Scotland in the World: A New Perspective

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Mr. Peter Duncan (Galloway and Upper Nithsdale): The hon. Gentleman will be surprised to hear that I concur entirely with many of his remarks about Europe, and particularly on the French market. However, I should temper his suggestion that France is our greatest European ally by mentioning its on-going refusal to import Scottish beef. If he had mentioned that fact, he would have given his argument greater weight.

Mr. Tynan: Europe is not perfect. The Scottish Parliament and Ross Finnie in particular are working very hard to sort out the problems, and I am confident that they will succeed.

Since 1989, a financial package of European funding, which also includes contributions from the Scottish Enterprise network, local authorities, the voluntary sector, and colleges and universities, has invested £1 billion in the economy of western Scotland. Since 1985, Scotland has attracted inward investment of more than £11 billion, which constitutes between 15 and 20 per cent. of all UK inward investment projects. That would simply not be the case, were we not deeply engaged in Europe. Moreover, our quality work force makes Scotland a gateway to the EU and brings us vast economic benefits.

People in my constituency of Hamilton, South are benefiting from the constructive and meaningful approach to the EU. In the period 1997–99, European funds invested more than £5 million in projects in Hamilton, and projects in Lanarkshire received nearly £8 million. The new spending round, which will run from 2000 to 2006, will also benefit my constituency. For example, the workplace initiative in Hamilton was granted more than £300,000 of European funds under the 2000 to 2006 programme to refurbish the local Burnbank library. It will build a unique job access and training centre for local residents, with an information technology learning centre, training space, a vacancy display, and outreach counselling services. That is the sort of initiative by which the community will understand the benefits of Europe.

The principle of subsidiarity has worked to Scotland's benefit. It is a strong voice on the European Union Committee of the Regions. That is to be welcomed. The Labour Government accepted when instituting devolution that decisions should be taken at the lowest level appropriate to Scottish people's needs: sometimes in Edinburgh, sometimes in Westminster and sometimes in Brussels.

Angus Robertson: Following the hon. Gentleman's logic, is he not concerned that most subjects regarding devolved matters that are debated and decided on at European level are not attended by Scottish Ministers?

Mr. Tynan: I think that the hon. Gentleman missed my point about devolution and relations with the UK. My view is that if we work and deliver in partnership, we will be better able to deliver for the people of Scotland. If we become negative and introverted, we devalue and deprive Scotland.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): Does my hon. Friend agree that it is good that attendance and participation by Ministers of the Scottish Executive in the European Council is much better than representation and attendance by members of the Scottish National party in this Chamber? If we took that as an example, there would be hardly any attendance by Scottish Ministers in the decision-making procedures.

Mr. Tynan: I am more concerned to promote the positives than the negatives. There is much that we can promote that is very positive and, if we do so, we do not fall into the same trap as Opposition Members.

With the weight and influence that Scotland has as a strong and vital part of Britain, we can shape Europe. If Scotland were independent, not part of the UK, and not working in partnership, we would lose influence in Europe. We would be regarded as a small nation trying to play at the big table. It is vital to be part of the UK.

The Labour Government have not gone far enough in committing to the European project of establishing peace, security and economic prosperity. When the economic conditions are right, Scotland must take its rightful place in the eurozone. Otherwise, we could lose out badly. The large amount of inward investment that Scotland has seen during the last decade will be in danger if we remain outside the euro. We have already witnessed a worrying trend in the first few years of the euro's life. Foreign investment in the UK manufacturing sector fell by 15 per cent. in 2000, but in countries that have joined the euro it rose by 38 per cent. That demonstrates what is required.

The strength of the pound and the volatility of the currency markets mean that while Scotland stays out of the euro it is less attractive to inward investment. The quality of the Scottish work force may not be enough to negate the risks inherent in dealing in a different currency from the rest of the EU. Scotland has become a gateway to Europe for many American and Japanese companies during the past few decades. If we are not careful, that investment might drain away.

Producing goods under one currency and selling them in another is a risky strategy, especially when there is an option with far less risk. Sudden changes in exchange rates can wipe out profits and knock a company completely off course. Continental countries are embracing economic reform with enthusiasm. They are deregulating labour markets, cutting taxes and attempting to generate a more entrepreneurial business culture, thereby further eroding Britain's competitive advantage.

Changing currency is an expensive business in this country. Britain spends about £4.5 billion on changing between currencies. I am deeply concerned about how long we can afford to put ourselves at that disadvantage.

The economic downturn of recent months has highlighted how fragile global trade can be. Although the Organisation for Economic Co-operation and Development has said that Britain is well placed to weather the storm—and that is thanks to the Chancellor's prudent economic policies since 1997—we cannot become complacent because too many people's lives depend on economic success. In 1999–2000, there was a loss of some 12,000 manufacturing jobs in the Scottish manufacturing sector. Although that was not due merely to our absence from the eurozone, it does not help that we are outwith it. Numerous companies, including Daks Simpson in Lanarkshire and OKI Electronics in Cumbernauld, have blamed the strong pound and, although that should not be used as an excuse, I recognise that they are facing barriers that competitors on mainland Europe are not and that that is not helpful.

I am aware that a debate on the single currency in Scotland could create divisions among and within political parties, but it must happen as soon as possible. We must engage with people in Scotland and the UK and ensure that we promote the case for the euro. If we do, real progress will be made. When the euro becomes a reality next year, and the coins and notes are in the pockets of those going on holiday, there will be pressure to consider the euro in toto. On the basis of our current convergence, in respect of growth rates, the two economies are moving to a similar situation.

I believe that we can persuade the Scottish people of the single currency's benefits. Opinion polls show that they are more pro-European than other Britons; they are aware of Scotland's wider role in the world and so are well placed to give a lead to other parts of the country and present the substantial facts on Europe. Despite the malicious scare stories that are propagated in many sections of the press, the British population are not as Europhobic as is sometimes assumed. The Conservative Opposition would be wise to take heed of that. The health of Scottish trade and industry depends upon it, and that is an argument that we cannot move away from. We must ensure that we deliver.

Before the devolution settlement for the Scottish Parliament, we promoted a consensual Parliament—one that was different from Westminster. We have seen that working under the Liberal and Labour parties, but we have not seen other Opposition parties working with the people of Scotland, or with the nation. The Scottish Parliament must be used as a method of joining elements together to deliver for the people. If it is not, the parties that are currently opposing it will find themselves on the periphery at the next election.

12.13 pm

Angus Robertson (Moray): I begin in much the same way as the hon. Member for Caithness, Sutherland and Easter Ross, by saying that it is important to approach any Government announcement or proposal on its merits. On behalf of the Scottish National party, I welcome any measure that may boost Scotland's standing in the world and I wish the Secretary of State every success in doing that.

Like the Secretary of State, I think that we need to understand the wider issues in the international community and the global economy, and how they might impact on Scotland so that we can find the right answers, which will position Scotland for the future. The challenge for legislators here and in the Scottish Parliament is how to deal with this—the Secretary of State described it as a new perspective—in a way that guarantees success and ensures that it is accountable and democratically answerable.

Two of the biggest challenges that we face are globalisation and, of course, terrorism. All parties, including the SNP, believe that enhanced international co-operation is essential, whether it be through the European Union, as the hon. Member for Hamilton, South (Mr. Tynan) suggested, the United Nations or informal coalitions.

I was surprised that the Secretary of State overlooked the biggest single development in Europe: the enlargement of the European Union. Perhaps the Minister will deal with that when he winds up. Enlargement should be seen not as a problem but as an opportunity, and I urge the Government to take that on board as part of this initiative. Incidentally, the majority of the countries that we would all welcome into the full European Union are small and medium-sized independent countries.

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Prepared 28 November 2001