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Mr. Alex Salmond (Banff and Buchan) (SNP): The hon. Member for Dundee, East (Mr. Luke) opened his speech by offering congratulations to the hon. Member for Chipping Barnet (Sir Sydney Chapman) on his valedictory address. I do the same and wish the hon. Gentleman best wishes for the future. I extend the same good wishes to the hon. Member for Dundee, East, in case the citizens of that great city are less impressed than he is by the Chancellor's track record on the Scottish economy, which is what I shall speak about.
At the Scottish Labour conference a couple of weeks ago, the Chancellor attacked me and accused me of claiming to be an economist. I make the frank admission that I am a fully paid-up member of EA—economists anonymous. I confess that I was a Government economist. I confess that I was a bank economist. I confess that I am a visiting professor of economics at Strathclyde university. I confess to all those things. I would never accuse the Chancellor of any of them.
I am sure that the Chancellor's degree in history was great training for his present position and that his lecturing in politics was marvellous preparation. His time with Scottish Television as a producer also stood him in good stead for his tenure as Second Lord of the Treasury. I do not actually think it necessary for a Chancellor to be an economist, although it can occasionally be helpful for recognising mumbo-jumbo such as "endogenous growth cycle theory", but it is not necessary to have that background or expertise. My claim against the Chancellor is that he claims to be a Scottish Chancellor of the Exchequer when his track record tells us that he is not. He has done nothing specific or substantial to benefit the Scottish economy during his tenure of that office.
Mr. Luke: I am glad to hear about the hon. Gentleman's CV in economics. Does he agree, however, that it would be much more profitable for him to concentrate on teaching economics rather than pursuing a career in politics where there is no end in sight?
Mr. Salmond: I shall try to combine both. Perhaps the hon. Gentleman will hear me do so in my speech.
The Chancellor's speech last week opened with the boast about 50 continuous quarters of economic growth. The House may remember that he referred to the English premiership record of 50 consecutive matches.
Ian Stewart (Eccles) (Lab): It was 49.
Mr. Salmond:
Well, it was almost 50. The Chancellor said that he had gone one better and had reached the magic number of 50.
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I wanted to ask the Chancellor about the figures for the Scottish economy—I thought that his own country might be of some interest to him. I asked a parliamentary question but received the reply:
"The Chancellor of the Exchequer has asked me to let you know that your parliamentary question: 'To ask Mr. Chancellor of the Exchequer, in which quarters Scotland has been in negative growth since 1997' . . . is more appropriate to the Secretary of State for Scotland."
What on earth does the Secretary of State for Scotland have to do with economic growth in Scotland? He has no power and no influence whatever. He survives on a pocket-money budget that is sliced off the Scottish Executive budget. Ninety per cent. of the decisions that affect economic growth in Scotland are taken by the Chancellor and the other 10 per cent. are taken by the Scottish Executive. None of them is taken by the unfortunate Secretary of State for Scotland, who presumably exists to answer questions that the Chancellor does not want to answer.
The answer to my question finally arrived. We find that there have been four quarters of negative growth in the Scottish economy since 1997. The last one was three years ago in the first quarter of 2002. In Scotland, far from seeing the longest period of economic growth for the past 200 years, we have experienced that for only three years under the current Chancellor. If the Chancellor was examining his record on the Scottish economy, he would not have started his Budget speech with that boast.
For the climax of his Budget speech, the Chancellor announced a freebie—free bus travel for pensioners. Earlier, the right hon. Member for South-West Norfolk (Mrs. Shephard) said that that announcement had confused some of her constituents, who were finding it difficult to get any buses, let alone free ones. The announcement would also confuse the Chancellor's constituents in Dunfermline, East, because they have had free buses for some time. I am not certain whether the Chancellor travels on buses in his constituency, but it seems significant that the climax of his Budget speech was an announcement that had already been made in Scotland.
In a speech that ranged wide and looked at announcements such as the well deserved memorial to the Queen Mother which has been mentioned, the Chancellor managed to miss out many things pertinent to the Scottish economy. I am somewhat concerned that even now, when I asked the question earlier—let us call it the Banff and Buchan question—about growth in the Scottish economy, the Secretary of State for Trade and Industry was unaware of the situation, as was the Conservative spokesman, although his reply was so nice about Scotland that perhaps I will forgive him. It was certainly a lot better than that of his colleague the hon. Member for Beaconsfield (Mr. Grieve), who described the problem of emigration for Scotland as being attributable to the fact that Scotland was "an unattractive country". I hope that the hon. Member for Eddisbury (Mr. O'Brien) will give his hon. Friends some lessons on how to address problems in the Scottish economy.
But this is a serious matter. We have a Chancellor of the Exchequer sitting for a Scottish constituency who either does not want, or is not prepared, to engage in why the economic success that he boasts about at a UK
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level is not being replicated in his own constituency and in his own country. Even more seriously, unless there is an acknowledgement of this growth problem and difficulty in the Scottish economy, how can there be any measures within the Budget to tackle it and do something about it? Significantly, when I asked the Secretary of State for Trade and Industry for two measures in the Budget that would boost Scottish growth, she did not come up with even one. So the charge that I make against the Budget and the Chancellor is that he is a Chancellor from a Scottish constituency, but in no way can he be described as a Scottish Chancellor of the Exchequer.
The black holes that were supposed in the Chancellor's estimation are also quite interesting. Brown's black hole seems to have been filled by black, black oil. I have been looking at the entirety of the Budget give-aways, and if we include everything, including measures that are due to take effect from this year, the give-aways, announcements or bribes, depending on one's point of view, come to £3.4 billion. The increase in projected oil revenues this year conveniently also comes to £3.4 billion, exactly replicating the figure of Budget give-aways.
I suppose that the Chancellor of the Exchequer could claim that he was anticipating this increase in oil revenues to allow him to be in a position to finance his Budget largesse and therefore it was all built into his calculations. As we all know, the price of oil is now $54 a barrel. The Budget estimates are based on around $40 a barrel, according to the Treasury convention. But I have been looking back to last year and I find that, far from arguing that the price of oil should be $55 or $40 a barrel, the Chancellor of the Exchequer was lecturing the Organisation of Petroleum Exporting Countries and suggesting to it that the price should be $28 a barrel. On BBC Online on 20 May 2004 he said:
Just in case OPEC was not reading BBC Online, in The Times of 24 May, the Chancellor said:
"I think Opec do accept themselves that the sustainable price for oil is $22 to $28 a barrel, and I think they do therefore recognise there is a need for production targets to be increased".
Rather luckily for the Chancellor, OPEC seems to have paid no attention whatever to his forecasts for last year, because if it had, and if that had been the prevailing price, I am afraid that the £7.1 billion of revenues forecast for the coming year in his Budget statement would not have been there, and therefore presumably he would not have had the wherewithal to finance the largesse and give-aways that the Budget has just announced.
I suspect that the Treasury model for looking at the impact of oil revenues on world economic growth is seriously out of date: out of date because the current surge in oil prices is demand-led rather than supply-led; out of date because the coefficients of energy in the economy have changed dramatically since the 1970s; and out of date because the major factor in world growth and oil prices in the '70s was the question referred to as "recycling", which now presents nothing like the same difficulties of hoarding and suppression of demand that we have now.
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I wonder what would have rescued the Chancellor on this pre-election Budget if it had not been for the windfall of oil gains. I would have liked to see in the Budget some recognition or appreciation, or perhaps, as the Norwegians have done over the past 10 years—almost the tenure of the present Chancellor of the Exchequer—the building up of an investment fund for future generations, the first payments on which were made in Norway in 1996. The fund now stands at almost £90 billion, some £20,000 a head for every man, woman and child in that country. The revenue generated from that fund is greater than annual Norwegian oil and gas revenues. The point is clear. What we fear in Scotland is that while our neighbours across the North sea are providing for future generations—for their oil and gas revenues will never run out, in the sense that that fund will always be available to power forward the Norwegian economy—no Chancellor, and certainly not the present Chancellor, has made any similar provision for the long-term benefit of the Scottish economy and for effecting the transformations that are undoubtedly required.
Economic growth can be considered a dry subject, but the impact of low growth in Scotland is felt in ways that are comprehended by every person in the country. The official forecast is that far from gaining population—we note the debate on immigration that is taking place in the election campaign—Scotland is to lose 500,000 people over the next 40 years. That is the equivalent of losing a town the size of Alloa, Carnoustie or Kelso every single year. That is the impact of low growth on the Scottish economy. If we and our colleagues across the Chamber had a pound for every young Scot we meet in London who has come down here for opportunity and would love the opportunity to go back home if there were similar career advantages, we would all be very rich indeed.
So, far from being a dry subject, economic growth is a subject that touches every family in Scotland, and far from finding in the Budget a way out of the low growth-depopulation cycle to which the present and previous Chancellors have subjected Scotland, we find a Budget with nothing substantial to offer the Scottish economy and therefore nothing substantial to offer the Scottish people.
The right hon. and learned Member for Rushcliffe (Mr. Clarke) asked why the Chancellor was so keen to have items like the Queen Mother's memorial in his Budget speech. The answer lies in the same reason as for his mentioning Britain 60 times in his Budget, and Scotland twice: he is anxious to recast himself as someone with British credentials. They used to say in the Labour party, when they talked about such things, that one could rise with one's class or out of it. The difficulty with the Chancellor is that he is not rising with his country; he is rising out of it.
5.28 pm
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