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Economic Policy
A debate on motion
S2M-3321, in the name of Mark Ballard, on Economic Policy.
The
Presiding Officer (Mr George Reid):
Good morning. The first item of business is a debate on motion S2M-3321, in
the name of Mark Ballard, on economic policy.
Mr Mark Ruskell (Mid Scotland and Fife) (Green):
I move,
That the Parliament notes that the top priority of the Scottish Executive,
as stated in the current Partnership Agreement, is "growing the economy" but
reminds the Executive that GDP, its preferred measure of economic growth,
makes no distinction between beneficial and harmful economic activity,
ignores many socially beneficial and highly desirable practices and treats
the depletion of natural capital as income and is therefore a very poor
indicator of economic development; agrees with the Labour Party Policy
Commission on the Environment that "For too long, economic and political
success has been measured solely in terms of the rate of growth of economic
activity"; considers, therefore, that if Scotland is to enjoy economic
development that does not compromise social justice and environmental
sustainability it needs a more meaningful yardstick than simply measuring
the monetary value of goods and services produced in Scotland; remains
committed to assisting the positive economic development of a healthy
Scottish economy and considers that placing sustainability and national
well-being at the heart of Executive policy will ultimately lead to a
stronger, healthier and more innovative economic future for the people of
Scotland, and urges the Executive to consider alternatives to GDP with a
view to adopting a more suitable measure of national progress as its top
priority.
The Deputy Minister for Enterprise and Lifelong Learning (Allan Wilson):
The powers of devolution have given us a fantastic opportunity to give
Scotland a strong competitive edge in a growing international market. We are
determined to make the most of Scotland's potential. That is why we made
growing the economy our top priority. The First Minister reiterated that
position in his recent statement on the legislative programme.
I agreed with much that Mark Ruskell said, but clearly not all. Our priority
of growing the economy is not at the expense of sustainable development more
generally.
Mark Ballard (Lothians) (Green):
In those circumstances, can the minister explain why GDP is the Executive's
measure of progress, when GDP cannot account for sustainable development
because it does not mention social or environmental impact or the
distribution of wealth?
Allan Wilson:
GDP is obviously an indicator of economic growth. As I am sure Mr Ballard is
well aware, we have a number of other indicators that are used across a
broad range to chart our progress towards sustainable development more
generally.
Scotland has a small, open economy and the increasing globalisation of trade
— global trade has grown twice as fast as world GDP over the past decade —
means that the linkages between Scotland and the rest of the world have a
critical influence on our economic performance. However, we do not wish to
see increasing economic growth and international integration at the expense
of sustainable development — the point that I just made.
We have an excellent business environment and a support framework that works
for Scottish firms and inward investors.
Our workforce is skilled and well educated; higher education participation
is at a rate that other countries envy; and major investments have been made
in transport and electronic infrastructure. That all translates into a
positive
economic performance. For example, the most recent GDP data, which are for
the first quarter of 2005, showed growth over the year of 2.0 per cent,
which is the highest for four years and is above our long-run annual
average.
The Scottish labour market continues to perform strongly, with all the main
indicators moving in the right direction. The trends have remained strong
and consistent. Employment indicators and social indicators are as important
as wider economic indicators in measuring the success of economic policy.
For development to be sustainable, we have to close the opportunity gap and
give economic and employment opportunities to all our fellow citizens, not
just to those who currently benefit.
Jim Mather (Highlands and Islands) (SNP):
The minister tells us that all the indicators are going in the right
direction, but is that in absolute terms or in relative terms? There is
still a relative gap between Scotland and the rest of the United Kingdom.
When will that gap be closed? When will that indicator be positive?
Allan Wilson:
As Jim Mather in particular will be aware, the trend is certainly moving in
our direction. Overall growth in Scotland's economy this quarter last year
was twice that of the UK as a whole. However, the longer-term issue is
clearly to close the gap in the growth rate between the Scottish economy and
the economy of the UK more generally. We can agree about that; it is the
reason why — to answer the Greens' point — we make growing the economy our
top priority. By closing that gap, we will create greater wealth, which will
allow us better to distribute the employment and economic benefits that I
spoke of earlier.
Alex Neil (Central Scotland) (SNP)
rose—
Murdo Fraser (Mid Scotland and Fife) (Con):
Will the minister take an intervention?
Allan Wilson:
I will take the Tories.
Murdo Fraser:
I am grateful. As we are bandying around statistics, will the minister tell
us whether the Executive is satisfied that Scotland has fallen four places
in the UK regional competitive index since 1997? We were fourth out of 12
regions of the UK in 1997; today we are eighth. Is that a record of success?
Allan Wilson:
The member makes a fair point. Obviously, we would wish to be more
successful than we are currently.
However, to grow the economy over the year at 2 per cent—which is the
highest for the four-year period that I referred to, and which is above our
long-run annual average—demonstrates progress towards our objectives, as I
am sure Murdo Fraser would agree. That is not to say that everything in the
garden is rosy. I do not argue — and I have never argued — that it was.
However, Murdo Fraser knows that I emphasise the importance of employment.
Unemployment was the scourge of the Scottish economy — dare I say it? —
during the period of Conservative control.
Over the most recent period — May to July this year — unemployment is down.
It is around its lowest level since quarterly records began in 1992. More
and more Scots are being encouraged to participate in the labour market, and
our economic activity rate is above that of the UK as a whole. Critically,
employment is around its highest level since quarterly records began.
Shiona Baird (North East Scotland) (Green):
Will the minister give way?
The Presiding Officer:
The minister is in his last minute.
Allan Wilson:
The rate of employment is above that of the UK and is among the highest in
the 25 European Union countries.
Life sciences are very important to the Scottish economy. In sectors such as
life sciences, microelectronics, energy and renewable energy — to which we
are committed — financial services and the creative industries more
generally, Scotland is, I would argue, world class.
Our ambitions for Scotland are to provide all Scots with opportunities for
good jobs, fulfilling careers and safe communities — safe communities are a
vital part of the social progress that is part of sustainable development
more
generally—to fulfil all Scots' potential and to help them to achieve their
ambitions. All of that must be achieved in an international economic
environment, and sustainable development is at the heart of our economic
development agenda.
I move amendment S2M-3321.4, to leave out from "notes" to end and insert:
"supports growing the economy as the top priority of the Scottish Executive;
believes that economic growth must be sustainable; agrees with the
Partnership Agreement commitment to assess economic development policies
against their impact on sustainable development indicators; notes that the
Framework for Economic Development in Scotland has made sustainable
development the principal objective; welcomes the stronger emphasis on
sustainability in the refresh of A Smart Successful Scotland; endorses the
Executive's determination to drive forward its green jobs strategy, and
endorses the Executive's commitment to sustainable development."
Alex Neil (Central Scotland) (SNP):
If the Greens and others consider the countries that are at the top of the
UN human development index, they will see that the same countries are at the
top of the league for GDP growth and GDP per head. Conversely, the countries
at the bottom end of the UN human development index tend to have lowest
growth and GDP per head.
That tells me that there is a strong correlation between GDP growth, with
all its flaws, and general human well-being. It is no accident that the
countries that are at the top of the GDP league and the human development
index have several common features. The first common feature is high
investment in their economies; on average they invest 20 per cent of their
GDP in their economy in education, health, manufacturing and other services.
Secondly,
most of them strive for full employment. Thirdly, they have far fairer
societies. Denmark, Norway, Sweden and Austria have 2 per cent child
poverty, not 25 per cent. There is a definite correlation with GDP. I agree
with the Greens' criticism of using GDP as the only measure, but it is an
indicator or proxy for social as well as economic well-being.
Allan Wilson:
I would like to take the route that was set for the debate by my colleague —
Christine Grahame (South of Scotland) (SNP):
He has forgotten his name.
Allan Wilson:
Des McNulty. Des McNulty. I repeat it for anyone who failed to grasp the
significance of what I said.
Growing the economy is not just about statistical indicators going in the
right direction. As Des McNulty said, it is about real people, jobs,
businesses and ensuring that our actions in the chamber enable future
generations to enjoy the best possible quality of life. Des McNulty
articulated that today.
I do not disagree with what Alex Neil said about GDP as an indicator. It is
easy to argue, as Mark Ruskell did, that GDP alone is not a comprehensive
measure of a nation's prosperity because it does not measure the
environmental and social changes that are associated with production.
However, as Alex Neil said, no one has yet developed a better indicator that
is universally accepted as the new standard. GDP is an internationally
recognised measure and a GDP figure is produced by all OECD member
countries. It therefore allows the level of activity of Scotland's economy
to be compared with other developed countries.
Robin Harper (Lothians) (Green):
Does the minister agree that knowing whether the well-being and welfare of
our poorest people is increasing is more important than simply comparing
ourselves with another country in the world?
Allan Wilson:
I do; that is a point that others have made. In fact, from the Greens'
perspective, I would have thought that it would be worrying that the point
was made by Tommy Sheridan on their behalf. Economic growth is central to
delivery of public services and social justice. That is the real dividing
line between us. The Greens believe in environmental protection and
environmental justice, but their policies on economic growth would lead us
into an economic wilderness that would deny us the social justice and public
services that we seek. Tommy Sheridan made that point and Des McNulty
answered it. If the Greens want to go in the same direction as Tommy
Sheridan's socialist party in popular opinion, they should follow his
advice. If they do, that is where they will end up.
Tommy Sheridan:
I invite the minister to confirm that it is not just the Greens and the SSP
that support nationalisation of the railway network: the Labour Party does,
too.
Allan Wilson:
I believe in a mixed economy. There is a place for public sector ownership
of our utilities in certain circumstances. I supported the revision of
clause 4 of the Labour Party constitution because I do not believe that all
the means of production, control, distribution and exchange should be in the
public sector. I believe that that is one of the reasons why Tommy Sheridan
is no longer in the Labour Party.
Wendy Alexander deprecated the fact that we had not got down to discussing
sustainable development more generally, and that we had got into a sterile
debate on statistics. I blame my Opposition colleagues for that. Every time
I get up and try to debate the economy, I am confronted with one statistic
or another that has usually been plucked from a small European country that
the Opposition likes to compare us with while ignoring all the other
statistics that are relevant to that country.
The Greens did that again today, so I remind them of my advice to them. They
picked one sustainable development indicator — renewable energy — and
pointed out that it was going in the wrong direction. However, it is doing
so because the proportion of renewable energy that we sourced from hydro
power in the year in question had reduced because there had been a reduction
in precipitation during that year. In other words, there had been less rain
and snow.
Hydroelectricity generation fluctuates in direct proportion to the
prevalence of snow or rain in our climate.
Although I can do a lot in this chamber and Alex Neil might claim that
independence is the solution to all our problems, not even he could claim
that the Government can influence the amount of precipitation in our
climate.
Our trend for energy generation is on target to allow us to fulfil our
objective of providing 18 per cent of energy from renewable sources by 2010
and to meet our ambitious target of providing 40 per cent from renewable
sources by 2020. Members must look at the overall picture rather than pick
out individual statistics to suit their arguments.
The Presiding Officer (Mr George Reid):
There are 11 questions to be put as a result of today's business. For this
morning's first debate, on economic policy, if the amendment in the name of
Allan Wilson is agreed to, the amendment in the name of Murdo Fraser falls.
The first question is, that amendment S2M-3321.4, in the name of Allan
Wilson, which seeks to amend motion S2M-3321, in the name of Mark Ballard,
on economic policy, be agreed to. Are we agreed?
Members:
No.
The Presiding Officer:
There will be a division.
The Presiding Officer:
The result of the division is: For 59, Against 27, Abstentions 13.
Amendment agreed to.
The Presiding Officer:
The next question is, that amendment S2M-3321.1, in the name of Jim Mather,
which seeks to amend motion S2M-3321, in the name of Mark Ballard, on
economic policy, as amended, be agreed to. Are we agreed?
Members:
No.
The Presiding Officer:
There will be a division.
The Presiding Officer:
The result of the division is: For 25, Against 74, Abstentions 0.
Amendment disagreed to.
The Presiding Officer:
Amendment S2M-3321.2, in the name of Murdo Fraser, has fallen, so the next
question is, that motion S2M-3321, in the name of Mark Ballard, on economic
policy, as amended, be agreed to. Are we agreed?
Members:
No.
The Presiding Officer:
There will be a division.
The Presiding Officer:
The result of the division is: For 60, Against 25, Abstentions 14.
Motion, as amended, agreed to.
Resolved,
That the Parliament supports growing the economy as the top priority of the
Scottish Executive; believes that economic growth must be sustainable;
agrees with the Partnership Agreement commitment to assess economic
development policies against their impact on sustainable development
indicators; notes that the Framework for Economic Development in Scotland
has made sustainable development the principal objective; welcomes the
stronger emphasis on sustainability in the refresh of A Smart Successful
Scotland; endorses the Executive's determination to drive forward its green
jobs strategy, and endorses the Executive's commitment to sustainable
development.
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