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Financial Services Strategy
A debate on motion
S2M-2729, in the name of Jim Wallace,
on the Financial Services Strategy.
The Deputy
Presiding Officer (Trish Godman):
The next item of business is a debate on motion S2M-2729, in the name of Jim
Wallace, on the financial services strategy.
The Deputy First
Minister and Minister for Enterprise and Lifelong Learning (Mr Jim Wallace):
I am delighted that, following a positive and constructive debate last month
on life sciences, we have the opportunity for parliamentary discussion on
another — albeit longer-standing — Scottish success story.
Financial services are a powerhouse of the Scottish economy. They contribute
£5 billion to gross domestic product and directly account for more than
100,000 jobs. Scotland is undoubtedly the most important United Kingdom
financial services centre outside London; indeed, it is one of Europe's
leading financial centres. The success of our financial services has been
sustained over 300 years amid significant political, economic and societal
change in Scotland. However, I firmly believe that devolution — the
establishment of this Parliament and the use of the levers that we now have
— stands us in excellent stead to support the industry's continued and
enhanced success into the future.
The Deputy Minister
for Enterprise and Lifelong Learning (Allan Wilson):
I am very pleased to have Alex Neil's endorsement of the Executive's "A
Smart, Successful Scotland" policy. Perhaps I should start my speech with
the points on which we agree and come in due course to those on which we
might disagree.
The strategy that we have outlined, which is entitled "Success", is all
about how, within the UK's stable macroeconomic policies, a devolved
Administration might best help the financial services industry to develop,
expand and create more employment and wealth in Scotland. As I said earlier,
I agree with many of Kenny MacAskill's comments about celebrating Scotland's
success and, as a result, improving the culture of success in the country.
In that respect, like every other member who has spoken this afternoon, I
condemn the SSP's absence from the chamber. Its members have no concept of
success and crucially fail to understand that the financial services
industry is as important as any other industry in the country in creating
employment and wealth and in giving people economic opportunities. Because
they fail to understand that, they are not here this afternoon and will not
receive the Scottish people's support.
Susan Deacon:
Will the minister give way?
Allan Wilson:
Certainly.
Susan Deacon:
If the SSP members had turned up, they might have taken the opportunity to
recognise the contribution that the workforce in the financial services
sector makes. Would the minister like to do that?
Allan Wilson:
I would indeed. I agreed with everything that Susan Deacon had to say. It is
critical that we understand that the creation of employment and wealth is
not simply for the productive sectors or the manufacturing sector, and that
public sector administration and investment, too, make a significant
contribution to the creation of employment and wealth. Of course, the
financial services industry is critical to that process here in Scotland. If
I have a minor criticism of what Kenny MacAskill and Susan Deacon said, it
is that it is not only Edinburgh that benefits from a strong financial
sector in Scotland. Glasgow and the west of Scotland and the rest of the
country also benefit from a strong financial industry.
In that context, I found what Murdo Fraser and his Conservative colleagues
had to say breathtaking. As an exercise in trying to rewrite history, it was
something to behold. Murdo Fraser said that pension credit reduces the
incentive to save. That is completely wrong, of course, because pension
credit reforms saving by getting more cash to those who have saved. In fact,
it is a benefit to those who saved their hard-earned money and not the
opposite, as Murdo Fraser claimed. He also said that the Tories claim that
pension credit is not working because people are not taking it up. Again,
that is simply not true. Already, 3.2 million pensioners are getting pension
credit, with an average household award of £40 a week, and the numbers are
going up every day. The two basic claims that underpinned Murdo Fraser's
speech are false.
Murdo Fraser:
Would Allan Wilson concede that there are, according to best estimates, 1.5
million pensioners in this country who would be entitled to pension credit
but who do not claim it?
Allan Wilson:
That is quite a different premise from the claim that Murdo Fraser
previously made. We are committed to increasing take-up of pension credit.
He referred to it as a means-tested benefit, but it can be claimed by a
simple free phone call, after which the credit is set for a period of five
years. That is in complete contrast to the system that the Tories had
introduced before pension credit was set up.
Mark Ballard made some significant comments about financial inclusion and I
support in large part what he had to say. My colleague the Deputy Minister
for Communities launched the Executive's financial inclusion action plan in
January, to set out exactly what is needed to ensure that all people can get
the financial services and products that they need. That includes working
with credit unions, which might be able to provide a better service to our
more disadvantaged communities, as well as with the banks to which Mark
Ballard and other members referred.
Donald Gorrie referred to the burden of debt. The solution to the problem of
debt is to ensure that more people have more money, and that can be achieved
in a number of ways, principally by helping more people into employment. We
will take no lessons from anybody on that, given our record on creating
employment opportunities in Scotland. The solution is also a matter of
ensuring that people get access to all the benefits to which they might be
entitled and of helping people to understand their finances better. That is
the point that Donald Gorrie was making, and the Executive is committed to
that.
Mark Ballard:
I thank the minister for recognising the importance of financial inclusion.
Donald Gorrie, Christine May and I talked about the role of social
enterprises in providing financial services. Does the minister see any
potential role for the co-operative development agency in helping to provide
financial services on a co-operative basis?
Allan Wilson:
We expect to outline our
proposals for the co-operative development agency within the next month. I
am sure that the member will welcome the proposals when they are published.
Ted Brocklebank made two criticisms: that there is too much regulation and
that the United Kingdom Government has done nothing for the financial
services industry. I will read a quote, which is not from me. It states:
"We have got the most successful economy in the developed world. It's
completely stable, low inflation, low interest rates, virtually no
unemployment and quality sustainable growth. Now America doesn't have that
with its deficit, France hasn't got it with its very, very high
unemployment; Germany hasn't got it with zero growth and high unemployment
... A business doesn't want that changed".
It was not a Labour politician who said that but Digby Jones, the
director-general of the Confederation of British Industry. The Tories used
to claim that they were the party of business, but in fact the UK Government
can now claim in its support the words of none other than the
director-general of the CBI.
Mr Brocklebank:
Does the minister think that Digby Jones would agree that an economy of
which 54 per cent or thereabouts is in the public sector is a healthy
economy? Is that healthy for Scotland?
Allan Wilson:
If the member does not mind my saying so, there was a complete contradiction
between what he said and what Murdo Fraser said. Murdo Fraser called for
more public sector investment in our roads and transport infrastructure, but
Mr Brocklebank and his colleague Baillie Bill called for less public
expenditure. There is a fundamental contradiction at the heart of the
Tories' economic policy in that they tell us that we need to invest more in
our infrastructure to help business to grow and then tell us that £35
billion of public sector cuts are required to achieve that objective.
Bill Aitken:
Will the minister give way?
Allan Wilson:
No. I will move on.
The Presiding Officer
(Mr George Reid): You
have three minutes.
Allan Wilson:
Okay. I will give way.
Bill Aitken:
Surely the minister must
recognise that I made it clear that investment in transport infrastructure
would be funded by a reduction in the budget of Scottish Enterprise, which
should be restricted to doing what it should be doing.
Allan Wilson:
That is not what the Tories'
finance spokesman down south said. Oliver Letwin told us that we should
expect "painful cuts" as a consequence of what the Tories would do on public
expenditure. There is a dichotomy.
It is to the Tories' eternal shame that one of the ways in which they intend
to balance the books is by dispensing with the new deal. That is one of
their stated policies. The new deal, more than any other single measure, has
made youth unemployment negligible in this country and has made a major
contribution to restoring social and economic equality in this country.
We have significantly slimmed down the administrative burden of financial
services regulation by rationalising regulatory structures. There is
probably no better example of that than the Financial Services Authority,
which was created from nine other bodies.
I have difficulty taking seriously a party that has no monetary policy, no
fiscal policy and no idea of what interest or exchange rates would be.
Nevertheless, Alex Neil said that we could reliably understand that the
SNP's word is its bond. Of course, Alex Neil's bond is in fact an offshore
trust fund. We will take lessons about growing the population when the SNP
can convince the good Mr Connery to return to these shores.
There was a very significant news release today. The registrar general for
Scotland estimated that Scotland's population was 5,078,400 on 30 June 2004,
which represents an increase of 21,000 on the previous year. Scotland is
growing: migrants are coming here and young Scots are staying in Scotland
because, unlike Mr Connery, they recognise success when they see it.
I have always thought that the SNP's economic policy owed a little to the
works of Lewis Carroll, to say the least. However, the revelation that Mr
Jim Mather's strategy for the financial services industry is to sprinkle
some "fiscal fairy dust" on the sector left even me speechless. He argued
that London acts as a magnet that sucks talent and investment down south,
but if London is a magnet, the poles are reversed. Gross value added
statistics show that the Scottish financial services industry continues to
outperform the industry in the rest of the UK.
Jim Mather:
Will the minister give way?
The Presiding Officer:
No, the minister is in his final minute.
Allan Wilson:
Growth in the Scottish financial services industry, as measured by gross
value added contribution, outstrips growth in the industry in the rest of
the UK. Since 1999, the sector in Scotland has grown by more than a third,
compared with growth of about a fifth in the UK financial services industry
as a whole.
The reality — not the fairytale — is that so-called fiscal autonomy is not a
dream but a nightmare. It is not in the strategy because no one in the
financial services industry believes in it. The only people who believe in
fiscal autonomy are the fairies, SNP members and Alex Salmond.
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