§ Order for Second Reading read.4.22 pm
§ The Parliamentary Under-Secretary of State for Scotland (Mr. Calum Macdonald)
I beg to move, That the Bill be now read a Second time.
This Bill has a narrow and, indeed, a technical compass. It arises because section 25(2) of the Enterprise and New Towns (Scotland) Act 1990 places an aggregate financial limit on Scottish Enterprise. For it to continue its operations, that limit must be raised every few years. The purpose of this Bill is to increase the financial limit from the present £3 billion to £4 billion. In addition, it removes the provision that enables the Secretary of State to increase the limit further by statutory instrument, so clearing the way for the Scottish Parliament to introduce its own arrangements in due course.
§ Mr. John Home Robertson (East Lothian)
I cannot resist commenting on the fact that, barring accidents, this should be the last Scottish Bill ever to pass through this Parliament. As my hon. Friend may recall—well, perhaps not personally—the first Scottish Bill to pass through it was the Court Exchequer (Scotland) Act 1707, which concerned taxation. Is it not entirely appropriate that the final Scottish Bill to pass through under this Government concerns enterprise?
§ Mr. Macdonald
My hon. Friend makes a fair and historic observation. I understand that this will be the last Scottish programme Bill to be presented to the House, so it is a matter of some note. As I said, the Scottish Parliament will arrange such matters in future.
§ Sir Robert Smith (West Aberdeenshire and Kincardine)
Does the Minister accept that there might still be ballot Bills containing Scottish legislation?
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I am not sure whether I put the Question on the mini-debate that is taking place. Perhaps we may now move on to the main debate on Scottish Enterprise.
§ Mr. Macdonald
As I said, this will be the last Scottish programme Bill to be presented to the House.
To return to less controversial matters. A number of items count towards the financial limit that is placed on Scottish Enterprise: first, its and its subsidiaries' general borrowings; secondly, sums issued by the Secretary of State or the Treasury in fulfilment of guarantees; thirdly, loans guaranteed by Scottish Enterprise or its subsidiaries; and finally, the largest item comprises payment from the Secretary of State consisting of grant in aid less administrative expenses, plus voted loans payments.
The increase to £4 billion will allow Scottish Enterprise to continue to operate until approximately March 2001. Thereafter, as already noted, the Scottish Parliament will have an opportunity to consider the future funding arrangements. It is entirely right that that should be a matter for the Scottish Parliament to decide.
§ Dr. Norman A. Godman (Greenock and Inverclyde)
On a practical, not a historical question, I hope that the 1080 legislation will encourage the officials of Scottish Enterprise to ensure that the money is invested in areas of high unemployment and in desperately needed developments. The Gourock waterfront development is one such example and it is crying out for assistance. I hope that, by way of this Bill, the Minister will encourage Scottish Enterprise to give that development some support.
§ Mr. Macdonald
The legislation will not do so by itself, of course, but it will enable Scottish Enterprise to keep functioning and, therefore, to follow through the Government's plans and the strategy that has been agreed with SE, which takes into account the very points made by my hon. Friend.
Expenditure for 1997–98 alone has achieved some significant successes: the creation of 30,000 jobs opportunities; 17,700 projects undertaken with Scottish businesses; 5,300 new businesses started up, generating £33 million of additional sales and employment opportunities for 13,500 people; and finally, 87 inward investment projects.
Recently, there has been much in the news about job losses, which are always of concern. Yesterday, we heard of the possible closure of the Wrangler factory in Falkirk with a loss of 500 jobs. I understand that Forth Valley Enterprise, the local authority, the Employment Service and Triaze, which is a new deal training company, are meeting to put together practical steps to help employees gain alternative employment. Falkirk is not the only area to have to cope with setbacks of that nature.
Those statistics do not tell of the real impact on individuals and families who suffer because of job losses. However, the successes in creating jobs should also be noted. Of particular relevance to Falkirk, Thomas Cook in Larbert has just launched a campaign to recruit at least another 250 staff in the next four to five months. There are other successes throughout Scotland. In recent months, such companies as Foxteq, Packard Bell NEC, Bank of Bermuda, BSkyB and Universal Scientific Industries have announced plans to create more than 6,000 new jobs in Scotland. Yes, jobs are being lost, but throughout Scotland there are positive successes in job creation.
My right hon. Friend the Secretary of State recently provided Scottish Enterprise with strategic guidance that will ensure that it is aligned to the Government's aims and objectives for the economy as a whole. That includes the point made by my hon. Friend the Member for Greenock and Inverclyde (Dr. Godman), and we debated those aims on Monday in the Scottish Grand Committee. The strategic guidance lays out ambitious plans for Scottish Enterprise: to help create 100,000 new businesses in the next ten years; to improve their survival rates; to broaden the knowledge base of the Scottish economy; to promote the clustering of companies in sectors that are most likely to benefit from a strategy of collaboration; to engage the strength of large companies in partnerships across the economy; to raise the level of investment in research and development; to sustain Scotland's attraction to inward investment; and finally, to help Scottish Trade International to create new exporters and expand new markets for Scottish goods.
That is an ambitious programme, but we consider that it is achievable within the current level of funding. It is a programme that goes beyond June 1999, when the 1081 current aggregate amount outstanding will be reached. The purpose of the Bill is simply to raise that level to enable Scottish Enterprise to continue its work to meet those objectives until the Scottish Parliament can consider afresh the funding arrangements for Scottish Enterprise. I commend the Bill to the House.
§ Mr. Oliver Letwin (West Dorset)
As the Minister and some of his hon. Friends have mentioned, this is the last Scottish programme Bill before the House. [HoN. MEMBERS: "Hear, hear."] That will be a matter of delight to Labour Members, but a matter of sadness to me not to have the opportunity in my guise as MacLetwin to encounter the Minister with his charm and elegant exposition. It has frequently been the case in Committee and on considering orders that the Minister has been able to make his remarks concise. I hope that I have been able to oblige by also reducing mine, in some cases to approximately 30 seconds. That would be in the tradition of the Scottish Enterprise Bill's predecessors: when previously the limit has been raised, the debate has been short. I fear, however, I cannot utterly oblige the Minister on this occasion. I hope that he will bear with me if I make a few observations about what I think is a remarkably different situation from that which first appears.
This is a short Bill—that is an understatement—and it appears to be innocuous. After all, when allowance is made for the Scottish Enterprise (Aggregate Amount Outstanding) Order 1997 having raised already the limit to £3,000 million, this Bill only raises the limit by a further £1,000 million. I hope that hon. Members will pause at the words "only raises the limit by a further £1,000 million". That is about enough to pay 50,000 nurses for a year, to buy 1,000 miles of railway, to pay 37,600 teachers, to build 340 primary and 150 secondary schools or to build 10 major district hospitals. It is a large sum. It is about the same as the gross domestic product of Fiji or Nicaragua and about twice the GDP of Chad or Belize. I hope that those measures make it plain that we are not talking about peanuts. The question is whether we are dealing with monkeys.
§ Mrs. Maria Fyfe (Glasgow, Maryhill)
Does the hon. Gentleman recall any such substantial increase during the Tory years when cities such as Glasgow were left to get on with high levels of unemployment to the despair of many citizens? The previous Government simply ignored their needs.
§ Mr. Letwin
I am grateful to the hon. Lady. The last time the limit was raised under the order it was raised by £1,000 million, so I can recall, or rather read about, such things. As I proceed the hon. Lady will discover that we in the Opposition have no opposition to the idea of an increase, nor to an increase of this magnitude. We may find ourselves joined by the hon. Lady in a few moments when she realises what is happening in Scottish Enterprise.
It is true, as the Minister says, that this organisation claims to have created about 30,000 jobs, net, at a cost of about £15,000 a job, if my arithmetic serves me correctly. That is not all that it does. The level of information that 1082 the organisation provides in its report and accounts is a good deal better than sometimes applies to non-departmental public bodies. It is still fairly exiguous compared with the amount of information about most public companies—certainly most public companies spending £400 million a year or so as this does.
There is enough in the report and accounts, with which the Minister is no doubt fully familiar, to cause more than a few eyebrows to be raised on the Benches opposite. This is not a partisan point, but something on which the whole House can agree. [Interruption.] I wonder whether the hon. Member for Carlisle (Mr. Martlew), who from a sedentary position says that there is no reason for eyebrows to be raised, knows how much Scottish Enterprise spends on administration.
§ Mr. Eric Martlew (Carlisle)
I am sorry to intervene. I was pointing out that there are no hon. Members behind the hon. Gentleman to raise their eyebrows.
§ Mr. Letwin
I do apologise to the hon. Gentleman, but I did say the Benches opposite. As a matter of fact three of my hon. Friends are here and ready to offer themselves and their wisdom to the House. In any event I hope that we can make up in quality for what we lack in quantity.
I wonder whether the hon. Gentleman knows or, indeed, whether the Minister has at the forefront of his mind just how much this organisation last year spent on management expenditure. Let us bear in mind that its total expenditure nets about £400 million. The national health service—not always cited as the prime example of management efficiency in western Europe or the world, and certainly not usually cited by the present Government as such because they accuse the previous Government of having inflated its management—spends about 0.7 per cent. of its budget on management. That is a little less than 1 per cent. and would be equivalent to Scottish Enterprise spending £4 million on its management. The Department for International Development or the Welsh Office spend a rather higher amount—about 2 per cent., which would suggest about £8 million in this case. Perhaps most relevantly, the Scottish Office spends about 5 per cent. of its budget on management, which would suggest about £20 million in this case.
It may, therefore, come as a surprise to some Labour Members—it certainly came as a profound shock to me when I got to grips with these accounts—to find that this organisation spends nearly £70 million of its £400 million budget on management. That is a genuinely astonishing achievement. I do not know quite how it is managed, but that seems to be the case.
§ Mr. Tam Dalyell (Linlithgow)
When the hon. Gentleman says that he got to grips with the accounts, did he talk to the Scottish Office and give it an opportunity to give an explanation?
§ Mr. Letwin
I took advantage of the House of Commons Library and asked for a note on the matter. So far as I can make out the expenditure is partly the consequence of the rather elaborate federal structure—perhaps of interest to the hon. Gentleman—that the organisation operates with its subsidiaries, the local enterprise companies. It is also no doubt the case—I judge this from the statements made on the internet provision, 1083 the website and other statements by Scottish Enterprise management itself—because it prides itself on offering a high level of service to what it calls its clients, or those whom it is trying to help. The fact remains that the total sum of expenditure on management and administration is extraordinarily high.
§ Mr. Letwin
I do apologise, Mr. Deputy Speaker. I did not know that two hon. Members were seeking to intervene. I give way to the hon. Member for Linlithgow (Mr. Dalyell).
§ Mr. Dalyell
As one who in his constituency work, like my colleagues, has a good deal to do with the organisation, I have the anecdotal and first-hand impression that it is efficient. I do not want to score points against anybody, but fair is fair. Before making this kind of criticism the hon. Gentleman should talk to those involved.
§ Mr. Letwin
Nevertheless there is a set of accounts and the hon. Gentleman's anecdotal impressions must be reconciled with the facts that the accounts present. The facts presented suggest that £70 million of public money is spent on management and administration. That is not all that emerges from the accounts. The body also publishes a balance sheet. We might ask ourselves just how much cash an organisation like this needs to keep in the bank at any given time. Perhaps a few million pounds would be perfectly reasonable. Is it not therefore a matter of some surprise to discover that almost £90 million are kept in cash at the bank or in hand? Does that not strike one as a rather large sum of money?
§ Mr. Morgan
Regardless of the validity or otherwise of the hon. Gentleman's criticisms, would he care to tell the House who put in place the structure to which he is referring?
§ Mr. Letwin
The structure was put in place by the previous Government. That is fully acknowledged. It is a matter of some concern to me that the previous Opposition did not point out some of these things. That is no reason for the current Opposition to fail similarly. It is the duty of this House to scrutinise without regard to political partisanship; that is precisely the job that I am trying to fulfil.
§ Mr. Desmond Swayne (New Forest, West)
It has been suggested that there are bound to be rational explanations 1084 for the phenomena to which my hon. Friend drew attention. We have a Minister present who will no doubt be able to explain the matter in his reply.
§ Mr. Letwin
I am grateful to my hon. Friend, who is right that that should be the position. No doubt my remarks will cause the Minister to make some illuminating utterances, if he chooses to make any later. My hon. Friend would be misled if he supposed that it is only the items to which I have referred that cause concern.
In the strategy guidance to which the Minister referred, there is no mention of how the organisation is administered. Much is said about what it should be doing vis-a-vis the external world but nothing, as far as I could determine, about how it acts internally. That leads me to suspect that the Minister may not quite be able to live up to the high expectations of my hon. Friend the Member for New Forest, West (Mr. Swayne) of his ability to enlighten the House on the matter.
Things are worse than might be supposed because on examining the accounts, we next discover—the Government appear to have noticed this, to judge from the statements of the Secretary of State—that Scottish Enterprise has turned itself over the years into a sizeable property company. It holds an asset base—it is not clear on what valuation—of about £200 million, on which it seems to make a normal commercial return of about 5 per cent. One might say that there was nothing wrong with that, but it would be interesting to discover why it needs to hold such a portfolio. None of the statements in the report and accounts or otherwise published by the organisation make the matter clear. I must share my view with the Secretary of State because he has asked it to redirect its efforts away from property towards other activities.
The organisation has a heavy burden of management—at least in respect of the costs associated with it—a large amount of cash in hand, and a big property portfolio. I could bore the House with an analysis of the other issues that cause concern.
§ Mr. Letwin
I do not intend to do that, not least because I know that Labour Members are desperately keen to get on trains and disappear under the new dispensation for Thursdays.
It is a remarkable fact that, irrespective of the veracity of the anecdotal observation of the hon. Member for Linlithgow that the organisation is highly efficient, the matter has not, so far as I was able to determine, been investigated. Over many years, the Public Accounts Committee has not investigated whether it operates thoroughly efficiently. That brings me to the main burden of my argument.
The Minister is right that hereafter, it will not be this Parliament in which such questions can be raised. The Public Accounts Committee will no longer in any obvious sense be able to examine them; they will move to the Scottish Parliament. The Minister will remember that as a concern of Opposition Members right from the beginning of the prolonged debates on devolution. It was raised vividly in one debate by the Chairman of the PAC. I know that we are talking about efficiency rather than 1085 outright fraud or impropriety, but how will such matters be monitored in the new arrangements for the Scottish Parliament?
§ Sir Robert Smith
To draw conclusions from what the hon. Gentleman has said so far, the Scottish Parliament will provide an opportunity more closely to monitor such matters because it will have the time and inclination. As he said, the current set-up has not done the job and he has found nothing in print to assist him in understanding the accounts.
§ Mr. Letwin
That is an interesting point but I wonder whether the hon. Gentleman will hold that view when I have finished. Certainly, the Accounts Commission for Scotland has concerns. It has probably invited him, as it has me, to a reception.
§ Mr. Letwin
I have no intention of paying my way into the reception.
We are told that the reception will examine a key theme: the role of public scrutiny and audit under the Scottish Parliament. At least the commission is asking the right question. There is a serious problem but I wonder whether Ministers have seriously considered it. That brings me face to face with the point made by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith). The Scottish Parliament will not be spending its own money, apart from what the Prime Minister tells us to regard as the penny rate. Of course, no Government or Parliament has its own money; it is all taxpayers' money, but the Scottish Parliament will not even be spending money that it has raised but money from the United Kingdom that will have been voted by this Parliament. We know a good deal about how human nature reacts in such situations because we can examine the long record of local government.
We all know that local councils—whether controlled by the Conservatives, the Liberal Democrats, or even, dare I say it, Labour—have a long and enviable record of successfully arguing, whenever they find that their inefficiencies prevent them from fulfilling the needs and desires of their local communities, that the cause is lack of cash from central Government. I have not the slightest doubt that all parties in the Scottish Parliament will, if left to their own devices, first resort to the argument that any lack comes not from the inefficiency of the bodies that they administer but from an insufficiency of funds voted by this Parliament to the Scottish Parliament.
I do not say that as an accusation. Any hon. Member, including me, would be inclined in that position to make that argument. That is how democratic politics works but it raises a question that the House must address, and which I fear that Ministers may not have addressed. To what extent will it be proper for this House to consider the efficiency with which the funds that it votes to the 1086 Scottish Parliament, and which the Scottish Parliament administers on behalf, so to speak, of the United Kingdom, are disbursed? The case of Scottish Enterprise and the figures that I have raised concern about are a case in point. I believe that it will be proper for the House to continue to exert itself to try to find whether the moneys allocated are being efficiently spent in such cases.
§ Mr. Malcolm Chisholm (Edinburgh, North and Leith)
When we analyse the hon. Gentleman's speech afterwards, we will regard it as one of the better speeches by an Opposition Front-Bench spokesman in favour of a Scottish Parliament. He seems to be saying that the House has signally failed over all the years of Scottish Enterprise to exercise any scrutiny. Clearly, those of us who aspire to go to the Scottish Parliament will spend much more time examining the affairs of Scottish Enterprise than we ever have here. He is wrong to assume that we shall want more money on every question. The priority will be to ensure that we get maximum value from the large resources that we will have.
§ Mr. Letwin
I am extraordinarily grateful to the hon. Gentleman, with his distinguished record in public service, for saying that my speech is good. I doubt that it is, but I assure him that it is not a speech in favour of, or indeed against, devolution. I am reflecting on the consequences of a fait accompli. I do not doubt that conscientious Members such as he, if they become Members of the Scottish Parliament, will seek to ensure that the things for which they are responsible are efficiently run. The question is: with what level of energy will they devote themselves to that task and to the much more politically attractive task of arguing that Westminster has not given them enough money? If the hon. Gentleman claims that the former task will be given a larger amount of energy and the latter will be given a lesser amount of energy, I would be happy outside the Chamber to take a large bet on the matter. This Parliament will continue to vote large sums via the Scottish Parliament to bodies which there is a serious threat that the House of Commons will no longer scrutinise.
We come to the second point that the hon. Member for Edinburgh, North and Leith (Mr. Chisholm) made. Has the House of Commons already shown itself incapable of examining such matters? The answer, I regret to say, is that as a result of the lamentable record of the previous Opposition, in the case of Scottish Enterprise the House was not good at examining such matters. But at least it had the motive for so doing. It could not blame anyone else if the money was badly spent and it could not ask anyone else for more money other than the taxpayers, who are also its voters.
Despite the badinage, there is a serious issue for the House. How far will we retain the ability to raise matters of concern that may be allayed by further investigation? If we do not retain that ability, we will betray the trust that our electors have placed in us by sending us to this place.
§ Mr. John McAllion (Dundee, East)
The hon. Gentleman seems to argue that the Scots cannot be trusted to look seriously at the way in which money is spent in Scotland and that only this Parliament can be trusted to do that. Will he reflect on the fact that my right hon. Friend the Chancellor of the Exchequer is the first Scot 1087 to hold the position in more than 20 years, and that he, after Labour came to office, found an extra £40 billion that had been inefficiently spent by the House?
§ Mr. Deputy Speaker
Order. I do not want to pin the responsibility wholly on the hon. Member for Dundee, East (Mr. McAllion), but I suspect that the argument is spinning to the further reaches of what is permissible. I wish to hear more arguments specifically about Scottish Enterprise.
§ Mr. Letwin
I will certainly stick by that admonition, although it is gravely tempting to respond to the hon. Gentleman.
In the case of Scottish Enterprise and many other such cases, the House will have to develop mechanisms for examination. Notwithstanding the fact that this is the last programmed Bill on Scottish matters and the last Bill that we shall see on Scottish Enterprise, as and when further increases are made in the amounts of money that Scottish Enterprise can spend out of taxpayers' funds, and as similar Bills come forward in the Scottish Parliament in relation to bodies governed by it, those amounts must be scrutinised. Such mechanisms may not often be invoked, but it must be possible to invoke them so that any serious concerns can be dealt with. The Minister has not said anything about that, which is odd. I think that he genuinely has not spent any time worrying about whether there are any concerns about the accounts of Scottish Enterprise. That is sad, but it is remediable.
The purpose of this Second Reading debate and my speech has been to ensure that the Minister goes away with his very able officials and works at precisely the question that I have raised. I hope that by the time we have gone through the Committee stage and come back to the Floor of the House for Third Reading, the Minister will be able to make an eloquent exposition on exactly how this Parliament will deal with the problem. If he does not, he will convict himself and his Department of failing to wrestle with one of the serious issues that arises from devolution, with which we have come face to face today as a result of the need to examine Scottish Enterprise.
In summary, there is a specific concern about Scottish Enterprise. That concern does not lead the Opposition to object to the raising of the limit, but it makes us wish that the Scottish Office would look closely at the matter. It is a concern that perhaps ought to be reflected in an investigation by some Committee of the House. More macroscopically, it is a concern that brings us face to face with the need for the House to develop adequate mechanisms to ensure that when public money is voted by this Parliament to the Scottish Parliament and ends up in the hands of bodies administered by the Scottish Parliament, it is nevertheless subject to the proper scrutiny of the House.
§ Mr. Macdonald
I shall try to respond to the points that the hon. Gentleman has made, but may I clarify whether he is attacking the Bill or simply wants to question the devolution context? I take it that he agrees with the Bill.
§ Mr. Letwin
That is correct. This is a probing speech in a Second Reading debate. I know of no other sufficiently serious way of raising this issue. We have no objection to the Bill and will certainly not ask colleagues to vote against it in the Lobby today.
§ Mr. David Marshall (Glasgow, Shettleston)
The fact that the hon. Member for West Dorset (Mr. Letwin) has not been long in this House may explain—I am being charitable—how he conveniently ignores that for 18 of the past 20 years his party was in power and operated the Scottish Office. His party set up Scottish Enterprise in 1991 when it replaced the Scottish Development Agency.
The hon. Gentleman criticises Scottish Enterprise's management. While I would be the last to say that everything in the Scottish Enterprise garden is rosy and there is no room for improvement, it is only fair to point out what we get from that management. The summary of the results of Scottish Enterprise for 1997–98 includesthe creation of 30,000 net additional job opportunities, a net additional £600 million added to Scotland's output; 17,700 projects undertaken with Scotland's businesses, leading to over £850 million of additional sales, of which over a third are exports; 230 companies entering new export markets; 180,000 employees benefiting from training and development; 640 companies committed to or recognised by the national standard of Investors in People; 77,000 enquiries handled by local networks of Business Shops and Enterprise Trusts; 5,300 new businesses started up generating 33 million additional sales and employment opportunities for 13,500 people; 22,000 visitors to the Personal Enterprise Shows; 87 inward investment projects attracted including high-tech research and development, such as Cadence and Clintrials, creating and safeguarding 18,000 jobs and generating £1 billion private investment; over 68 per cent. of young people received skills training as employed status and over 16,000 VQs were awarded; 4 out of 10 adults in Training for Work went on to a positive outcome; 350,000 sq m of property and 540 hectares of land developed in support for industrial and commercial businesses; 55 per cent. of contaminated and derelict land cleared and taken up for development; for every £1 spent by the Network on the physical business infrastructure in Scotland, £4.85 was contributed by others.That impressive record may explain why Scottish Enterprise and its network are the envy of many other parts of the United Kingdom and the world.
§ Mr. Laurence Robertson (Tewkesbury)
I do not wish to appear churlish, but the point that my hon. Friend the Member for West Dorset (Mr. Letwin) was making was that, although all that may be true, it is at an enormous cost. In spite of what the hon. Gentleman has said, in the Scottish Enterprise annual report the chief executive said:Scotland, however, still lags behind the rest of the UK in the number of businesses emerging.
§ Mr. Marshall
Some people are never satisfied. If people do not speculate, they cannot accumulate. The investment return as part of the Scottish economy far outweighs Opposition Members' carping criticisms.
The Bill must command the unanimous support of the House. I was pleased to note that the Opposition will not oppose it—they know the political consequences of such a step, although there is little hope for them in the forthcoming elections in Scotland. I warmly welcome the Bill. Any Bill that updates the overall limit that Scottish Enterprise can spend from £3 billion to £4 billion is very good news. I congratulate the Secretary of State for Scotland and the Scottish Office team.
Some may say that it is one thing to uprate the spending limit, but yet another to spend any of the additional moneys. I do not believe that the Government would have introduced the Bill if they did not intend Scottish Enterprise to use this additional spending power to deliver 1089 some of the Government's key economic objectives. This proposal will be a massive boost to the new Scottish Parliament, especially as it will take over the running of Scottish Enterprise. The money will be even more essential to the future well-being of Scotland in an ever-increasingly competitive world.
I shall touch briefly on two of Scottish Enterprise's activities: first, its international role, and secondly, its involvement in the city of Glasgow. The Select Committee on Scottish Affairs, which I have the privilege to Chair, is currently conducting an inquiry into inward-outward investment in Scotland and tourism in Scotland. Those matters are connected, and both are vital to Scotland's economy.
Last week, the Select Committee visited the United States of America as part of that inquiry. The visit was well worth while, because it enabled us to see how Locate in Scotland, Scotland Trade International, Scotland Virginia Partnership and the British Tourist Authority in the USA promote Scotland's interests in that country. Other members of the Committee who are present may want to give their opinion of the success of the visit.
Suffice it to say that the USA is the largest market in the world, and it is also the fiercest and most competitive. City competes against city, county against county and state against state. Their problems are not vastly different from ours, and neither are their solutions. We are competing with them: we are all competing with each other in north America and in the wider world. It is to the great credit of Scottish Enterprise and the component parts of its network that Scotland has done so well out of north America. We are the envy of many other places, few of which have done better than we have, although there is the odd exception.
The Committee also saw the operation of the consul general's office in New York and the British embassy in Washington, and met Scottish business people doing business in the USA. It also met with American companies, such as IBM, that are major investors in Scotland and in the United Kingdom as a whole.
§ Dr. Godman
IBM in Spango valley in Greenock employs almost 5,000 people, which makes it one of the biggest employers in the west of Scotland. I remind my hon. Friend that IBM has been in Greenock since 1951. It was brought there by the remarkable work of the late Sir Hector McNeil, who was the Labour MP for Greenock.
§ Mr. Marshall
As usual, my hon. Friend is correct in all that he says. IBM was the original inward investor in Scotland. IBM's importance to the Scottish economy is such that it is worth more than the Scotch whisky industry, and that says it all.
We met many American business people who are interested and involved in Scotland. Almost to a person, they were impressed by the activities of Scottish Enterprise, Locate in Scotland and Scotland Trade International. Americans do not give praise lightly, and members of the Committee were convinced that it was sincere and genuine, and a proper reflection of the activities of Scottish representatives in that country.
1090 In the five days we were there we visited four cities: Stamford, New York, Washington and Philadelphia. I should like to place on record our appreciation for the assistance, information and advice that we were given by everyone we met.
§ Mr. Swayne
The hon. Gentleman is giving eloquent testimony to the work of the Scottish Affairs Committee. I am deeply grateful to him for that—I was unable to take part in the visit, so he is providing a great service. In the light of the remarks of my hon. Friend the Member for West Dorset (Mr. Letwin), does the hon. Gentleman think it proper to consider whether the Committee, of which he is Chairman, should undertake an investigation into the management of Scottish Enterprise?
§ Mr. Marshall
It is a matter of great regret to the Committee that the hon. Gentleman was unable to go with us, because we genuinely value the role that he plays on the Committee. No Conservative MPs represent Scottish constituencies, and we thought that the hon. Gentleman had committed some cardinal sin when he was put on our Committee. I say with all sincerity that he has played an important part in the work of the Committee and is a good member of it. I have no hesitation in saying that, and if it embarrasses him, so be it.
Let me answer the hon. Gentleman's question. I am sure that tomorrow I shall find on my desk a letter from him making the suggestion that he has just made to us. If I do, it will be given serious consideration in the normal way.
I feel that I should praise Steven Bennett, director of Locate in Scotland in north America, David Taylor, director of Scotland Trade International and Lisa Smith, executive director of the Virginia Scotland Partnership—or the Scotland Virginia Partnership, depending on which part of the world one is in at the time. We were tremendously impressed by the presentations that were made to us and by the work done by those people.
Whether we like it or not, globalisation is happening. We can no longer take the status quo for granted. I believe that Scottish Enterprise, Locate in Scotland and Scotland Trade International are doing all that they can in the United States on behalf of Scotland's interests. I also believe, however—and this brings me to the purpose of the Bill—that they could do much more with a few additional resources, especially in terms of staff and premises and especially in Canada, where there is a great affinity with Scotland, and where there must be considerable opportunities. Locate in Scotland has only four offices in the United States, and I am not sure whether Scotland Trade International has any. It is difficult to run such a vast area as north America out of four small offices with fewer than 20 staff. I think that the return on a reasonably modest increase in resources could make such an increase well worth while. There is great interest in the United States in the Cadence project in Livingston. It could give Scotland a leading role at the cutting edge of technology in the future and bring massive benefits to our economy.
I was impressed to learn that the commonwealth of Virginia was the first state in America—as far as I know, it is still the only state—to appoint a Secretary for Technology, because it considers technology so important. It is worth noting that there are 23,000 1091 high-tech job vacancies in Virginia, which it is unable to fill because it cannot obtain trained staff. Perhaps the new Scottish Parliament will take on board the idea of a Secretary for Technology. Scotland has enough high technology to guarantee such a post, and I think that it would pay enormous dividends.
I counsel against going overboard on inward investment at any cost, and I hope that Scottish Enterprise will not dissipate too much of any additional moneys in that way. It appears that there are some unscrupulous companies that are interested only in obtaining whatever grants they can get, and then playing one area or country against another. They come in, take the money and run. We must not let ourselves be taken to the cleaners by such companies.
§ Mr. Letwin
I do not want to embarrass the hon. Gentleman unduly either, but I hope that he will accept that the Opposition thoroughly agree with what he has just said.
§ Mr. Marshall
I am unembarrassable, but that is by the way.
We would perhaps be better served by doing everything possible to retain existing jobs. That is another lesson that we learnt from our trip. Cities such as Philadelphia have great problems, and great similarities to Glasgow, which also has problems. They have found it more cost-effective and beneficial to concentrate on retaining jobs than to spend a fortune on trying to attract them. We should also encourage our indigenous industries to expand and prosper in their own areas. There is a feeling that we do not do enough in that regard.
It is essential that we expand our air services to Europe. At present they are totally inadequate. Perhaps Scottish Enterprise and the Scottish Office will consider what can be done.
I am delighted that at last a Labour Government are getting down to tackling Glasgow's problems after 18 years of Tory victimisation of and bias against it. I am aware that £1.5 billion of public money is being spent in the city,but the scale of the problem is so great that it is still not enough. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) raised the issue in an Adjournment debate in the Scottish Grand Committee in Edinburgh on Monday. She referred to the problems of deprivation in the city, and I congratulate her on doing so.
Just a few months ago, the Scottish Office central research unit and the department of urban studies at Glasgow university revised the Scottish area deprivation index, which ranks areas by post code sectors. Thirty-nine of the worst 45 sectors in Scotland are in Glasgow, including the worst 15. Twelve of those 45 post code areas are in my constituency, including two of the top 10. Of the 618,430 people in Glasgow, 369,313, or 60 per cent., live in the worst 10 per cent. of post code sectors.
Those statistics are horrifying and unacceptable as we approach the new millennium. They illustrate why Scottish Enterprise must give more resources to the local employment company, namely, the Glasgow development agency, if the problems that face the city are ever to be overcome.
For example, the brown-field site budget is only £3 million, yet there are approximately 2,000 acres of derelict and contaminated land; 11 per cent. of the city's 1092 area is derelict or contaminated. That could be the source of much future prosperity if it is brought back into use as soon as possible. The draft Glasgow Alliance strategy has a target of bringing 50 per cent. of that land back into use within five years. Let us improve on that target, either in scale or in time. Again, Scottish Enterprise could spend more money in dealing with that problem.
Perhaps I should declare an interest, being a member of the board of the East End Partnership, of the East End Regeneration Management Board and a co-opted member of the board of Glasgow Alliance. The alliance has a visionary strategy and we now have a consultative document on a joint economic strategy for Glasgow. What we need now is action and, as I have said, even more resources from Scottish Enterprise.
Glasgow is turning itself around. There is much good in the city and a lot going for it. It is, indeed, miles better than it was. It has improved leaps and bounds, particularly over the past two years, thanks to the change in Government, but it must be remembered that, almost every year for the past 20 years, Glasgow has lost the equivalent of a Ravenscraig in terms of jobs. People tend to ignore that fact. Because it is a city, it somehow misses out.
Unemployment and poverty are still endemic in the city. There are still thousands of below tolerable standard houses, many in my constituency. Therefore, there are great opportunities for new housing partnerships. Scottish Enterprise is also involved in that.
The new employment zone has been good, but has had problems. I understand that it is £500,000 short of European social funding. If we cannot get ESF for that vital initiative, perhaps Scottish Enterprise can make up the shortfall. The hopes of hundreds of unemployed young people—including 80 of my constituents who are on the programme—depend on the success of the zone.
There are concerns in Glasgow and elsewhere that, with the establishment of the Scottish Parliament in Edinburgh, there will be a jobs drift from the west of Scotland to the east. Therefore, it is essential that the M74 extension from Tollcross to Kingston be completed as soon as possible. That is arguably the number one priority for the economy of Glasgow. It would free many hundreds of acres of derelict land for investment, create thousands of jobs, reduce pollution, improve the environment, eliminate congestion in the city, improve road safety and reduce pressure on Kingston bridge.
I appeal to the Minister to ensure that Scottish Enterprise spends its resources in a well-balanced way. It is fine to have physical developments and large projects, but it is also essential to concentrate on getting more to the poorest communities, especially if we are to maximise the advantages of the new deal.
Many thousands of young people have already benefited from the new deal, but many more have still to do so. We will not be able to levy former public utilities again to continue to fund the new deal, so, if we are to be serious about social inclusion, we must take the longer-term view and invest in training, education and infrastructure.
Thankfully, unemployment has fallen substantially since the change of Government, even in Glasgow. However, in the latest research paper issued by the House of Commons Library on unemployment by constituency as at December 1998, my constituency is ranked the 1093 16th worst in the UK and number one in Scotland. Indeed, eight of the top nine in Scotland are all in Glasgow and there are only nine and a bit constituencies in the city.
The male rate of unemployment in my constituency is 16.5 per cent. The female rate is 5.1 per cent., giving an average of 11.8 per cent. Those are tragic figures, and all the more so when we consider that they are substantially down on what they were two years ago and on what they were for most of the 18 years of Tory Government, when they were over 20 per cent. Under the Tories, there was no hope for my constituents, but, under the new Labour Government there is a great deal of hope. Let us extend the Scottish Enterprise budget by this £1 billion and ensure that it is spent to the benefit of the people of Scotland.
§ Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale)
It is a pleasure to follow the hon. Member for Glasgow, Shettleston (Mr. Marshall). As a member of the Select Committee on Scottish Affairs, I have enjoyed working with him and other colleagues, many of whom are present this afternoon. The hon. Gentleman was right to focus many of his comments about this Bill in the context of the Select Committee's visit to north America last week. We went to see, in practice, much of the work of Scottish Enterprise and its agencies, Locate in Scotland and Scottish Trade International. I concur with the hon. Gentleman's view that, as a group, we were very impressed by the work being done.
It is also a pleasure to follow the hon. Member for Shettleston because, in truth, he brought the debate back to the real issues that should be under discussion as we deal with the funding for Scottish Enterprise. I have, for my sins, over many years, pored over rather more sets of accounts than is probably safe for my sanity, but I have never inflicted an analytical review of a set of accounts on more than myself, and certainly not on a Chamber such as this. I was disappointed to hear that the main thrust of the speech from the Opposition spokesman was a comparison of balance sheets and expenditure over the past year. Although there is a legitimate scrutiny issue, time and again, the Conservatives have missed the point that, under the Scottish Parliament we will, for the first time, have an opportunity to have the accounts of enterprise agencies such as Scottish Enterprise and Highlands and Islands Enterprise, looked at thoroughly whereas perhaps, in the past, this House has not done that particularly well.
The timing of the debate is opportune. It comes at a time when Scottish Enterprise is announcing a new strategy which will take it forward into the millennium. It comes in a week when the noble Lord Macdonald of Tradeston made a statement to the Scottish Grand Committee in Edinburgh. Also, as I have said, it follows the Select Committee's visit to north America where we were looking closely at the work of many of Scottish Enterprise's agencies.
The hon. Member for Shettleston has graphically painted a picture of how much work remains to be done in different parts of Scotland if we are to ensure that enterprise and economic development are shared out 1094 equally and benefit all areas of the country. Anybody who is in danger of being complacent has only to look at the list of recent job losses across the country. This week there have been job losses at Wrangler in Falkirk. There have been job losses on the ferries at Stranraer in Galloway. There has been a series of job losses in Dumfries and Prestwick and in the borders, my part of the country, we have seen unprecedented job losses. While the banana war continues in all its irrelevance between the United States and Europe, we suffer the consequence of hundreds of job losses in the cashmere sector.
It is important that we do not lose sight of any of those job losses when we are looking at the budget for Scottish Enterprise and how it may spend that money. When Lord Macdonald spoke to the Scottish Grand Committee he highlighted various weaknesses in the Scottish economy. He listed a poor level of business start-up, very low investment in research and development, low skills and zero population growth. He was eloquent in pointing out how we might address most of those issues, but, strangely, how to combat zero population growth was missing from the list of initiatives.
There can be no doubt that Scottish Trade International, which is a largely forgotten body in the economic development armoury of the Scottish Office, is an organisation that will have a greater role to play over the next 20 years. The themes of the Select Committee's visit to the United States were, time and again, the increasing need to take account of the knowledge-based economy and the fact that technology is changing very rapidly. Above all else, the Committee learnt that economies will have to adjust to mobile capital and the fact that businesses can very quickly move in and out of a country. Although Locate in Scotland has for years been very successful, we have to focus increasingly on outward investment, ensuring that Scottish companies receive as much assistance as possible in promoting their products and sales overseas.
Lord Macdonald also made much of the technology ventures initiative, which is examining ways in which Scottish Enterprise and other agencies may be able to help promote the growth of high-tech industries, which are critical to our future. The Scottish Office and Locate in Scotland have so far been successful in attracting Cadence to Scotland. Project Alba is examining ways of increasing our competence in chip technology systems and of expanding that knowledge base in Scotland. The project is very exciting but will require the support of a cluster of Scottish companies to make it successful.
I am concerned that, in Scotland, we are not yet sufficiently alert to the prospects of our financial sector or attuned to its needs. When the Committee was in the United States, we met a venture capitalist in Philadelphia who talked about establishing a European fund to provide capital to new, small high-tech companies. He plans to raise great sums to invest in Scotland, where he sees great potential. However, he does not foresee any great competition from Scottish venture capitalists. Perhaps Scottish Enterprise has more of a job on its hands than it has so far acknowledged.
This week, the Scottish Office made an announcement on establishing various business pathfinder groups to consider ways of promoting the Scottish Parliament to business and of ensuring that its Members and the Parliament's debates are attuned to business's needs and demands. That welcome initiative is directly relevant to 1095 Scottish Enterprise. In the debate on devolution and on establishing the Parliament, the business community was initially atheistic about the Scottish Parliament. Business is now perhaps agnostic about the Parliament, but has not yet become evangelistic about it. Nevertheless, things are moving in the right direction, and anything that supports such movement is welcome.
I should be interested to hear the Minister address the issue of why, although Scottish Enterprise has identified oil, gas and electronics as key clusters in developing the Scottish economy, appropriate pathfinder groups are not being established. It is a strange omission.
There is much consensus on how the Scottish economy should be developed, although the issue will continue to be debated actively in the remaining few months until the elections in June and beyond. Nevertheless, when implementing its new strategy and using the new funds that we are considering today, Scottish Enterprise should consider the business culture in Scotland, especially the way in which we do or—more often—do not encourage entrepreneurship.
I am afraid that too many people become aware of the need for wealth creation and business creation, and of the fact that profit occasionally can be a good thing, long after they have left school and university. We cannot blame that situation on any one sector, but there is no doubt that teacher training and school and university curriculums do not address the issues of entrepreneurship and wealth creation, thereby creating a major gap in business education. We need look no further than that non-business culture to discover some of the reasons for our low start-up business rate. It is strange that successful business men and women are the exception rather than the rule when Scotland has produced so many over the generations. Over hundreds of years, Scots have proved their ability in international trade and business. We must not lose out because of a lack of far-sightedness from agencies such as Scottish Enterprise.
I agree with the hon. Member for Shettleston about the need to complete the M74 link from Tollcross to Kingston bridge. That highlights a wider issue for Scottish Enterprise and economic development throughout Scotland. It is incredible that Scottish Enterprise's remit does not include the need to establish or draw up a national infrastructure strategy. The Minister may say that different parts of the Scottish Office consider roads and rail. Some hon. Members are eagerly awaiting the announcement of those reviews in the next few weeks. From an economic development perspective, it is important in international competition for our major enterprise agencies to have a blueprint of the national infrastructure, covering rail, road, air and sea, that would best help to attract new businesses to Scotland and help indigenous companies to grow. IBM in Greenock is almost an indigenous company, but it is important when dealing with such global firms to keep Scotland competitive as a place to do business.
I referred earlier to the significant job losses that we have experienced in Scotland recently. I have argued for some time that there is a need to establish a rapid reaction unit in the Scottish Office to take account of problems as they strike a particular area. All hon. Members present today have their own experience of the Government's response to their local difficulties. I endorse and welcome all the efforts of the Borders working party. The direction 1096 in which the interim report is going is encouraging, as long as the funding—of which there may be some available after this debate—comes along in due course.
Crises have hit Scotland time and again. They are unpredictable. Nobody could have expected Wrangler to announce the closure of its business this week and nobody foresaw the trouble at Viasystems in the borders. We need teams that can be assembled in the Scottish Office at short notice with the remit and responsibility to draw up local action plans, bringing together transport and education requirements and industrial and economic development issues. Sadly, the Scottish Office is getting a lot of practice at that at the moment. There is a good case for making it a standing part of Scottish Office machinery, particularly at Scottish Enterprise.
I should like to refer briefly to the situation in the borders. I have already talked about the need for the Government to keep a watchful eye on the trade dispute. I acknowledge that the Scottish Office cannot sort that out on its own. I want to put on record my gratitude to Scottish Trade International and other bodies in the Scottish Office that have worked closely with my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and me on that. I also had a helpful meeting with the Minister for Trade this week. The potential impact of the loss of jobs in cashmere would be devastating. We have had many job losses in the borders and people are bleary at the prospect of more. We saw the problems in textiles and agriculture coming, but we are now being confronted by an issue that has nothing to do with the borders. It started as a trade war over bananas between the United States of America and the European Commission and somehow came home to roost in the borders. That is bad luck. We must be confident that the Scottish Office and Scottish Enterprise will continue to be behind the borders and will face up to the threat.
I understand that local enterprise companies in Scotland will learn of their budgetary allocations in the next few days. Indeed, it may even be as soon as tomorrow. I hope that the House will be told pretty quickly and not via a press release issued late on Friday evening. Those allocations are an important part of the debate on the Bill.
I remind the Minister of the commitment given by the Minister for Trade to support the £1 million down payment for the borders with further funding for specific projects in the local enterprise companies' budgets in the coming year. I hope that that pledge is about to be honoured.
The debate has focused on Scottish Enterprise, which is an important organisation. As hon. Members on both sides of the House have pointed out, it has a great deal of influence and potential for good around the country. We support the Bill and we hope that the new strategy for Scottish Enterprise proves to be the correct one, and that no one is carried away by talk of clusters and knowledge economies and forgets the problems that still face many people in Scotland.
§ Ms Sandra Osborne (Ayr)
I am by no means desperate to catch a train, as the hon. Member for West Dorset (Mr. Letwin) suggested. Indeed, I intend to use the opportunity of supporting the Scottish Enterprise Bill to highlight a number of local issues affecting Ayrshire—a place with which the hon. Gentleman may not be familiar. 1097 If he listens, he may learn something about the recent problems and successes there. They emphasise the importance of the network that comprises Scottish Enterprise and the need for more resources which we hope will be made available shortly.
Scottish Enterprise has enjoyed a high profile this week. In the Scottish Grand Committee, the Minister made a statement on the new network strategy document; Sir Ian Wood gave evidence to the Scottish Affairs Committee this week; and today we are debating the Scottish Enterprise Bill.
The Scottish Affairs Committee has been inquiring into inward and outward investment, and a number of issues have been raised. In addition to the visit to America—rather than repeating any of the points that have been made, I shall simply say that I concur with the views of my colleagues on the Select Committee—there have been several visits to Scotland. We have taken evidence in the borders and in Dundee and I am pleased to say that we shall shortly visit Ayr to hear about the problems affecting inward investment and tourism in my constituency.
I believe that the Select Committee will produce an extremely helpful report. Some of the comments that have been made today are relevant, although I would not dream of pre-empting our recommendations or making them before the publication of the report. One issue raised during our inquiry concerned the potential problems associated with having a number of different agencies dealing with economic development and competing for inward investment. That can occur nationally and locally. I shall briefly describe the approach adopted in Ayrshire, which is a good example of how local players can work together to achieve a coherent strategic approach.
The Ayrshire economic forum is a partnership drawn from the three local authorities: Ayrshire chamber of commerce and industry, the Scottish Trades Union Council and Enterprise Ayrshire. For the past two years the forum has been working towards a new economic development strategy for Ayrshire. However, it has been overtaken by recent events, particularly a number of redundancies announced by significant companies such as Volvo, Digital, Prestwick Circuits, Sweater Shop, Sports Division and Butlins. Following those redundancies, the Minister addressed the forum and called for an action plan for jobs in Ayrshire. He said his involvement reflected the Government's concern and commitment to support areas facing structural economic change. I was pleased that he was involved.
It is clear that Ayrshire is an area facing such changes, and that there is a need for new businesses in Ayrshire and further diversification of the economic base. The economic forum will shortly publish an action plan for jobs, and will drive that forward with Scottish Office involvement. Again, that is a positive move on the part of the Scottish Office.
The action plan for jobs will be set in the context of the existing Enterprise Ayrshire business plan, the economic development plans of the local authorities and the Scottish Enterprise network strategy. That has been possible because the forum is a genuine partnership in which all the agencies work together.
The changes that are impacting on the Ayrshire economy are deep-seated and are affecting a wide range of sectors such as electronics, engineering, textiles and retail 1098 distribution. In the past, those sectors have contributed a great deal to Ayrshire's economic prosperity. We have a highly self-contained labour market, with 96 per cent. of Ayrshire jobs taken by Ayrshire residents. Tackling structural change in Ayrshire's economy therefore continues to be our overriding priority.
The pace of economic change, along with the wave of redundancies to which I referred, means that the current resources available to Enterprise Ayrshire and its local authority partners leave them running fast to stand still. The action plan for jobs must, therefore, be underpinned by the availability of additional resources. I am sure that the House will forgive me for making my bid for Ayrshire in the same way as others have made bids for their local area.
The work done by the forum does not suggest a quick-fix strategy—it is a detailed plan for the future, with concrete proposals that will create jobs. It builds on Ayrshire's considerable existing assets, which include the extension of the M77 and Glasgow Prestwick international airport—which continues to achieve substantial growth in its freight and passenger business, and does a great deal, as we heard on our trip to north America, to support the development of the Scottish electronics industry.
The presence of nationally significant development sites is also an advantage. As well as the area surrounding Prestwick airport, we have Riverside in Irvine and Rowallan in Kilmarnock. These represent future potential, and are areas on which we hope to build. We also have international research institutions in Ayrshire, such as the Hannah research institute, the Scottish agricultural college and the higher education facilities at Ayr campus of Paisley university, which are developing positively.
I am sure that everyone in the House will recognise that Ayrshire is a beautiful part of the country with a natural environment that provides an exceptional quality of life, which I recommend to all hon. Members—including the hon. Member for West Dorset. Despite those assets, however, Ayrshire's road and rail links will continue to require substantial investment if they are to meet future business needs. As my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) has emphasised, we will need to target areas of acute disadvantage and join in the Government's existing efforts to tackle social exclusion.
The action plan will have ambitious targets to create thousands of jobs over five years, but there has been a deliberate aim that the targets should be realistic and achievable. That is very important for local credibility. People often hear of action plans, task forces and working parties being set up, but they do not always see tangible results. There is a real, determined effort to make sure that there are tangible achievements after five years.
There has been also some good news in Ayrshire recently, with a number of announcements about inward investment—for example, Universal Scientific Industries creating 700 jobs in Irvine—and there have been positive views from local companies.
I want to highlight the work of the Prestwick task force, which was set up specifically to address aviation issues involving Prestwick airport and the surrounding aerospace companies. One of the crucial elements in its success has been the involvement of the national and multinational 1099 companies surrounding the airport. They have participated with great enthusiasm and have co-operated to the benefit of the whole area as well as themselves.
The final report, published in December, is a testament to how a collaborative approach can produce results. Only 18 months ago, when British Aerospace announced that production at Jetstream would cease at Prestwick, the banner headlines were all about the devastation of the Ayrshire economy. Now the talk is about Prestwick as a leading aerospace cluster on the world stage and about the continuing growth of traffic, especially freight cargo, at Prestwick airport.
The task force set itself eight targets. They have all been fully achieved or are well on the way to being achieved and have been picked up by other bodies. Alternative employment has been found for the majority of Jetstream workers affected by the closure, and all 270 aerostructure jobs at British Aerospace, which were at risk, have now been secured. In addition, more than 600 jobs have been created or are planned for the Prestwick area.
Locate in Scotland undertook a marketing exercise in north America highlighting the advantages of Prestwick as a location for aerospace companies. I agree with what other hon. Members have said about Locate in Scotland's work, which we witnessed when we were in America. The work done for Prestwick has resulted so far in 15 active leads that are currently being pursued. The airport recently opened a new purpose-built airfreight facility with support from Enterprise Ayrshire.
Some outstanding issues were highlighted by the task force report and were agreed by all the partners in the Ayrshire economic forum to be crucial to the further development of the Ayrshire economy. Those issues are extremely relevant to the work of Enterprise Ayrshire.
Improvements are needed to the roads infrastructure. Like other hon. Members, I will make a bid for the upgrading of the A77 to be completed. That is crucial to future development in Ayrshire. We will also pursue assisted area status. It will come as no surprise to hon. Members when I mention the vital importance of the completion of the new Scottish air traffic control centre at Prestwick, which will provide hundreds of high-quality jobs. The current centre is already a major contributor to the local economy. We must have progress on the contract. That is not directly the responsibility of Enterprise Ayrshire or Scottish Enterprise, but I am sure that they would agree that it is absolutely crucial to the local economy.
We need progress on fifth freedom rights for Prestwick airport. I am pleased that the Government have recently shown more flexibility and have granted fifth freedom rights to Polar Air Cargo at Prestwick, uniquely without a reciprocal arrangement from the United States Department of Transportation. That is real progress and it was certainly not achieved by the previous Government. In the long term we need a final agreement on fifth freedom cargo rights, which will bring significant benefits to Prestwick and indeed the whole of Scotland. We will continue to press for that.
It is clear that only a certain amount can be achieved locally and we are very dependent on national action and support to further our aims. A wider economic framework obviously determines how effective the enterprise companies can be locally, and general economic conditions have a major impact on the prospects for any one area.
1100 It is ironic that, despite everything else that I have said, unemployment in the Ayr constituency has dropped by 30 per cent. since December 1996. We warmly welcome that, but there is no room for complacency, and the figures hold no consolation for those who lose their jobs through redundancy. We must stick to a long-term strategy, both locally and nationally, to create stable and lasting jobs and make available training opportunities to help people into new employment. I am pleased that, unlike the previous Government, this Government have not washed their hands of redundancies in my area and Ministers have been willing to get involved. The role of Scottish Enterprise and local enterprise companies has also been crucial, because they are a concrete way in which the Government can ensure that they do not wash their hands of difficult situations.
All hon. Members present will no doubt wish to see applied to their area a fair share of the considerable resources that will be available to Scottish Enterprise. As my hon. Friends have said, we wish to see resources concentrated in areas of greatest need. That is important for Scotland, but was not done in the past 18 years. Ayrshire's case for more resources is sound and we will make a good case when the action plans for jobs are produced shortly. I trust that Scottish Enterprise will respond positively to our requests and our bid for increased funding.
§ Mr. Desmond Swayne (New Forest, West)
It is a great pleasure to follow the hon. Member for Ayr (Ms Osborne), who is a member of the Committee on which I have the privilege to serve and who represents the town of my school days.
Before I deal with the subject of the Bill, will you first indulge me, Mr. Deputy Speaker, by allowing me to get a point of frustration and irritation off my chest? It is not the fact that I am unable to put in a bid for Scottish Enterprise money for New Forest, West, but the fact that, as is my custom, I rose early, swam quarter of a mile in the Serpentine and cycled to the Palace of Westminster. As a consequence of the business that must necessarily take place before the Chamber sits, I went straight into a series of meetings. Since business in the Chamber began, I have been in my place. At 5.46 pm, I rise to speak, feeling faint because I have scarcely had a moment to eat a banana and a mouthful of soup. The new arrangements for Thursday are inhumane and barbaric.
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. I am sorry to hear that the hon. Gentleman is feeling faint and has not had a decent meal. However, I have had a decent meal and I wish to hear what he has to say on Scottish Enterprise, not on the arrangements of the House.
§ Mr. Swayne
In that case, hon. Members may welcome the fact that this is the last programmed Scottish Bill before the Scottish Parliament takes over Scottish business.
If one were to be partisan and make party political points, one might draw attention to the fact that the budget for training and Scottish Enterprise was cut by some £67 million in the comprehensive spending review. Were someone to make such a point, Labour Members would no doubt respond by saying that the previous 1101 Secretary of State cut the budget. However, Conservative Members would say that he did so only with the agreement of the chairman of Scottish Enterprise and that, within a year, the value of the cut had been more than restored. I wish to move on from such sterile ground in this age of new politics and consensus and to question the fundamental basis of the Bill.
The hon. Member for Glasgow, Shettleston (Mr. Marshall) made some pertinent points about the balance of investment between the need to secure more indigenous investment and the acquisition of more capital investment from overseas. I wish to go further and raise questions about the fundamental assumptions underpinning the Bill.
My first point relates to the expensive pursuit of overseas capital. The balance of payments must, of necessity, balance. The number of potatoes sold at the prices charged must be equal to the number of potatoes bought at the prices paid. Any imbalance in the balance of trade in the current account must be made up for by an equal and opposite imbalance under another item in the current account, or by an equal and opposite imbalance in the overall capital account.
Both the British and the Scottish economies are familiar with that fundamental concept. For a long period during the 19th century, and during this one, the Scottish economy and that of the whole United Kingdom ran a huge surplus on current account, made up of a deficit on the balance of trade masked by a huge surplus on invisible earnings. Strangely, even at the height of the industrial revolution, when Glasgow was the workshop of the world, we ran a deficit on our balance of trade.
The statistics of the 19th century are not entirely clear, and the evidence is not always obvious. At the beginning of the 19th century, our collection of statistics was not as sophisticated as it is now. However, it is questionable whether the United Kingdom ever ran a balance of trade surplus during that century. As a result, our current account surplus was made up of a huge surplus on invisibles, largely because of the shipping industry. The balance of trade was affected by the fact that the motor of our economic development—the cotton industry—relied almost wholly on an imported raw product.
Of necessity, the huge surplus on the current account led to an equal and opposite outflow on the capital account. Britain had to export capital to make its trading partners able to afford to continue to trade with us. On the back of that fact, British capital ended up building railways throughout the rest of Europe and in north America. A lasting legacy is that we retain the lead in the world, including the United States, as the largest per capita owners of overseas capital.
If there is a persistent balance of payments deficit, it must equally be met by a capital inflow. One cannot go on buying from a shop—
§ Mr. Deputy Speaker
Order. The hon. Gentleman is losing me, perhaps because I am not as well-versed as he in the economics of the 19th century. We must home in on the Second Reading of the Bill, which is about 1102 enterprise and new towns in Scotland. The hon. Gentleman seems to be speaking more about the economy of the UK as a whole.
§ Mr. Swayne
One of the principal functions of Scottish Enterprise and its partnership with Locate in Scotland will be to attract inward investment. The point that I seek to make, Mr. Deputy Speaker, is that one cannot go on buying from a shop without having some source of income. I have pointed out the necessity of equal and opposite matching outward capital flows where a country runs a persistent current account surplus, or inward capital flows where a country runs a persistent balance of payments deficit. Capital inflow is an automatic consequence of the state of the current and capital accounts of the balance of payments. My question concerns the wisdom of making the expensive pursuit of foreign investment a priority. Obviously, it is a matter of balance. There is a measure of automation in the process, yet we seem to be investing a great deal to short-circuit and do the work that the logic of economic theory would ordinarily do for us.
§ Mr. Alasdair Morgan
Is the hon. Gentleman saying that, if Locate in Scotland did not pursue its activities, for example, all that inward investment would still come to Scotland and would not be attracted to Ireland by, say, the Irish Industrial Development Agency?
§ Mr. Swayne
I am making a case for having a balance. Obviously, one must have a view as to the type of investment that one wants. After all, one would not want merely to attract screwdriver plants; one must have a qualitative attitude to the sort of investment that comes in. The hon. Gentleman is right in identifying the fact that economic logic requires a certain amount of inward investment.
§ Mrs. Fyfe
The hon. Gentleman talks as though depressed areas can easily pick and choose where investment comes from. Industry disappeared from the area that I represent decades ago. Maryhill was at the heart of the industrial revolution and all that industry has gone. Frankly, if an investor from Mars were offering jobs in Maryhill, I would take up the offer.
§ Mr. Swayne
I hope that the hon. Lady will be successful in that bid for inward investment. I was talking not so much of the ability to pick and choose as of the logic of economic theory, which would require inward investment.
Another aspect of the work of Scottish Enterprise is that of the funds that it maintains to provide venture or seedcorn capital for business start-ups that would otherwise not be able to secure such funds. By its very nature, that is a risky business and it leads to a significant element of loss. Arguably, that is of necessity so. Indeed, if the figures for Scottish Enterprise did not show such losses, it could be argued that it was not doing its job properly by providing for industries that would otherwise not be able to secure such capital and so would never start up. There has to be a balance, but I am not wholly persuaded by the argument.
However, I do not want to go into that. I want to question why Scottish Enterprise finds itself in that position at all. Many years ago, there were agencies for 1103 providing such capital. It is all very well for us to complain that the banks do not fulfil that role, but it was never their role to provide venture capital. In the great age of Glasgow—the industrial revolution—the main source of capital for risky enterprises was from within an entrepreneur's own family. Why has that source of capital almost completely disappeared throughout the realm? One cannot blame it on new Labour even if, in this age of consensus and new politics, one were minded to do so. That situation arose not only in this century but in the past century—
§ Mr. Dominic Grieve (Beaconsfield)
Is not the answer simple? It is due to the failure of wealth to cascade down the generations.
§ Mr. Swayne
My hon. Friend has a pertinent point. As the state has taken on a series of activities, it has displaced—
§ Mr. Deputy Speaker
Order. I am interested in what the hon. Gentleman has to say, in particular about the history of my native city, Glasgow, but he must be more specific. He must deal with the Bill, not wander through the economic problems of the United Kingdom.
§ Mr. Swayne
Thank you for your guidance, Mr. Deputy Speaker. You will be relieved to hear that I am drawing to my peroration. The point that I am seeking to make is that we are about to provide an agency that already spends a great deal of public money with an additional £1 billion. I am questioning the necessity of that process.
§ Mr. Letwin
I want to ask my hon. Friend a question that is absolutely specific to Scottish Enterprise and that I neglected to draw to the attention of the Minister earlier. Is he aware that of the approximately £3 billion that Scottish Enterprise has so far consumed, total investments—apart from those in property—amount to some £51 million, showing that some £2.95 billion has not gone into investments currently held?
§ Mr. Swayne
I thank my hon. Friend for that intervention, which is highly pertinent at this time.
My hon. Friend the Member for Beaconsfield (Mr. Grieve) pointed out that, as the state has taken on greater and greater activities for itself, it has displaced the activity and responsibility that would otherwise have come from individuals and their families. The state has reduced the incentive to save by funding such activities through taxing savings, income and, very importantly, inheritance—so much so that the diffusion of wealth throughout the population no longer exists to fund the activities of venture capital. That is why this Bill which requires the state to provide funding is before us today.
§ 6.2 pm
§ Mr. Russell Brown (Dumfries)
Follow that, as they say. Unlike my hon. Friend the Member for Ayr (Ms Osborne), let me tell the hon. Member for West Dorset (Mr. Letwin) that I shall be catching a train this evening and, like Cinderella, hope to be home before midnight.
1104 I welcome the opportunity to support the Scottish Enterprise Bill which will provide financial cover for various activities over the next two years. Thereafter, as has been said, that will become the responsibility of our Scottish Parliament. Naturally those resources filter down to local areas. For an area such as my constituency, which has seen significant job losses over recent months, any additional support that may flow from these moneys will be welcome. Hon. Members have spoken of the major role played by Scottish Enterprise and, like them, I welcome the new network strategy document that was announced earlier this week by my noble Friend Lord Macdonald of Tradeston.
Only this week 20 job losses in heavy engineering and a further 80 job losses in the polyester film manufacturing business in my constituency were announced. The ICI site that offered about 800 manufacturing jobs during the summer of 1997 will by the middle of this year offer only 350 jobs. The collapse of the Asian market and the decision of multinational companies to change their portfolios and abandon certain manufacturing sectors can have a devastating effect on rural areas. Dumfries, Galloway and the Scottish borders have felt some of these devastating consequences during the past 12 months.
Given that in recent months we have had about 600 job losses announced in my locality, it comes as a surprise to many people that unemployment figures do not show significant increases. I do not want to play down job losses because losing a job is a personal tragedy for anyone. However, far from the significant job losses being shown in an increase in unemployment, compared with this time last year, the statistics show a 3.7 per cent. reduction in people seeking employment and claiming jobseeker's allowance; compared with two years ago, the reduction is 20.4 per cent.
After the numerous job losses, my noble Friend Lord Macdonald of Tradeston visited our locality.
§ Mr. Moore
I know that the hon. Gentleman will develop his point, but does he agree, given our similar experiences of rural issues in the south of Scotland—the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) is also here—that when people lose their jobs, they are forced to leave the area? That artificially suppresses the unemployment rate. Does he agree that many of the worst recent job announcements have yet to kick directly into the statistics?
§ Mr. Brown
I agree to some extent. People in the hon. Gentleman's area may leave the locality to seek employment elsewhere, but that is not necessarily so in my constituency. He said that some job losses had yet to kick in, but my figures relate to people who have become unemployed and are a true reflection of what is happening.
The position has undoubtedly been helped by the excellent performance of Dumfries and Galloway enterprise company. Like so many such companies, its assistance is welcome in difficult times. Rural areas cannot attract inward investors who would bring 400 or 500 jobs at a stroke to one place. I therefore believe that it is even more important for the local enterprise company to spread its financial resources over as wide a variety of activities as possible.
According to its most recent annual report, my local enterprise company, which also covers the constituency of the hon. Member for Galloway and Upper Nithsdale 1105 (Mr. Morgan), provided information and assistance to 247 companies and helped 271 businesses to start up. The general public often miss such figures. It assisted 45 exporting companies and advised four potential inward investors. It supported 28 food, 27 forestry and 73 tourism businesses.
In such a large rural area, the importance of the ability to support 750 companies in training their staff cannot be overstated. Such training, in programmes such as skill seekers and training for work, helped some 230 long-term unemployed people attain employment. That is an excellent step forward for those who have fought so long and hard to find employment. It is also worth mentioning that 20 companies committed to the Investors in People standard during that year.
Dumfries and Galloway Enterprise is involved directly in the delivery of the new deal in my area. As a member of the strategic partnership formed to deliver the initiative, it is leading on the management and delivery of the employment option and the full-time training and education option. It sees its role in the new deal as an increasingly important part of the economic inclusion activity.
I mentioned previously that 271 new businesses had started up. That element of entrepreneurship continues to be a strong feature of the local economy in rural areas. Rural areas depend on small and medium-sized businesses. The launch of a new business start-up programme has proved invaluable to so many people who have been seeking opportunities to start a business.
The importance of tourism in rural areas can be shown by the numbers employed in that sector. Almost 10 per cent. of the area' s work force is employed in the industry and last year we saw the development of a partnership that established our area's first integrated tourism strategy, in which a comprehensive vision for the industry's development was set out.
The ability to offer market research, exhibition support and overseas promotional literature assisted the previously mentioned 45 exporting businesses in the locality. In what is clearly recognised as a difficult time for export companies, the enterprise company's intervention is expected to have led to a growth in direct sales of just less than £1 million. That activity, along with other activities that my hon. Friends and hon. Members have mentioned in the realms of property and environmental improvements, as well as assistance to a significant number of property-based initiatives, has shown just what can be done in rural areas by local enterprise companies.
The Bill offers the opportunity to support through Scottish Enterprise a significant amount of economic activity that might otherwise never happen. I hope that hon. Members on both sides of the House see fit to support it.
§ Mr. Laurence Robertson (Tewkesbury)
I am rather amazed to find myself talking at this hour about the Scottish Enterprise Bill.
§ Mr. Robertson
With a name like Robertson, I am perhaps entitled to offer one or two words on the Bill. 1106 When I looked at the Bill I was even more amazed. The thing that caught my eye was the extraordinary amount of money that we are talking about—not just the extra £1 billion but the almost £3 billion that has already been spent. I welcome the removal of Ministers' ability to increase the amounts by statutory instrument, but I want to make a short speech that my hon. Friend the Member for West Dorset (Mr. Letwin) might describe as a probing speech. I wish to ask a few questions and seek clarification.
I am concerned that responsibility for Scottish Enterprise will pass to the Scottish Parliament. It is not a matter of whether the Scots, the English, the Welsh or people from Northern Ireland are competent to deal with their own affairs, but the amount of money is so enormous that it inevitably comes from the United Kingdom taxpayer. Should not the United Kingdom Parliament have some control over it? If Labour Members feel that the money is well spent and benefits the people of Scotland to such an extent, would they be happy for the people of Scotland to provide it in its entirety? If they are, I suggest that the Scottish Parliament would need to increase the tax in Scotland by more than the 3p in the pound by which it is entitled to increase tax. I wonder whether it would have been better to delay introduction of the Bill until the Scottish Parliament was up and running. The responsibilities would have been clearer.
§ Mr. Robertson
If that happens, that may well be the case. I have probably presented only one half of the equation because I am only a quarter of the way through my speech. Who will pay? The hon. Lady makes a good point. Will Scottish Enterprise be self-financing? What returns can we expect from the new companies that are created which otherwise would not have been created? That has to be the question. What will they contribute in terms of corporation tax, job creation and jobs retained—which is important—and in terms of inward investment attracted? In other words, is this money well spent?
I wish to put the amount into context. My hon. Friend the Member for West Dorset mentioned the number of nurses who could be employed by the extra money. The £4 billion over the period in question would run the health service for quite a few weeks. The health service employs about 1 million people. In that context, the figures quoted this afternoon are not impressive.
§ Mr. Alasdair Morgan
Does the hon. Gentleman accept that the Bill will not increase the sum available to the Scottish Parliament because that is clearly laid down by the Scotland Act 1998 and the Barnett formula? If the Scottish Parliament finds that money, it will be at the expense of other items of expenditure. The hon. Gentleman appears to want the House to supervise the Scottish budget in total.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. It is not in order to go down that track. We must 1107 concentrate on the Bill before us, not the wider issue, which has already been raised once in the debate and which I hoped I had expelled.
§ Mr. Robertson
Thank you, Mr. Deputy Speaker, for rescuing me from going down a complicated path.
May I put the £4 billion in another context? I was saying how many people it could help and how long it could run the health service, for example, which employs 1 million people; but given that the entire population of Scotland over the age of 16 numbers just over 4 million and the economically active population is only 2.5 million, it seems an extraordinarily large sum to spend on such a small work force. That is not to undervalue that work force; my argument is whether it is money well spent. The money might be better spent elsewhere, as the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) might have been suggesting, or perhaps left in the pocket of the taxpayer, who knows how to spend it better than Governments.
A number of differing figures have been quoted this afternoon. They also differ from the figures that I shall give. In an earlier intervention I quoted the chief executive of Scottish Enterprise. I shall do so again for the benefit of hon. Members who were not in the Chamber then. He claimed in the annual report that Scottish Enterprise has helped to attract inward investment of £1 billion, and created or retained 18,000 jobs and 36,000 training places. Yet he says:Scotland …still lags behind the rest of the UK in the number of businesses emerging".The chairman of Scottish Enterprise, Sir Ian Wood, says that Scottish Enterprise hasadded £600 million to Scotland's GDP.Those figures may sound impressive, but compared with what Scottish Enterprise has cost, they are not impressive at all. The agency has not moved Scotland on very far. Will the Minister assure us that the money will be well spent and will result in gains to Scotland that are proportionate to the cost of the schemes?
§ Mr. Moore
Is the hon. Gentleman suggesting that economic development is not a valid purpose for Government expenditure, or is he contending, by contrast, that Scottish Enterprise is particularly inefficient in terms of economic development? If it is the latter, what benchmark is he using to make that suggestion?
§ Mr. Robertson
I have used a number of benchmarks, the best of which is the fact that the chairman of Scottish Enterprise, Sir Ian Wood, says that it has added £600 million to Scotland's GDP. However, if one averages out what the agency has cost since its creation, that £600 million is not impressive. One must ask how much of it would have existed had the money not been spent in the first place.
I shall bring my remarks to a close because I am interested in hearing the Minister's response. Will he assure us that the value for money of Scottish Enterprise will be constantly monitored?
§ Mr. Dominic Grieve (Beaconsfield)
I shall try to keep my remarks brief. Whenever I have participated in Scottish debates in the past and told the House that I would be brief, I have usually succeeded in keeping to that undertaking.
1108 It is a great pleasure to participate in this debate and to have listened to it. During the long passage of the devolution Bill, when I spent many long hours on the Benches, I realised how much one learns about issues concerning places other than one's own constituency when one bothers to attend debates in this Chamber.
I hope that you, Mr. Deputy Speaker, will allow me to go slightly beyond the Bill, because I want to refer to the necessity for Members of Parliament to be kept informed of what goes on nationwide. I am satisfied that the Bill should commend itself to the House, and I accept that Scottish Enterprise has been beneficial in Scotland, so I have no objection to raising the limits.
However, the comments of my hon. Friend the Member for West Dorset (Mr. Letwin) about the lack of past scrutiny of the activities of Scottish Enterprise are perfectly valid. The House has previously discussed the problem of our ability to scrutinise every aspect of Government activity. I suspect that the Scottish Parliament may also have that problem, especially if every day it packs up at 5 o'clock in the afternoon—it is now a quarter past six. Bills should not be allowed to be nodded through. They require explanation, and I hope that the Minister will deal with my hon. Friend's points, if only briefly, when he winds up the debate.
Some issues go beyond the Bill, which I am told is the last we shall consider before the Scottish Parliament comes into being. Finance is at the root of what makes a unified nation state. We all have concerns about one another's finances. During the devolution debate, and even this evening, I heard enough compelling speeches, such as that of the hon. Member for Ayr (Ms Osborne) about the particular needs of her constituency, to know that there is competition nationally for the allocation of funds. If any issue is to cause problems and dissent when the Scottish Parliament is established, it will be finance.
I listen to Government Members who represent English constituencies, particularly in the north-west. It is clear that, even though this money may come from the block grant, the block grant itself will be up for consideration far more frequently once the Scottish Parliament is established. Therefore, those of us who believe in the Union—that applies across the Benches—argue that continuing, adequate information should be provided to hon. Members about how money is spent north of the border after the Scottish Parliament comes into being. If it is not provided, that will be a fertile area of misunderstanding. New mechanisms will have to be established in this Parliament so that we can be given that information.
§ Mr. Grieve
We shall have to look beyond the existing Select Committee system to provide mechanisms for frequent contact between Members of the House and Members of the Scottish Parliament in Edinburgh, for the exchange of information, if not on a statutory basis then according to growing conventions, and for relevant Ministers to explain to hon. Members whether they are satisfied with the way in which expenditure is being handled north of the border. I do not see that as unwarranted interference, because Members of the Scottish Parliament should be entitled to obtain answers on those aspects through representatives at Westminster on issues that concern England alone.
1109 As these new mechanisms come into being, I should like to see them work. I hope that the hon. Members present who were also present during the devolution debate are aware that I want the new system to succeed, even if I have reservations about it. I hope that the Minister will take my comments on board, because without such mechanisms an interesting debate will not happen and misunderstandings will build up. That will ultimately threaten the Union, so we must get the exchange of financial information right.
§ Mr. Macdonald
With the leave of the House, Mr. Deputy Speaker.
Despite its technical start, the debate has been interesting. I think that the point on which the debate concluded is the point that began it, but I shall deal with that later, when I respond to what was said by the hon. Member for West Dorset (Mr. Letwin).
The hon. Member for Tewkesbury (Mr. Robertson) asked why we could not delay the whole business until the Scottish Parliament was up and running. The purpose of the Bill, however, is to enable Scottish Enterprise to continue its operations until the Parliament is up and running. If it is not presented and passed, Scottish Enterprise cannot do that. I think we all agree that it is important for Scottish Enterprise to continue its work. We have extended the limit for a minimal period, so that the Parliament can decide on future arrangements when it has been established.
The hon. Member for New Forest, West (Mr. Swayne) mentioned reductions in support for training. Under the new deal, an extra £300 million is being spent in Scotland over the lifetime of this Parliament—much more than was available to Scottish Enterprise before. Indeed, this is the biggest training programme in peacetime history.
The hon. Gentleman also made a plea for balance in terms of efforts to attract inward investment. Scottish Enterprise tries to maintain that balance. It may interest the hon. Gentleman to learn that less than 10 per cent. of Scottish Enterprise's operational expenditure is devoted to inward investment and the attraction of such investment; the rest is devoted to companies that are already operating in Scotland.
My hon. Friends the Members for Dumfries (Mr. Brown) and for Ayr (Ms Osborne) made a number of important points, especially in regard to the difficulties and challenges that exist in their constituencies. Those points will be drawn to the attention of my noble Friend the Minister for Business and Industry, who will note them with interest. As both my hon. Friends will know, my noble Friend recently met representatives from Dumfries and Galloway, and expects to meet representatives again in the next month or so. Many of the points that have been raised can be pursued then. The Scottish Office has now joined the Ayrshire economic forum. My noble Friend attended the forum's last meeting before the end of last year, and will attend the next on 25 January.
The hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) welcomed the action plan drawn up for the borders, and I welcome his positive comments. 1110 He suggested that the plan could provide a model or template for the future, and I agree that there are lessons to be drawn from the necessary speed with which Scottish Enterprise responded to the crisis in the borders. I certainly think that the way in which the action plan was put together by the working party provides a model from which we can learn lessons for the future.
The hon. Gentleman also emphasised the importance of infrastructure to economic development. Infrastructure is important for the borders, and also for my part of Scotland. It is taken into account in the current roads review, and the hon. Gentleman can be assured that officials from the Department that deals with transport, who are working on that review, try to consider the economic impact and the benefits of the various roads proposals. They are always grateful for the advice and information that they receive from Scottish Enterprise and from officials in the Department of Trade and Industry, so the communication that he was looking for is there.
The hon. Member for West Dorset raised a number of issues. Essentially, he asked questions about the value for money achieved through expenditure on Scottish Enterprise. He had particular queries and points in that respect, but he also couched the matter in a larger question about scrutiny of Scottish Enterprise post devolution.
As regards the first point, I can reassure the hon. Gentleman on the specific points that he made. Scottish Enterprise has not escaped scrutiny. In 1996, the National Audit Office published a report on Scottish Enterprise following a two-year review by the NAO that was obviously extremely thorough. It made several points to Scottish Enterprise. I think that the balance of them was positive in terms of the frame of controls that Scottish Enterprise has established to secure value for money.
The hon. Gentleman noted that the Public Accounts Committee had not conducted its own investigation of Scottish Enterprise, but the NAO conducted that thorough review, which was presented to the PAC. I do not know the practical reason why the PAC did not take that further, but one assumes that it was because it was satisfied with the outcome of the NAO report, Therefore, I hope that the hon. Gentleman can take reassurance from that and will rest his case not on any fears that Scottish Enterprise is not achieving value for money, but on the wider constitutional points that he made.
§ Mr. Letwin
Of course the Minister is right that my main point is a constitutional one and about the future, rather than a financial point and about the past, but does he accept that the NAO report is interesting in that it looks in painstaking detail at the way in which the moneys that were disbursed, after administrative expenses and so forth, were used, and whether value for money was achieved in terms of cost per job? It also, I should add, examined internal auditing controls; I am not and have never suggested any impropriety and the NAO found none. However, does he agree that the report does not look at all closely at whether the organisation is, as a financial enterprise, running its internal affairs efficiently? Is that not surprising?
§ Mr. Macdonald
That is a point that the hon. Gentleman could take up with the NAO. Certainly the tone of the report is one of general satisfaction with the operations of Scottish Enterprise. Unless we know 1111 otherwise, we would do better in this Chamber to emphasise that positive side, albeit the hon. Gentleman wants to make those wider points about scrutiny. It would only be fair if, here, we accepted that the NAO issued a generally positive report on Scottish Enterprise, and we can only assume that it found favour with the Public Accounts Committee as well.
My hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) made the point that, during the Select Committee visit to north America, it heard glowing testimony of the high regard in which Scottish Enterprise is held in north America because of the nature and quality of its work and the way in which it is perceived. I agree with what he said about Scottish Enterprise strategy and I find nothing to disagree with his points about Glasgow in general. I agree particularly with the fact that we need to address the problems of Glasgow, not just through the efforts of Scottish Enterprise, but through other measures such as the new deal, social inclusion partnerships and so on.
My hon. Friend the Member for Shettleston also mentioned the subject of brown-field sites in Glasgow which, quite rightly, he raises frequently. The treatment of such sites is important and my hon. Friend will be reassured to know that £3 million has been ring-fenced specifically for the development of brown-field sites in Glasgow.
The future oversight of Scottish Enterprise will be a matter for the Scottish Parliament. It will be one of the agencies under the Scottish Executive. The Scottish Executive and its agencies will be held to account by the Parliament. One would assume that the Parliament will have its own audit committee, which, like the Public Accounts Committee, will play an active and powerful role in the life of that Parliament. From April next year, responsibility for auditing Scottish Enterprise will transfer to the auditor-general for Scotland. That may not answer the deeper questions about devolution that were asked by the hon. Member for West Dorset, but I believe that those are just points of disagreement between both sides of the House about the merits of devolution and the need to achieve it.
§ Mr. Letwin
Without entering the depths of the dispute, if there is one, will the hon. Gentleman clarify a point? Is he saying that, it is the Government's view that, following devolution and in the light of the audit arrangements which he no doubt correctly says will be established by the Scottish Parliament, there should be no opportunity for oversight by this House or this Parliament of the use of funds by agencies which come under the Scottish Parliament.?
§ Mr. Macdonald
I am sure that the hon. Gentleman will be free to make his own speeches after devolution and to raise any points that he wishes with the Government of the day about how that Government are spending 1112 their money. It is a firm view on the Labour Benches that those responsibilities and duties should be transferred to the Scottish Parliament and, in our view, it will be the responsibility of that Parliament to fulfil them.
§ Mr. Letwin
I am sorry to interrupt again; this will be my last intervention. Can the Minister tell us how far he intends to press that point? Is he saying that, even if there are suggestions in this House that moneys voted by this House through the block grant to the Scottish Parliament are being ill-used, he and his colleagues do not intend to set up any specific mechanism to enable the taxpayers of the United Kingdom, as represented in this House, to investigate that?
§ Mr. Macdonald
I am confident that the Scottish Parliament will be able to acquit its financial duties and its responsibility for oversight of the agencies every bit as competently as the current Parliament and Government are able to do. As I have said, I am sure that the hon. Gentleman and his colleagues will be able to make their own speeches and raise their own points in their own way post-devolution. I hope that he will at least accept that, within the Parliament, there will be a powerful mechanism for ensuring proper oversight of those agencies.
I am grateful to have had the opportunity to respond to this debate. Although it is a technical Bill, it has raised some interesting issues. As I explained at the beginning of my speech, the Bill is intended simply to raise the aggregate limit for Scottish Enterprise to allow it to continue its important work, which I am grateful to note has received cross-party support. I commend the measure to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).