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[1st Allotted Day, 2nd Part]

Class XIII, Vote 1

Scotland Office

[Relevant documents: First Report from the Scottish Affairs Committee, Session 1998-99, Inward/Outward Investment in Scotland, HC 84, as it relates to the Estimate, and the response of the Government and the Scottish Executive thereto, HC 119 of Session 1999-2000; Departments of the Secretary of State for Scotland and the Forestry Commission Departmental Report 1999, Cm. 4215.]

Motion made, and Question proposed,

4.55 pm

Mr. David Marshall (Glasgow, Shettleston): This is a unique debate. The report of the Select Committee on Scottish Affairs on inward-outward investment in

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Scotland, which was printed on 24 June, exactly seven days before the Scottish Parliament came into operation, is the first report by a departmental Select Committee on one of the devolved areas of the United Kingdom to be debated on the Floor of the House.

The debate is also unique because it enables us to consider not only the response to our report by the UK Government, but the response of the Scottish Executive, both of which documents were ordered to be printed only yesterday and have been available only since 11 am today.

There is one more unique feature, inasmuch as we can also consider, and make references to, the memorandum of understanding and supplementary agreements between the United Kingdom Government, Scottish Ministers and the Cabinet of the National Assembly for Wales, which was presented to Parliament by the Lord Chancellor in October, and the subsequent concordat between the Scottish Executive and the Department of Trade and Industry. Those are extremely important documents for the future of inward investment.

As a member of the Liaison Committee, I am grateful to my colleagues on the Committee for recommending the estimate for debate today. I am grateful also to all the members of the Select Committee on Scottish Affairs representing all four parties, and to the Committee staff for all the hard work that went into the conduct of the inquiry and the compilation of the report. I thank our three specialist advisers, Professors Neil Hood and Stephen Young of Strathclyde university and Mr. Alf Young of The Herald.

Thanks are also due to all those who gave oral evidence to the Committee, and to all the individuals and organisations who submitted written memorandums or who participated in our informal visits in Scotland, Northern Ireland, the Republic of Ireland and the United States.

Our report is published in three volumes. Its recommendations were agreed by all four parties represented on the Committee.

I know that many of my hon. Friends and colleagues on the Opposition Benches want to participate in the debate, which is restricted to two hours. I shall therefore be as brief as possible, but a number of points must be made.

I am pleased that my right hon. Friend the Secretary of State has chosen to respond to the debate. As it progresses, I am confident that it will demonstrate the wisdom of the House in maintaining Select Committees such as ours to consider the vital aspects of reserved powers as they relate to matters such as those that we are discussing today, especially the roles of the Department of Trade and Industry and the Foreign and Commonwealth Office, as well as scrutinising the work of the Scotland Office. I am sure that my right hon. Friend welcomes that, just as he welcomes appearing before the Select Committee--at least, I think that he does.

The Committee's inquiry was a follow-up to a previous Committee inquiry in 1979-80 Session, when my right hon. Friend the Member for Glasgow, Anniesland (Mr. Dewar), now Scotland's First Minister, was its Chairman. This time, however, we added outward investment to the terms of reference. The Committee considered it important to revisit the report of almost 20 years to see what, if anything, had changed and what

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progress, if any, had been made. It carried out that inquiry simultaneously with its inquiry into tourism. We were all impressed by the number of similarities between the two.

Although the majority of our 10 conclusions and recommendations relate to matters now devolved to the Scottish Parliament, there are important policy areas that are reserved to the UK Government, such as international relations and trading agreements, which have a vital influence on the operation of agencies such as Locate in Scotland and Scottish Trade International. I referred earlier to the roles of the DTI and the Foreign and Commonwealth Office, which are paramount in respect of both those bodies.

Despite devolution, many of the factors affecting the climate for inward investment are reserved--for example, designation of assisted areas, taxation, employment legislation, air transport liberalisation and, most important, the promotion of the UK as a whole to foreign investors.

Earlier, I referred to the memorandum of understanding and the concordats. It would have been useful for the Committee to have had those during the course of its inquiries, but it was not to be. None the less, our report is relevant. The memorandum and concordats set out common UK guidelines and consultation arrangements in respect of co-ordination of European policy issues, on financial assistance to industry, international relations and statistics.

The concordat on financial assistance to industry provides for consultation between the interested parties in each particular case before offers are made to large mobile investments where there is an interest in more than one part of the UK, where it is proposed to breach agreed financial limits, and where relocation from one part of the UK to another is involved. No doubt, other hon. Members will have something to say on some of those points.

The arrangements will be overseen by representatives of the UK Government and devolved Administrations, and will facilitate the exchange of information on financial assistance between both Administrations. Hopefully, those concordats create a level playing field. They will be essential in resolving any conflict that may arise in future, especially in view of the increased competition between the regional development agencies in England and their Scottish and Welsh counterparts.

The Committee was impressed by the professionalism of Locate in Scotland and the high regard in which it was held by everyone, including its competitors. Regardless of the future of Scottish Enterprise, I hope that Locate in Scotland will continue and that it will be adequately funded. That is essential to meet the ever-increasing worldwide competition for whatever inward investment projects there are to be won.

I welcome the general tenor of the Government's response to our report and their agreement with most of our findings. I especially welcome the apparent good will and co-operation between the Secretary of State's office and that of the Scottish Executive, and the desire to work together for the benefit of Scotland. [Interruption.] The hon. Member for Beaconsfield (Mr. Grieve) may laugh, but he should not believe everything that he reads in the press. The good will is there and the report proves that, particularly the responses from the Government and the Scottish Executive.

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That bodes well for the Chancellor's most welcome announcement about the establishment of joint action committees and for the Select Committee's desire to work closely with the Scottish Parliament's social inclusion committee on our inquiry into poverty in Scotland.

I also welcome the Scottish Executive's response. They do not agree with some of the Committee's findings, but they accept and welcome others. In general, they accept that our report was on the right lines and appear to be moving towards making the changes that we suggested. It is always interesting to note the way in which movement is described, which in this case would appear to suggest that it was always intended, regardless of any Select Committee inquiry.

I am deeply disappointed at the Scottish Executive's response on transport issues in paragraph 5. All the evidence given to us highlighted the need for the completion of the last six miles of the M74 in Glasgow, much of it in my constituency. For economic, environmental and social reasons, that should have been the number 1 priority in the roads programme in Scotland. It would protect many existing jobs, open up many hundreds, if not more than a thousand, acres of derelict land for development, and create the potential for several thousand new jobs, as well as removing a malignant eyesore on the surface of Glasgow. It would relieve pressure on the Kingston bridge and reduce congestion and pollution in the city centre, resulting in huge environmental improvements. It would also reduce road accidents, especially for children and old people, especially, again, in my constituency due to the high volumes of through traffic which really should not be there and would not be there if the M74 were completed.

The Scottish Executive has suggested that the local authorities should take the project forward themselves, but that inevitably means road tolls, which would defeat the whole purpose, would add substantial cost to industry and would definitely not be an incentive to inward investment.

Equally, the UK Government need to ensure that the north of England above Birmingham, Scotland and Northern Ireland benefit from good rail and road connections to their major markets, especially in respect of perishable products and products with a short shelf life. We should not forget that the A75 from Gretna to Stranraer is Northern Ireland's main link with Europe.

We are familiar with recent reports, which highlighted the north-south and east-west divides in unemployment, poverty and health. Unfortunately, for reasons that other Labour Members understand only too well, my constituency is at the top of the list, closely followed by most of the other Glasgow constituencies. It is therefore incredible that the Glasgow development agency, the Glasgow Alliance--I confess to being a board member--and Glasgow city council did not make submissions to the Select Committee, despite being told about our inquiry. That is unacceptable, given that Glasgow lost the equivalent of Ravenscraig almost every year for almost 20 years until 1997, and that inward investment to Glasgow almost never meant manufacturing jobs but instead service sector jobs. Those bodies should have made an input into the inquiry, and must accept the blame for not getting their act together and doing so. I make no apology for publicly criticising them. I hope that they will learn from their mistake and do their utmost on behalf of the city.

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Since 1997, Labour's record in attracting inward investment to Scotland has been outstanding. From May 1997 to date, inward investment has amounted to more than £2 billion and an estimated 30,000 jobs. That success is due to economic growth and the stable economy that the Government established, and to Labour ending the Tory years of boom and bust and 18 wasted years for Scotland. It is also due to the partnership between the United Kingdom Government, the Scottish Executive and various agencies, and to devolving decision making to local levels. Devolution will enable Scotland to continue attracting record rates of investment. The nationalists would put all that at risk by divorcing Scotland from the rest of the United Kingdom.

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