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Manufacturing Industry

4. Sir Nicholas Winterton (Macclesfield) (Con): If he will make a statement on manufacturing industry in Scotland. [187629]

The Parliamentary Under-Secretary of State for Scotland (Mrs. Anne McGuire): The Government fully recognise the substantial role that manufacturing continues to play in Scotland's economy. We will continue to work with the Scottish Executive to ensure that Scotland's manufacturing industry benefits from the macro-economic stability delivered by the Government.

Sir Nicholas Winterton: I am grateful to the Minister for her reply. I am sure that she will admit that manufacturing growth in Scotland is lower than in England, but that is not the purpose of my question. Does she not agree that manufacturing industry is one of the few sources of non-inflationary sustainable economic growth, and if so will she ensure that the Government and the Scottish Executive do not impose further additional costs on manufacturing industry that will undermine its competitive position?

Mrs. McGuire: I know from the hon. Gentleman's continued attendance at Scottish questions that he takes a great interest in matters Scottish, and I hope that he will also recognise that the Government have done a great deal for manufacturing industry. Working with the Scottish Executive, we are determined to recognise that Scotland has world-class companies and a world-class reputation. Yes, we have very good traditional industries such as shipbuilding and aerospace, but we
 
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are determined to build on the new industries—chemicals, biotechnology and pharmaceuticals. A great deal of work is being done to support the Scottish Executive in macro-economic developments to ensure that Scotland's manufacturing base continues to deliver in the years to come.

Mr. Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): My hon. Friend is aware of the threatened closure of the VA Tech engineering plant in my constituency, a state-of-the-art modern plant, with the possible loss of 250 jobs. Now that that company, which was owned by an Austrian multinational, has itself been taken over by a larger multinational, will she urge the new owners to back the work of the task group set up by local management, trade unions and the local enterprise company to try to keep this important manufacturing facility in Edinburgh and in Scotland, and will she ask her office to do what it can to back the work of the task group?

Mrs. McGuire: I know that my hon. Friend has been active in the campaign to save the VA Tech transformers plant in Leith, and I am also aware that there is a great deal of involvement on the part of local agencies, including Scottish Enterprise Edinburgh and Lothian, in that. We will continue to keep an eye on the situation as it develops and work with colleagues as appropriate.

Mr. Peter Duncan (Galloway and Upper Nithsdale) (Con): Is the Minister aware that the success or failure of Government policy in the manufacturing sector will be judged over the longer term by its failure to improve competitiveness levels in Scotland? With our international competitiveness ranking slipping to 36th out of 60, some nine places behind the UK as a whole and behind China, Colombia, India and Slovakia, what is she doing to arrest that decline?

Mrs. McGuire: Sometimes I think that the hon. Gentleman and his party suffer from political amnesia when it comes to manufacturing industry in Scotland. I remember a time through the 1980s and 1990s when there was decimation of manufacturing industry in Scotland. Some of my colleagues on the Government Back Benches have very bitter personal memories of what happened to manufacturing industry. Let me be clear: the Government, with the Scottish Executive, are determined to develop our manufacturing base. To ensure that we are not competing with low-wage economies, our manufacturing base will be developed on the basis of high productivity, high skills, high quality, innovation and high technology—something to which the Conservative party in government never even aspired.

Mr. Duncan: If existing manufacturing businesses are becoming less competitive on her Government's watch, would the hon. Lady agree that it is particularly vital that we see a growing number of new businesses in that sector? If so, is she content to see the report this week from the Committee of Scottish Clearing Bankers, showing new business start-ups falling by 10 per cent.? When will that trend by reversed?
 
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Mrs. McGuire: The hon. Gentleman forgets that we are introducing research and development credits, we have cut corporation tax and we have introduced measures to support the commercialisation of academic research. He is very selective in his use of statistics. He is using one aspect of the report, which was published yesterday, but he has failed to advise the House that the number of business start-ups has increased by 15 per cent. since last year. Let us be clear about the summaries of business surveys in Scotland. The Conservatives look at a glass and see it half empty. We look at a glass and see the reality. [Laughter.] If hon. Gentlemen would stop laughing, they would find out what the reality is.

"Manufacturing remains positive as order growth rate slows".

That is from the Scottish Engineering quarterly review in September 2004. That is the reality of the situation, not the pessimistic interpretation of one aspect of a statistical review.

Mr. Duncan: The Minister clearly needs a longer summer recess. Scotland's manufacturing exports have decreased by more than 12 per cent. during the past year, and Scotland's manufacturing and business sector continues to suffer from more talk, more tax, more tape and more complacency from both the Scotland Office and the Scottish Executive. When will the Minister and her colleagues take their eyes off the ministerial reshuffle and focus on delivering an economy that works?

Mrs. McGuire: The hon. Gentleman fails to recognise that the Scottish manufacturing sector is more optimistic than it has been for some time and that we have cut some of the burdens. [Interruption.] To be frank, I will not take what the Member for Mid Scotland and Fife in the Scottish Parliament, Brian Monteith, says as gospel—he has interpreted a set of statistics.

The Scottish manufacturing sector is optimistic. The Scottish chambers of commerce business survey points to continued growth in the Scottish economy, and, according to the Lloyds TSB report, Scottish business has the highest expectations, which is the reality of Scottish manufacturing and the Scottish economy. It is a great pity that the hon. Gentleman colludes with hon. Members from other parties who continue to talk down Scotland.

Mr. Eric Joyce (Falkirk, West) (Lab): My hon. Friend may know that Alexander and Dennis, which builds buses in my constituency, has announced £40 million of orders today. Will she visit the plant in my constituency, which is an excellent example of a successful Scottish manufacturing venture?

Mrs. McGuire: As the Member of Parliament for Stirling, I am always delighted to visit Falkirk. I cannot promise that I will visit in my ministerial capacity, but I understand that my right hon. Friend the Secretary of State may visit in the near future, in which case my hon. Friend can personally apprise him of the situation with regard to Alexander and Dennis.

Scottish Enterprise

5. Mr. Alex Salmond (Banff and Buchan) (SNP): When he last met the head of Scottish Enterprise; and what issues were discussed. [187630]
 
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The Secretary of State for Scotland (Mr. Alistair Darling): First, I congratulate the hon. Gentleman on his good fortune in being elected leader of his party for the second time. It is good to see him leading from London, and we look forward to his doing that for many months.

Secondly, the hon. Gentleman knows that the funding, direction and oversight of the enterprise networks is a matter for the Scottish Executive, although I have, of course, met the chief executive of Scottish Enterprise on a number of occasions.

Mr. Salmond: I thank the Secretary of State for his good wishes—I am full-time and elected as opposed to part-time and appointed, like him. I also thank Labour Back Benchers for their enthusiastic support—although it is also worrying.

Returning to the substantial issue, which was raised earlier, of renewable energy and, in particular, Talisman, the Secretary of State will have noticed that Talisman has cited transmission charges of £20 per kilowatt as the greatest single threat to the viability of the Beatrice offshore wind farm. Will he explain why generators in the north of Scotland must pay £20 or more per kilowatt while generators in the south of England are subsidised at a rate of £9 per kilowatt? How will the Secretary of State address that threat to thousands of Scottish jobs, billions of pounds of investment and Scotland's potential as the renewables capital of Europe?

Mr. Darling: Labour Members are enthusiastic about the hon. Gentleman's election because he did not win a single general election as leader last time. On the matter of substance, I said to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), who speaks for the Liberals, that it is important to make sure that the transmission charge regime is fair in order to encourage the development of renewable energy. One of the new scheme's advantages is that the Scottish interconnector charges will go, but the hon. Member for Banff and Buchan (Mr. Salmond) is right that we must ensure that the regime is fair, so that we can generate renewable energy and other types of energy for sale in England, which is important for the industry's future.

Mr. Brian H. Donohoe (Cunninghame, South) (Lab): When my right hon. Friend met Scottish Enterprise, did he raise the Lyons review, in which, as it stands, Ayrshire is not included? What can be done about that and when will a report on the implications of the dispersal of public service jobs be produced?

Mr. Darling: My hon. Friend has met me to make the case for development in Ayr. As I told him, the object of the Lyons review is to encourage more dispersal of jobs away from Whitehall to other parts of the country. In relation to Scotland, while there are obviously advantages in putting jobs where centres already exist, it is also important that we consider other sites around the country, particularly those where jobs and development are needed. I am very much aware of my hon. Friend's point about Ayrshire, and I shall certainly bear it in mind.
 
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