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The Parliamentary Under-Secretary of State for Scotland (David Cairns):
I congratulate my hon. Friend the Member for Falkirk (Mr. Joyce) on securing the
debate. Since he was elected, he has always been an outspoken advocate for, and tireless champion of, central Scotland, in particular the Falkirk area that he proudly represents. I also congratulate him on his magnificent struggle with failing health. He managed to get through his speech without his voice giving way, although he had me worried when he declared an interest in Jobcentre Plus. I was not sure what he was going on to say, but he assures me that he is interested in it because he opened it, and there is a plaque on the wall to confirm that.
This is an important debate and it is important to have it at this time. The performance of the economy is always crucial, but at this time, in a period of political flux, it is essential to recognise just how well the economy of central Scotland is doing, and how important it is not to take any decisions or pursue any policy paths that will put the state of the economy at risk.
As my hon. Friend properly outlined, the central Scotland economy makes a vital contribution to the overall Scottish economy. If one widens it out from the central region to what he called “Glasburgh”, we are talking somewhere in excess of 70 per cent. of the value of the entire Scottish economy. I take issue with him on one thing, however: I gently remind him that central Scotland extends west of Glasgow—indeed, some of the most dynamic, exciting and beautiful parts lie there. However, I will not chide him any further. I think he takes my point.
With the area making such a large contribution to the overall Scottish economy, it is reassuring to remind ourselves that as recently as April this year, no less an authority than the chief economist of the RBS Group, Dr. Andrew McLaughlin, said that the
“Scottish Economy is in fine fettle”.
How right he was. The latest growth figures show Scottish output rising by 2.6 per cent. over the year, well above the long-term growth rate of 1.8 per cent. That is the highest calendar-year increase in GDP since 1997. It also marks the 10th consecutive quarter of greater-than-trend GDP growth.
As my hon. Friend said, dynamic sectors such as the financial services sector are creating a prosperous Scotland. Over 2006, financial services grew at the staggering rate of 8.1 per cent. Manufacturing, which played an important part in my hon. Friend’s speech, experienced a 0.9 per cent. quarterly increase in output, meaning that the sector—which, as we all know, has struggled, as it has done throughout the western and the developed world—is no longer in recession. Gross value added per head in Scotland exceeds that in Wales, Northern Ireland and all the English regions except London and the south-east and east of England.
Not only is the Scottish economy performing strongly at the moment, but the predictions are also encouraging. Independent forecasters such as the Fraser of Allandar Institute and the Ernst and Young ITEM Club suggest that the economy will continue to grow at above its long-term rate into 2008.
In the past the economy has done well, but growth has often come without jobs attached to it. That does not apply to the strong Scottish economy at present. The Scottish labour market is experiencing a period of unprecedented strength. There have never been more Scots in work, and the economic activity level and rate
are at record highs. The latest statistics show that unemployment is falling, and is currently near an historic low.
As my hon. Friend said, stability generated by the United Kingdom’s strong macro-economic framework has delivered the strongest Scottish labour market for decades. Much as I should like to take credit for that, I think my hon. Friend will agree that much of the credit must go to the excellent stewardship of the economy achieved by my right hon. Friend the Chancellor of the Exchequer. I think everyone in Scotland will recognise that just as he has delivered an outstanding economy overall, he is well placed to take over leadership of the United Kingdom on the basis of his outstanding track record in delivering a strong Scottish economy, with record low inflation, record investment in our public services, and record numbers of people in work. That is the legacy of my right hon. Friend the Chancellor of the Exchequer, and it gets his premiership off to an outstanding start.
More jobs are available than ever before. Over 250,000 more people are in work than in 1997. The Scottish employment rate exceeds the United Kingdom average and that of almost all other countries in the European Union, and, as I have said, unemployment is near an historic low.
It is not only politicians who are making these claims. It might be seen as entirely self-serving if I merely read out a list of statistics, so let us examine what independent sources are saying. On 14 May the senior economist at the Royal Bank of Scotland, David Fenton, said:
“Growth in new business fell on the month, but has been so strong over the past year that order books are now brimming over, with the index of unfinished work also at a record high.”
On 24 April Iain McMillan, director of CBI Scotland, said:
“Scotland’s manufacturers are confident they can match the best in the world. Optimism regarding the business situation continues at a high level with export optimism at its highest level since February 1968.”
On 29 March Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said:
“The Scottish economy continues to grow above its trend rate whilst expectations for future growth have risen to their second-highest level in nine years...Consumer confidence remains high, reinforced by record levels of employment.”
In March Dr. Peter Hughes, chief executive of Scottish Engineering, said,
“the Scottish manufacturing engineering sector continues to have an optimistic outlook with overall improvements in total orders and output volumes continuing.”
As my hon. Friend says, central Scotland is rightly seen as a driver for growth in the Scottish economy. Although all parts of Scotland are making their contribution, tonight we are focusing particularly on the contribution made in central Scotland. In terms of gross value added per head, both Edinburgh and Glasgow easily exceed the UK average and are continuing to grow at a quicker rate than the national average. I have already mentioned the tremendous success of the financial sector in Scotland. Long may that continue. It now employs directly 110,000 people, and a similar number indirectly. New jobs are being created there all the time.
My hon. Friend apologised for being parochial. He has no need to apologise for that. He does what constituency
MPs are entitled and supposed to do, which is to make a case on behalf of their constituency on the Floor of the House. His constituency is a prime illustration of the success of the central Scotland economy. In the past year alone, unemployment has fallen by 9 per cent. in Falkirk and now sits below the Scottish average. I am sure that his predecessors would have liked to have been able to come to the House when unemployment in Falkirk was below the Scottish average. In his constituency and mine, unemployment was into double figures, where it stayed for many years. He can now boast that he is an MP at a time when unemployment in Falkirk is below the Scottish average. That does not happen often. He must take some credit for that, too.
My hon. Friend mentioned Alexander Dennis, the coach builder, which is renowned not just throughout Scotland but throughout the world. On a trip to Shanghai, he and I spotted some buses that were made in Falkirk trundling through the streets, so they are clearly well known and well regarded throughout the world. We congratulate Alexander Dennis on winning in March a contract from Stagecoach worth £55 million, for another 393 buses and, just last week, on being awarded a contract by the National Express Group worth £26 million for 119 double-decker buses. In addition, it is making great strides forward. My right hon. Friend the Secretary of State for Scotland saw that when he visited the company recently: he saw the “eco-warrior”, the environmentally friendly double-decker.
My hon. Friend invited me to reflect on the situation of some industrial estates throughout Scotland, including in my constituency. I have an industrial estate in my constituency that closely mirrors the one that he described. In Port Glasgow, the Devol industrial estate does not employ people in the vast numbers of years gone by, but it still makes an important contribution to the local economy in Inverclyde. I can think of several companies there that are still employing many of my constituents in well-paid, well-trained jobs. We lose those jobs at our peril, and we minimise the importance of that at our peril.
I have had a lot of dealings with—I will pick just one of the companies—McLaren Packaging Ltd, which has gone from fairly standard manufacturing of boxes for television sets to sophisticated manufacturing of those cardboard presentation tubes that Scotch whisky now comes in. It is a very skilled job. Many millions of pounds have been invested in the necessary capital, equipment and training of the work force. The Scotch whisky industry is thriving. It is worth a huge amount to the Scottish economy. Companies such as McLaren Packaging Ltd play an important part in allowing Scotch whisky to expand into markets where it is seen more as a niche product. The company will soon be employing upwards of 100 people, and has plans to expand even further. It is making a tremendous contribution to the economy of Inverclyde, and by extension to the economy of central Scotland.
Such industrial estates are not without their problems, as my hon. Friend outlined, but we give them up at our peril. We allow them to be sold off for housing at our peril. They may not be what they once
were, but they are still important. We must not minimise the importance of that.
On the broader front, the success of the economy in central Scotland has allowed the Government to make available to the Scottish Executive record sums of money to invest in our vital public services. In Falkirk alone, we have 23 more consultants, 88 more nurses, more midwives, 24 more dentists, and 162 more teachers. That is directly related to the strength of the economy. If it were not for the strength of the UK economy at macro level, and the strength of the central Scotland economy benefiting from that, we would not have the resources to allow us to invest in the college that my hon. Friend mentioned, in the schools and in the hospitals. It is important that we continue with the policies that have given us that strong macro-economic growth, if the new Executive are to continue to have the money that we have made available to the Executive to invest in vital public services.
Tourism in Scotland has increased. The success of the magnificent Falkirk wheel has helped in that. I visited it last year, and it is an astonishing feat of engineering. It is distinctly Scottish, and a triumph of engineering skill. It has taken Falkirk from being an also-ran as a tourist destination to the 12th most visited tourist destination in Scotland, and that ranking will only continue to improve. The wheel has played a tremendous part in that, and I am sure that the local economy near the wheel is benefiting from it. That stands as a great tribute to the people who had the foresight to come up with the idea for the venture, and who then implemented it.
As well as successes in tourism, manufacturing and the financial sector, there is also in the wider central Scotland area a blossoming of a relatively new industry: the life science research industry. Cognia, a US specialist life science database company, has expanded its Edinburgh operations by recruiting 75 new staff. Many life science research companies are locating to Scotland. There is a cluster in and around central Scotland that rivals—and is secondly only to—that of Cambridge in the whole of the UK. That is an exciting development. We must make the right macroeconomic choices to foster and encourage those companies, which will in due course employ my hon. Friend’s constituents.
My hon. Friend made a strong case for the continued success of the central Scotland economy. It is doing well, but he is right to highlight the fact that we must continue to make the right policy choices for it to continue to flourish. Solid economic growth and success does not happen by accident. It happens because tough decisions are made, because the Government have the foresight to put in place the proper macro-economic policies, and because we have over the past eight years worked very closely with the Scottish Executive to ensure that in places such as Falkirk and Grangemouth the benefits of it are enjoyed by our constituents. I hope that that close co-operation on behalf of our constituents flourishes in years to come, and I know that as long as the people of Falkirk have as vociferous an advocate as my hon. Friend, they will continue to enjoy the economic success that they are enjoying today.
Adjourned accordingly at twenty-two minutes past Nine o’clock.
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