SNP focus on Scotland's economy

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2008-11-12

Cabinet Secretary for Finance John Swinney today told Parliament that Scotland could come through the current economic situation "stronger" and "better" as he put forward the SNP Government's position on Scotland's economy.

Speaking in Parliament John Swinney said; 

 

Over the last few weeks, world financial markets have experienced a swift and unprecedented degree of turmoil - the implications of which are now being felt across the real economy, including here in Scotland.  Moreover, all of Scotland’s communities are feeling the effects of the sharp rise in prices for key commodities, particularly energy and food – which, although now falling in some cases, have put a burden on  thousands of Scotland’s families and businesses.    Increasing numbers of Scots are worrying about their job security – and are concerned about whether or not they will be able to make their next mortgage repayment, or afford their rising heating bills this winter. Such a broad threat has required a Government that is prepared – as this one is - to stand up in the national interest, and defend Scottish livelihoods and jobs.

One of these issues of national interest relates to the HBOS position.  This Government has already made its position clear on the proposed merger between Lloyds TSB and HBOS.  Our concern is to ensure that we retain employment and decision making in Scotland.  We will also consider the impact of any deal on competition for businesses and personal customers in the wider Scottish economy. And, we will continue to do all that we can to retain HBOS jobs and decision makers here in Scotland.   State of the Scottish economy At the same time, we will continue to take decisive action – to focus on helping our businesses and households; to maximise jobs and investment; and to provide a solid foundation for Scotland to take early and speedy advantage of any recovery.  Last week, the Bank of England’s Monetary Policy Committee’s cut interest rates to their lowest rate for over half a century.  The Scottish Government had called for such a cut and we welcome that decision.   I was pleased to see that banks - which are benefiting from a substantial investment of public money – are now passing on the benefits of the one and a half percentage point cut to their customers.  This SNP Government has also welcomed the actions taken by the UK Government to help release funds into the system, in order to kick start interbank lending.  But more needs to be done. 

Last week, I wrote to Chief Executives of all four clearing banks in Scotland encouraging them to use all possible sources of funding  - including invoice discounting, Small Firms Loan Guarantee and the available funds from the European Investment Bank - to support lending  to SMEs, and to pass those benefits on to businesses.  There is too much evidence that Scottish SMEs are facing real difficulties simply because of a limited availability of lending.   But, we believe that further measures are necessary – and, will continue to be necessary for some time to come.  With the UK now expected to enter a recession, we are beginning to see evidence of a weakening in the Scottish economy.   Economic growth is stalling.  As figures published today show, our unemployment rate stands at 4.7% - and, although this significantly below that of the UK and many other advanced economies, it is increasing. 

Scottish economic recovery plan Increasing sustainable economic growth has been this Government’s overarching Purpose from day one.  Almost a year ago today we published our Government Economic Strategy setting out our vision for Scotland.  This remains the cornerstone of our approach to government.   The actions we have taken since last May are already helping our households and businesses cope with the economic slowdown. We have eased the pressure on tight household bills through freezing the Council Tax – and, we will provide funding to allow councils to implement further freezes for the next two years.  This is a real terms tax cut that will help many of our hardest hit families balance their budgets.  While  households in England expected to see an average council tax increase of 3.9% this year, Scottish households will get a helping hand from Government and local authorities.    Because of this Government’s actions, too, tens of thousands of Scottish businesses also saw their rates bill slashed through the Small Business Bonus Scheme.  And in April next year, thousands of businesses in Scotland will pay no rates at all.  But, even before this global economic downturn began to take effect, this Government knew that we would need to do more to help our economy weather this storm.   That is why, this summer, we developed a Scottish Economic Recovery Plan aimed at stimulating growth and helping those families and businesses who are suffering.

This includes action to re-shape our capital expenditure - including bringing forward £100 million of affordable housing investment to be spent this year and next.  This will help increase the availability of affordable housing across Scotland for those looking to get onto the property ladder - and provide a much needed increase in demand for our construction sector.

On top of the £180 million we have already committed to spend from the 2007-13 European Programmes, we also intend to bring forward a significant share of the remaining £385 million of European Structural Funds to support high quality projects that will stimulate the Scottish economy.  Over the summer we recognised the growing pressures on employment and that is why we announced support through the European Social Fund for a series of employability initiatives in 11 Community Planning Partnerships across Scotland.   I am delighted to be able to confirm to the Chamber that this £50 million investment in employment in Scotland is to be expanded to cover 2 new areas, Inverclyde and Clackmannan. That means all proposed bids under this aspect of the European Social Fund have been funded.  This money will be used to develop training and skills development – and, help more Scots get into, and progress through, the workforce.   It will also provide investment in infrastructure, research and development and other underlying factors of success for Scottish businesses – all helping improve their ability to survive these tough times.   In the face of the current economic situation, our £35 billion ten year infrastructure investment plan is delivering too - with £14 billion being invested during the current Spending Review period.    This is providing for the construction of new schools, hospitals and roads across the country – and, is again helping to keep our economy moving.   I will update the Chamber tomorrow on progress with the Scottish Futures Trust which – under the leadership of Sir Angus Grossart -  will also help ensure that we make the very best use of our investment in infrastructure to support Scotland’s economic recovery.  We are also reshaping our capital expenditure to invest £25 million in the Homeowners Support Fund to help those facing repossession in these difficult times.   At the same time, we are intensifying our activity and support for Homecoming 2009.   Homecoming will be the biggest ever celebration of Scotland's achievements - and a chance for us to boost our income from tourism.  Already, VisitScotland has brought forward part of its 2009 marketing budget to encourage more visitors to Scotland this autumn.   Elsewhere, we will continue to ensure all Government activity, including on planning and regulation, supports economic development and has a positive impact in creating jobs locally.    Last month I launched a wide-ranging package of improvements to make our planning system leaner and fitter.   We want Scotland to finally have a planning system which acts as an aid, not a barrier, to economic growth – and, this package of improvements will help us achieve that.  We are also intensifying our work around energy efficiency and fuel poverty.   Far too many vulnerable Scots are facing soaring energy bills this winter – that is why this Government is putting an extra £10 million into the free central heating programme this year.  And, it is why we are expanding the scheme from next year to include families on income support with children under five or with disabled children under sixteen. 

Through our economic recovery plan we are also developing a single national tender for the bulk purchasing of electricity across the public sector.  The annual public sector electricity bill is around £200 million and our new strategy aims to harness the combined purchasing power of the public sector to save taxpayers' money so that it can be invested elsewhere.  The contract will provide public bodies with access to energy management measures such as advanced metering, small scale renewables initiatives and opportunities to sell electricity into the grid. Elsewhere, we will increase advice to businesses and individuals.  Scottish Enterprise has now started recruiting manufacturing professionals to double the size and capability of the Scottish Manufacturing Advisory Service, to ensure that even more companies are able to gain access to quality advice.  We will also provide a fast and effective, quality of service to people should they become unemployed. Partnership and local delivery are key to helping people back into work. That is why we will ensure that the Partnership for Continuing Employment initiative will be ready and available to provide the support that individuals require should they lose their jobs. This local network is unique to Scotland - and we will continue to develop it so that it helps us respond to redundancies as they occur.  

Elsewhere, our new skills agency, Skills Development Scotland, is already working with employers and the Sector Skills Councils to ensure that we have the right training and support programmes for individuals at this time.   But, of course, we also believe that JobCentre Plus has got a crucial role to play too – and, we will continue to look to the UK Government to bring forward resources to ensure that JobCentre Plus is equipped and ready to help get more people back into work. Finally as part of our economic recovery plan we are also improving financial advice to vulnerable individuals – and, through this, are introducing a shared equity scheme for first-time buyers is being extended nationwide and spending increased to £60 million. What we want from the UK Government But we could achieve even more. We  believe that we should be in a position, during these difficult times, to use Scotland’s resources more fully.  

That is why - at a time when the UK Government’s own budget rules having effectively been set aside - we are looking for the tight Westminster controls on Scotland’s budget to be relaxed. We are pressing for the release of £1 billion of Scotland’s money, held by Westminster, which should without further delay be invested in Scotland’s economic recovery.   Furthermore, we will continue to press the UK Treasury on the implementation of the International Financial Reporting Standards which must be done to ensure we can continue our ambitious capital spending programme.    At the same time, we will recognise any tax cuts that the UK Government decides to make to try and boost the economy.  But, we will do so with one important qualification – that these tax cuts are not made at the expense of current public expenditure.

Indeed, it is this Government’s firm view that public expenditure should also increase at this time to ease the hardship on Scottish households and Scottish businesses.  This balance of lower and fairer tax, matched by increased in investment in frontline public services is our social democratic contract with the people of Scotland – it is a model the UK government would do well to adopt.  I will raise that issue at next Thursday’s Finance Minister’s Trilateral Meeting – and, will look to my counterparts in Northern Ireland and Wales to join with me in raising these concerns with the UK Government in the context of the pre-budget report.   Of course this would all be easier if we had the same range of responsibilities as other independent countries that have the ability to exercise full financial responsibility and flexibility.

Independence offers the best opportunity for our economy, because it will give us the full flexibility we need to respond to current economic challenges.  Of course that won’t stop this Government doing all it can within the current settlement. And, this Government has been decisive in its early actions to help our businesses and households, and to stand up for Scotland’s interests during this period of economic uncertainty.   While we face up to the prospect of recession, I believe that, with strong leadership, Scotland is better placed than at any time in the past to address that challenge and come out of it stronger.