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Mr. Gray: Will the Secretary of State hold on for a moment? My understanding of what the Secretary of State said is that the Chancellor has committed himself to increasing the price of petrol only by the rate of inflation year on year and that the increase will no longer be automatically higher than the rate of inflation. If that is what he is saying, how does he explain the figures in the table at the back of the Red Book that show a 4.6 per cent. increase in fuel duty income year on year, both for next year and the year after that?
Dr. Reid: I can help the hon. Gentleman, who obviously supported a mechanism when the previous Government were in office that he did not understand. The difference with an automatic fuel duty escalator is that it rises automatically one year after another; it does not rise because of a year-on-year choice. My right hon. Friend the Chancellor of the Exchequer has now abolished the duty. Moreover, he has said that, should there be, in any given year, any increase over inflation, that will be ring-fenced and put into transport. I hope that that helps the hon. Gentleman to understand the policy that he apparently supported without understanding for six years.
Mr. Gray: I shall not rise to the Secretary of State's amusingly patronising manner. If he is suggesting that
petrol prices will not increase by more than the rate of inflation and that all the increase will be used for transport, which is not otherwise being provided for by the Government, I challenge him to return to the House after the next Budget when, without question, he will find that the price of petrol has gone up by far more than the rate of inflation. People in Scotland will thus pay disproportionately more because of the distances involved in travelling in Scotland.
I am surprised to hear the Secretary of State justify the huge increases in petrol prices. In Scotland, petrol now costs £3.50, £3.60 and £3.70 a gallon, and I remember the days when my father used to fill up his car for 10 bob. A price of £3.50 a gallon is extraordinary and it bears down disproportionately on Scotland.
I have a final point about transport. The Secretary of State says that all the money will be hypothecated. The important things about hypothecation are that it is permanent and that it provides additional money. We heard how little investment there has been in the transport infrastructure in Scotland, and the Select Committee went to some length to say how poor it was. Several hon. Members have said that they regret the fact that the response has not been better on that front. I therefore challenge the Secretary of State to commit the Government, without any deviation, to ring-fence all the extra revenue that may be raised through any increase in petrol duty next year for transport infrastructure in Scotland. Will he also specify what he will do after next year's Budget that he would not otherwise have done? In doing that, he will have to say that he will not provide the infrastructure that the Select Committee has called for.
Mr. John McFall (Dumbarton):
I am delighted to be able to speak in the debate and particularly to commend my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) and his Committee for a worthwhile and substantial report.
I have been keen to focus on certain issues over the years and they have been mentioned in the report. The first is inward investment and after care. The line between inward investment and investment by indigenous companies is becoming increasingly blurred. For example, 60 per cent. of all inward investment is reinvestment by existing companies. The need to focus on that is very important.
Secondly, there is the issue of added value. Scotland used to be called a branch economy for inward investing companies--hopefully no more. The focus must be on research and development and on local sourcing. If we get that right--so far, too little attention has been paid to the matter--we will create many thousands more jobs in Scotland.
We must also consider the links between universities and industry. I recall the invention in the 1960s of flat-panel technology at Dundee university. The benefits of the technology were not produced or sourced there, with the result that more than 40,000 jobs are scattered around the world that should be in Scotland. Scottish Enterprise and the higher education institutions have looked at developing links between universities and the world of business and industry, but we have yet to move from analysis to action.
The report mentions one-stop shops. Some years ago, I recall making inquiries about Glasgow in that regard and discovering that people wanting to set up a business could make about 80 separate lines of inquiry. There is therefore an awful long way to go before a one-stop shop can be established.
I was delighted that the report suggested that Scottish Trade International and Locate in Scotland should merge. Another factor in that discussion is Highlands and Islands Enterprise. The hon. Member for Argyll and Bute(Mrs. Michie) is making faces at me, but there is a need for a strategic competence covering the whole of Scotland. That could be achieved by combining Scottish Enterprise and Highlands and Islands Enterprise, while still retaining the distinctive elements of the latter organisation.
Finally, there is the question of the duplication of services on offer from local enterprise companies, local authorities, enterprise trusts and other local bodies. We must get that right if we are to focus on economic development at local level. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) is right to say that there is no evidence of inward investment in many areas in Scotland. It is very important that we get that happening at local level.
As for the present--and future--economic environment, we are on the verge of the knowledge economy. Through the internet, technologies for computers, telecommunications and broadcasting technologies are starting to converge. The result is that our lives and life styles are going to change enormously.
For example, British Telecom has declared that it wants to source as much of its services as possible on the internet. In one year, that will save the company£70 million, and other companies are clearly going to follow suit. That will have implications for jobs, our town centres and for the way in which we do our business. We have not got around to thinking about that in Scotland yet, but e-commerce will affect how business is done.
I visited Lindendale university in St. Louis recently. It has a student population of 8,000, and its president, Denis Spellman, told me that the university would have to change enormously as a result of the knowledge economy and e-commerce. The report contains echoes of that prediction. In paragraph 114, it states:
One area on which the report did not focus, but on which we should focus more, is the need to develop our local economy and to promote and develop small
businesses. In America, the success of the Clinton presidency was based on the development of 8 million jobs in small businesses during his first term. At the Glasgow chamber of commerce dinner a few weeks ago, Peter Sutherland, the ex-commissioner, mentioned that, every year in America, 900,000 businesses are set up. At the end of the year, 800,000 go out of business, but that means that 100,000 new businesses are set up every year. Scotland has not had a culture of starting new businesses, giving people confidence to develop their businesses and go through the pain barrier, and helping them develop. We need to do that. Yes, there are good ideas in Scotland but how do we harness them into developing businesses and keep them going? That is the big secret. In the 21st century, the economy will depend on the development of small businesses. It can be called entrepreneurship and it is important that schools and universities focus on it.
A few weeks ago I read a book by Charles Handy called "The New Alchemists", in which he looks at entrepreneurs. Oswald Boateng, Charles Dunstane of the Car Warehouse company and Richard Branson left school without qualifications but with ideas. Somebody nurtured and encouraged them to develop their ideas. We need to do that in Scotland. In the 21st century, we will do that through our information and communications technology. We should widen the curriculum and ensure that we are ready to take advantage of future opportunities.
As my hon. Friend the Member for Shettleston said, we need infrastructure. I agree that the M74 is an important link because I want Scottish goods to get to our most important European market--England. It is important, too, if we are to get the benefits of the Single European Act, which Baroness Thatcher signed us up for in 1985, by putting our goods into Europe. We are not doing that sufficiently well now.
I draw to the Secretary of State's attention a local issue. Last year, the J & B Whisky plant in my constituency was closed. To date, the Government have provided good help. Diageo, the company that closed it, West Dumbarton council, Dumbartonshire Enterprise and I are working very closely together to see if we can find a novel solution to replace the lost jobs. It was a body blow to lose 500 jobs and a company that had existed for 30 years. We need to do something to replace those jobs. My right hon. Friend the Secretary of State has been of assistance in the past and I know that he will continue to assist us. I assure him that I shall be knocking on his door.
Finally on the economy in the 21st century, one writer drew an analogy between "fleas and elephants". I was reminded of that comment a few weeks ago when I met Governor Gray Davies of California. He said that, in the first six months of this year, venture capital investment was $14 billion in California. Obviously, we could never get near that figure. In terms of that analogy, I think that we are a flea and it is important for the Scottish economy to get on the back of a good elephant. That is the way to prosper.
"It is not enough to have excellent universities unless their output can be harnessed for the wider benefit of Scotland. This is not a uniquely Scottish problem; we heard in Virginia of the problems of bringing together to their mutual benefit a university culture whose roots are in the middle ages and whose time-scale is based on university terms and a technological one which thinks in web-hours and in which 'instant gratification is too slow'".
The way in which business develops therefore has enormous implications for our universities.
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