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Wealth Creation

7. Lady Olga Maitland: To ask the Secretary of State for Scotland if he will make a statement on wealth creation in Scotland. [777]

Mr. Kynoch: The process of wealth creation in Scotland would be severely damaged by the constitutional changes advocated by Opposition Members.

Lady Olga Maitland: I thank my hon. Friend for his reply. Is he aware that the Scottish chamber of commerce has found that 70 per cent. of Scottish businesses are bitterly hostile to the idea of a Parliament with tax-raising powers? They know very well that that would be the death knell for Scottish investment from outside. Indeed, it would kill all the work of the past five years, when £3 billion has been invested in Scotland, creating 47,000 jobs. Is he aware that those jobs would simply head down south, which would put thousands on the dole?

Mr. Kynoch: My hon. Friend is absolutely right and I wish that the hon. Member for Hamilton (Mr. Robertson), instead of talking to one of his colleagues on the Opposition Front Bench, would listen and realise that

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70 per cent. of Scottish businesses have said that his tartan tax-raising Scottish Parliament is bad for them, the people of Scotland and the economy of Scotland.

Sir Russell Johnston: Is the Minister aware that both he and his right hon. Friend the Secretary of State going on and on in a mindless way about a tartan tax, which is no more than a superficial, meaningless soundbite, should consider federal systems throughout the world, such as those in Germany, the United States and Canada, where it is possible for federal units to raise taxation and thereby stimulate wealth creation?

Mr. Kynoch: Perhaps the hon. Gentleman should talk to his Liberal Democrat colleagues because that is not what his party advocates. It is advocating a tax-raising Parliament for Scotland. It is clear to everyone who looks at the figures on funding in Scotland that that will be bad for Scotland. Seventy per cent. of businesses in the Fraser of Allander report confirmed that it would be bad for business in Scotland.

Mr. Stephen: Does my hon. Friend accept that people who have a job in Scotland and elsewhere in the kingdom are working harder and for longer hours than ever before and that their employers would like to take on more staff but are afraid to do so because, if they prove unsatisfactory, they might not be able to get rid of them? They are afraid that they might be taken to the cleaners under so-called employment protection legislation.

Mr. Kynoch: My hon. Friend refers to employment practices. What is clear to the people of Scotland, and to employers in Scotland, is that the policies advocated by the Labour party--the social chapter and a national minimum wage--are, along with the tartan tax-raising Parliament, very bad news for the Scottish economy and bad news for business.

Mr. Maxton: Instead of continuing to mouth his closed-mind attitude to devolution, why does not the Minister--and the Secretary of State--take a little time to study what has happened in the autonomous regions of Spain, in particular, which is much more like what is being proposed in Scotland? Catalonia, the Basque country and Galicia have all shown an improvement in their economic structures as a result of devolution and have not been damaged.

Mr. Kynoch: I wish that the hon. Member would look at all the positive things that are happening in Scotland: the fact that unemployment is falling steadily--whereas in Spain I understand that it is at record levels--and that business is performing better than ever before, with record output and exports. None of this would be possible if businesses were not competitive. The hon. Gentleman should look at the success stories in Scotland and question why he wants to make it very difficult for business to continue succeeding in Scotland.

Mr. Gallie: Has not the principle of level taxation across the United Kingdom given Scotland the opportunity to create the levels of wealth of recent times? Will that not be put in jeopardy--and the Union too--if we impose a tax on Scottish people which is not imposed across the Union as a whole?

Mr. Kynoch: My hon. Friend is absolutely right. I am sure that nobody in Scotland wants to pay more tax than the rest of the United Kingdom. We have been discussing

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record inward investment and the successes of last week. I question whether we would have been able to convince those companies that they should locate in Scotland if it was taxed higher than elsewhere in the United Kingdom. Quite blatantly, the Opposition parties cannot see how their tax-raising Parliament will square the books unless they either reduce services or increase taxes, and that would be bad for the people of Scotland.

Mr. McFall: The Minister knows that the 21 Tory taxes since 1992 are the equivalent of one every seven weeks in Scotland. Can he look in the eye the 200,000 unemployed and 50,000 young people who do not have a future and tell them that they are participating in wealth creation? Like the Prime Minister and the Secretary of State for Scotland, is he not wrong on devolution, culpable on the poll tax, which wasted £2 billion, and part of a Government who have deeply scarred the Scottish economy and Scottish society? Does he not accept that the majority of Scots believe that the Government's lies on taxation render them unfit for office?

Mr. Kynoch: I hope that the hon. Gentleman will look the people of Scotland straight in the eye and explain to them how, if he were ever to get in a position of having his tax-raising Parliament, he would justify the loss of jobs, not just from the tax-raising Parliament but from signing up to the social chapter and the national minimum wage, even though he and his party are scared to tell the people what national minimum wage he proposes. I suggest that he is scared because he knows that it will cost jobs--and dearly.

Inward Investment

8. Mr. John Marshall: To ask the Secretary of State for Scotland if he will make a statement on inward investment in Scotland. [779]

Mr. Michael Forsyth: Scotland is enjoying record levels of inward investment.

Mr. Marshall: I congratulate my right hon. Friend on the announcement of an additional 3,300 jobs in Lanarkshire and on the fact that Scotland has more success in attracting inward investment than any other country in western Europe. Does he believe that that success would continue if Scotland adopted a tartan tax, a national minimum wage and the social chapter and were as well run as the district of Monklands?

Mr. Forsyth: No, I do not.

Dr. Reid: Since everyone else has raised it, may I also say to the Secretary of State and Ministers that I am very pleased about the inward investment from Chunghwa Picture Tubes. The Minister will know that it has been a team effort running from the local development agency in Lanarkshire and local councils up to the Scottish Office. It would be churlish of me, having criticised Ministers in the past, not to give them full credit for the efforts that they have made--particularly the Minister of State--to keep me informed, and I therefore congratulate them.

Will the Secretary of State accept that, although I say that without qualification, he must realise that a hard-headed, realistic and progressive company such as Chunghwa came here in full knowledge of all the circumstances? It cannot but have contemplated the onset

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of a Labour Government. If anything, its coming here proves that the scare stories about Labour Governments and tartan taxes hold no water.

Mr. Forsyth: I am grateful to the hon. Gentleman for his generous remarks and for promoting my hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch) from Under-Secretary of State to Minister of State. I am sure that my right hon. Friend the Prime Minister will take account of that recommendation, given the splendid job that my hon. Friend did in attracting Chunghwa to Scotland.

The hon. Gentleman is a fair-minded man. I should like him to use his imagination--to imagine, for a moment, a Labour Government and to imagine, for a moment, that the negotiations were going on under such a Government. Exactly what argument would he use to attract Chunghwa to Lanarkshire when the Secretary of State for Wales pointed out that if the company were to go to Wales, it would not have to pay a tartan tax? It would be a knock-out blow. In this case, it was pretty tight between us and Wales, and we won because of the conditions that we had created in Scotland. If the hon. Gentleman's party had its way, Scotland would be disadvantaged.

Mr. Kirkwood: Will the Secretary of State accept that there are real difficulties for companies that are expanding in areas of Scotland that do not have any development assistance, and that they can be enticed outward, for disinvestment purposes, to other parts of the United Kingdom? Will he make it his business to ensure that local enterprise companies and local authorities have the wherewithal to try to get sensible arrangements in place to prevent that disinvestment?

Mr. Forsyth: I agree with the hon. Gentleman. Indeed, I have spoken to Scottish Enterprise about the matter in the context of the borders where there is a need for us to see what we can do to generate more investment opportunities and to create more employment, especially in respect of the difficult position of textiles. I took the opportunity of a meeting, last week I think, with the Commissioner to discuss some of those points. I can assure the hon. Gentleman that I am very aware of the concern in the borders. I have asked Scottish Enterprise to discuss with the local enterprise company what more can be done to take advantage of the tremendous opportunities in the borders, of the wonderful quality of the labour force and of the environment on offer there for those who wish to invest in Scotland.

Sir Hector Monro: Does my right hon. Friend agree that, with two notable exceptions, it seems impossible to get Opposition Members to understand the successes of Locate in Scotland during the past five years? Can my right hon. Friend spell out a little more detail about the 47,000 jobs and the 379 projects that have been created? Can he show that the trend of unemployment in Scotland has been markedly downward and is likely to continue in that direction?

Mr. Forsyth: I would be happy to arrange for all the successes to be printed in the Official Report if my right hon. Friend would provide a question that would give me such an opportunity. I will not list the successes this afternoon in view of your strictures, Madam Speaker, to keep answers as short as possible.

Suffice it to say that none of the successes has happened by magic. They have happened because we have created flexible labour markets and low taxation and

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improved standards of education. All those policy achievements are important in creating jobs. If Opposition Members examine their consciences, they will find that they were on the wrong side of the argument when we made changes in our economy and in our policy.

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