living centres continue their good work where that fits with local funders' assessment of people's needs and local service priorities. Some local funding decisions for 2009-10 have already been signalled. Further decisions will need to be determined now that the budget positions for 2009-10 have been resolved.

Karen Whitefield (Labour, Airdrie and Shotts)

I am grateful to the minister and to the cabinet secretary for their interest in the subject. Does the minister agree that healthy living centres have made a positive contribution to communities across Scotland, and that there is a need to guarantee long-term, sustainable funding to allow them to continue? Will she consider what funding could be made available to projects such as getting better together in Shotts to enable them to extend their services to other communities?

Shona Robison (Scottish National Party, Dundee East)

I agree that healthy living centres make a positive contribution. We established a transition fund to give local partners time to consider long-term, sustainable funding. I am well aware of the excellent work that getting better together provides in Shotts and know that local partners are well ahead in their discussions to resolve the provision of sustainable funding for that project. I make the point that the transition fund that we established has allowed such discussions to take place. That is in marked contrast to the position under the previous Administration, when six healthy living centres were allowed to close. We have provided transition funding to enable those centres to have a future.

Christina McKelvie (Scottish National Party, Central Scotland)

To ask the Scottish Government what support it has provided for police and firefighters' pensions. (S3O-5838)

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

Police and fire pension costs are provided for within the local government settlement. However, we are making available an extra £32.8 million this year and £22.3 million in 2009-10 to meet the additional costs of changes in the commutation rates for police and fire officers.

In addition, we will provide an extra £20 million in 2009-10, and the local government family will contribute £20 million, to meet the additional pension costs that will arise from the increased number of retirals in that year.

That amounts to an extra £32.8 million in 2008-09 and £42.3 million in 2009-10. Together with the £20 million share from local government, that brings the total extra funding available to £95 million.

Christina McKelvie (Scottish National Party, Central Scotland)

Does the cabinet secretary agree that it is right and proper that employers take cognisance of the behaviour of their employees, and of any criminal behaviour in particular? Does he agree that it is disgraceful that a convicted rapist is using legal aid to seek to restore his pension rights? Will he consider amending the legal aid rules?

Kenny MacAskill (Scottish National Party, Edinburgh East and Musselburgh)

I cannot amend legal aid rules, as they are dealt with by the Scottish Legal Aid Board, but I can tell the member that the Government is concerned about the matter. In a world of finite resources, and in which there is pressure on legal aid, we wish legal aid to go to those who have suffered great injustice, as opposed to those who have perpetrated injustice. I will discuss those matters with the chief executive of the Scottish Legal Aid Board.

First Minister's Question Time

Iain Gray (Labour, East Lothian)

To ask the First Minister what engagements he has planned for the rest of the day. (S3F-1425)

Alex Salmond (Scottish National Party, Gordon)

Later today I have engagements to take forward the Government's programme for Scotland, which includes the implementation of the budget that was so resoundingly passed by virtually the entire Parliament yesterday.

Iain Gray (Labour, East Lothian)

That is exactly what I would like to explore with the First Minister. Yesterday, the Parliament put aside political differences to pass the Budget (Scotland) (No 3) Bill. The money is in place, but what will the First Minister do to turn it into schools, hospitals, houses and jobs for construction workers?

Alex Salmond (Scottish National Party, Gordon)

Thankfully, because the Parliament passed the budget bill, we now have the opportunity to combat recession in Scotland. That will include, for example, the accelerated capital investment that will generate 5,000 jobs in Scotland; the accelerated capital for town centres around Scotland that will generate jobs in four figures; and—yes—the additional opportunities in training that will give young people in Scotland an opportunity. The Parliament and the Government will do everything within their power to combat recession in Scotland.

Iain Gray (Labour, East Lothian)

I agree that the money is in place, but it is a matter of what is done with it. Despite the sound and the fury of the past week, we should not forget the Finance Committee's advice in its budget report that

"the Scottish Government should consider all available funding models"

for capital investment. We have waited two years for the Scottish Futures Trust, and it has built nothing. Will the First Minister now give up on it and get Scotland building?

Alex Salmond (Scottish National Party, Gordon)

There are record capital allocations in the budget, but with regard to the Labour Party's continuing love affair with private finance initiatives and public-private partnerships, I suggest that Mr Gray casts an eye at the headlines south of the border.

On 26 January, the Press Association said, "Recession halts billions worth of public projects" because of problems in PFI. The Guardian said, "Government may have to take on risk of PFI deals" and "deals may have to be underwritten", and the Daily Express said, "Crunch hits PFI".

If Iain Gray and the Labour Party genuinely want to give us the power to ensure that we can increase capital investment across the range of projects in Scotland, they should vote for the motion on borrowing powers at 5 o'clock.

Iain Gray (Labour, East Lothian)

Professor John Kay said that the not-for-profit distribution method that the Scottish National Party dreamt up was "PFI with window dressing". There is no difference there at all—we should look back to before the recession.

I do not think that the First Minister understands his responsibility in this matter. Government figures for projects that are in the investment pipeline show that in 2007, under Labour, construction projects were worth £1.3 billion. Last year, under the SNP, that plummeted to £300 million. In one year, £1 billion worth of construction was lost to the Scottish economy, along with 20,000 jobs, while Mr Salmond fiddled with his futures trust.

In Scotland, the credit crunch comes on top of the Salmond slump. How many more jobs have to go before the Government wises up and starts building something?

Alex Salmond (Scottish National Party, Gordon)

Iain Gray is not particularly in command of his subject. Professor John Kay is one of the most long-standing and trenchant critics of PFI in the United Kingdom. The Government's capital budget is not £300 million; it is £3 billion injected into the Scottish economy year after year.

In the new atmosphere of consensus breaking out across the chamber, I tell Iain Gray that everyone has to contribute to it. I am afraid to say that in answer to Iain Gray on 8 January, I rather misled the chamber about the number of school projects that had been completed under this Administration. I said that it was 71, but I now understand that that was the figure for 2008. The real figure is actually 150 schools built or refurbished under this Administration.

Iain Gray (Labour, East Lothian)

The First Minister does not seem to be in command of his Council of Economic Advisers—John Kay was criticising the Scottish Futures Trust. It is true that he was criticising PFI, but he was saying that the SFT is exactly the same as PFI. That £1 billion is the measure of the projects stopped by the SNP Government—supposed to be replaced by the Scottish Futures Trust, but not replaced by the Scottish Futures Trust.

The First Minister can bluster as much as he likes, but in the real world, Harry Frew of the construction workers union says that there is a crisis in the construction industry and that it is losing confidence in the SNP Government. In the real world, Michael Levack of the Scottish Building Federation agrees. He says that Scottish Government funds are

"taking far too long to get to the coalface. This year is going to be horrendous ... If we don't have the jobs coming forward we will lose more and more as the weeks go on."

Michael Levack is blaming this Government. That is the Salmond slump. When will the First Minister stop costing jobs and start creating them?

Alex Salmond (Scottish National Party, Gordon)

At some stage, the Labour Party had better understand its inescapable responsibility for the Downing Street downturn or the Brown recession—or maybe depression, as we have to call it after yesterday's Prime Minister's questions.

Serious points are coming out of the budget negotiations. One of the reasons why I applaud the decision of the vast majority of members of this Parliament to back the budget—the unity of the Parliament might at some point be reflected in the unity of the Labour Party—is that it focused attention on some of the key aspects that we must face as a Parliament, one of which is borrowing powers. If we are to combat a recession and reflate the economy, we need the power to borrow, as every other Government in the western world is doing.

The other aspect that came out of the budget negotiations and which I welcome is the realisation across most parties in the chamber that the basic threat to public expenditure in Scotland will be not in this coming year, the budget for which we have agreed, but in the year after that when £500 million in public cuts is coming at us through the tunnel.

Here is the advice to the Parliament's Finance Committee from Professor David Bell. He said that there is

"a possibility that real public spending in Scotland will fall during 2010-11 for the first time since the early 1990s."

I challenge Iain Gray and the Labour Party to unite with the rest of the Parliament in saying to the Chancellor of the Exchequer that deflating the Scottish economy and public spending into the teeth of a recession would be an act of madness. If we unite on that, as we united yesterday, we can do some real good for the Scottish economy.

Annabel Goldie (Conservative, West of Scotland)

To ask the First Minister when he will next meet the Prime Minister. (S3F-1426)

Alex Salmond (Scottish National Party, Gordon)

I have no plans to meet the Prime Minister in the near future.

Annabel Goldie (Conservative, West of Scotland)

The First Minister will be aware of yesterday's extraordinary admission by the Secretary of State for Scotland that he did not know whether his boss, the Prime Minister, had met the First Minister to discuss the recession in Scotland. Unbelievably, the secretary of state seemed to neither know nor care whether such meetings had occurred. I wonder whether the First Minister knows how many times he has met the Prime Minister in recent months to discuss the recession in Scotland.

Gordon Brown claims to be saving the world, but is ignoring Scotland. Alex Salmond claims to be saving Scotland, but is more obsessed with breaking up the union. During this period of economic turmoil, how many times has the First Minister met the Prime Minister face to face to find common ways of tackling Labour's recession? How many times have they met face to face to discuss helping our small businesses? How many times have they met face to face to help our high streets in Scotland?

Alex Salmond (Scottish National Party, Gordon)

The last time I met the Prime Minister to discuss an economic issue it was on the dispute at Grangemouth last year, because of the importance that I felt it had and the threat that the entire Scottish economy faced. Let me make it absolutely clear that I am more than willing to meet the Prime Minister or the chancellor to talk about such issues. In a range of correspondence, particularly on the banking crisis, I have indicated that I thought that that would be a very useful thing to do. I am completely willing to meet the Prime Minister to talk about these issues, because of their seriousness.

Late last night, when I watched yesterday's Scottish questions, I saw that the Speaker of the House of Commons had to upbraid the Secretary of State for Scotland by saying:

"prolonged criticism of the Scottish Parliament will give the impression that that is all we have to talk about."—[Official Report, House of Commons, 4 February 2009; Vol 487, c 827 .]

Those were wise words from the Speaker. The Secretary of State for Scotland should concentrate on doing his own job—whatever that is.

Annabel Goldie (Conservative, West of Scotland)

It is extraordinary that in these difficult times there has been no face-to-face engagement between the First Minister and the Prime Minister. Of course, the suspicion is that the relationship between those two people is more akin to permafrost than partnership. Would it not be better if, instead of picking fights with each other, Gordon Brown and the First Minister worked together in the best interests of Scotland?

David Cameron has made it clear that if he becomes British Prime Minister, he will work constructively with Scotland's First Minister, whoever that may be. [Interruption.]

Alex Fergusson (None, Galloway and Upper Nithsdale)

Order.

Annabel Goldie (Conservative, West of Scotland)

I say to Mr Rumbles that we all know who the next British Prime Minister will not be.

I urge the First Minister to schedule regular talks with the Prime Minister, especially during this Labour recession. In the meantime, I ask the First Minister to endorse the Scottish Conservatives' help our high street campaign. Town centres the length and breadth of Scotland need our help as Gordon Brown's economic downturn hits our streets hard. Will the First Minister today endorse the Scottish Conservative campaign by logging on to helpourhighstreet.com?

Alex Salmond (Scottish National Party, Gordon)

I seem to have a choice between logging on to a Tory website and meeting the Prime Minister—I am perfectly willing to meet the Prime Minister. Last week in a press release, Iain Gray seemed to concede the next election to the Scottish National Party in Scotland, and Annabel Goldie just stopped herself from conceding the United Kingdom election. I must say that it will add lustre to the UK general election that the people competing to be the Prime Minister of the UK will also be competing for the ability to meet me on a regular basis. I confirm that I am absolutely willing to meet the current Prime Minister and, indeed, any Prime Minister, to discuss subjects of importance to Scotland.

I endorse the town centre initiative in the budget. I recognise the Conservative party's championing of that cause. This is exactly the right time to invest the capital acceleration in capital projects around the town centres of Scotland. I am sure that Annabel Goldie will agree that also crucial is the small business bonus scheme and the advantage that it gives small businesses throughout Scotland. I welcome the co-operation over the past two budgets that has brought that into place.

David McLetchie's lesson yesterday on chronology, and on who did what when, made me look back into the parliamentary record. When the SNP first announced the small business bonus scheme, Murdo Fraser said on 28 September 2006—in an exchange with Alex Neil—that the proposal "lacks credibility". I am glad that wiser counsel has prevailed upon the Tory deputy leader.

Tavish Scott (Liberal Democrat, Shetland Islands)

To ask the First Minister what issues will be discussed at the next meeting of the Cabinet. (S3F-1427)

Alex Salmond (Scottish National Party, Gordon)

The next meeting of Cabinet will discuss issues of importance to the people of Scotland.

Tavish Scott (Liberal Democrat, Shetland Islands)

Does the First Minister envisage that he would ever use the phrase, "Scottish jobs for Scottish workers"?

Alex Salmond (Scottish National Party, Gordon)

Not in the manner in which the Prime Minister used a phrase that he probably regrets using, given how it was picked up and promoted.

It is far better to take the initiative in the way that has happened on a range of public projects in Scotland and in negotiations with our key private sector companies. For example, Scottish and Southern Energy recently declared that it anticipates that 50 per cent of the contracts in the new Clyde project, one of our great renewable energy projects, will go to Scottish firms, not because it is compelled in that regard but because it thinks that that is the right thing to do, particularly in a renewable energy project.

Many councils in Scotland have negotiated section agreements whereby consideration will be given to the ability of local labour within a 40-mile radius to take advantage of major capital projects. That is the wish of Scottish Power at Longannet and it is the wish of many other major companies.

The Scottish Government's interest in getting our small companies sector on to the contracts portal, to enable small companies to take advantage of major contracts, is important, as is business club Scotland, which was launched this week and through which all our business organisations are combining to get the maximum benefit out of major capital contracts that will come to Scotland during the next few years.

Such productive action from the private sector and the public sector is the way to answer the question, as opposed to creating slogans such as the one that has come back to haunt the Prime Minister.

Tavish Scott (Liberal Democrat, Shetland Islands)

I am sure that the Parliament will welcome the First Minister's careful choice of words. People are angry about the recession and angry with a Labour Prime Minister who invented a slogan about British jobs to deflect attention from the miserable job that he is doing. Yesterday, Labour gave us a lecture on economics without mentioning the Prime Minister's useless slogan or his comments about conquering boom and bust, saving the world and the beloved prudence. Nor did Labour mention the £1.4 trillion of consumer debt, which might have had something to do with the position that we are in.

This morning the Parliament debated how to protect Scottish jobs in financial services, which look after not just Scotland's pensions but the world's pensions. Our reputation has been shattered by the turmoil and failure of the banks. Does the First Minister agree that putting up national barriers will not protect a single Scottish job? How will he promote a global role? Does he have more to offer than a slogan?

Alex Salmond (Scottish National Party, Gordon)

Given that in his first question Tavish Scott reflected on what was perhaps an injudicious choice of words by the Prime Minister, I think that he should not have said that our reputation has been shattered by recent events in the financial sector. It is clear that there have been major setbacks and major blows. However, let us remember that the Scottish financial sector has a huge position in long-term investment, insurance and pension management and that there are many huge and strong companies.

That is why I welcomed and could agree to the Liberal Democrat proposal on the financial sector jobs task force. The proposal will be taken to the Financial Services Advisory Board meeting on Tuesday and I believe that the task force will be established. That will happen in a positive way, in the context of our knowing that there are substantial strengths in the Scottish financial sector, so that the task force not only faces up to the inevitable problems that we must face in the next while but considers the substantial opportunities for the future that exist. Such positive proposals are the way forward, as opposed to phraseology that turns out to be empty or even counterproductive.

Alex Fergusson (None, Galloway and Upper Nithsdale)

I have received a large number of requests for constituency questions, which all reflect the same type of issue. I cannot take them all.

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

Does the First Minister share my concern at the recent announcement by FMC BioPolymer UK that around 145 jobs will be lost from the company's Girvan plant by the end of 2009 as a result of company restructuring and the moving of production to Norway? Will he urge the Minister for Enterprise, Energy and Tourism to meet the company urgently, to ascertain what can be done to ensure that jobs are retained on the site? Will the Minister for Enterprise, Energy and Tourism meet me and other people who want manufacturing to continue in the Carrick area and who want to know what more can be done to ensure that existing jobs are retained and new jobs created?

Alex Salmond (Scottish National Party, Gordon)

The Minister for Enterprise, Energy and Tourism will certainly meet the constituency member, and other members who cover the area, to progress the matter.

I know that Cathy Jamieson and the Parliament welcome the increased investment in the partnership action for continuing employment service and the early intervention of Government services in doing the maximum to try to prevent further job losses and ensure that the workers involved get the best benefits possible in terms of training opportunities.

Joe FitzPatrick (Scottish National Party, Dundee West)

To ask the First Minister what action the Scottish Government is taking to support employment in green industries. (S3F-1438)

Alex Salmond (Scottish National Party, Gordon)

This week, the Scottish Government announced plans to create 16,000 green energy jobs by 2020 as part of Scotland's economic recovery programme. Looking to the long term, that is a substantial contribution to the new economy. We are taking action to create those jobs for the future—jobs in our rapidly expanding renewables industry, the development and application of clean fossil fuel technology, energy efficiency, microgeneration, and new sustainable travel methods.

Joe FitzPatrick (Scottish National Party, Dundee West)

What effect does the United Kingdom Government's obsession with nuclear power have on the renewable industry and Scotland's green jobs?

Alex Salmond (Scottish National Party, Gordon)

I believe in a general sense that any investment in nuclear power is investment—and it will be billions—that is taken away from investment in clean and renewable technology. My approach to such things, as a Government that I believe has now approved 18 major renewables consents in the past 18 months—the previous average was four a year—is one of highlighting the great prospects in our renewables sector, which is a huge priority.

By and large, my general attitude to nuclear power is this: I do not believe that the case for nuclear power is made. Indeed,

"nuclear power is not the answer to tackling climate change or security of supply".

I quote, of course, from Sarah Boyack's parliamentary motion S2M-4061.

Liam McArthur (Liberal Democrat, Orkney Islands)

Having launched the green jobs strategy in 2005, Jim Wallace doubtless takes as the sincerest form of flattery the Cabinet Secretary for Finance and Sustainable Growth's announcement on Monday. How will the green jobs be defined and the targets measured?

Alex Salmond (Scottish National Party, Gordon)

A whole range of initiatives is being taken. Our task is one not of counting jobs—it will be easy enough to do that—but of generating jobs, for which we have first to approve consents. In launching the document in 2005, Jim Wallace was far-seeing in looking forward to the renewables surge in Scotland. Unfortunately, the Government then did not consent to renewables investments beyond four a year. The 18 consents that we have made in the past 18 months are impressive in that regard.

Making consents is not the only thing that requires to be done. We also have to encourage our universities to build up the research base. That is being done. Three out of four of the first awards from the Energy Technologies Institute are being led by Scottish universities. That is a fantastic achievement. The Scottish European green energy centre in the great city of Aberdeen is another substantial step forward, as is our engagement in the European grid initiatives. Above all, as the constituency member for Orkney should understand, if we are to realise Scotland's true potential as the green energy powerhouse of Europe, we have to crack the availability of transmission systems.

Lewis Macdonald (Labour, Aberdeen Central)

As with green jobs, the First Minister will recall that it is now nearly two years since the consultation closed on proposals for a Scottish energy efficiency strategy, the intention of which was to improve energy efficiency and create green jobs. When does he intend to publish his Government's energy efficiency action plan?

Alex Salmond (Scottish National Party, Gordon)

We are taking action. Ultimately, the Green party was not satisfied with what we were able to offer in the budget. Nonetheless, the largest insulation programme and drive against poor insulation in Scottish history has been brought forward. As that programme is brought forward, and in terms of the action that is being taken, including the publication in due course of the strategy, our view of the action that was not taken in the past will be validated by the investment and job opportunities that it creates.

Jackie Baillie (Labour, Dumbarton)

To ask the First Minister what action the Scottish Government is taking in light of the emergence of the new and potentially more dangerous 078 strain of Clostridium difficile in hospitals across Scotland. (S3F-1436)

Alex Salmond (Scottish National Party, Gordon)

Irrespective of strain, the control of C diff is best achieved through prudent prescribing, zero tolerance of hand hygiene non-compliance and robust infection control measures.

The Government has introduced key measures to fight health care associated infection. From April 2009, there will be a new national target to reduce C diff across NHS Scotland by at least 30 per cent by 2011. We have introduced a new reporting template that requires national health service boards to report hospital-by-hospital performance on key indicators. We have provided £3 million of HAI funding this year to support the development of local surveillance systems, to help us gear up for the phased national roll-out of MRSA screening from 2009-10. In April this year, a new care environment inspectorate will be introduced to monitor actions that are being taken to reduce HAI at NHS board level. Other measures include a zero tolerance approach to hand hygiene non-compliance; tougher hospital cleaning standards, following the recent independent audit; ensuring 100 per cent provision of single rooms in new-build hospitals; and no more privatisation of cleaning contracts in the NHS.

Jackie Baillie (Labour, Dumbarton)

I simply note that at the Vale of Leven hospital cleaning was not privatised.

Existing guidance to health boards requires samples of the 027 strain to be submitted to the national laboratory for typing but is silent on the 078 strain. Will the First Minister ensure that the 078 strain is specified in guidance? Given that the Deputy First Minister has said that the 078 strain is not a new strain, why was it apparently not reported by the Government until just a few weeks ago?

Alex Salmond (Scottish National Party, Gordon)

It is not a new strain of C diff, but it is potentially a very potent strain. That makes it all the more important that we proceed with the action plan that I have just outlined in great detail to Jackie Baillie. The Government is also willing to consider any positive suggestion for intensifying our battle against the infection. I hope that the battle can satisfactorily be won by the whole Parliament and the whole community of Scotland.

Christine Grahame (Scottish National Party, South of Scotland)

Does the First Minister share my concern about carpeted areas, unlimited visiting hours, unlimited numbers of visitors, visitors sitting on beds and so on as possible sources of infection? Does he agree that other commonsense improvements, as well as simple, commonsense attention to hand cleanliness—[ Interruption. ]

Alex Fergusson (None, Galloway and Upper Nithsdale)

Members near to Christine Grahame's microphone should check whether their communication equipment is switched off; someone's BlackBerry is on. Carry on, Ms Grahame.

Christine Grahame (Scottish National Party, South of Scotland)

I am not the offender, Presiding Officer.

Does the First Minister agree that other commonsense improvements, as well as simple, commonsense attention to hand cleanliness, that could be made in our hospitals might limit the spread of infections?

Alex Salmond (Scottish National Party, Gordon)

Many of the measures that are being taken could be described as commonsense measures, and many are informed by the studies that have been made. All require a substantial increase in budget. That is why I am particularly pleased to note that the budget that the Parliament passed yesterday includes a 75 per cent increase in the budget for the battle against these vicious infections

Bill Aitken (Conservative, Glasgow)

To ask the First Minister what action the Scottish Government will take in light of reports that a breach of bail is committed every 47 minutes. (S3F-1445)

Alex Salmond (Scottish National Party, Gordon)

In December 2007, the Scottish Government introduced tougher bail rules so that those accused of serious violent or sexual offences or drug dealing with previous similar convictions would be granted bail only in exceptional circumstances. The Government has also ensured that those who commit an offence while on bail face longer jail terms.

Bill Aitken (Conservative, Glasgow)

The First Minister will be aware that, despite the best efforts of all concerned, Scotland's bail laws are simply not working. Despite the introduction of the new steps, there are still instances—there have been three this year—of people who appear on a petition alleging violent conduct being released and subsequently committing violent acts. Accordingly, will the First Minister carry out a further review of the operation of Scotland's bail laws—recognising the fact that last year there were 11,000 breaches—and report back to Parliament in early course with its results?

Alex Salmond (Scottish National Party, Gordon)

The reason Bill Aitken has those figures is that this is the first time they have been compiled. Compiling the figures seems to show a determination, for the first time, to get to grips with the seriousness of the situation. The figures show the number of breaches, not the number of individuals who have committed breach.

I am surprised and disappointed by Bill Aitken. I know that he is a hard man and all the rest of it, but I have been looking back at the parliamentary records again—this time for Westminster—and, in August last year, the Tories at Westminster proposed a tightening of bail laws in England and Wales. Their document, "Public safety first: Reducing the risk of offending by suspects on bail", said:

"These changes will effectively bring the bail laws in England and Wales broadly into line with Scotland where breach of bail is already a free-standing criminal offence and where new bail laws came into force in December 2007 providing for many similar measures to the ones we propose."

The Conservative party said—as was reflected in the house journal, The Daily Telegraph:

"the proposals would bring laws in England and Wales into line with the tougher regime in Scotland."

I know that Bill Aitken is the Jeremiah of justice in Scotland, but when we have a record number of police and the lowest recorded crime for 25 years, does even Bill Aitken recognise, as his colleagues south of the border do, that something at last is being done in Scotland?

Question Time — Scottish Executive — Education and Lifelong Learning

Ted Brocklebank (Conservative, Mid Scotland and Fife)

To ask the Scottish Executive, in light of the publication of the early years framework, what it is doing to address parenting skills. (S3O-5817)

Adam Ingram (Scottish National Party, South of Scotland)

The Scottish Government has recognised the central importance of parenting and family capacity in delivering improved outcomes for children and families by making it one of the key elements for transformational change in the early years framework. The framework has been developed in partnership with local government and ensures that the right help is available to children and families at the right time.

The Scottish Government is committed to providing early support to parents, and it has a range of policies and programmes that provide support for parenting either directly or indirectly. This includes funding for a range of parenting programmes that promote positive parenting skills and support to parents, especially at challenging times.

Ted Brocklebank (Conservative, Mid Scotland and Fife)

Will the minister give more detail on the practical steps that the Government is taking to prepare people for the responsibilities of parenthood—particularly in situations where parenting skills seem increasingly to be lacking?

Adam Ingram (Scottish National Party, South of Scotland)

One of our major initiatives works through the curriculum for excellence. We are trying to provide our schoolchildren not only with skills for work or learning but with skills for life. The development of the health and wellbeing strands within the curriculum for excellence is addressing many of the issues that we have to get across to youngsters who are approaching adulthood.

A significant problem in many communities is a high rate of teenage pregnancy. That is one issue that we may be able to tackle by means of early interventions through the education system. We have a host of other programmes, one of which is on care pathways relating to birth and is aimed particularly at first-time mothers. We will develop that programme within the early years framework.

Karen Whitefield (Labour, Airdrie and Shotts)

Is the minister aware of the excellent work that is being carried out at St Serf's primary and nursery school in my constituency and in other nurture classes in North Lanarkshire? The classes provide individual and intensive support to children from difficult backgrounds. Does the minister agree that providing support to the parents of those children through home-school link workers is equally important? Can he tell us how the Government will ensure that such initiatives are rolled out across Scotland?

Adam Ingram (Scottish National Party, South of Scotland)

Yes, I can. I am a firm advocate of the nurture-group approach. Ken Macintosh will remember that I was very keen to push the idea in the previous session of Parliament. To his credit, Peter Peacock took it up and ran with it.

Early last year—in March, I think—we had a three-day training course for local authorities across the country on how to set up nurture groups properly. I am very much in favour of what is happening in the member's constituency, and the Government is supporting it.

Wendy Alexander (Labour, Paisley North)

To ask the Scottish Executive whether it considers that the local authority settlement for 2008 and 2009 provides sufficient resources for education. (S3O-5776)

Fiona Hyslop (Scottish National Party, Lothians)

Yes. The total package of local government funding from 2008 to 2010 is £23 billion. The level of support in 2009-10 represents an increase of 9.9 per cent on the 2007-08 figures and includes capital funding for local government for this year and next of £2 billion, a significant increase over previous years. Obviously, both packages are subject to parliamentary approval.

Through the provisional outturn and budget estimate returns, local authorities estimate that their net revenue education budgets for 2008-09 are, on average, 5.5 per cent higher than those that were set for 2007-08. Although those estimates are provisional and need to be treated with some caution, they are reported directly by local authorities and provide evidence of increased spending on education this financial year.

Wendy Alexander (Labour, Paisley North)

I invite the cabinet secretary to comment on the reasons behind a fall of 119 in the number of teacher posts in Renfrewshire. The figures show that there were 42 fewer teachers in Renfrewshire primary schools and 77 fewer teachers in Renfrewshire secondary schools in 2008 than in the previous year. Is such a cut either necessary or desirable?

Fiona Hyslop (Scottish National Party, Lothians)

The employment of teachers is, of course, a matter for Renfrewshire Council, but any consideration of the situation must include the outcomes for children. I am pleased to see that, in Renfrewshire Council, the average class size for mathematics and English in secondary 1 and 2 is 20.1 and that only three of the 395 classes go beyond that figure. I am also delighted to hear that Renfrewshire Council will invest £53 million in its school estate. Indeed, one of the schools in line for some of that investment is Wendy Alexander's old school, Park Mains high school.

Murdo Fraser (Conservative, Mid Scotland and Fife)

The cabinet secretary might be aware that our friends in the Liberal Democrats are claiming to have secured extra money for school buildings as part of this week's budget settlement. How much extra money have they secured, when will it be available, and how many new schools will be built?

Fiona Hyslop (Scottish National Party, Lothians)

I am delighted that we are progressing the school building programme. As the First Minister made clear earlier, 150 new schools have been built since May 2007, and a record level of investment in schools—£2 billion—is being made now and over the next few years. I am also delighted to say that the Scottish Futures Trust will support its first school project over the course of the year and that the accompanying funding and revenue stream will be available in the year of that spend.

Kenneth Gibson (Scottish National Party, Cunninghame North)

Ms Alexander sheds crocodile tears about the level of resources available to Renfrewshire Council to spend on education. In her now infamous hungry caterpillar speech, she deplored Scottish National Party targets on efficiency savings, claiming that the public sector—

Alex Fergusson (None, Galloway and Upper Nithsdale)

Can we have a question, please, Mr Gibson? You are asking a supplementary question.

Kenneth Gibson (Scottish National Party, Cunninghame North)

—was fatter and should therefore slim down faster than the United Kingdom with its 3 per cent year-on-year cuts. What impact would such year-on-year cuts have on local government and education in our schools?

Fiona Hyslop (Scottish National Party, Lothians)

A 3 per cent efficiency saving in education budgets would have had a serious impact, and the fact that local authorities can not only retain efficiency savings but reinvest them in services such as education is to be welcomed. I am pleased that Marilyne MacLaren, the education convener of the City of Edinburgh Council, has said:

"I am very pleased and relieved to be able to announce that the administration will be protecting schools in the forthcoming budget, and therefore there will be no cuts to direct school funding this year."

I do not think that the same reassurance could have been given if the 3 per cent efficiency savings that the previous Administration had proposed and which could not have been recycled had been made.

Mike Rumbles (Liberal Democrat, West Aberdeenshire and Kincardine)

I was surprised to hear the cabinet secretary tell Wendy Alexander that she thinks that the capital funding is sufficient, only then to confirm to Murdo Fraser that the new funding stream for new schools from the Scottish Futures Trust will come on-stream at the end of the year. Given that Aberdeenshire Council is paying for all its primary school rebuilding and the rebuilding of one academy and needs access to £200 million to build five new academies from scratch, will it be at the head of the queue to access money from the new funding stream?

Fiona Hyslop (Scottish National Party, Lothians)

I am sure that the member will not be backward in coming forward and ensuring that Aberdeenshire Council's case for being at the front of the queue is made. I look forward to the results of the school estate strategy, which is being conducted with our local government partners; I look forward to the Scottish Futures Trust rolling out its programme; and, finally, I look forward to the accompanying revenue stream, which will enable us to continue to build on the brick-for-brick promise that we made and are keeping and to ensure that 250 schools are built in the lifetime of this Parliament.

Cathie Craigie (Labour, Cumbernauld and Kilsyth)

To ask the Scottish Executive whether it will introduce a national salary structure for lecturing staff in further education colleges. (S3O-5784)

Fiona Hyslop (Scottish National Party, Lothians)

Ministers no longer have a power of direction over individual colleges. Colleges are independent employers and the salaries that they pay are not a matter for ministers. However, I announced on 11 November at the college and university round-table meeting that I would encourage employers and unions to consider jointly the pros and cons of national collective bargaining for the sector as a whole. All parties are aware that the matter is ultimately for colleges as employers, and an immediate resolution is not expected, but my initiative has been welcomed by college staff unions and the convener of the principals forum of the Association of Scotland's Colleges as an opportunity for informed dialogue.

Cathie Craigie (Labour, Cumbernauld and Kilsyth)

I welcome the cabinet secretary's intention to establish talks. Does she agree that it is wrong that our lecturers work in a postcode lottery for their salaries and conditions? Will she undertake to work with staff and unions to explore a proper national salary structure and a collective national bargaining system for lecturers in Scotland's colleges? She appears to support such a system. What timescale has been set to undertake such discussions and explore all the options?

Fiona Hyslop (Scottish National Party, Lothians)

If Cathie Craigie reflects on my answer to her first question, she will see that I not only support but have initiated such dialogue. It is clear that the benefits and disbenefits must be resolved and discussed. One clear issue is the time and effort that all colleges spend on negotiating and reaching individual settlements, but flexibility has advantages. In Aberdeen, for example, general salary levels are quite high in comparison with the rest of the country so Aberdeen College needs flexibility to recruit the staff that it needs.

Fleshing out the pros and cons is important. Some college principals support a national structure, but a significant number oppose it. Useful dialogue will allow us to address the issues, and I have offered to facilitate a session in the spring to bring together all the agencies. I have been pleased by the reaction of principals and unions, which are also finding ways to have such discussions without the Government's interfering.

I will make an important point. To help preserve the charitable status of colleges, the previous Administration took away ministers' powers to intervene directly in colleges. I will be at pains to ensure that I do nothing to jeopardise that position. I hope that Cathie Craigie understands the restrictions under which I work. I have tried to be constructive in encouraging discussions.

Bob Doris (Scottish National Party, Glasgow)

To ask the Scottish Executive what progress has been made on its commitment to work with local authorities to promote lower class sizes in primary schools. (S3O-5827)

Fiona Hyslop (Scottish National Party, Lothians)

Under the concordat, local government has agreed to make year-on-year progress to reduce primary 1 to 3 class sizes to a maximum of 18. Sufficient funding has been provided to local government to maintain teacher numbers at 2007 levels which, at a time of falling school rolls, provides headroom to make progress on the joint commitment. Some authorities are making better progress than others.

Bob Doris (Scottish National Party, Glasgow)

I draw the cabinet secretary's attention to Glasgow City Council's proposal to close 25 primary and nursery schools in the city and, in particular, its proposal for St Agnes's primary school in Cadder. The school has seven classes, none of which is a composite, and an average class size of 21. The council proposes to merge St Agnes's with, and move its pupils to, St Blane's primary school in Summerston, where the new school will have an average class size of 25. What representations does the cabinet secretary make to local authorities—and Glasgow City Council in particular—to ensure that they are on board with and do not fly in the face of the Government policy to lower class sizes between P1 and P3?

Fiona Hyslop (Scottish National Party, Lothians)

I understand the member's question, but I hope that he appreciates that I cannot comment on individual schools or on Glasgow City Council's programme, which is the council's responsibility.

In Glasgow, 318 teaching posts have been lost. That represents an opportunity lost to Glasgow City Council to cut class sizes by replacing those teachers. It is for the council to manage its resources, but I am aware that Gordon Matheson, the council's executive member for education, said in May 2008 that

"Education's budget in Glasgow, in real terms, will be higher next year than it is this year."

It is clear that the resources are available to maintain teacher numbers and that the council must manage its estate accordingly. If authorities do not use such a chance to reduce class sizes, that is a missed opportunity.

It is regrettable that Glasgow, which has one of the poorest levels of attainment—yes, it has challenges—also has one of the lowest levels of expenditure on education. That is a choice that the council makes.

Malcolm Chisholm (Labour, Edinburgh North and Leith)

The cabinet secretary welcomed this week's statement by Councillor Marilyne MacLaren that there would be no further cuts to devolved school budgets in Edinburgh, but does she realise that there will still be significant reductions in education expenditure, including fewer teachers next year? How can we have smaller class sizes and fewer teachers?

Fiona Hyslop (Scottish National Party, Lothians)

Malcolm Chisholm should pay close attention to the budget-setting discussions that will take place in the City of Edinburgh Council. It would be extremely surprising if there were reductions in the education budgets, and he should think carefully before making such accusations.

Education spend in Edinburgh is a matter for the council. Malcolm Chisholm would be best to engage with the council and, when the budget is set, pay attention to the levels of that spend. I do not anticipate any reduction in it. Indeed, in my answer to Wendy Alexander, I indicated that, in their provisional outturns, local authorities estimated a 5.5 per cent increase in the current year's budget. We can examine projections for next year as we move forward.

John Wilson (Scottish National Party, Central Scotland)

To ask the Scottish Executive how Skills Development Scotland is performing in relation to its key performance indicators for 2008-09. (S3O-5760)

Maureen Watt (Scottish National Party, North East Scotland)

Skills Development Scotland reports monthly on performance against the key performance indicators—KPIs—that are included in its 2008-09 operating plan. At the end of January 2009, SDS reported good progress against all KPIs.