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Mr. McAllion : I will not give way to the hon. Gentleman ; this is a short debate.

May I draw the Secretary of State's attention to the research carried out for the standing commission by Alastair Lonie and David Power at Dundee university, and the evidence given by Professor David Vines and David Bell of Glasgow? They concluded that the policy of high interest rates had disproportionately disadvantaged Scotland and had taken £630 million from the local economy--more than the annual budget for the Scottish Development Agency and regional assistance in Scotland.

The Government have deliberately taken £630 million from an economy which is suffering from unemployment

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and under-utilisation of capacity and tried to pass that off as a serious economic policy that will benefit the people of Scotland. It is not so much that the Government have the wrong diagnosis for Scotland as that they have no diagnosis and do not care whether they have such a diagnosis because they do not need the voters of Scotland in order to be re-elected.

Mr. Hayward rose--

Mr. McAllion : I have only a short time available, so I will not give way to the hon. Gentleman.

We know that the Secretary of State has abolished regional development grants in favour of selective assistance, which he says will more effectively target Government money where it is required. That was considered in some detail by the standing commission. It carried out a survey of regional financial assistance in Scotland between 1981 and 1988. It concluded that fewer firms are being helped now than in 1981.

The standing commission then considered the take-up of selective assistance, but what it found was very different from the picture that the Government paint. Taking into account the new and revised offers made by the Government, it found that in 1988-89 only £49.4 million had been provided in selective assistance to firms in Scotland--£9 million less than the previous year, and £17 million less than in 1984-85. The Scottish economy is desperately in need of state support and investment, yet it is being starved of both by the Government.

The standing commission concluded that, although that policy helped to reduce the Exchequer's outlay--and no doubt the public sector borrowing requirement--it was proving a real cost to the Scottish economy and was effectively negating the Government's policy of regional assistance.

There is evidence of that everywhere in Scotland. The headline in the Glasgow Herald of last November said, "Docklands aid dwarfs Scotland's". Alf Young, its economic correspondent, wrote of "the most dramatic demonstration of regional policy in reverse yet mounted by the Thatcher Government"

and the massive spending by the Government on London docklands. Docklands boasts an enterprise zone on the Isle of Dogs. Quite why an enterprise zone was necessary to move the City of London a few miles down the river has always been beyond me. The article says that the Government are increasing assistance for the docklands development from £228 million to £332 million in 1990-91. Between 1989 and 1992, the Government will make a staggering investment of £813 million in the docklands development.

In addition, the extension of the Jubilee line to Canary wharf will cost £1,000 million, £600 million of which will be direct state subsidy. When I raised with Ministers and ScotRail the

electrification of the line north of Edinburgh, I was told that it was too expensive at £100 million, yet £1,000 million is being spent on a short extension of the Underground to docklands. However, they cannot afford to electrify the north-east railway line north of Edinburgh, which is a disgrace.

If one compares the budgets for the Scottish Development Agency and for the new Scottish Enterprise, on present trends and over the same period to which I referred when I spoke about the docklands, one sees that no more than £330 million will be allocated to Scotland.

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How does that compare with the £1,000 million for the Underground development and with the £813 million for the London docklands development? Inevitably, the people who pay the price for those problems--

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

Mr. McAllion : I will not give way to the hon. Gentleman, who was not here at the beginning of the debate.

The people who pay the price for the Government's policies are those whom the Opposition represent and who live in Scotland, in the north of England and in Wales. The Secretary of State referred to the tremendous falls in unemployment. In my constituency, the figures of the Secretary of State suggested that 4,791 people were out of work last November. He would no doubt argue that that represents tremendous progress compared to the figures in 1982, but it represents progress only if one is taken in by the Government's own fiddled figures for unemployment.

Since 1982, there have been no fewer than 30 changes in the way in which the Government count the unemployed. Only one increased the number of unemployed ; the other 29 reduced the number of those who were officially counted as unemployed. That was done in many ways. The Government based the figures, for example, on the claimant count rather than on those who were out of work and seeking work. They also discounted unemployed school leavers and denied income support to 16 and 17-year-olds. Those were all ways of bringing down the unemployment figure without bringing down unemployment.

Mr. Lang : The Organisation for Economic Co-operation and Development labour force survey assesses unemployment in the United Kingdom as being lower than the figures that we assess from our own unemployment benefit count. Is not the hon. Gentleman's case therefore nonsense?

Mr. McAllion : My case is not nonsense. The figures have been made available to me by the Unemployment Unit, which examines the Government's fiddled statistics carefully. It provided figures that show a different picture. Instead of there being 4,791 unemployed in Dundee, East, there are 7,011 unemployed in that constituency. In other words, 2,200 unemployed people have disappeared from the statistics not because they found work and so were no longer unemployed, but because they were removed by the Government's administrative diktat. They are still there and still unemployed, but they have become invisible to those in the Department of Employment who count the unemployed.

Dundee, East now has a real unemployment level of 17.5 per cent. more than 10 years after the Government took responsibility for the Scottish economy. Of 633 constituencies, only 48 have higher unemployment and almost all are in Scotland, in the north of England and in Wales.

Mr. Hayward rose --

Mr. McAllion : None of those constituencies is in the south-east, yet the hon. Members who represent constituencies there get up on their hind legs and boast

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about unemployment being defeated once and for all. They should tell that to the people in Scotland, in Wales and in the north of England.

Mr. Hayward rose --

Mr. McAllion : The hon. Gentleman will have the chance to make his own speech later.

What is worse is that, among the unemployed in Dundee, East, almost one in three have been out of work for at least a year. Does the Secretary of State wish to boast about such a record at the Dispatch Box? I hope not. I am conscious of the time and I may have spoken for too long already. [H on. Members :-- "Hear, hear."] I am pleased that the Minister says, "Hear, hear." I am obviously having some effect. Other hon. Members have referred to moving away from the old smokestack industries into new sectors, such as electronics, which is a central theme of the Government's defence of its handling of the Scottish economy. They always boast about the work of Locate in Scotland in attracting inward investment to Scotland. That argument is beginning to wear thin with the Opposition.

The Government must understand that we live in a world where competition for inward investment is becoming ever fiercer. In four inward investment cases, Scotland has lost out. The Mitsubishi Electrics £180 million semiconductor plant did not go to Scotland, but to West Germany. The Fujitsu £400 million microchip plant went to the north-east of England and Texas Instruments, with 1,000 jobs, went to Italy. The Intel Corporation from California, with up to 2, 400 jobs, went to the Republic of Ireland.

Increasingly, that will become the pattern. We shall be competing not only with the countries and areas that I have mentioned, but with eastern Europe. I heard on the radio this morning that workers in factories in East Berlin, for example, earn the equivalent of £25 a week. With such low- wage economies, where will international capital go to build its new semiconductor plants and its factories? It will go to eastern Europe, not to countries such as Scotland, England and Wales.

Mr. Lang : Will the hon. Gentleman remind the House why the Ford Motor Company did not come to Dundee?

Mr. McAllion : That is easy. Ford did not come to Dundee because Ford can play one country off against another. The hon. Gentleman should remind himself of the real issue. Ford claimed that it refused to come to Dundee because it could not obtain a single-union agreement there. What happened? Ford went to Spain. It did not obtain a single-union agreement there, but a multi-union agreement. It went to Spain because the Spanish Government provided more incentives. Does the Minister remember Wang in Stirling and Caterpillar in Uddingston? Those were multinational companies which came here, picked the flesh off the bones of the Scottish economy and then took off when it suited them. Increasingly, that will be the pattern, as the Minister must realise. He cannot base his whole strategy on attracting inward investment. That is not realistic nowadays. If we are to move forward, we must have a strategy that focuses on the local people and on the local area, with indigenous enterprise. That strategy was developed first in

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Scotland by the Labour administration in Tayside region in 1986. We went to the people with the policy of establishing an enterprise board which would give assistance, soft loans and grants to small and medium-sized companies in Tayside to encourage them to grow. That was a successful policy, but it was fought tooth and nail first by central Government, because to them it smacked too much of the Greater London council from which the idea was borrowed, and then by the local Tories, who thought that it involved interference in the free market. Now it has been heralded as a great success. The Minister of State, Scottish Office came up to Dundee to help launch the Tayside enterprise board and to try to claim some credit for it, although his party had fought it tooth and nail all along. If we are to have the policies that will boost local industry and the local economy, they will come only from control being decentralised from Westminster. They will come only from a powerful Scottish parliament with key economic powers and key powers over the infrastructure. There is no future for Scotland otherwise. That is the conclusion of the standing commission report and, increasingly, of people across the country. It should be the conclusion of the debate, although unfortunately it will not be, because this debate has no effect on the Scottish economy or on Government policy. The Secretary of State is not Scotland's man in the Cabinet, but the Cabinet's man in Scotland and there is a wealth of difference in that distinction.

Several hon. Members : rose --

Mr. Deputy Speaker : Order. Unless speeches are much briefer, I am afraid that a number of hon. Members will be disappointed. 5.37 pm

Mr. Bill Walker (Tayside, North) : The hon. Member for Dundee, East (Mr. McAllion) does not, of course, like to be reminded about Ford, so I shall remind him of something else. I shall remind him of the time when Dundee was competing for the headquarters of an international oil company. When the decision was about to be made, Dundee district council told its employees to go out on strike in support of what was obviously a politically motivated activity. That did nothing to persuade the oil company that Dundee was the place to establish its headquarters. With such leadership, companies will not come. I shall return to the problems of Dundee later, because my constituency is adjacent to Dundee.

Mr. John Maxton (Glasgow, Cathcart) : Will the hon. Gentleman give way?

Mr. Walker : I have only just started my speech, but very well.

Mr. Maxton : I hoped that the hon. Gentleman would correct the misinformation that he gave the House earlier. Will he point out to the House that the Labour party has five seats north of the Tay, whereas the Tories have two and a half?

Mr. Walker : I hope that the hon. Gentleman understands where north is in Scottish geography. If he said that the Labour party had four seats including those

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in Dundee and Aberdeen--and I imagine that he is also including the Western Isles--he would not be right about what was pure north. I should not expect him to understand that. I draw the hon. Gentleman's attention to the fact that in the Highlands, the Labour party is not considered to be the party that understands its problems--[ Hon. Members-- : "The Tories aren't."] The Labour party claims that it speaks for all the people of Scotland. I have never claimed to speak for all the people of Scotland. I speak for the people of north Tayside.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) said that the Conservatives were going to make this a debate about the roof tax. We are not. I find it interesting that the Labour party wishes to have a tax for Scotland which is different from that for England and Wales. I imagine that on this occasion Scotland is to be Labour's guinea pig. As I understand its proposals, councils will set their own levels of expenditure and the level of roof tax. Once again, under Labour, the elderly will pay a tax based on the size and present-day value of their home, regardless of the price that they paid for it. The Labour party proposes to introduce computerised revaluations. What a lovely way to revalue. Labour would return Scotland to the evils of the old rating system and of revaluations. The uniform business rate will vanish and, once more, Scotland's shopkeepers and business men will find that department stores in Sauchiehall street pay more in local authority tax than similar stores in Regent street in London. There would be no harmonisation under Labour, and we know why. As my right hon. and learned Friend the Secretary of State said, there would be a 24 per cent-plus increase in the business rate this year. Of course, the £130 million saving made under our policy last year and this year would not be made under Labour's policies. I welcome my right hon. and learned Friend's statement today on flood and storm damage in my constituency and other Scottish constituencies. That statement will be welcomed by all who have suffered in the flooding. That is true of my constituency where there has been extensive flooding.

The output of Scottish manufacturing industry in the second quarter of 1989 reached record levels. The Opposition do not like to be told that. Industry surpassed the previous peak recorded in the second quarter of 1974. Output was 3.8 per cent. up on the previous quarter. In 1988, manufacturing output in Scotland grew by about 8 per cent. At the same time, seasonally adjusted unemployment stood at 8.5 per cent. in December last year--the lowest since 1980.

Self-employment has increased by 50 per cent. since 1981. Between June 1981 and June 1988, self-employment rose by 66,000. When one compares that with the three decades to 1981--in which there was no change--one can see what a remarkable change has taken place in Scotland.

The October Confederation of British Industry survey confirmed the August Scottish chambers of commerce's business survey which showed that export markets, on which we depend so vitally, remain healthy. The 1989 annual survey of the top 200 Scottish firms carried out by Scottish Business Insider shows that turnover rose by 25 per cent. on the year before. That is a massive increase. Profits were up by 14 per cent. Both turnover and profits are up, yet all that we hear from Opposition Members is doom and gloom.

Some 132 of the top 200 companies are Scottish-owned. So much for the nonsense about Scotland's industry being

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owned and run by other people. All those facts show that the growth in the Scottish economy in 1988 was the strongest since 1973. The growth in Scottish manufacturing productivity since 1979 has been faster than any of the major industrial economies. Between 1 January 1980 and 1 January 1989, the number of companies registered in Scotland rose by just under 20,000 or more than one half. The most recent survey by the Fraser of Allander Institute forecast that the growth of the Scottish economy is set to outstrip that of the United Kingdom over the next five years.

It is interesting to note the dramatic change in the places to which Scottish firms export. For example, 23 per cent. of our exports in 1973 were to north America. Today only 17 per cent. of our exports are to north America, so there has been a reduction. Let us see what has happened within the EEC. In 1973, 23 per cent. of our exports were to the EEC. That has now jumped to a massive 53 per cent. We are exporting much more to Europe. The benefits of the European market are beginning to be felt, and not before time, particularly when one considers some of the non-tariff barriers that kept our exports out for so long. Strangely enough, the biggest single export earner is the manufacture of office and data processing machinery.

I make no apology for mentioning the whisky industry. As a teetotaller, I am proud of what the Scotch whisky industry does for Scotland. It provides £1 billion-worth of exports, or 20 per cent. of our manufacturing exports. That is important for Scotland and we must continue to remind those who do not realise its value to Scotland that the Government's sensible tax regime over recent years has done much to help the Scotch whisky industry.

We also must not forget British Aerospace, Rolls-Royce and Ferranti. Aviation and avionics are the industries of tomorrow, among which we must include electronics. IBM, Motorola, Digital Equipment, NEC, National Semiconductor, Hewlett-Packard, Honeywell, NCR and Unisys are all the industries of today and tomorrow. They produce 16 per cent. of Scotland's gross domestic product and employ 12 per cent. of the work force. The output of the industry last year was three and a half times higher than in mid-1979. That shows what the Government's policies have done to make Scottish industry more competitive.

In 1989, the oil industry recorded the second highest level of drilling activity ever, with 328 offshore wells started. So much for the doom and gloom that we heard about the oil industry running down and out.

The service sector provides 68 per cent. of Scotland's employment, with over 1.3 million jobs. There was an overall increase of 112,000 in service sector employment from 1979 to December 1988. The service sector also helps Scotland's economic growth. The financial services and business services sector, with 179,000 jobs--50,000 more than in 1979--also contributes massively to Scotland's well-being. Some £100 billion of funds is managed from Scotland. That is over 10 per cent. of the United Kingdom unit trust market and 20 per cent. of the life assurance market. The industry depends on doing business outside Scotland, as does the Scotch whisky industry and all the other

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companies that I listed. So much for the narrow nationalist attitudes of those who say that we should do things only in Scotland.

Tourism is another important industry in Scotland. It must be discouraging for visitors to Scotland to see messages written on stone telling them to go home. Yet that is what one gets from the Socialist nationalists. Tourism had a turnover of £1,594 million in 1988. The number of overseas tourists was up by 27 per cent. on 1984. Scotland's penetration of the north American market is higher than that of the United Kingdom as a whole. Again, Scotland is performing well. I make no apology for speaking about tourism. It is the largest employer in north Tayside.

I welcome the introduction of Scottish Enterprise. Recently in Brechin we had the launch of the north Angus initiative. The Labour administration of Tayside regional council was noticeable by its absence at that launch. It seems that the hon. Member for Dundee, East thinks that such great initiatives are fine in Dundee but not much good in Brechin, Kirriemuir or Forfar. The district councillor, the convener of industry--a gentleman known by the name of Forsyth of that ilk, who is an SNP councillor--made an attack on the regional council when he launched the initiative. He did so because of the council's absence. It is interesting that, since then, Councillor Sheana Welsh has publicly criticised me for agreeing with Forsyth. That Forsyth is the SNP district councillor, not my hon. Friend the Member for Stirling (Mr. Forsyth).

But what else can we expect when as Councillor Flora Isles said when she resigned from the SNP :

"We have different policies in different parts of the country and different policies or no policies to meet changing circumstances"? Indeed, that is why she resigned from the Scottish National party. Councillor Sheana Welsh, running true to SNP form, has a different policy and makes different public utterances from her industry convener--the famous Forsyth. Perhaps she was embarrassed by the "Absent Andrew", her husband, the hon. Member for Angus, East (Mr. Welsh), who, like the Labour party, failed to attend the north Angus launch. Perhaps his failure to attend brought about yet another division in the SNP.

In connection with regional grants, I commend Don Brothers, who recently opened a large factory in my constituency despite the fact that no grants are available and he was given no assistance under any funny schemes run by the Labour administration in Tayside. I understand that Don Brothers gave up grants amounting to about £500, 000, which he could have had if he had gone to Dundee, which he was asked to do. He declined to do that and stayed in Forfar because its work force and environment are so much better and more conducive to productivity and to exports than those in Dundee.

That is an example of why regional aid had, properly, to be changed. That is why I welcome the changes that the Government are making. I advise Ministers that the economic successes of our policies in Scotland are there for anyone who wants to see them. They can be seen in our supermarkets, stores and shops and in the bustle in the high streets-- [Interruption] --even in Dundee. Opposition Members should go to Taybridge station and watch the people going on holiday and doing things that were not available to them 10 or 20 years ago. They are able to do

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those things now because of our economic success. Because they have more money in their pockets, people can enjoy more things today. The quality of life in Scotland is superior to that in any other part of the United Kingdom and that, linked to our economic success, makes it the best part of the United Kingdom in which to live and the best place in the world to be part of.

Several Hon. Members rose--

Mr. Deputy Speaker : Order. I remind the House of my earlier appeal for brief speeches.

5.52 pm

Mr. James Wallace (Orkney and Shetland) : I shall do my utmost to follow your advice, Mr. Deputy Speaker, and to be brief.

The debate has gone up or down according to one's expectations. One need only read the Order Paper, the substantive motion and amendment in the name of the Prime Minister to note the diametrically opposed views on the Scottish economy. Indeed, I wonder whether they referred to the same thing. We have, of course, had selective statistics to support either case, especially from the hon. Member for Tayside, North (Mr. Walker). However, I agree with the hon. Gentleman in two particulars. He was the first hon. Member to refer to tourism, which is an important and growing industry in the rural areas of Scotland, and he referred to the whisky industry which, as in his constituency, is important in mine.

The hon. Member for Tayside, North referred to the Scottish chambers' "Business Survey". It is important to note that its most recent survey is its most pessimistic since its surveys began in 1984. That pessimism has been echoed in the "Industrial Trends Survey" of the Confederation of British Industry, which shows that manufacturing optimism is at its lowest for seven years.

Hon. Members of all parties have accepted that in recent years the Scottish economy has been going through a period of fundamental change as the old smoke stack industries have declined and we have looked to the development of new industries. As electronics has been around for some time, I am not sure whether we can still classify it as a new industry, but it has a potential for growth. Reference has also been made to the oil and gas industry and to the financial services sector. As the older industries decline, it is important that we do not forget the economic consequences. If the Scottish steel industry were to decline even further, it would have severe implications for the rail network in Scotland and knock-on effects on the electricity industry. Such factors cannot be overlooked. There are other warning signs because much of the growth in jobs in recent years has been in the service sector, and, as last week's report "Economic Outlook" from the Royal Bank of Scotland suggested, the current downturn will squeeze the service sector, especially the retail sector, more than the last recession in the early part of the 1980s. Therefore, the outlook in that sector is not encouraging. The hon. Member for Kingswood (Mr. Hayward) referred to Locate in Scotland. None of my hon. Friends would criticise or object to jobs coming to Scotland as a result of foreign companies investing here. However, we should be concerned to ensure that we do not become

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dependent solely on jobs which, in many respects, are production jobs and that we try to create as many jobs as possible that are high-quality, high-tech jobs. We should ensure that we are designers as well as putters-together, if I may put it that way.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to a report that the Secretary of State attributed to an official of the Scottish Development Agency. It contained the sombre warning that the contribution of indigenously based industries is particu-larly disappointing. The loss of Scottish ownership of Scottish enterprises has already been mentioned. It has been estimated that fewer than 100 clearly definable Scottish companies are now listed on the stock exchange. Between 1983 and 1986, 321 Scottish companies were taken over by outside companies. Some of the names are well known, including Anderson of Strathclyde, Collins, Clydesdale bank, Bells and Distillers.

While that has been happening and Scotland has been losing some of its big companies, as Alf Young pointed out in a recent article in the Glasgow Herald, things on not too happy a note have been stirring at a lower level in the economy. He wrote :

"If many of the biggest trees in the Scottish corporate forest fell to the chainsaws wielded by Guinness, Vantona Viyella, BP, Charter Consolidated and many others over the past 10 years, the paucity of seedling companies springing up from the forest floor to take their place simply compounds the problem."

That is a cause for concern.

If one takes the number of new small businesses that are being set up, by reference to net VAT registrations, one sees that the growth in Scotland has been significantly below that in the United Kingdom as a whole. The article then states that a number of our smaller and medium-sized companies have been selling out, although they may not have made the headlines as much as the bigger companies, and that fewer of those smaller and medium- sized companies then grow into big companies. Consequently, there will be fewer opportunities in Scotland for our graduates to take jobs in promotable posts and fewer opportunities for our managers to reach the top in commercial enterprise.

As has been said, there has been emigration over many years, but the quality as well as the quantity of that emigration causes concern. Many of our best people and our graduates are going south. The introduction of the student loans scheme may affect the number of graduates in Scotland because of our four-year courses. If Scottish graduates have that debt around their necks as they leave university, how many of them will be attractive propositions to banks if they then wish to set up a small business on their own? I believe that for many years to come we shall reap an adverse whirlwind from the student loans plan.

Enterprise in Scotland needs encouraging. In the White Paper that foreshadowed the Employment Bill, the Government identified the importance of training. They have admitted that the private sector has never been a good trainer in Scotland, yet they are passing responsibility for training to the private sector. If that is to happen, it is important that it works, and that it works well. I took some encouragement from the reply that the hon. Member for Galloway and Upper Nithsdale (Mr. Lang) gave me at Scottish Question Time last week, when he seemed to suggest that there would be scope for the

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local enterprise companies to develop training over and above the national training schemes of employment training and the youth training scheme. Perhaps he will say more about that when he replies to the debate and state whether more money will be available for training or whether the only money that is being made available for training with the LECs will be the money that is available for funding ET and YTS.

In addition, there is a need for venture capital. There has been a lack of venture capital going into Scottish companies, particularly for start-up. One often finds a willingness to lend £1 million or £100,000, but in some cases what is needed is £10,000. In fact, 80 per cent. of applications to the Highlands and Islands Development Board are for grants up to £15,000. Such grants have been very important to people, particularly in the highlands and islands, starting small businesses. As the board's last annual report shows, the cost per job, in grant-equivalent terms, has been just over £6, 000.

That seems to me to be money very well spent. Government Members and their kin in the City often criticise Scotland for having, in some ways, developed a dependency culture, but without the HIDB and the SDA our economic position would be far worse. The £22 million that the HIDB spent on grant assistance in 1988 produced £69 million from private sources. That seems to me a very good form of pump priming, and I hope that that valuable work will continue as we move over to the new system.

In addition to venture capital and training, we need a Scottish Parliament. No doubt Government members will tell us happily about the statistics, about the polls carried out among Scottish business men, showing that a Scottish Parliament is not tops among the things that those people would like to see. Within the last two or three weeks, Scotland on Sunday carried an article, written anonymously by a Scottish business man, putting the case for a Scottish Parliament. It says something about the climate of Scottish business that somebody putting his head above the parapet to support a Scottish Parliament feels that he has to do so anonymously. This is the bunker mentality.

Mr. Norman Hogg (Cumbernauld and Kilsyth) : I agree that people should be prepared to put their names to things in which they believe. Why did the Social and Liberal Democrats fail to table an amendment to this motion?

Mr. Wallace : The hon. Gentleman will be delighted to know that the matter was discussed last night at a parliamentary party meeting, and it was decided that the motion in the name of the hon. Gentleman's right hon. and hon. Friends was one that we could support. I believe that a Scottish Parliament would be much more in touch with the continuing development needs of Scottish industry. I have already mentioned how it could target its tax-cutting powers ; how it could look into the possibility of lower interest rates and the setting up of an industrial credit bank. Consider the situation in West Germany, where power is diffuse, where there is a federal structure. One often finds businesses being set up in centres of power. In many ways, centres of power attract new business. I believe that a Scottish Parliament could be a catalyst and could add some dynamism to the Scottish economy.

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As one looks forward to 1992, one is conscious of the need for an improved transport infrastructure. The hon. Member for Tayside, North, who has left the Chamber, referred to the importance of Scotland's export industries. He mentioned whisky and office equipment. Clearly, in the case of an economy that is so dependent on exports, access to markets is important. I remember going to the constituency of the hon. Member for Edinburgh, East (Mr. Strang) when the Portobello Freightliner terminal was being closed. At the time, that seemed to be a very short-sighted move, and experience has shown just how short- sighted. Our European competitors are improving their infrastructure, particularly in the case of railways, while the Government here seem to baulk at extending electrification north of Edinburgh.

Take the question of air transport. Currently, and quite properly, there is a debate on the future of Prestwick. In this regard, I think that the hon. Member for Eastwood (Mr. Stewart) will find that my views do not differ much from his. This is the focus of Scottish debate at a time when, for example, the Charles de Gaulle airport in Paris is being integrated with the whole transport network--linking it to the city and to the rest of the country. While these imaginative things are being done by our European competitors, little imagination is being used here. I certainly do not count a toll bridge to Skye as one of the imaginative projects that we need if we are to compete on equal terms.

Finally, I want to refer briefly to the fishing industry, which is so important to many communities round our coast. When the Government failed to embark on a decommissioning scheme, they missed an opportunity. It was a big mistake. Of course it would not have been the whole answer, but I cannot see a better way of ensuring that the capacity of the fleet is more in line with the catching opportunities. If the fishing opportunities of the industry are to be reduced, it must be given some financial compensation. One wonders what kind of fleet the Government expect to see at the end of this year if they allow pure market forces to take their course. 6.5 pm

Mr. Allan Stewart (Eastwood) : The hon. Member for Orkney and Shetland (Mr. Wallace) has made a number of points to which I want to refer later. He referred to the absence of my hon. Friend the Member for Tayside, North (Mr. Walker) from the Chamber. I should point out that my hon. Friend is attending a Committee meeting upstairs. I apologise to right hon. and hon. Gentlemen on both Front Benches for my absence during the opening few minutes of the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar). I was having a personal meeting with the Prime Minister. [ Hon. Members :-- "Oh."] It was about the Armitage Shanks Tubal works in Barrhead. I want to thank the Minister of State and a large number of Opposition Members for their support in that regard. It is an issue of great importance to my constituency.

Mr. William McKelvey (Kilmarnock and Loudoun) rose --

Mr. Stewart : As the hon. Gentleman has signed my early-day motion, I will certainly give way to him.

Mr. McKelvey : I wish the hon. Gentleman every success when he meets the Prime Minister. I hope that she will be able to do something about Armitage Shanks. When I

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went to see her about the Armitage Shanks closure in Kilmarnock, she said that she would do her best. Unfortunately, however, the closure took place. I accepted the hon. Gentleman's support at that time, and respected him for giving it. Indeed, I received support from other hon. Members. I cautioned the hon. Gentleman not to put too much faith in the Prime Minister's ability to do anything against a multinational that is determined to move elsewhere.

Mr. Stewart : The purpose of my meeting was to look to the future in Barrhead. Armitage Shanks has, indeed, confirmed its decision to close the Tubal works. When I went with a letter from the Prime Minister to discuss the situation I was prevented from passing the factory gate. That is an indication of the company's management. The hon. Member for Orkney and Shetland referred, rightly, to the importance of transport policy. As he said, we await the decision on Scottish lowlands airports policy. My hon. Friend the Minister of State cannot possibly be expected, in this debate, to announce a decision ; that is a matter for the Secretary of State for Transport. However, anything that he can tell the House about the timing of the announcement would be helpful to hon. Members in respect of the positions that they may take.

While I am on that point, I wish to congratulate the noble Lord King on his excellent announcement about the Scottish headquarters for British Airways and the intention to provide a service from Glasgow to New York, starting on 3 August, if the Secretary of State for Transport takes the correct decision on airports policy. I want to draw the attention of my hon. Friend the Minister of State to the importance of the imaginative set of proposals for the development of the corridor. These will turn on Glasgow's getting transatlantic status. There is immense potential for new growth in that area of west central Scotland--and that is not just my opinion ; it is an opinion shared by others, such as the Labour group in Renfrew district council.

More generally, my right hon. and learned Friend the Secretary of State and my hon. Friend the Member for Tayside, North have put forward very clearly and comprehensively the basic figures on the Scottish economy. Manufacturing output is now the highest in Scotland's economic history. One has only to look at the CBI's figures on output and employment.

The hon. Member for Dundee, East (Mr. McAllion), who is also attending a Standing Committee meeting, and the hon. Member for Orkney and Shetland both referred to the need for indigenous growth in the Scottish economy. That is a very important point. The self-employment figures have increased by about 50 per cent. since 1981, compared with no change at all in the previous three decades. Many of these people will in future need small, medium-sized and large firms in Scotland. The other most encouraging indicator for the future is that manufacturing productivity in Scotland in recent years has been as high as in any other industrialised country and higher than most.

When I saw the motion on the Order Paper, I wondered why the Opposition had chosen to debate the Scottish economy today. I hoped that we would hear concrete proposals from the Labour party about how it would tackle the problems, as it sees them, of the Scottish economy. We have had some proposals. The hon. Member

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for Dundee, East talked in ringing terms about the importance of a Scottish Parliament, which was also referred to by the hon. Member for Orkney and Shetland.

We know of the enthusiasm of the Opposition Benches for that important body. No doubt if I took a show of hands, most Opposition Members would put up their hands. I see the hon. Member for Kilmarnock and Loudoun (Mr. McKelvy) putting up his hand. If such a body were set up, no doubt Opposition Members would give up their seats in this place to serve in it. May we have a show of hands to see which hon. Members agree with that? I see that Opposition Members are about 50 : 50. If there is ever a Scottish assembly, we look forward to by-elections in Scotland.

The Labour party proposes that the new body would have economic and industrial responsibilities. We are also told that the new powerhouse of Scottish Socialism would have responsibility for inward investment. No doubt hoardings would go up from Massachusetts to Mississippi and from Los Angeles to Long Island saying, "Come to sunny Scotland. We can offer you what no other European country can--Socialism." But there would need to be a footnote--"except Albania." Only in Albania and on the Benches occupied by Scottish Labour Members is there any following left for Socialism in Europe.

Mr. Wallace : Does not the hon. Gentleman presuppose that that would be a Scottish Parliament elected without proportional representation? Would he change his mind if there was proportional representation?

Mr. Deputy Speaker : Order. Would the hon. Gentleman please keep to the motion on the Order Paper?

Mr. Stewart : If the hon. Member for Orkney and Shetland thinks that the Labour party will go for proportional representation, he will have a sad awakening.

The second proposal from the Opposition was on business rates. The important progress towards a unified business rate, which the entire business community, large and small, has underlined as of crucial importance to the future of Scottish business and industry, would be thrown away by the Labour party. There would be huge increases in the burden of rates.

Of course, local authorities have a tendency to increase the burden on non- domestic ratepayers, because businesses do not have votes. The burden of the increase on businesses is often passed on to consumers who live outside the area. When the hon. Member for Glasgow, Cathcart (Mr. Maxton) replies to the debate, he may confirm his belief, which I have heard in the past, that rates have no effect on jobs. That is not the view of any business man to whom I have talked on the subject.

We also heard a proposal from some Opposition Members for a roof tax. That was well analysed by my hon. Friend the Member for Tayside, North. It is interesting to note the rumours that the Labour party in England would not go ahead with that proposal. No doubt, in the next 24 hours or so, we will hear another authorised version from the Opposition.

My right hon. and learned Friend the Secretary of State may have been slightly unfair to the roof tax in his general criticisms. The roof tax would be good news for some parts of the Scottish economy. It would be good news for that admirable body of people, double glazing salesmen, and for central heating engineers, because their products are to be exempt from the general increase in taxation which

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