House of Commons Hansard Debates for 8 Feb 1990

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for the people of Scotland to face a level of income tax higher than elsewhere in the United Kingdom, we can only express some puzzlement as to why the hon. Gentleman's party has failed to reach a similar conclusion about the consequence of giving a Scottish assembly power to alter the rate of income tax.

As we have identified before, it is the implications for the Scottish economy of a higher rate of income tax in Scotland than elsewhere in the United Kingdom which is one of the prime arguments as to why those proposals would damage Scottish jobs, Scottish employment and Scottish industry. It is therefore appropriate that the hon. Gentleman and his colleagues should at least try to be consistent.

Mr. James Wallace (Orkney and Shetland) : The Secretary of State referred to fiscal powers that many of us would like to see vested in a Scottish parliament. Does he agree that if, in the forthcoming Budget, the Chancellor thought it improper for the United Kingdom as a whole, because of overheating in the south-east, not to reduce corporation tax on small businesses, for example, but felt that it might be an important and useful measure for small businesses in Scotland, he would effectively not be allowed to do so? If we had a Scottish parliament with fiscal powers, such a tax-cutting measure could be undertaken.

Mr. Rifkind : To listen to the hon. Gentleman, one would not think that he was a member of a party that wishes to see fiscal integration in the European Community. His party's whole wish is to see a harmonisation of taxes throughout the Community. It is therefore a slightly curious way of bringing that about to wish to see fiscal disintegration in one part of the Community. Perhaps the hon. Gentleman should try to reconcile that curious anomaly in his position.

I should like to pay a compliment to Opposition Members, which the hon. Member for Garscadden did not pay, by responding to the terms of the motion. I always think that, where possible, we should allow these debates to concentrate on the motion on the Order paper. I am sure that the hon. Gentleman, at least in principle, does not disagree with that observation.

As I read through the motion, I saw several allegations made against the Government, to which it is appropriate for me to seek to respond. The first is that we are responsible for what the motion refers to as "relative economic decline" in Scotland. The word "relative" is important : "relative economic decline" is Labourspeak for "actual economic growth", and that is precisely what Scotland is experiencing and has experienced for some time.

It is important that that point be fully registered. It is something that the House should already be aware of, that over the past year Scotland has enjoyed the highest output, including manufacturing output, that it has ever known in its economic history. I recall, as I am sure the House will, that two or three years ago-- Mr. Thomas Graham (Renfrew, West and Inverclyde) rose --

Mr. Rifkind : Perhaps the hon. Gentleman will allow me to continue for a moment.

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I recall the Government and the House constantly being told by Opposition Members and by various learned commentators that Scotland was experiencing de-industrialisation and that the whole of Scotland, as an industrial economy, was disappearing like snow off a dyke. Yet we find that in the past 12 months manufacturing output not only has been maintained, but has been the highest in our economic history. That does not refer to the service sector only ; it includes the manufacturing sector.

Mr. Tam Dalyell (Linlithgow) : This is a point that affects a great many of my constituents. On manufacturing output, can the Scottish Office look very carefully--that is all I ask--at the operation now of Mr. Kerry Packer and his associates, after two, if not three, Australian takeovers, of the north British Steel foundry in Bathgate, coupled with the Atlas Steel foundry in Armadale? I know that those are important sectors of any economy. I know that there are problems. I think that the Scottish Office has tried to be helpful. Could this have the attention of both the right hon. and learned Gentleman and his Minister of State? It is a very complex matter.

Mr. Rifkind : I am happy to give the hon. Gentleman the assurance that we shall certainly look at the point that he raises. Not only is Scotland experiencing the highest manufacturing output of its economic history, but output there is now growing faster than that of the United Kingdom as a whole. For example, in 1988-89, the last year for which we have figures available, the level of growth of industrial production in the United Kingdom was 2.2 per cent. In Scotland it was 4.5 per cent. Faced with those figures and the present record manufacturing output, the reference in the Opposition motion to "relative economic decline" shows a disregard for the facts that is not to the credit of the hon. Member for Garscadden.

Mr. Jim Sillars (Glasgow, Govan) : Is the right hon. and learned Gentleman suggesting that we are suffering from overheating of the Scottish economy? If this has been such an economic miracle, why are we still losing young skilled people, who have to go south to find jobs?

Mr. Rifkind : I do not know whether the hon. Gentleman was in the House a few moments ago when I intervened during the speech of the hon. Member for Garscadden. The question of migration was raised at that time and I was able to inform the House that the net migration figures last year were the lowest of any year since 1975. That is something which I am sure the hon. Gentleman will welcome as much as I do. I am not saying that we do not have economic problems in Scotland, or that the economy in Scotland is overheated. I am saying that the Scottish economy at present is growing faster than that of the United Kingdom as a whole, and not to recognise that is to do a disservice to Scotland's interests.

Mr. Gavin Strang (Edinburgh, East) : As the Secretary of State knows very well, Scotland's largest manufacturing employer is Ferranti. I put it to him, as the Minister with responsibility for the Scottish economy, that we welcome the support that the Government have given to the GEC acquisition of Ferranti Defence Systems in Edinburgh, but to achieve the benefits of that we need to win the radar contract, which will be achieved only if that acquisition is not referred to the Monopolies and Mergers Commission.

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I know that the right hon. and learned Gentleman cannot anticipate the decision of the Secretary of State for Trade and Industry, but, if the acquisition is referred to the MMC, it will jeopardise not only the radar contract but the whole European fighter aircraft project, which involves thousands of jobs. Will he take that on board and ensure that the Secretary of State for Trade and Industry fully takes account of Scottish economic interests in this matter?

Mr. Rifkind : I note what the hon. Gentleman says ; I am sure that he will acknowledge that recent developments regarding Ferranti have been beneficial to the interests of the thousands of members of its work force in Edinburgh. I shall be happy to give the hon. Gentleman the support he seeks if he will support the maintenance of proper levels of defence expenditure, as without that, Ferranti would have a pretty grim future.

Mr. Bill Walker (Tayside, North) : Will my right hon. and learned Friend remind the Opposition that the EFA programme depends vitally on a pledge from this Government and any future Government, and that we should be interested to know what Labour's view is on that?

Mr. Rifkind : My hon. Friend is absolutely correct in saying that it works both ways, as I am sure the hon. Member for Edinburgh, East (Mr. Strang) will recognise.

Dr. Jeremy Bray (Motherwell, South) : There has already been a reference to the importance of Ravenscraig, which must account for about 5 per cent. of Scottish manufacturing output. Is the right hon. and learned Gentleman aware that the cuts in output of steel in Scotland, which have not taken place in Wales, must have reduced manufacturing output in Scotland by at least 1 per cent.?

Mr. Rifkind : This is becoming more like Question Time and less like a debate than I had originally intended. Obviously, we have expressed our concern about recent decisions in that respect. It is encouraging that, since Christmas, Ravenscraig has resumed its output of steel products. I know that the hon. Gentleman will welcome that. The charge of "relative economic decline" is difficult for the Opposition to sustain, certainly when one looks at developments in the Scottish economy over the past year.

The next charge is of "unacceptable levels of unemployment" and I must ask the hon. Member for Garscadden what he means by that. If he means that unemployment is too high, I agree ; that would be true of any time in the past 30 years. There has never been a time when hon. Members on either side of the House have been complacent about the levels of unemployment.

However, if the hon. Gentleman is trying to discern the current trend of the problem of unemployment, he should at least acknowledge that over the past year unemployment in Scotland has fallen by no less than 50,000, which is the largest fall since records began in 1948. Not only has unemployment fallen by 50,000 in one year, but the rate at which unemployment is falling in Scotland has, over the past few months, been significantly higher than in other parts of the United Kingdom.

If the hon. Gentleman looks at those matters not from the perspective of unemployment but from the perspective of total employment in Scotland, the situation is equally encouraging. Employment in Scotland increased by no less

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than 100,000 in 1987, the latest year for which we have figures, and that included the manufacturing sector. That is something of which the hon. Gentleman should be aware. The total number of people in employment is the highest that it has been for 10 years.

Mr. Dewar : Why, if the record is so good, has the gap in average earnings to which I referred opened as it has? If the right hon. and learned Gentleman goes back two or three years, he will see that in the league table of unemployment we were in the middle. We are now, on the British mainland, the second highest, behind only the north. It seems to me that our record has been deteriorating quite clearly against the record in other parts of Great Britain over the past two or three years.

Mr. Rifkind : I do not accept that there is any such trend to which the hon. Gentleman is entitled to refer. He will know that, when we pointed out that Scotland had very high levels of earnings a few years ago, he immediately dismissed that as somehow irrelevant to his argument. Now that there has been a relative change in respect of certain areas of England, he immediately says that this is decisive and conclusive. The hon. Gentleman must make up his mind about the importance that he attaches to these matters.

Several Hon. Members rose--

Mr. Rifkind : The House will forgive me ; this is a short debate and I have already given way a considerable number of times. The next charge made against the Government is on the alleged inadequate levels of industrial investment and the alleged reduction in regional incentives. I happily concede that we should all like to see higher levels of industrial investment. That has been a problem in the United Kingdom as a whole probably for the past 100 years, never mind the past 10 or 30 years. But it is important also to recognise that the level of industrial investment in Scotland matches very well the United Kingdom level as a whole. While we would all wish to see it increased substantially, that is something that is ultimately within the control of industry itself.

On regional incentives, I accept that we have quite deliberately and consciously abolished the regional development grant. We did so with considerable support from the Scottish Council (Development and Industry) because it acknowledged in its study of the matter that automatic grants of that sort did little to encourage investment and that it was far more sensible to concentrate investment and support on companies that would not otherwise wish to invest in Scotland. That is, I believe, a much more logical and sensible basis. We are accused in the motion of not having prepared properly for 1992. That is pretty rich from a party that opposed our membership of the European Community until very recently, although I exempt the hon. Member for Garscadden from that charge. However, he cannot allow his own party to be exempt from it, because it was passionately hostile to our membership of the Community until the British electorate persuaded it otherwise.

As the single most important preparation that we can make for 1992 is to improve our training and business support in Scotland, it is pretty ironic that the Labour party, alone in Scotland, is opposing Scottish Enterprise, and that it cannot even call on the support of the Scottish

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TUC or Scottish local authorities in its lonely, isolated opposition to the measure. It is pretty rich for Labour to say that we are not preparing for 1992. It is widely recognised by the Confederation of British Industry, by the STUC, by Scottish local authorities and by the whole Scottish economic community that Scottish Enterprise offers an exciting new opportunity, as does its counterpart in the Highlands and Islands. If the Opposition are concerned about those matters, they should tackle their own failure to support this important change.

Mr. Dennis Canavan (Falkirk, West) rose--

Mr. Rifkind : I shall not give way at the moment, but perhaps later on.

On the charge that we have failed to protect Scotland from high interest rates, the hon. Member for Garscadden clearly has not examined recent trends in the Scottish economy. Several recent reports and studies acknowledged that Scotland was faring much better than any other part of the United Kingdom with regard to high interest rates.

Mr. Dewar : Not true.

Mr. Rifkind : I shall respond to that allegation. The forecast of growth for the United Kingdom for 1990 is 1.25 per cent. The report by Cambridge Econometrics to which the hon. Gentleman referred projects that growth in Scotland will be not 1.2 per cent., but 1.6 per cent. Fraser of Allander is projecting growth of 1.9 per cent. and is even more optimistic, and Business Strategies, in its recent reports, said that Scotland can expect to be second only to East Anglia in economic growth levels in the early 1990s.

The studies of the CBI in Scotland present a more optimistic picture than that painted by the CBI in the United Kingdom as a whole. In its surveys, the Scottish CBI shows that output in Scotland is growing faster than in the United Kingdom as a whole. Manufacturers are less pessimistic, exports are increasing faster and employment is growing, although it fell elsewhere in the United Kingdom in the last quarter of 1989.

Those are the views of outside spokesmen, including the Fraser of Allander Institute, which is a body that has never been hesitant to criticise the Government in the past when it thought it appropriate.

Mr. Dewar : As a corrective to those remarks, does the Minister remember the National Westminster bank report of 20 December 1989, which said :

"After a brief interlude next year, when Scotland will suffer less from a slowdown than the more prosperous parts of the United Kingdom, Scotland will again grow more slowly than the UK as a whole for the following five years."?

I shall also quote the chairman of the CBI's economic committee in Scotland, Mr. Wrigglesworth, who said in October--so this is two or three months old--that :

"The outlook has deteriorated since summer, with orders and employment falling and output at a standstill."

Mr. Rifkind : The hon. Gentleman can easily see from the overall economic situation that Scotland is coping far better than the United Kingdom as a whole at present.

For example, let us consider the construction industry in Scotland--73 per cent. of those who responded to the survey by the Scottish Building Employers Federation say

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that they are expecting increased orders in the next year. That is the highest response of that kind in the United Kingdom.

We know that the Scottish economy has been less affected by high interest rates, it is more export-oriented and the oil industry in Scotland is booming at present, with an increase in employment of no less than 11 per cent. over the past year. We should warmly welcome that.

Mr. Alex Salmond (Banff and Buchan) : The Secretary of State was telling the House--and it was received with some incredulity--that the Scottish construction industry is undergoing a boom. I am looking at the index of industrial production, from which the Secretary of State quoted a few moments ago. It says that, since 1985, the Scotish construction industry has grown by 2.5 per cent., and in the same period the construction industry in the United Kingdom as a whole has grown by 23.5 per cent. Where is the boom?

Mr. Rifkind : The whole point that I am making, if the hon. Gentleman would be good enough to listen, is that in the past couple of years Scotland has overtaken the United Kingdom position, which has fallen back. The Building Employers Confederation's recent survey shows that 73 per cent. of Scottish firms expect an increase in their work load in the coming year. In no other part of the United Kingdom do firms expect anything like that. I should have thought that the hon. Gentleman would welcome that.

The hon. Gentleman is right in that, between 1985 and a year or so ago, the balance was the other way round. I have not sought to suggest otherwise, but in the past couple of years the situation has been reversed.

Several Hon. Members rose

Mr. Rifkind : I shall continue because many hon. Members want to take part in the debate.

Finally, I wish to refer to non-domestic rates, which are of equal importance to the Scottish economy and to the prospects of Scottish industry and employment. Opposition Members will be as anxious as I am to ensure that that important area of taxation, which has a material effect on commerce and industry in Scotland, should be properly protected. The hon. Member for Garscadden acknowledged that fact.

The Government have shown their commitment to achieve a level playing field --a harmonisation of business rates--and have taken early steps to move in that direction. For example, one of our first measures in the past few years was the indexation of non-domestic rates. That has already been of substantial benefit to Scottish industry and commerce. It has been estimated that, if we had not indexed non-domestic rates to the rate of inflation, Scottish industry and commerce would have paid £50 million more in business rates during the past few years. That support would disappear immediately if the Labour party's proposal came into effect. I have been examining the Labour party's proposals, and they are revealing and interesting. The document published last week on non-domestic rates is rather coy. It says only that Labour's provisional plans were laid out in its consultation document published in 1989. I thought that I had better refer to the original holy writ on the subject, so I turned to that document, which says that Labour

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"would abolish the restrictions limiting increases to the retail price index. Businesses should shoulder a fair burden of the cost of local services."

I have no doubt that Opposition Members are proud of that proposal, but they should be under no illusion about what its consequences would be. If that had been Government policy in the past couple of years, businesses would already have paid £50 million more than they have paid, or are due to pay in the forthcoming year. That is the first consequence, and it would be damaging to the Scottish economy and to employment in Scotland.

But it is even more serious than that, because we know that local authorities-- [Interruption.] No, let me continue. Local authorities have just been fixing the community charge, and we know that, if there had not been indexation, judging by the experience of previous years, the business rate would go up next year by the same amount as the community charge. For example, in Strathclyde, which covers half of Scotland, the increase in business rate would not have been limited to the rate of inflation, but would have been 12 per cent. In Stirling, the district business rate would be going up by 18 per cent., and in Edinburgh by 24 per cent.

I do not wish to debate who is responsible for that increase at the moment. [Laughter.] No, I am happy to do so on another occasion, and Opposition Members will not distract me from the point that I am making.

If this was a matter for local authority discretion, no matter whose fault it was, local authorities would be increasing the business rate for commerce and industry in Strathclyde by 12 per cent., and in Edinburgh by 24 per cent. Opposition Members should realise that that would be a consequence of the policies that they wish to pursue.

Mr. Robert Hughes (Aberdeen, North) : Will the Secretary of State give way?

Mr. Rifkind : I shall give way in a few moments.

The position is far worse than I have so far described. Not only is the Labour party opposed to the indexation of business rates, but the inevitable consequence of what I understand to be Labour's policy is that there would be no prospect, either now or in the future, of the harmonisation of business rates north and south of the border. That is an even more serious point. As the House knows, harmonisation has been welcomed by virtually everyone in Scotland and there has been widespread recognition that the Scottish economy and Scottish industry have suffered for years because of the high business rates there compared to rates in England and Wales. For the purpose of today's discussion, let us not argue as to whose fault that was. Business rates have been far higher in Scotland than in England and Wales, and everyone, apart from the Labour party, seems to agree that that should end as quickly as possible. But to achieve that, two things must happen ; there must be a harmonisation of valuation law and a common rates poundage. If local authorities are left to decide those matters, quite properly they will use their discretion in different ways, and on the experience of the past 40 years, business rates in Scotland will remain significantly higher than those in the rest of the United Kingdom.

In the very first year we have reduced the gap by £80 million. That £80 million, together with the £50 million by which industry has benefited from indexation, means that already our policy has saved industry and commerce in

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Scotland--that means the Scottish economy and Scottish jobs--no less than £130 million. All that would be wiped away if it became a matter of local authority discretion.

It is literally impossible to have a common business rate and local council discretion. If the Labour party chooses the latter, it will consciously damage the Scottish economy and Scottish employment. The situation goes from bad to worse. The Labour party document seems to acknowledge that differential rates burdens could be damaging to some sectors of industry. The document states that it

"will need to ensure that any proposals do not put Scottish small businesses at a serious disadvantage in comparison to small businesses elsewhere in the country."

That sounds splendid, but why is it necessary to protect only small businesses from different and heavier rate burdens, but not big businesses or industry? Why protect small businesses, but give no protection to Ravenscraig, Yarrow, IBM or Ferranti?

I ask the hon. Member for Edinburgh, East why his party is guaranteeing or seeking to suggest that it would protect small businesses from differential rates burdens caused by giving local authorities discretion, but would offer no protection to the larger industries that employ most people. Has the hon. Member for Garscadden thought it out? Is it a conscious policy or is it simply a mess?

I suspect that it is a mess. I cannot conceive that the Labour party consciously wishes to put Ravenscraig, of all places, in a position where its rates burden would be consciously and deliberately higher than that of the steel industry elsewhere in the United Kingdom. As Opposition Members know, the steel industry in Scotland, along with every other industry there, has paid higher rates burdens than any industry in England and Wales. The Government's policy will eliminate that over a period. According to the document, the Opposition's policy would offer no such protection.

I have to ask the hon. Member for Garscadden--I shall happily give way to him--whether he and his party believe in and support the objectives of harmonising the rates burden of Scottish industry compared with industry south of the border. If he does, does he accept that that cannot be achieved without a common rates poundage? If he does not accept that, can he explain how giving local authorities discretion to determine the level of non-domestic rates is compatible with achieving a level playing field for Scottish industry compared with the rest of the United Kingdom?

Mr. Dewar : Obviously, I shall read with some care what the Secretary of State has said, but there are several ways in which we can help Scottish industry. Industrial derating was the simplest and best known way of doing that. I certainly do not accept that what he is doing, which is preserving the differences by conserving the present system, does what he has claimed.

The Secretary of State is indulging in sleight of hand. If he is assuming that the industrial rate will go up by the same extent as the poll tax, he forgets that that will produce a great deal more income that will bring both down towards a medium position. That is one example. I shall not say that the right hon. and learned Gentleman is cheating, as that would be an offensive thing to say and I would not wish to be offensive, but in a fabric of words, he is misrepresenting the position. We do not wish to place an unreasonable burden on Scottish industry, and we have no intention of doing so.

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Mr. Rifkind : The hon. Gentleman has shown himself totally confused. I notice that he did not answer the question. The question was quite simple : does he believe in harmonisation--that means identical business rates for industry north and south of the border? If he does, how can he reconcile that with giving local authorities discretion as to the level of business rates? The hon. Gentleman knows that we have had industrial derating for years, and that has not produced a level playing field ; that is not the answer. If the hon. Gentleman would like to clarify that, I shall happily give way to him again.

Mr. Dewar : I do not think that local authority discretion is necessarily the disaster that the right hon. and learned Gentleman is suggesting. In the past, local authority discretion has been a forced discretion, largely because cuts in central Government support meant that the system was bearing a burden for which it was never designed. If we consider who must bear the responsibility for that, I would not suggest the Secretary of State alone--I presume that his colleagues in the Treasury and his predecessors would take some responsibility. The right hon. and learned Gentleman talks about a mess and confusion and unreasonable burdens, but he should look at the record over the years of the Government whom he supports, in terms of the rate support grant, the revenue support grant and, of course, the poll tax.

Mr. Rifkind : The House and Scotland will note that the hon. Gentleman has not thought this one out. He is obviously embarrassed. He knows that in principle he is in favour of harmonisation. He knows that that is in Scotland's interests, but he obviously did not realise until today that that was incompatible with the policy that he is putting forward.

From the party that brought us the roof tax, we now have the jobs tax. The perpetuation of a heavier rates burden on Scottish industry and commerce would be damaging to heavy industry, to Ravenscraig, to Yarrow and to every business, big or small, wherever it may be in Scotland. If this debate is about the interests of the Scottish economy, I do not accuse the hon. Gentleman and his hon. Friends of deliberately wishing to do down the Scottish economy ; I accuse them of a much more serious offence--of total and utter confusion and incompetence.

Hon. Members : Is that it?

5.17 pm

Mr. John McAllion (Dundee, East) : It is little wonder that my hon. Friends are asking the Secretary of State for Scotland, "Is that it?" Rarely have I seen a less competent performance by the right hon. and learned Gentleman. He showed complete and callous indifference to the state of the Scottish economy, and instead tried to turn the debate into an attack on Labour's policy on local government finance, purely to try to push the Tory party's chances in the forthcoming regional council elections in May.

The Secretary of State said that the House and Scotland would note what my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said. The people of Scotland will judge my hon. Friend's contribution to debates over the past 10 years, and that of the Secretary of State, when they go to the polls in the next general election. I have every confidence that they will give resounding support to the Labour party, and that the policies that it has espoused for many years will be put into practice when

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Labour wins the next general election and forms a Government for the United Kingdom and sets up a Scottish Parliament.

The Secretary of State referred to the document that the Labour party produced on local government. He referred to the phrase that stated that the Labour party will look to business to shoulder a fair share of local government taxation. The Secretary of State seemed to imply that it is terrible to envisage that business should carry a fair share of the burden. That implies that the Government's policy is that poll tax payers should carry an unfair share of the burden. If business does not carry its fair share, the burden will be put on the poll tax payers. If that is the official Government policy on which the Tories will fight the next regional council elections, and the next general election, I look forward to that contest, as I am confident of its outcome.

At the end of last year, the Standing Commission on the Scottish Economy produced its final report. I feel it is necessary to remind the Secretary of State that throughout the three years in which the standing commission studied the Scottish economy, it was studiously ignored by Ministers, as was its final report. Ministers may argue that it is another cross-party political body, but it is nothing of the sort ; if it was, the Scottish National party would have walked out by now.

The Secretary of State must recognise that the standing commission is composed of distinguished Scottish academics, industrialists and economists. Its final report was based on 30 different reports from Scottish analyists, and it took in a wealth of evidence from overseas. The conclusion of its report is that we require Scottish solutions to Scottish problems.

In the preface to the report, the chairman of the standing commission, Professor Sir Kenneth Alexander, said :

"Some of the policy proposals are so specifically Scottish in their purpose that we consider it unlikely that they would be legislated by a Westminster Parliament. This leads us to conclude that the adoption of such policy initiatives requires a more decentralised political and administrative structure with a Parliament in Scotland having key economic and social powers."

That is not a party political conclusion but the conclusion of industrialists and business men. They have determined that Scotland's economic problems will be solved only by a Scottish Parliament with key economic powers.

It is imperative that the Secretary of State begins to take that message on board, because if he does not he will fail to understand the real problems that are facing the Scottish economy. He must accept that we have a pan- United Kingdom institution in charge of the Scottish economy--the Westminster Parliament. I shall not argue whether, by definition, that is good or bad. In control of that Westminster Parliament is a party whose power base is almost exclusively in the midlands and south of England. It will secure its control of Parliament as long as it retains its power base in the south. It does not require the voters of Wales, Scotland or the north to return it to office. As long as the voters of the midlands and south of England vote for it, it will retain control of this country.

The Conservative party is interested only in ensuring that everything is done to secure the economic interests of the south of England. It does not care whether that is bad for Wales, Scotland or the north, because it does not need voters in those areas to return it to office.

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Mr. Bill Walker : Does the hon. Gentleman realise that the description that he is giving rather fits the Labour party's position in Scotland, where it represents only one seat north of the Tay?

Mr. Robert Hughes : What about Aberdeen?

Mr. McAllion : As my hon. Friend points out, Aberdeen is north of the Tay. Sometimes, Dundee is also considered to be north of the Tay.

Mr. Bill Walker rose--

Mr. McAllion : If that is to be the quality of the hon. Gentleman's interventions, I will not give way again. The hon. Gentleman has convinced me that it is unwise to give way to him.

Mr. John McFall (Dumbarton) : Was the intervention made by the hon. Member for Tayside, North (Mr. Walker) deliberate disinformation in the guise of his position as Scottish Defence Minister, or was it complete ignorance on his part?

Mr. McAllion : As my hon. Friend knows, it was complete ignorance. The solution to the economy overheating in the south is to apply high interest rates not only in the south but in Scotland, Wales and the north, regardless of whether the economies of those areas need it. The mass unemployment, slow growth and under-utilisation of capacity in Scotland represent a complete negation and condemnation of the Government policy.

Mr. Hayward : Will the hon. Gentleman give way?

Mr. McAllion : I shall not give way because the hon. Gentleman is an English Member.

Mr. Tim Devlin (Stockton, South) : On a point of order, Mr. Deputy Speaker. The hon. Member for Dundee, East (Mr. McAllion) said that he will not give way to my hon. Friend the Member for Kingswood (Mr. Hayward) because he is an English Member. Will you remind Scottish Members that all hon. Members are eligible to take part in debates on all parts of the United Kingdom? Many of us have much interest in the welfare of Scotland.

Mr. Deputy Speaker (Mr. Harold Walker) : The hon. Member who has the Floor decides to whom he will give way.

Mr. McAllion : I would have been more impressed by that point of order if the hon. Member for Stockton, South (Mr. Devlin) had been present throughout the debate.

Mr. Hayward rose--

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