Official Report 876KB pdf
The next item of business is a debate on motion S6M-17352, in the name of Kate Forbes, on supporting Scottish industry during turbulent economic times.
I would be grateful if members who wish to speak in the debate were to press their request-to-speak buttons, and I call the Deputy First Minister to speak to and move the motion, for up to 15 minutes.
14:36
I will begin by saying that it is a matter of deep regret that Petroineos has closed the Grangemouth refinery. My immediate thoughts—and I am sure that I speak for the Parliament—are with those workers who will be made redundant over the coming months. I reiterate the responsibility that the business has to support the workforce at this time.
The decision will have a devastating impact on hundreds of workers at Grangemouth and across the wider supply chain. We believe that the decision is premature and means that Scotland risks losing skills that are critical to our efforts to deliver a just transition to a net zero economy.
We are already supporting the workforce at this difficult time, and today must fundamentally be about reassuring everybody who is employed at the refinery and in the supply businesses that they have a future.
I agree with what the Deputy First Minister is saying, but does she share my concern and the concern of many members of this Parliament that we learned this news by way of a post on X from Colin Mackay of STV? Well done to Colin Mackay, because he obviously has good sources, but what does it say about Petroineos that that is how it chooses to release that information to the wider community? Does the Deputy First Minister agree that that does, unfortunately, create question marks around its good faith in how it proceeds on the issue?
I heard Mr Kerr’s point of order earlier. The point with which I agree the most is that having the workforce learn of any such decision through the media does it a disservice, because the priority must always be to inform the workforce first. Subsequently, Parliament has a duty to scrutinise—
I am grateful to the Deputy First Minister for giving way and for her answer to Stephen Kerr, but will she clarify whether the Government was given any warning in advance of the announcement via X, to which the member has alluded?
With regard to the finer points of timescales, the only reason why I cannot be definitive is that I was in Cabinet this morning and I, too, learned of the decision from online sources. I cannot say whether the wider Government was informed in advance, but, if that was the case, it is highly unlikely that it was by more than a few minutes. I would give a more definitive answer, but Mr Johnson has asked about timescales, and I was certainly not given any advance warning, as far as I know. The team of officials at the back of the chamber might want to clarify that.
The workforce’s skills are valued and we want the workers to stay, live and work in Scotland. That is why we have provided up to £450,000 for a skills intervention that is being delivered by Forth Valley College to help to retrain and upskill affected workers. That will enable them to progress to the sort of new jobs that will be created through the project willow proposals and other opportunities across the Grangemouth cluster. The United Kingdom Government must also stand shoulder to shoulder with those who have contributed so much to the Scottish economy. I will have more to say on that later.
This debate could not be more timely. It is an opportunity to recognise the huge contribution that Scottish manufacturing and heavy industry play in our economy and our social and cultural lives. They are the lifeblood of our rich industrial heritage.
I know that the Government is aware of a growing manufacturing company, Nova Innovation, which is a leading tidal developer with a manufacturing site in Leith, in my constituency. It is considering starting another site in Grangemouth and is producing tidal power in Shetland. It has secured ÂŁ100 million of investment, including from the European Union and private investors, for a tidal array in Orkney. Unfortunately, that investment is at imminent risk due to challenges regarding sea bed site access. Will the Deputy First Minister agree to meet urgently with Nova Innovation to help to sort that situation and realise that investment?
I am more than happy to meet with Ben Macpherson and Nova Innovation, which is exactly the kind of business that we want to support in Scotland, particularly as it is working in the renewables space. I thank Ben Macpherson for bringing it to my attention and I am sure that we can schedule a meeting as a matter of urgency.
Will the Deputy First Minister give way?
I love a proper debate, so I will be delighted to take another intervention.
I thank the Deputy First Minister for being generous in taking interventions. There are issues that should probably be addressed in a ministerial statement or, better still, in a debate. However, will she tell us how many serious inquiries there have been about the willow prospectus? Has Petroineos indicated its willingness to allow the redevelopment of the site, which is fundamental, or to invest in any of the nine potential projects?
Those are very good questions. Subject to the decision of the Parliamentary Bureau, I would be more than happy to come back to the Parliament with a statement and give an update on the inquiries, if that would be the best place to go through some of those questions in detail. I think that I answered a question from the member a couple of weeks ago—or last week—to say that we had received far more inquiries than was anticipated, and Scottish Enterprise is very closely involved with that. There may be scope for cross-party updates on the progress of that work.
Scottish manufacturing and heavy industry currently play a key part in our economy and have shaped the nation as we know it today. The manufacturing sector is vital to our nation’s prosperity; it accounts for more than half of Scotland’s exports, it employs around 178,000 people and it contributes more than £18 billion in gross value added to the economy. We want to see that contribution grow. We will do that partly through investment of £75 million in the National Manufacturing Institute Scotland. We are also working to enable manufacturing companies, large and small, in every region of our country to be the best that they can be as they compete on the global stage. NMIS has a mission that aligns with our own: to make Scotland a global leader in advanced sustainable manufacturing.
Will the Deputy First Minister take an intervention?
Who could resist taking an intervention from Mr Ewing as well?
I entirely share the Deputy First Minister’s sentiment, but does she agree that the biggest obstacle and greatest challenge that industry faces, whether in Scotland or the United Kingdom, is the fact that the energy costs for energy-intensive industries are four times higher than in the USA and about 50 per cent higher than in Germany and France? That was arguably a cause—if not the major cause—of the problems at Grangemouth and Scunthorpe. We should therefore be debating how we solve that problem, whether here or at Westminster.
Once again, on that particular issue, I could not agree more. Being clear about the root causes of the issues is vital if we want to support Scotland’s manufacturing base.
We are a nation that develops energy sources and that benefits from a surplus of energy in some regards, yet our industrial sites are expressing concern about energy prices. I have raised that reserved matter a number of times with the UK Government. I know that there are on-going discussions about reforms. We need certainty fast, and we need to break the artificial connection between gas and electricity prices.
We are working with centres such as NMIS and the National Robotarium to bring to fruition a number of plans for a deep-tech supercluster, which was one of Mark Logan’s original visions. We want Scotland to be a maker, not just a consumer, of world-leading products and innovations. By helping some of Scotland’s most cutting-edge technology businesses to grow and scale up their manufacturing operations here, that programme will surely be a welcome boost to our long-term economic resilience.
That is all the more important as we look to deliver those things in the midst of very turbulent economic times. Just last week, the International Monetary Fund highlighted the damaging economic headwinds from the tariff increases that the US has imposed. In Scotland, we are already seeing concerns in key sectors such as food and drink, machinery and life sciences.
The First Minister recently held a round-table meeting with representatives from Scotland’s business community to hear at first hand the impact of US tariffs. It is inevitable that there is concern, and some companies with stock in the US are taking decisions to pause further shipments until the position is clearer.
The First Minister spoke to the Prime Minister and made it clear that we need to see bold and decisive action from the UK Government that takes into account Scotland’s particular needs and strengths. A conclusion should not be reached without extensive engagement with the Scottish Government. I know that business wants to see that, too.
In recent weeks, the UK Government has taken action to protect the British Steel plant in Scunthorpe. Fergus Ewing outlined some of the reasons why that was required. The UK Government’s decision provides some hope that it is prepared to act when vital national interests and assets are at stake. We welcome that action. It protects the only plant in the UK that can make crude steel and will, I hope, be part of a comprehensive future strategy for steel-making across the UK.
Will the Deputy First Minister give way?
Presiding Officer, will you remind me how much time I have?
Fifteen minutes.
Oh, wonderful. I give way to Daniel Johnson.
Thank you, Deputy First Minister—I will be brief. Despite today’s tragic announcements, does the Deputy First Minister accept that the UK Labour Government came forward with proposals, including quite substantial funds, for Grangemouth within weeks of taking office?
I accept that the UK Government’s engagement was good from the very beginning, but my concern is that, if we compare it with the action that it took in relation to the British Steel plant in Scunthorpe, we cannot conclude that it took an equally decisive and interventionist approach to Grangemouth. The secretary of state answered questions in the UK Parliament on that, making the point about the number of refineries. However, at the end of the day, where there is a will, there is a way. On the scale of intervention that would be required at Grangemouth, that did not happen in the way that it happened at the Scunthorpe plant. I do not think that anybody is in any doubt that it would have required intervention by the UK Government at that level and at that scale.
Although we welcome the decision to intervene at British Steel, in decisive recognition of the need to protect an industrial asset that is so critical to the UK economy, it stands all the more in stark contrast to the UK Government’s willingness to listen to calls from this Government, trade unions and Labour MPs for decisive action to protect the future of Grangemouth.
We have moved quickly to establish a ÂŁ25 million Grangemouth just transition fund, which is aimed at catalysing near-term opportunities arising from project willow and sends a clear signal that we will work with businesses to make low-carbon projects at Grangemouth.
We welcome the UK Government’s confirmation that £200 million has been ring fenced in the national wealth fund to support the deployment of projects at Grangemouth.
However, many of the proposals that are outlined in project willow might not meet the criteria that are currently being applied by the fund, and we must not find ourselves in a position in which good intentions are not translated into meaningful practice.
I take this opportunity to repeat the call for the UK Government to work with us to leave no stone unturned in efforts to mitigate any future job losses on the site. I call on UK ministers to take that action to ensure that the ÂŁ200 million commitment is deployed. There must also be clarity; it needs to be made clear, with the same urgency and decisiveness that we saw in relation to Scunthorpe, that the money will be available for Grangemouth as soon as business needs it.
We cannot risk losing those opportunities, because underpinning the future success of Grangemouth is the development of carbon capture and storage. We need a firm commitment from the UK Government on a timeline and funding for the Acorn project, in order to provide investors and workforces with the confidence that Scotland can capitalise on our comparative advantage.
Just last week, the UK Government finalised a ÂŁ2 billion deal for carbon capture in England. That is why it is even more vital that the Acorn project, which is essential to delivering a just transition and economic growth, is given the green light in the spending review on 11 June. I will continue to lobby UK Government ministers on that. I hope that Parliament can join us so that we speak with one voice on the vital importance of the carbon capture and storage scheme. I know that the Secretary of State for Scotland in particular understands the urgency of that matter.
As I close—which will be somewhat of a miracle, considering all the interventions—let me provide some assurances about the way in which we are working to ensure that businesses, workers and the economy navigate the current international headwinds.
Despite our limited devolved powers, we are working with enterprise agencies and partners to tackle the barriers to investment, to support our exporters into international markets and to provide assistance and advice on the impact of the national tariffs.
There are opportunities ahead, despite those headwinds. This Government has always been, and will continue to be, one that takes action. We want to see positive decisions on awards to Acorn and the Scottish cluster to further enhance Scotland’s international reputation, and we do not want to see decisions being taken on behalf of our industries without consulting those industries, not least in relation to a trade deal with the US.
I look forward to the debate and commend the motion to Parliament.
I move,
That the Parliament recognises the value of Scotland’s heavy industrial and manufacturing sectors, and the significant contribution that they make to the national and regional economy; notes recent developments in global trade policy and their potential economic impact; welcomes the UK Government’s intervention in British Steel to support the continued resilience of the supply chain, and believes that the UK Government should give similar consideration to its engagement with the Grangemouth oil refinery, given its significance to national resilience and high-quality job opportunities.
Thank you, Deputy First Minister. Before I call the next speaker, I alert members to the fact that we have no time in hand and that, therefore, interventions will need to be accommodated in the allocated time.
I invite Murdo Fraser to speak to and move amendment S6M-17352.3. You have up to 11 minutes, Mr Fraser.
14:52
I very much welcome this afternoon’s debate on supporting Scottish industry. I also welcome my good friend Jamie Greene to his new position as the economy lead for the Scottish Liberal Democrats, which is a very welcome and encouraging lurch to the right on the part of the Liberal Democrats. I am sure that we will hear a lot of good sense from Mr Greene shortly.
On Friday, along with a number of colleagues, I attended the business in the Parliament conference, which was held in this chamber and the Parliament’s committee rooms. That conference is always a valuable opportunity to bring together members of the business community—both those in leadership and those who work at the grass roots—and łÉČËżěĘÖ. I was pleased to sit on a panel in the well of the chamber with the Deputy First Minister, Michael Marra and Lorna Slater and take questions from the audience. Those questions were, as members would expect, wide ranging, but they gave us a useful insight into some of the pressures that the Scottish economy and the business community face at this time.
One question that came up in that discussion that is relevant to this debate was on the cost of energy, and electricity in particular. At the heart of the issue that we are discussing this afternoon—the decline of heavy industry in Scotland and across Great Britain, including Britain’s steel industry—lies the high cost of energy in this country. In that respect, I agree very much—not for the first time and probably not for the last time—with the intervention that Fergus Ewing made a few moments ago.
I recall that, more than two decades ago, when I was first elected as an MSP to represent Fife, paper making was a major component of its economy. Over the years, we have seen that industry shrink and almost disappear, as have other sectors, such as metal production and steel making. All those sectors are high users of energy. Rising electricity costs have been a major factor in the deindustrialisation of Scotland and the United Kingdom.
I agree with Murdo Fraser on the fundamental importance of energy costs for the industrial strategy, but does he accept that the previous Tory Government’s selling off of our gas resilience—our gas storage—was one of the direct contributors to the fact that the UK has had higher electricity costs over the recent period compared with comparator countries?
I am afraid that the member is wrong, and I will come on to explain why in just a moment.
I look forward to that.
Thank you.
On the point about steel, just last week, I read in the media that the current UK Government is considering importing coal to support our steel industry. That is a significant departure and is perhaps indicative of some of the choices that we have made as we try to achieve net zero. The issue is that we have not stopped using those products. We have not stopped needing steel for construction and we have not stopped needing metals and paper. All that is different now is that we purchase those products from other countries, which do not have the same commitment to meeting net zero as we do.
Therefore, the overall carbon emissions from producing those materials have not been reduced; all that we have done is export them to other countries. We can feel virtuous about the fact that our carbon emissions have reduced but, overall, they have not gone down.
On that point, does Mr Fraser agree that, since the UK produces 1 per cent of the world’s carbon emissions and Scotland produces one tenth of that, we are responsible for one out of 1,000 of the carbon emissions and that the other 999 are emitted by other countries? Therefore, does he agree that what we do in terms of cutting is almost irrelevant to solving what is a global problem, and that we would be best focusing on areas such as supporting our oil and gas industry to produce oil and gas with the lowest possible carbon footprint and to export those skills throughout the world, so that we can all move more effectively towards a global solution?
I thank Mr Ewing for that intervention. I struggle to disagree with much of anything that he has said. He makes his points very well.
To come back to my basic point, the high cost of energy—specifically, electricity—must be addressed if we are concerned about the future of heavy manufacturing and industry in this country.
I turn to the point that Mr Johnson made. He reflects a point that has been made by the current UK energy secretary, Ed Miliband. He says that we have high electricity prices because we are overreliant on gas. I thought that I would examine some of the data. I am grateful to the latest edition of The Spectator magazine, which has some helpful information that compares the situation internationally.
In the UK today, the cost of our electricity per kilowatt or equivalent is 25.85p. We derive 34 per cent—just over a third—of our electricity from gas. Ireland has a lower price of 22.55p, yet it derives 50 per cent of its electricity from gas. Italy, which has a price of 21.82p, derives 45 per cent from gas. The Netherlands has a price of 16.28p and derives 38 per cent from gas. Greece has a price of just 15.31p and derives 32 per cent from gas. The US, which derives 42 per cent of its electricity from gas, has a price of just 6.48p, which is less than a quarter of what we currently pay.
Each and every one of those countries, which derive more of their electricity from gas than we do, has lower—and, in some cases, substantially lower—costs, which suggests that the issue lies elsewhere. The Deputy First Minister said in her remarks that we need to be clear about the root causes. I agree, and it is very clear that the root cause is not the component of gas in electricity production but lies elsewhere.
All that said, does the member accept that one of the greatest hurdles to industrial expansion is access to the national grid? The long delays to upgrading national grid infrastructure mean that my inbox is often full of messages from businesses that want to expand and major companies that want to relocate, some of which have been told that they must wait five to 10 years to get access to the grid. Does he accept that there are some things that are more within the control of the UK Government that will make a difference?
I should clarify that I was not criticising the Scottish Government’s energy policy, because I entirely accept that those are largely reserved matters. I do not disagree with the Deputy First Minister’s point.
Yesterday, in the area that I represent, I met a house builder who expressed concern that it could take three or four years to get a power connection to deliver 44 much-needed units of affordable housing in an area where there is huge demand. The only constraint on that happening is the time that it takes to get a transmission upgrade from Scottish and Southern Electricity Networks, which I hope to meet shortly to discuss the issue.
We are seeing massive investments in the green economy, such as in renewable energy, infrastructure projects, transmission and pylons. Those investments are welcome because they are creating jobs, but they all have to be paid for, and they are being paid for by the levies that all of us—consumers and industries—pay on electricity bills. We should not pretend that that is not a factor in the high cost of electricity here—it is not down to the volume of gas in the energy supply.
We also need to recognise the importance of oil and gas, which is a point that Fergus Ewing made. Today, Gary Smith of the GMB union was quoted as saying that there is
“a growing sense of betrayal”
among workers about the approach that the UK Labour Government is taking towards oil and gas. In his words, it is “absolute madness” not to grant licences for oil and gas. That is from somebody who is at the heart of the labour movement, and I hope that Labour colleagues will listen to what he has to say.
To come back to the Scottish Government, in the past few days, we have seen what looks like something of a shift in Scottish Government policy when it comes to zonal pricing. In July last year, when interviewed on “Good Morning Scotland”, the Deputy First Minister suggested that zonal pricing could actually deliver free electricity for consumers in Scotland. This morning, I listened back to that interview with great interest. In October, she told the “Holyrood Sources” podcast that zonal pricing would right
“the greatest injustice of our day.”
It seems that she might now have changed her tune. On Friday, she told the business in the Parliament conference that zonal pricing could scare off investors. Some clarity from the Deputy First Minister on where exactly she and the Scottish Government stand on that particular issue would be welcome.
I would be interested to hear those interviews. I will go back and listen to them to check whether I specifically referenced zonal pricing, because I have long called for market reform. The point that I made on Friday is really key: cheaper bills could be delivered if investments and developments happen. If they do not happen—say, in the Highlands—people miss out on cheaper bills. That is the dynamic that I was referencing on Friday.
I thank the cabinet secretary for that intervention, but it does not really answer my question, which was about where the Scottish Government currently stands on zonal pricing. Is it for or against it?
I will happily give way again if she wants to clarify that point.
I have raised that with the UK Government a number of times. We support market reform and think that it needs to be concluded quickly in order to provide certainty, and we are open to looking at the analysis on whether zonal pricing will deal with the point that I have just identified. We are not yet convinced that it will.
Could you bring your remarks to a close, Mr Fraser?
I think that that was a maybe.
I have taken lots of interventions and time is escaping me, but I will make two more brief points. First, the Government is entirely right to recognise the importance of the Grangemouth site. Today’s news is extremely distressing for the staff there. I would very much welcome a Government statement on what wider action it can take.
There is a lot in my amendment that I have not even had a chance to touch on, such as what the Scottish Government should be doing better in order to support business in the areas of taxation, regulation, planning and so much more. That is all covered in my amendment, which I am happy to move.
I move amendment S6M-17352.3, to leave out from “welcomes” to end and insert:
“condemns the UK Labour administration’s increase to employer national insurance contributions, which broke an explicit manifesto promise and put a large additional burden on industry in already challenging circumstances, putting jobs at risk; regrets that the Scottish Government’s Budget chose to keep Scotland as the highest taxed part of the UK and failed to pass on business rates relief in full, hitting workers, consumers and businesses; calls on the Scottish Government to prioritise common-sense policies for economic growth that develop skills in the workforce and ensure that the tax system is competitive, efficient, simple and fair; notes that the UK Government’s intervention in British Steel provides necessary support for the resilience of a strategic supply chain; recognises that the Grangemouth oil refinery is also part of a strategic supply chain that is important to both national resilience and high-quality job opportunities, and invites further consideration by both the Scottish Government and the UK Government of means to preserve this important national asset.”
I am sure that Mr Hoy was taking notes for the wind-up speech. I call Daniel Johnson to speak to and move amendment S6M-17352.2.
15:04
I begin by associating myself with the comments that the Deputy First Minister made about the really shocking and tragic news about Grangemouth today, which has come out of the blue. Our thoughts must be with the 400 workers whose future now looks decidedly bleak. The trade unions have been very clear—they have pointed the finger at all politicians and accused us of failure. In so far as we have not secured continuity of production, we need to reflect on that very seriously indeed.
I welcome today’s debate in the round, because we live in a time of profound economic change. We have war in Europe, the return of protectionism and trade wars, all at a time when we are attempting to make an energy transition of a scale and at a pace that has never been attempted previously. The security of our industrial base and our supply chains is vital in the context of those three factors. Many of the assumptions that have been made in recent decades have been altered radically, if not upended, in recent months and years.
In that context, I welcome the opportunity to discuss the new UK Labour Government’s approach to British Steel. That Government will always do what is necessary to keep the UK secure at home and strong abroad. The Labour Government is doing what previous Governments have failed to do. I almost feel that I have to remind Murdo Fraser that, until last July, his party had been in government for 15 years. If he wants to examine why the energy structure is as it is, perhaps he should reflect on his party’s time in government. Ultimately, his party failed to plan for the future by allowing steel production to collapse by 42 per cent, thereby putting our global standing at risk. The Labour Government refuses to make the same mistakes, so it has acted in the national interest to secure UK steel making.
The new UK Government also moved quickly and decisively in relation to Grangemouth. Within weeks, it made the decision to accelerate project willow and commit hundreds of millions of pounds to secure Grangemouth’s transition to a more sustainable future.
Both situations demand Government action, and the Labour Government has acted. However, the nature of the action has been different because of the different circumstances in the two situations.
I welcome Mr Johnson’s general arguments, but the UK steel industry, which is represented by the association with which I spoke yesterday, has two main asks on energy. The first is that the compensation that is payable for network charges be increased from 60 per cent to 90 per cent, as is the case in Germany and France. The second is that there be a two-way contract for difference that pegs the UK energy price to that pertaining in Germany and France. Will Mr Johnson address whether the UK Labour Government will meet those two requests that have been made by the main UK steel trade body?
As much as I would like to, I cannot speak for the UK Labour Government from this chamber, but Fergus Ewing’s point about ensuring the competitiveness of our energy costs is absolutely fundamental. Although we might disagree on the route to get to that point, that fundamental assumption is vital.
Let me set out the distinctions between the situation in Scunthorpe and that in Grangemouth. The first relates to the fundamental nature of the industrial process. People who know anything about blast furnaces will know that they cannot simply be turned off and on again, but there was clear evidence that the owners of the plant in Scunthorpe were about to do just that. The blast furnaces in Scunthorpe are the UK’s last blast furnaces. If they had been allowed to close, the UK would have been left as the only country in the G20 without the capability of producing primary steel.
The second distinction relates to the nature of the product. Steel is the backbone of a strong economy. It is one of the most, if not the most, important primary manufacturing products. Steel builds our railways, our airports and our homes. In these insecure times, it is important to point out that it also builds the tanks and warships that keep this country safe and secure. It underpins growth, prosperity and security, and we will be reliant on the product for decades to come.
That stands in contrast with Grangemouth, because the product from its refinery needs to change. We are seeking a transition away from fossil fuels and internal combustion engines—the very articles and machines that the plant seeks to supply and service. Many of us would have preferred that change to have been carried out in a more planned, gradual and deliberate way, but change must happen as we transition away from oil and gas.
Therefore, in my view, although they are both strategic sites, it is clear that the situation in Scunthorpe is different from that in Grangemouth.
I say for the record that the arguments the member makes for why the UK Government intervened in Scunthorpe are accepted and that we agree with them. He makes a compelling case.
However, does he accept that, even though the UK Government did not proceed with a so-called nationalising approach to Grangemouth, there were interventions that could have been made in the past six months regarding sustainable aviation fuel—funding for the development of which went elsewhere—and carbon capture, and that those interventions could have turned the direction of travel at Grangemouth?
I invite the Deputy First Minister to reflect on the actions that her Government could have taken and that are very clearly set out in project willow. That is the argument that our amendment makes.
We must genuinely and candidly reflect on the circumstances that have led to today’s announcement, but I argue that that reflection should go in multiple directions. It was in the context of the threat of the Scunthorpe blast furnaces being turned off that the Government acted quickly, using emergency legislation to ensure that those furnaces kept running.
The reality is that the Scottish Government has known of the challenges facing Grangemouth for at least a decade and its actions have been scant. It has been clear for a decade that the plant’s future was uncertain, and that was made explicit to the Government by the plant’s owners five years ago. That is a matter of public record.
Even without that information and context, the Government’s own policies should have prompted it to act, because, correctly, it is Scottish National Party policy to move away from the internal combustion engine—indeed, it brought forward the target for ending the sale of vehicles with internal combustion engines, making that sooner than the UK Government’s target date. Therefore, it is simply not credible for the Government to act as though what has happened in Grangemouth is a shock or surprise, because it knew that that was coming and, frankly, it failed to act.
The consequences of that inaction are stark. On the SNP’s watch, jobs and investment have been exported from Scotland and foreign countries and Governments have benefited from our natural resources. That point goes way beyond the energy sector. From ferry contracts to the failure to make good on the promise of 130,000 green jobs and new bridges being built with Chinese steel, the SNP’s track record on industrial policy and supply chain security is not good. The Government has tended to be reactive rather than proactive, has a poor track record on delivery and has completely failed to recognise, let alone support, our strategic supply chains.
Will the member take an intervention?
The member is about to conclude.
I am in my final minute—had I not been, I would have given way.
Critically, we have had five different energy ministers since the Scottish Government was made aware by Petroineos, the owner of Grangemouth, that it was likely to close the plant in coming years, but none of those five ministers produced a plan. Conversely, the new UK Labour Government acted within weeks on Grangemouth and acted promptly and expeditiously on Scunthorpe. The UK Labour Government’s actions speak for themselves.
I move amendment S6M-17352.2, to leave out from “, and believes” to end and to insert:
“; further welcomes the swift action taken by the UK Government following the General Election 2024 in recognition of the importance of the Grangemouth oil refinery, including its support for Project Willow and the commitment of £200 million to invest in the industrial future of the site, and calls on the Scottish Government to commit to publishing a detailed timeline setting out how and when it will implement the policy and regulatory changes needed to attract investment into the technologies identified by Project Willow.”
15:13
The theme of my amendment is transition. We speak a lot in the chamber about the transition away from oil and gas, and I believe that most members accept the scientific consensus that humanity must urgently reduce its carbon emissions if planet earth is to remain habitable.
The projections about what our home planet will look like if we approach 3° or 4° of warming are terrifying, and it is unclear how much life our planet could support past 6°, although our civilisation would certainly have collapsed by that point. Anyone who thinks that I am exaggerating the risk has not read enough climate science, and anyone who thinks that the cost of preventing climate collapse is too high has not understood the cost of the collapse of earth’s biosphere.
It is, naturally, in the interests of multinational capitalist corporations to try to extract as much profit from a declining industry as they can. After all, they exist for the sole purpose of making profits and it is not in their interest or remit to consider what the future will look like in 30, 50 or 100 years’ time. However, that is in our remit. We have this one dwindling chance to prevent the worst of this building catastrophe—this one chance to do the right thing by future generations by phasing out the fossil fuels of oil, gas and coal and to do the right thing by present generations by investing in a different future.
Some have called our dependence on fossil fuels an addiction. As anyone who is seeking to tackle addiction knows, the first step is to acknowledge the problem and recognise that change is necessary, but here is where I find frustration in the chamber. We hear everything from denial that climate change is happening to denial that daily life is going to need to change if we are to reduce the impacts of climate change. We cannot pretend that we can continue to extract oil and gas and burn it forever. We need to admit that we cannot do that and put in place the plans and strategies for how we are going to phase them out, changing our economy to one that is based on clean energy and clean heat.
A denial that transition was needed until it was too late is exactly what happened to the workers of Grangemouth. There was a sort of collective imagining that things could go on indefinitely until it was too late for so many jobs and for the community. Clearly, the challenge of Grangemouth was increased by the fact that it is owned by a billionaire who has no interest in the wellbeing of the community or the long-term prospects of Scotland’s economy. There is also a big question here about letting key infrastructure be owned in that way, which allows our environment and our people to be treated with such callous disregard.
Both the Scottish Government and the UK Government need to acknowledge the changes to our energy infrastructure and wider society that will be needed to tackle climate change. Part of that is about identifying the infrastructure sites, our future energy needs and the changes that are going to be needed to get the country on track to meet its net zero goals. We need a clear plan and not just hand-waving that signals that we are okay to carry on as we are, with people saying, “Don’t worry—carbon capture will sort it out.” We are not, and it will not. It is clear that, for there to be a just transition, substantial Government investment will be required that is far beyond the means of the devolved Scottish Government.
I accept that we are on the path towards a just transition, but does the member not realise that that transition also has to be realistic? Would it not be better to use the products of the North Sea here, in this country, rather than importing from other countries? That makes no sense.
Once again, the member seems to misunderstand the nature of the international market for oil and gas. The oil in the North Sea oilfields is being extracted not by public companies that can decide to sell the oil beneficially to the UK or to Scotland, but by international corporations that will sell it to the highest bidder. That may or may not be the UK, but in no way does that protect the UK’s energy needs. It simply does not do that.
The Scottish and UK Governments need to work together proactively and strategically to plan the transition and not simply deal with disasters after they happen. The changing climate is not the only external shock that is coming our way. Having Donald Trump in the White House means that more shocks are coming. It is likely that his on-again, off-again tariff policies will lead to recession and damage the global economy. It is possible that American support for Ukraine may be withdrawn, leaving Europe and the UK to have to support Ukraine ourselves, with the consequential costs. Those shocks will require additional Government intervention, which will require additional Government resources.
The UK Government, with its full suite of powers, will have to think carefully about how to raise those resources. Cutting public services further is a self-defeating strategy. Growth in the face of global economic slowdown is a mirage. Those resources will have to be found by taxing the very wealthy and the polluting corporations and reducing the tax breaks and subsidies for fossil fuel extraction and use. I encourage the UK Government to investigate those measures urgently, because it is going to need them.
I move amendment S6M-17352.4, to leave out from “the Grangemouth” to end and insert:
“Grangemouth as it transitions to supporting Scotland’s journey to a low-carbon economy, protecting the jobs of the highly-skilled workers at the site, and demonstrating how Scotland’s industrial sites can implement the recommendations of the Climate Change Committee, in the understanding that a just transition requires substantial public funding and support that private, profit-driven owners of energy infrastructure cannot be trusted to provide.”
15:19
I thank Murdo Fraser for his kind comments in welcoming me to my new place. I am very happy to be keeping the seat warm for him for next year, when he moves over to this side of the chamber—[Laughter.] Indeed, it might be sooner—there is a chair right next to me.
I am delighted to be making what would presumably be classed as my maiden speech from the Liberal Democrat benches. The economy underpins everything when it comes to Government. From this side of the chamber, the view is different, but some things have not changed, including the challenges that are faced by Scotland’s economy. As my amendment states, they also include the Scottish Government’s lack of industrial strategy. I hope that we will find some agreement on that across the chamber.
Of course, that is nothing new. Last year, the Auditor General for Scotland was firm on the issue, stating:
“The Scottish Government’s 10-year economic strategy ... lacks collective political leadership and clear targets.”
It was also warned as far back as 2021 by the Fraser of Allander Institute, which said:
“Without a coordinated strategy, interventions risk being tactical fixes rather than strategic investments that build long-term economic capacity.”
The Government was also warned by the Parliament’s Economy and Fair Work Committee in 2022, when it said:
“The absence of a clear industrial strategy has contributed to reactive, piecemeal interventions that lack coherence and long-term vision.”
I say to the cabinet secretary that that is pretty damning.
In 2023, Audit Scotland repeated the same warning:
“There is a continuing need for the Scottish Government to ensure robust planning, value-for-money assessments, and exit strategies when considering financial interventions in private companies.”
The Public Audit Committee, on which I am happy still to be sitting, has made it clear that
“Taxpayers must be confident that government investments are made with a clear purpose, sound financial judgement, and a credible plan to exit at the right time.”
The problem is that none of those warnings has been heeded—
Will the member take an intervention?
I say to the cabinet secretary that they have not been heeded, which is why the coal, shipbuilding and steel industries, which used to employ more than 400,000 Scots, now employ just under 50,000.
Rightly, the Scottish Government’s motion asks the question: if the UK Government can intervene in Scunthorpe, why can it not intervene in Grangemouth? It is a fair question, but it entirely misses the point. Grangemouth has been around for more than 100 years—it is the oldest oil refinery in the UK. However, across decades, very little has been done to help the site move on in the transition away from fossil fuels. We have known for years that we need to tackle climate change and that there would be a shift away from oil and gas. Yes, the refinery may have been in private ownership, but that does not mean that there is an absence of responsibility for the Government—or Governments. Instead, the question is whether public ownership will just fill in the existing financial gaps, or will it lead the industry to a glorious new future.
I get that Governments intervene to stop the immediacy of job losses. However, the Scottish Government has spent ÂŁ0.5 billion on financial interventions in private companies in recent years. Where has that led it to? Let us look at some of investments.
The Government has spent ÂŁ55 million of public money on Prestwick airport.
It is making a profit.
Do not worry—I am coming to that.
The Government has spent ÂŁ50 million of public money on Burntisland Fabrications and ÂŁ300 million to ÂŁ500 million of public money on Ferguson Marine. The GFG Alliance, albeit on different terms, exposed the taxpayer to potential risk in the amount of another ÂŁ0.5 billion pounds. That is the point of my amendment.
Will the member take an intervention?
I will make some progress, then I will take the intervention.
Chucking money into private companies will save jobs in the short term, but it is an entirely reactive approach to intervening in business. Members can call me a cynic, but the photo opportunities for ministers to stand outside the gates of some of those companies have been far more successful than the turnaround activity in the businesses themselves. That is presumably why the Confederation of British Industry Scotland is now calling on the Scottish Government to remove barriers to economic growth, tackle the skills shortages and create a competitive business environment. Those are fair asks.
I understand why the UK Government stepped in on British Steel. It was a critical situation. Scunthorpe and Grangemouth highlight the importance of domestic ownership in our energy sector, rather than the sector being controlled by foreign powers—and we all know where that leads to. However, bail-outs alone are not the answer—they are not the solution. That reactive, firefighting approach to the Scottish economy does not and should not replace a long-term industrial strategy.
Businesses are adept at changing in tough circumstances. That is what they do best. The private sector has been doing it for years. However, when a business cannot survive, the Government, if it chooses to intervene with public money, must use exceptional due diligence during and after those interventions, because lessons are not being learned.
I have seen that first hand on the west coast. Prestwick airport was bought by the Scottish Government in 2013, and it is still in public ownership, with no vision in sight of how to return it to the private sector. The same is true of Ferguson Marine, which was bought back in 2019. How is that going? The yard is losing out on much-needed contracts for new ships, and the private sector is going to Liverpool.
I have no problem with any Government intervening in private business if the purpose is to save jobs and prevent the collapse of industries. We all want to see good people in good jobs. However, when the Government uses public money to do that, it needs to demonstrate prudence and honesty to the taxpayer. It needs to be honest about the risks involved and the robustness of its exit strategy, if there is one. That is the point of my amendment, which I urge the chamber to support.
I move amendment S5M-23324.5, to insert at end
“; notes that over many years, several industrial interventions have been made by the Scottish Government necessitating significant public funding, as seen at Prestwick Airport, Ferguson Marine, the steelworks at Dalzell, the Bifab fabrication yards and the Alvance smelter at Lochaber, which have resulted in hundreds of millions of pounds of written-off loans and cash injections, unclear futures for many of these businesses and a perennial struggle to return the businesses into private commercial ownership; regrets that there appears not to exist any long-term wider industrial strategy in Scotland, and believes that, where and when the Scottish Government intervenes in business in future, it should adopt a proactive, not reactive, approach to industrial interventions that ensures value for public money and robust exit strategies are prime considerations.”
We move to the open debate.
15:25
My thoughts are also with the workers and the wider Grangemouth community today.
It would be remiss of me, as a Canadian citizen, not to use this opportunity to congratulate Mark Carney on becoming Canada’s new Prime Minister last night, on a platform that was defined by one simple but effective statement: “Canada strong”. In the face of hugely turbulent economic times, with the threat of a tariff war between the United States and Canada dominating over the past few months, that message united the majority of Canadians who—to quote a much-loved and much-used Canadian hockey term—put their elbows up to defend and promote team Canada.
We must do the same here today. Regardless of political persuasion, all of us in this place recognise the huge potential in Scotland and see that we often punch above our weight when it comes to innovation and securing inward investment. A record number of foreign direct investment projects were secured in 2023 in Scotland, the only part of the UK to see growth for five consecutive years, taking it to its highest level in a decade. Scotland is the top destination in the UK, outside London, for foreign direct investment, according to EY’s latest attractiveness survey.
Scotland’s economy grew by 67 per cent in real terms between 1990 and 2022, at the same time as we cut our greenhouse gas emissions in half, which shows that tackling climate change and growing a thriving green economy go hand in hand.
Scotland is open for business. Support in the UK for business cannot stop at the border. There is no denying that Scotland has the potential to lead in high-growth industry sectors such as advanced manufacturing, net zero industries, life sciences, innovation and artificial intelligence. On the world stage, it is recognised that there can be no better investment than an investment in Scottish innovation, because we have the talent, skills and resources in abundance to be a major player in the energy transition and secure a prosperous and sustainable future.
However, it is abundantly clear that we need co-operation between all spheres of government in the UK to realise the potential that we have in spades. Westminster has repeatedly failed to equitably spread opportunities for investment, employment and prosperity across the United Kingdom, and the UK Government must urgently develop a collaborative industrial strategy for the whole of the UK and recognise all that Scotland has to offer.
Many here today will speak about Grangemouth and project willow, or the north-east and Acorn. I will spend the small amount of time that I have left speaking about the sleeping giant that is Ayrshire, where my Carrick, Cumnock and Doon Valley constituency is. Ayrshire has long been recognised the world over for producing the very best engineers, who have innovated and pushed the envelope—my own father being one of them. However, sadly, due to the economic downturn in 1980, he took his family and his skills to Canada.
Recently, the Ayrshire growth deal, with more than ÂŁ250 million of public money investment promised, signalled to the region that all three local authorities and both Governments were committed to waking the giant from its slumber. The deal is also expected to secure a further ÂŁ300 million of private sector investment for the area. Covid has played a role in stalling some of the projects, and we have seen the vision being redeveloped over the past couple of years. It is crucial that we pull out all the stops so that Ayrshire can realise its potential and we bring a halt to the depopulation that always accompanies deindustrialisation.
In my constituency, I have innovative go-getters such as the Emergency One Group in Cumnock, which is a world-leading provider of innovative firefighting technology solutions, with customers right around the globe. It was the creator of the first all-electric fire appliance, which is an absolute sight to behold. It continues to nurture and develop the local workforce, helping to keep folk local.
Global wood panel expert Egger is massively expanding its operations in Auchinleck to include a lamination line, ensuring that the work stays local. Every time that I have an employment fair, there is a massive queue at its stall, because it has a much-sought-after apprenticeship scheme—which, again, nurtures local talent.
As other members have mentioned, the Scottish Government stepped in to save Prestwick airport. Thank goodness for that, as it is home to more than half of Scotland’s aerospace workforce. In excess of 3,000 highly skilled employees are located in the cluster, and there is a pressing need for many more. The aerospace campus has long-established and strong links with academia, and some of the UK’s leading aerospace-related training courses are delivered close by. It is also important to recognise the role that Ayrshire College plays in supporting and developing that strategically important workforce. Those jobs are extremely well paid and, in turn, can help to stabilise local populations and stop outward migration.
Both Governments must urgently realise the enormous potential for Ayrshire to become one of Europe’s leading centres of aerospace activity, in a location that is perfectly placed and strategically connected. There has been heavy private investment there to ensure that low-carbon and “factory of the future” standards are met while the necessary diversification and evolution takes place in Scotland’s rapidly growing aerospace sector. Global aviation companies can see what Prestwick offers not only in manufacturing but in maintenance, overhaul and repair operations. We need to see that, too. There must be a rebalancing of the UK’s economy if Scotland’s extraordinary economic potential is to be met. I urge both Governments to put Ayrshire firmly on their maps and at the forefront of their minds.
15:31
I remind members of my entry in the register of members’ interests, which relates to my ownership of property.
In his contribution, my colleague Murdo Fraser eloquently addressed issues relating to heavy industry. I want to address the pressing issue of Scottish businesses struggling in our turbulent economy and how decisions taken by the Labour and Scottish National Party Governments have significantly contributed to such challenges.
I will start with the UK Labour Government’s policies. Businesses across Scotland are grappling with the impact of the employer national insurance contribution rate increase that it has imposed. This month, the rate rose from 13.8 per cent to 15 per cent. The increase is expected to lead to a 2 per cent rise in employers’ payroll costs, which will add to their financial burden and so make it harder for them to sustain operations and retain staff. Many businesses have already said that they will not be able to bear that extra cost, which will lead to job losses and business closures. David Lonsdale of the Scottish Retail Consortium has said:
“Scotland’s retailers will face a £190 million increase in their tax bill”
and
“Such stark increases will increase the cost of operating a retail business and are unlikely to be absorbed by businesses”.
Closer to home, the SNP Government’s approach to taxation has not helped either households or businesses. Scotland remains the highest-taxed part of the United Kingdom, thanks to the SNP’s so-called progressive income tax regime. That high tax burden is unfair and detrimental to our economy. It discourages investment and drives talent away, as individuals and businesses seek more favourable conditions elsewhere in the UK. The widening tax disparity between Scotland and the rest of the United Kingdom could deter top talent from relocating north of the border. Businesses that depend on senior executives or specialists might need to offer additional incentives or higher salaries to offset that discrepancy. In addition, the freeze on higher tax thresholds has created a fiscal drag, pushing more employees into higher tax bands without there being corresponding increases in their disposable income.
Let us not forget the further damage caused by the SNP through its business rates policy. Talk about rubbing salt in the wound—as if businesses were not already struggling. Despite successive UK Governments providing funding for business rates relief, the SNP has not fully passed on that support to many businesses. That has resulted in many challenges for them, particularly small retailers and those in the hospitality industry, where soaring costs have forced many to reduce their operating days and to freeze hiring, which has led to job losses and reduced economic activity.
Professor Mairi Spowage, director of the Fraser of Allander Institute, said:
“Economic conditions in 2025 are turbulent and uncertain, and are likely to remain so throughout the year. Therefore, the picture is still one of subdued growth. Many of the challenges businesses faced in 2024—from rising costs to policy uncertainty—have not gone away.”
I emphasise that stability is crucial for businesses to make long-term plans and investments. However, under the SNP, businesses face uncertainty and unpredictability. According to the latest Scottish business monitor survey, three quarters of businesses expect Scottish economic growth to remain weak or very weak in 2025. The lack of a coherent strategy or consistent support means that businesses cannot confidently plan for the future, hindering growth and innovation.
Skills play an important part in growing the economy. However, the Institute for Fiscal Studies has reported that our universities’ struggles due to funding shortages are creating a ripple effect that is being felt across the business sector. The funding shortfall means fewer resources for research, development and student support, which in turn affects the overall quality of the skilled workforce.
The availability of apprenticeships depends on the number of businesses. If the proper fiscal environment is not in place, there will be fewer businesses and thus fewer apprenticeships. That is why the Scottish Government must listen to businesses, so that businesses can equip themselves with the right skills.
The policies of Labour and the SNP are failing Scottish businesses. National insurance increases, inadequate tax relief, budget constraints, a lack of stability and high taxes are all contributing to the struggles faced by businesses in our turbulent economy. It is time for change. We need bold, commonsense solutions that support the aspirations of families and businesses across Scotland, allowing them to keep more of their earnings and invest in their future. Only then can we create a thriving and prosperous economy for all.
15:37
I congratulate the cabinet secretary on her contribution and I welcome the fact that we are debating industry. We should perhaps debate all sectors of industry separately, because I will not have time today to talk about the Scotch Whisky Association’s briefing and the 10 or 12 points that it has raised—for example, extended producer responsibility being eight times the cost of what is applicable in other countries if the UK Government goes ahead with it, which I hope that it will not. I do not have time to cover the briefing that I have had from Liberty Steel, which has pointed out, as other companies have done, that there should be an obligation in the UK to purchase UK steel. That is perfectly deliverable. I also do not have time today to go over the briefing that I obtained from Tom Uppington—who, as the cabinet secretary will know, heads up operations at Lochaber, with which we are both acquainted—except to say that in that briefing, Tom said:
“Current energy market prices do not make it financially economical to produce primary aluminium in the UK.”
That brings me to the underlying central question of this debate, which is not just a general discussion about industry. Unless the high energy costs in the UK are addressed, it is difficult to see, even as an optimist, any other scenario than the inexorable and almost inevitable decline—and, sadly, death—of industry in Britain. I use that pessimistic phrase because I have thought about it deeply and read about it fairly widely.
It is very simple. If a business is producing industrial manufactured products such as steel, aluminium, chemicals, fertiliser, paper or cement, and if its energy costs are four times higher—perhaps even 50 per cent higher—than those of competitors in Germany and France, that business, which is producing a commodity that can be produced in many advanced countries, is going to lose custom because it is pricing itself out of the market, and it will make a loss.
That is why we are here on this very sad day, which sees the termination of oil refining in an oil-producing country. It is a dreadful and ghastly day for the workforce, and for everybody who is proud of Scotland and our magnificent oil and gas industry. However, unless the problem is addressed, there will be more Grangemouths and Scunthorpes. There is simply no doubt about it, and one does not have to be Warren Buffett to understand it; anyone with a rudimentary understanding of business can only come to that conclusion. Diagnosis, however unpleasant, is no use—
Will the member take an intervention?
I certainly will.
Given that we have established that it is not the level of gas in the energy mix that causes high electricity prices, to what does the member attribute that, and what is his solution?
With regard to electricity generation, the answer has been put best, and will never be bettered, in the statement by Winston Churchill that, when it comes to electricity supply, the solution is “variety, and ... variety alone.”
In the past 48 hours, we have seen blackouts occurring in Spain and Portugal, which, incidentally, have initially been estimated to have cost €4 billion. On a similar event in Britain, Daniel Yergin, who is arguably the world’s most informed energy expert, said:
“The near blackout in Britain in January this year, caused by the conjunction of cold weather, low wind production and unavailable cross-border transmission lines, demonstrated the glaring imbalance between rapid growth in renewable energy on the one hand and insufficient infrastructure and lack of alternative supplies on the other. Natural gas is an essential component of an electric power system that is heavy on intermittent renewables that depend on wind and sun.”
Moreover, although I am not an expert or scientist, I highlight that the combined-cycle gas turbines are now more efficient because they use the hot exhaust from the gas turbines to heat water, creating steam to drive a second turbine, producing more electricity. They are 50 per cent more efficient than ordinary gas turbines. They can be built in four to six years, rather than 10 to 12 years, as is the case for a nuclear power station. They can be built on budget, unlike nuclear power stations, and there is no waste to dispose of at the end of the process. That is why Britain should go for more gas, and more gas storage. We have only a few days of gas storage in the UK—in Germany, they have months.
Will the member take an intervention?
I will take an intervention from Mr Carson.
You will not, Mr Ewing, because you will be winding up very shortly.
I will wind up then—I say sorry to Mr Carson.
UK Steel has put forward very clear ideas for a two-way CFD that would peg our energy price to that in Germany and France, and for the compensation levels that are currently provided to business for the network costs, which are the other element, other than wholesale costs, to be equalised. That is a solution and a prognosis. Let us all, in all the main parties that are serious about the matter, work together to deliver such a solution for Scotland and Britain.
15:43
There is no doubt that these are turbulent economic times. Global instability, shifting trade policy and the urgent need to respond to the climate crisis are reshaping the way in which industry must operate. The question today is not about recognising challenges, but about rising to meet them. That is what the UK Labour Government did in acting to support British Steel—not just protecting jobs at the site of our last blast furnaces, but safeguarding the very future of domestic steel making.
That matters in Scotland. Hundreds of skilled jobs at Dalzell, and in the future—I hope—at Clydebridge, depend on the success of British Steel. Our infrastructure, our defence and our manufacturing and resilience all rely on having a steel industry that we can call our own. When the Labour Government saw a risk, it acted urgently, decisively and strategically. I only wish that when the then UK Government and the current Scottish Government were first made aware of the risk to the refinery at Grangemouth, we had seen that same urgency.
As we have heard, production has now ceased at the refinery. Our thoughts are, first and foremost, with the workers and their families. Those workers kept the national asset running for decades and deserved better. They should have been at the heart of a proper plan for transition years ago. Instead, they have been let down and left behind.
In evidence to the Economy and Fair Work Committee in November last year, Petroineos told us that it had approached the Scottish Government more than five years ago about the need to transition the Grangemouth site. When the former energy minister met Petroineos in February 2022, he was warned about the likely closure of the refinery. That was more than three years ago.
However, when the committee published its just transition report on Grangemouth in 2023, we said:
“There is no evidence of a clear, joined-up approach across government. No timeline. No worker-led strategy. No plan.”
We had two Governments asleep on the job.
Since then, we have seen a change of UK Government and, within months, a commitment of ÂŁ200 million to support a clean industrial future for Grangemouth through project willow, which involves biofuels, hydrogen and sustainable aviation fuel, and is a road map to protect skills and secure investment.
When it comes to the delivery of project willow, we cannot afford a repeat of the drift and delay that defined the past five years. We need urgency to attract investment, change regulation, develop infrastructure and secure the jobs that remain at Grangemouth and, crucially, those supply-chain jobs across the country.
The situation with the refinery at Grangemouth is not an isolated failure of the Government to turn warm words on a just transition into reality; it is part of a pattern of inaction, and I see that in my region of Dumfries and Galloway. That area should be at the forefront of Scotland’s net zero future, because we have the land, the wind and the water. However, we do not have the investment. Dumfries and Galloway is home to more than 11 per cent of Scotland’s wind turbines, but members would struggle to find a fair share of the renewable jobs in the communities that host them, and they certainly would not find any communities there that manufacture them. We have the highest level of fuel poverty in Scotland, the lowest wages and a population that is declining, with too many of our young people leaving because they cannot access the apprenticeships, housing or opportunities that they need to stay.
How has the Scottish Government responded? With a 22 per cent cut to the budget of the South of Scotland Enterprise Agency; reduced funding for colleges, which forces them to turn away young people who are desperate to train; and a continued failure to invest in crucial infrastructure, such as the A75 and the A77, which are vital links for business to Northern Ireland and the EU.
The Just Transition Commission could not have been clearer in its recent report on Dumfries and Galloway. A lack of housing is stifling economic growth; poor transport is holding back investment; and a lack of skilled workers is putting at risk the region’s ability to play its part in the transition.
That situation cannot go on in communities across Scotland. If we are serious about delivering a just transition, we need to back it with action—a proper industrial strategy that is rooted in Scotland’s strengths. There should be no more exporting of renewable energy supply-chain jobs abroad and no more bridges built with Chinese steel, turbines manufactured in Indonesia or ferries built in Turkey. We should be creating those jobs here, in Grangemouth, Motherwell, Stranraer and Dumfries.
I welcome much of what is in the Scottish Government’s motion today, but the fact that it is silent on the Government’s role speaks volumes.
Labour’s amendment recognises the importance of the action that is needed at Grangemouth and of a proper delivery plan. We owe it not just to the workers at Grangemouth, but to the young people across Scotland who are wondering whether they have a future in their home towns, and to the communities in every part of the country who are still waiting and hoping for the just transition that this Government promised them. Let us not let them down in the way that workers at the Grangemouth refinery have been let down today.
15:48
Grangemouth oil refinery was of economic importance to Scotland, just as Port Talbot was to Wales and as Scunthorpe is to England. Unfortunately, Petroineos announced today that refining has ended.
The Labour Government was right to intervene quickly to save the steel jobs in Scunthorpe, but the same should have applied to Grangemouth as the last oil refinery in Scotland.
The importance of Grangemouth was highlighted in the run-up to the general election, when Daniel Johnson referred to it as a key economic asset and said that its closure would undermine our energy security, which could be damaging for this country.
Anas Sarwar promised that a Labour Government would step in and save jobs at the refinery, but, despite promises of change, the Labour Government has repeatedly prioritised investment in England, including ÂŁ200 million for Old Trafford, as reported by the Financial Times on 13 March.
How do we save the skilled refinery jobs? The UK has positioned itself as a leader in sustainable aviation fuel, and the Labour Government could have announced that Grangemouth would be one of the additional eight production sites to receive funding. However, under Labour, it is only jobs south of the border that are worthy to be saved by Government intervention.
Another example is the ÂŁ800 million supercomputer that was promised for the University of Edinburgh by the previous UK Government. In 2024, Labour shelved the plans to build a state-of-the-art supercomputer at the university that would have been 50 times faster than any current computer in the UK. That cancellation was after the university had spent ÂŁ31 million on a purpose-built facility for the supercomputer as part of the Edinburgh and south-east Scotland city region deal. The university has been at the heart of research and development in AI for the past 60 years and has been the host of national supercomputing services for the UK for the past 30 years.
Then, in January 2025, Labour launched the “AI Opportunities Action Plan” to make the UK a global leader in AI. The AI growth zones will start in Culham in Oxfordshire,
“where approval planning for data centres will be accelerated and access to the energy grid improved. The plan also includes a pledge to build a new supercomputer and increase the UK’s compute capacity 20-fold by 2030.”
Is that another example of investment in England taking precedence over investment in Scotland?
Despite that setback, the Scottish Government is investing ÂŁ321 million through the current budget in Scottish enterprise agencies that support emerging tech, including AI and robotics, and in programmes such as the ambitious Techscaler programme. It is just a pity that Labour has once again turned its back on Scotland.
Manufacturing faces challenges relating to automation, shifts in global supply chains and the need for greener production processes. One such sector is the whisky industry, which in 2024 alone accounted for £5.4 billion in exports and was ranked as the world’s most internationally traded spirit. Yet, the Labour Government’s industrial strategy, “Invest 2035,” with its ambition to drive economic growth by targeting high-potential sectors, does not include food and drink among its eight key growth sectors. That is despite the global significance of Scotch whisky, which is a major economic powerhouse for Scotland and the UK. The industry contributes £7 billion in gross value added to the UK economy and supports 41,000 jobs in Scotland.
The UK Labour Government also has an industrial strategy advisory council, which is there to ensure that the needs and interests of industry across the UK are represented in the Labour Government’s policy-making processes. Yet, there is a lack of representation of the food and drink sector on the industrial strategy council. As Diageo pointed out in evidence to the Scottish Affairs Committee:
“Food and drink is a large, important sector that is economically important to the UK and has strong domestic support. We believe that this must be recognised via representation on the Council and the formation of the wider strategy.”
Once again, a key Scottish industry is being ignored by the UK Labour Government.
Universities Scotland also has concerns about the industrial strategy advisory council, given its cross-UK remit. It has called for
“a transparent framework or formal mechanism to ensure the Council connects to the Devolved Administrations and other stakeholders in the devolved nations on a regular basis.”
It went on to state:
“We note and understand the inclusion of Skills England on the Council. Whilst it makes sense to have a strong connection into strategic skills policy, this is another body in which Scotland is not directly represented, nor is it yet clear whether Skills England will set strategy for England only or cover cross-UK agendas. This gives us cause for further concern that the UK scope of the Council will inadvertently but inevitably be steered in the direction of the needs of England and its regions.”
Scotland has shown stronger economic performance than the UK. Our gross domestic product growth was higher; we now have more people in employment and a lower unemployment rate. In January 2025, Scotland’s private sector economy climbed from 11th to sixth among UK nations and regions, which was driven by strengthening services activity and slower decline in overall activity compared with other regions. Despite that, Scotland faces challenges such as the UK-wide impact of US tariffs, rising energy costs and increased employer national insurance contributions. We can combat those challenges only with the economic levers that other countries have to protect their economy. Labour has shown that its focus is on the south of the border, not Scotland. Therefore, only independence will deliver the support that our industry needs in these challenging times.
15:55
I come to this debate from a slightly different angle. The war in Ukraine, the vagaries of a flood of Trump executive orders on tariffs, and, indeed, the folly of the UK coming out of the EU, despite Scotland voting to remain by 62 per cent, have all exposed the fragility of the UK economy, particularly UK manufacturing capacity. That flows from decades of successive UK Governments, at least from the 1960s onwards, slipping happily into an importing nation, at least of goods, and relying on being a service economy. That vulnerability will take major change at a UK level to undo.
I recall when the label on goods “Made in China” and “Made in Taiwan” provoked scorn and even laughter. The same goes for Skoda and Lada. We are not laughing now, are we? Practically every device that we use has Chinese components. As for Taiwan, which I visited many years ago, it is impressive. With so little in the way of natural resources and with the looming threat of China just across the water, it has invested in research and development with great success. To protect itself from patent theft, it invests just as heavily in legal protections and it licenses the production that flows from its patents.
Across my Borders and Midlothian constituency, the wool industry is now a shadow of its former self and most of the jobs have gone, although its products are of high quality. Coal mining in Newtongrange, Gorebridge and Penicuik are consigned to the museum and memorials. Penicuik’s famous paper-making site has been redeveloped into residential housing. Those industries all sustained entire communities.
Some of the change was the result of the natural evolution of the international manufacturing landscape, and I accept that. However, we—that is, the UK—missed the boat in anticipating modern manufacturing requirements. Take, for example, the many wind farm developments across my constituency and elsewhere. Which companies manufacture the turbines? I understand that the two main manufacturers are Vestas, which is an American company that is based in Portland, and Siemens Gamesa of Madrid, Spain.
Siemens Gamesa’s company history states:
“40 years ago, we saw limitless potential in wind, from powering factories to illuminating homes around the globe. Our technological leadership has accompanied us all these years, from our first wind turbines to our powerful offshore projects ... From the very first wind generators to the world’s largest wind farms.”
Forty years ago, the company saw limitless potential. What was the UK doing then?
That illustrates my point. The nine largest public owners of wind farms in Scotland are foreign. That includes the Danish wind company Ărsted, the Swedish power company Vattenfall, the Norwegian Statkraft and Munich’s municipal energy company. The UK Government does not own one. To rub salt into the wound, we have high energy costs domestically and commercially. In Norway, although 69 per cent of wind farms are owned by foreign companies, Norwegian companies at least own 31 per cent.
The UK Government failed Scotland in the 1960s and 1970s by selling off the oil and gas industry and failing to build from its oil and gas revenues something similar to the extraordinary Norwegian Government pension fund global, which now amounts to $1.7 trillion. Members will say that we are where we are. Indeed, but it is worth saying how we got where we are and whether lessons have been learned by the UK Government. After all, it has the economic power; that is not here. I would say that it has not learned lessons.
Support is needed, but let us be clear that the Scottish Government can only tinker at the edges. Given the huge constraints of devolution, we should not say otherwise.
I return to the example of Taiwan, from which we can learn to invest in and value research and development in our universities, as Gordon MacDonald referenced in his comments. We can also look to protect our produce with the “Made in Scotland” label, which has worldwide value. Those are just two areas where the Scottish Government can make fundamental interventions.
However, to be clear, it is successive UK Governments, with their substantial reserved powers, that have failed—as I hope that I have illustrated over the decades—to provide the UK, let alone Scotland, with an industrial strategy.
16:00
I am grateful for the opportunity to contribute to the debate. I will be supporting the amendment in the name of my colleague Murdo Fraser.
The Scottish Conservatives are always happy to champion the needs of Scotland’s industrial and manufacturing sectors, and these are undoubtedly challenging and turbulent times. Right across the United Kingdom, those industries face the stark reality of challenges, such as rising energy costs because of the on-going war in Ukraine, which continue to have a significant impact on prices for businesses across Scotland and the United Kingdom.
As Scottish industry faces turbulent times, it is also facing uncertain times. The announcement from Grangemouth today confirms that. The loss of jobs and of the refinery in that location will have a massive impact on Scotland and its economy. In addition, disturbances of international trade and distribution that are taking place because of tariffs have made conditions more difficult for Scotland’s exporters, even though Brexit has allowed the UK to avoid the worst of those tariffs.
As Murdo Fraser’s amendment highlights, decisions that have been taken by both of Scotland’s Governments have made the situation even more difficult and volatile, including decisions that were taken by the Labour UK Government in its autumn statement. Labour’s broken promise on national insurance contributions will inevitably have a huge knock-on effect in the form of difficulties for businesses in hiring and retaining staff.
I would also like to talk about the difficulties around decisions that are made within industry. The CEO of PP Control & Automation has warned that tax hikes will burden the manufacturing sector at a time when it is already dealing with high operational expenses and skill shortages. We have skill shortages in many sectors, and the national insurance contributions rise will only exacerbate them. The director of S&P Global has warned of the impact that it will have on manufacturing: it will ensure that jobs are lost
“at a rate not been seen since the pandemic months of mid-2020”.
The Labour Government has said that it wants to make growth a priority. If it does, its actions need to make that the reality. Instead, the reality is that its decision to raise taxes will make growth more difficult to achieve for industries across Scotland and the whole of the UK. The fact that the tax increase is happening at the same time as Labour’s new Employment Rights Bill is before Parliament will only make a bad situation worse.
It is evident that the reforms are already causing instability, falling confidence and further uncertainty for the businesses community across Scotland. It is also clear that aspects of the reforms will have a real impact in practice. The Law Society of Scotland has said that the new provisions around zero-hours contracts are
“overly complicated and lack clarity”.
That alone will cause real issues for individuals. Furthermore, Labour’s own impact assessments suggest that the reforms could cost businesses an extra £4.5 billion across the United Kingdom and will impact industry in every sector.
However, for businesses in Scotland, the biggest challenges have been created by the SNP. Perhaps the most obvious example is the high-tax agenda that the Scottish Government continues to follow. On that issue, leading economists have warned that the SNP’s approach to income tax is “not working” and that tax divergence from the rest of the UK risks shrinking the Scottish tax base. Higher Scottish taxes are making it more difficult for leading industries to attract and retain top talent, which is a difficulty in the heavy industry and manufacturing sectors. According to Scottish Government data, the average salary in the Scottish manufacturing sector is significantly different from the average in Scotland, which means that workers are far more likely to fall into the SNP’s higher tax rates and lower thresholds. Given the importance of the sector to the Scottish economy, the Scottish Government should be careful that its policies do not end up clipping the sector’s wings.
The motion is right to talk about the turbulent times that industries face right across Scotland. Although the Scottish Government can see the problem, it is not always offering real solutions. Scottish industry should not be dealing with the higher tax burden or with lower long-term growth, which has taken about ÂŁ800 million out of the Scottish budget. Businesses need a sense of common purpose and commonsense policies that aim to grow the economy and empower business, so that all sectors can thrive. Instead of increasing the contributions that we receive from hard-working Scots, the SNP should listen to the calls to cut taxes and reduce the burden that people are having to endure.
It is time for both of Scotland’s Governments to invest in a competitive pro-business environment that empowers Scottish industries to survive and thrive for the future. We are truly capable of achieving that and will do so if that is offered.
16:06
The past decade or so has been very challenging for the economy of Scotland and the UK. We have had the self-inflicted wound that is Brexit, which the new Labour UK Government is fully signed up to; the Covid-19 pandemic, which understandably caused much of our economy to shut down; and, more recently, the cost of living crisis, which has impacted consumer spending and confidence and which was caused at least in part by the Tory party’s disastrous mini-budget. All those things have created huge economic stress, which translates into real difficulties in people’s lives.
Brexit, Covid and the cost of living crisis have also been a toxic mix for businesses the length and breadth of the country, and they will rightly be wondering when they will get a break. Unfortunately, due to a combination of external factors, it does not look like that will be any time soon. According to the respected Fraser of Allander Institute, the beginning of 2025 has seen growing unease as firms prepare for rising costs and escalating geopolitical tension, most notably as a result of the introduction of trade tariffs by US President Donald Trump.
The talk of tariffs can seem abstract, particularly given that they are being introduced on the other side of the pond and reciprocated in countries such as China, but they will have an impact on communities across Scotland. I have had the pleasure of visiting many manufacturing businesses in my constituency that export to the EU and the US, and I have heard countless times how Brexit has made doing business all the more difficult—it has cut profit margins or impacted on their ability to grow their workforce and operations. There are companies that provide highly skilled and well-paid jobs in my constituency, and the impact of tariffs on them, like the impact of Brexit, will be very real indeed.
We know that, post-Brexit, many businesses sought closer working relationships with companies and consumers in the US, and the President has now imposed harsh tariffs on them. Although I deeply disagree with many of President Trump’s policies, the US is a highly important market for Scotland, and the Scottish Government continues to support a positive transatlantic trading environment that boosts Scottish industries.
Additionally, weeks of tough talk on trade from the White House have caused market volatility across the world, with the US tariffs sending the cost of UK borrowing skyrocketing. That, in turn, has led to fears that further UK tax rises could be on the cards. It is absolutely right that the Scottish Government is working with key partners in the business community and trade unions to map out the actions that are required in Scotland and, indeed, the UK as a whole, to respond to those emerging economic challenges and ensure that the needs of the devolved nations are at the heart of UK decision making.
Those tariff challenges are being imposed on Scottish industry externally, but we need to do what we can to respond to them and to protect Scotland’s interests. As the First Minister said in his Bute house press conference earlier this month:
“There is a need to challenge ourselves on policy to make sure the policy interventions that we take are commensurate with the scale of the challenges that we now face.”
I look forward to hearing more from the Scottish Government as the discussions with industry bodies and trade unions proceed, particularly as the programme for government is to be published next week.
Crucially, given that most of the relevant powers are reserved, we need the UK Government to take action to minimise the potential harms that are being caused by the current volatile economic situation. If Scotland’s extraordinary economic potential is to be achieved, we need a fundamental rebalancing of the UK economy, including removing the self-imposed economic straitjacket of the chancellor’s fiscal rules, working more closely with the EU and reversing the increase in employer national insurance contributions, which are a tax on jobs that is stifling growth.
The Fraser of Allander Institute’s most recent Scottish business monitor survey shows that 94 per cent of firms expect cost pressures to increase in the first half of 2025, with three in four businesses highlighting national insurance changes as a significant concern. In my constituency, I have heard from businesses across almost every sector, from childcare facilities and general practitioner surgeries to service sector companies and manufacturing businesses, that are deeply worried about the tax hike. The reality is that the national insurance increases are still to fully bite businesses, so the economic outlook could potentially worsen as tax bills start to land.
The UK Labour Government’s intervention with British Steel in Scunthorpe is welcome, as members across the chamber have said. However, we need the same urgency for Grangemouth, which is sorely lacking from the Westminster establishment, as has been evidenced today. UK industrial interventions cannot stop at the border. The UK Government needs to get serious about protecting key Scottish industries, whether that is at Grangemouth, through the Acorn carbon capture and storage project or through wider industrial projects. As part of that, the UK Government must develop an industrial strategy for the whole of the UK, working with the Scottish Government as it does so.
As the First Minister said in his Bute house press conference earlier this month, independence is “a way around” the “damaging” impact of Brexit on the country’s finances and trade. Until Scotland has the full powers of an independent nation in the EU, we need to work with the UK Government, which must use its powers to spread opportunities for investment, employment and prosperity equitably across the UK. The people of Scotland, and businesses in Scotland, deserve no less.
16:12
Heavy industry and manufacturing are woven into Scotland’s economic and social history, from shipbuilding in Leith to brewing on the site of this Parliament, and Edinburgh’s history of manufacturing and industry continues today, with life science businesses in the BioQuarter creating life-saving drugs.
The manufacturing sector is vital to Scotland’s economy: each year, it adds more than £15 billion in value, and it employs more than 150,000 people. Those industries are also strategically important, now more than ever given international events. Although I was not able to attend last week’s debate on the international situation, I was able to read some members’ remarks, such as those of my colleague Daniel Johnson regarding globalisation. Donald Trump’s tariffs show that it is clear that the game has changed. I will not go as far as to say that globalisation is dead, but our strategy should reflect the new reality.
That requires taking action to protect manufacturing and industries that are based in Scotland and are creating resilient supply chains for our businesses, which have seen shocks in recent years. In that regard, I welcome the action that the UK Government has taken to protect Grangemouth and to save British Steel at Scunthorpe. It has kept the blast furnaces running, saved skilled jobs and prevented another one of our industries from being moved abroad.
Had that not been done, the UK would have been the only country in the G7 without steel-making capabilities, which, during a time of growing uncertainty in which we are increasing our defence capabilities, would not have been good for our autonomy or for Scotland’s industry.
The UK Labour Government’s investment in Grangemouth and support for project willow also shows how state intervention can protect industries. The £200 million of investment to secure jobs and ensure that Grangemouth is fit for the future should not be scoffed at. That is decisive action to support the industry in the long term, whereas the SNP knew about the issues for years but did nothing. Standing by as all that happened and then turning round, after all the work is done, and calling for nationalisation is simply not serious. With project willow, we have an opportunity to protect jobs, grow new industries and deliver a just transition. Governments should be working together to achieve that, not creating grievance where there was none.
As changes in global trade happen, we need not only to protect our manufacturing and industrial base but to take advantage of changing trade flows in order to expand it. In decades past, businesses offshored their manufacturing to other countries, moving jobs away from Scotland, but times have changed. Previously, it cost £4,500 to ship a 40-foot container from China, but it now costs £18,000. Supply chains are vulnerable to shocks—members will recognise the number of shortages that we have had in recent years.
In the new global trading environment, manufacturing might begin to return to where customers are. A report from Medius shows that 58 per cent of manufacturers have started to reshore their supply chains and move production back to the UK. In addition, a PwC survey of senior manufacturing executives found that 57 per cent said that they would increase investment in the UK in response to a long-term industrial strategy. The Scottish Government should look at how we can take advantage of those trends and reverse the decades-long decline in manufacturing, rather than offshoring ferry contracts to Poland.
Given the global situation, we should be protecting Scottish industry. I am pleased that the UK Labour Government stepped up to that task and secured Grangemouth’s future. I hope that the SNP will work with the UK Government to deliver project willow and take advantage of the global situation by bringing manufacturing to Scotland through a real industrial strategy.
16:18
Everyone has to start their speech in this debate by talking about today’s announcement about what is happening at Grangemouth. My heart and soul go out to the families involved, because I know what it is like to be in an industrial town and for the industry that people use to be destroyed and devastated by an uncaring UK Government. I know exactly how that feels, because that happened to us in Paisley. The scars will run deep for a while, and the people in those communities will remember what the UK Labour Government did to them. I am absolutely sick of hearing from Labour members how much of a difference will be made by the £200 million for the transition at Grangemouth, given today’s announcement. It is, at best, a fig leaf.
I want to be absolutely clear: Scotland is feeling the shock waves of instability. They are not of our making, but they are very much affecting our people and our economy.
Some of those people who are affected are those from the MS Society, some of whom who are here today because this is multiple sclerosis awareness week. Members will be glad to hear that Stacey Adam is not here this week—although she still has access to email and will be hassling them on issues. If you ask those from the MS Society what is affecting their members, they will talk about the brutal attack on their community’s benefits by the UK Labour Government.
That is one problem, but it is not the only one that we are dealing with. Across the globe, the forces of chaos and aggression are tightening their grip as the people of Scotland look on in fear and trepidation. Russia’s brutal and barbaric invasion of Ukraine rumbles on, displacing families, killing innocents and disrupting energy and trade routes across Europe while, in Palestine, the humanitarian tragedy deepens every day, with thousands dead, the infrastructure obliterated and no end in sight. Those are not isolated horror stories. They are seismic global crises that ripple through every household here in Scotland because we are not insulated from them; we, along with the rest of the world, are interconnected with them. Rising fuel costs in Renfrewshire and the inflation that is hitting local businesses in Paisley have an impact that is keenly felt by everyone.
Now, more than ever, Scotland must be a voice for peace, co-operation and fairness across the world stage, which brings me to the issue of Trump’s tariffs and the economic mayhem of his isolation. As if global conflict was not enough, we have another storm to deal with: Trump’s tariffs, because he is back and has brought chaos with him. His economic policy seems to be, if it moves, tariff it; if it does not move, tariff it anyway. We now live in a world where even the poor penguins of the McDonald Islands are subject to a Trump tariff. I do not know what the penguins did to him, but perhaps when he heard “McDonald” he thought that it was a good business opportunity for them. Frankly, they would probably still make better economic decisions than the man himself.
Trump’s isolationist trade tantrums are disrupting our supply chains and damaging Scottish exporters, especially in food, drink and manufacturing. On top of all that, Scotland is isolated because we are no longer in the EU or at the top table, thanks to a Brexit that we did not vote for. We are standing outside the world’s largest single market, nose pressed to the glass, while the UK Government hands out trade deals like novelty tea towels and calls that global Britain.
Westminster has let Scotland down time and time again. We have painfully and repeatedly seen how successive UK Governments have failed Scotland. Grangemouth, Scotland’s only oil refinery, is critical to energy security and a major source of high-quality jobs. The Labour Government was quick to nationalise British Steel in England—good job, guys—but, when it came to Scotland, Grangemouth was suddenly a private matter. Anas Sarwar stood in front of TV cameras and promised to save Grangemouth but then performed the biggest backtrack ever. That is just not good enough.
What about project willow, which would be a clear and viable path to transform Grangemouth into a sustainable aviation fuel hub? It is funded jointly and backed by experts but was, once again, ignored in favour of sites in England. Let us not forget carbon capture. Peterhead was shelved and the Acorn project has been delayed again and again while Teesside gets the green light and the money.
Will the member take an intervention?
The member will be bringing his remarks to a close very shortly.
Down in Westminster, they have found the cash to redevelop Old Trafford but have not found a penny for Scotland’s industrial future. Enough is enough. Scotland deserves better than to be treated like an afterthought.
Here is the thing. Despite all of that, Scotland is outperforming the UK. Our economy is growing, we lead the UK in foreign direct investment and we are a hub for high-tech, green tech, AI and life sciences—you name it, we are good at it. Towns such as Paisley are filled with talent, innovation and resilience, so just imagine what we could do with the full economic powers of independence.
That brings me to my closing point. In these turbulent times, rattled by war, tariffs and broken promises, Scotland needs more than sticking plasters. We need the powers to shape our future. Westminster has had its chance but, decade after decade, promise after promise has been broken. It is time that we had the powers, because the best people to make our decisions are those who live here in Scotland. That is why the only way forward for our country is to be in control of our own destiny as an independent country at the heart of Europe.
We move to the closing speeches. I note that a member who spoke in the debate is not present, which is discourteous to all the other members who spoke and to the chair, so I expect an apology.
16:24
As the Deputy First Minister said in her opening speech, this debate could not be more timely. As has been well rehearsed today, the news from Grangemouth is a warning to each and every one of us that time is simply not on our side when it comes to supporting Scottish industry. I am actually surprised that so many people are surprised by today’s news, because it has been a long time coming. The business warned both Scotland’s Governments for many years of its pending potential doom. The reality is that, if our Governments do not prepare Scotland’s historic industries for the economic landscapes of both today and tomorrow, they are failing in their duties.
It is not good enough to maintain the simple line that it is up to the private sector to make do and survive. That is an unsustainable position, particularly when Governments manage the levers that accommodate and nurture industries. Murdo Fraser mentioned the costs of regulation of the energy market, and we must also consider business grants and loans, corporation tax, other business incentives and the shortages in education and skills, which Alexander Stewart mentioned. Some of those areas are reserved and some are devolved, but businesses and their workers do not care about that; they just want support.
The debate has been both insightful and productive. We will support the Government’s motion because we agree on the value of Scotland’s heavy industrial and manufacturing sectors. I hope that that is a shared view. Equally, we will support Labour’s amendment, which calls on the Scottish Government to publish a detailed timeline relating to the implementation of the project willow recommendations. There are also many things in the Conservative amendment that I agree with, including that party’s support for Grangemouth and the fair point that condemns Labour’s national insurance hike.
The one amendment that I cannot bring myself to support is the Green amendment, and that is simply because I believe that private industry is needed for Scotland’s just transition. By that, I mean that private businesses need to be seen as part of the solution and not solely as the problem.
Will the member take an intervention?
I will not. I have a lot to get through.
By its nature, industrial strategy means different things to different people. In today’s context, we are talking about the sheer magnitude of intervention, particularly financial intervention, that will be needed in the oil and gas sectors.
Deindustrialisation and the continuous loss of big local employers have had an absolutely devastating effect in other parts of Scotland. Places such as Inverclyde, which is my home community, have suffered decades of neglect by successive Governments. Over many years, Inverclyde has lost major local employers, including Amazon, Berry BPI, EE, IBM, National Semiconductor and RBS, that have simply closed up shop, packed up and gone. In the past 18 months alone, 1,200 jobs in the local economy have been lost, which is just as devastating to that area as what is happening in Grangemouth is to the economy there.
No matter how resilient people are—and people in working-class communities generally are resilient—we all face the same issues, including the ageing population and lower or sluggish economic activity, which are the root causes of so many of the societal issues that we debate in this place. I would go as far as to say that the compound effect of flagging local economies, such as those in the region that I represent, is tantamount to a national economic emergency. It is a silent economic crisis about which nothing is being done.
However, the decline of our economy is not inevitable. I talked about the CBI’s policy calls on us in my opening speech, but I will repeat them for the benefit of those on the Government benches. The CBI wants the Scottish Government to use the full range of policy levers at its disposal to address long-standing barriers to growth; to improve infrastructure and connectivity, which involves digital, new homes and key roads; to ensure that Scotland’s economic strategy puts long-term growth ahead of short-term revenue raising; and to announce a skills strategy and a plan on how we will develop the workforce of tomorrow’s labour markets. I agree with all those points. I believe that the last one is the most important, because Scotland urgently needs to address its labour and skills shortages.
Recently, Scottish Engineering produced a report that talked about the “stark situation” that is faced by the engineering sector. Half the engineering companies in Scotland are facing difficulties due to the lack of skills in the marketplace. That is not how to create a vibrant and flourishing economy. In fact, both of Scotland’s Governments need to knock their heads together and come up with a long-term industrial strategy that works for all our communities. Scotland punches above its weight in many industries, but that plan must include a strategy on how we will meet the needs of tomorrow.
Our five key growth areas are renewables, life sciences, financial services, creative industries and the digital and technological sectors. Those five industries alone currently employ more than 300,000 people and contribute more than £27 billion of GVA to the Scottish economy, alongside AI, biotech, satellite, space, precision medicine and—yes—defence. All those industries will advance Scotland’s economy and restore our place in the world on an industrial scale.
Today, every small, medium and large business needs a message from a Parliament that is unified in voice and which says to them, “We are on your side, we will help you thrive and we will facilitate your growth—no ifs or buts.” I assure members that, on the Liberal Democrat benches, those businesses will have a listening ear on my part, because towns such as mine can ill afford anything less than a laser-sharp focus on rejuvenation and growth.
16:31
The debate has revealed quite a lot in common across parties. There seems to be a consensus that a proactive industrial and energy strategy is required and that we would like the return of high-value manufacturing to Scotland. I do not think that anyone wants the Trumpian vision of hordes of Scottish people assembling shoes and small electronics, but high-value manufacturing is a possibility.
Members will recall from my entry in the register of members’ interests that I used to work for Orbital Marine Power. It—we—built in Scotland the world’s largest tidal turbine, in the port of Dundee. Its components were assembled in Scotland and were launched and are now operating in Orkney. Many of the high-value components—gearboxes, generators and so on—were sourced from Europe. They were not manufactured in Scotland, which is a shame. Some of the components were manufactured in Ireland and some in England, but not in Scotland. However, we assembled them here.
There are big challenges to shifting a whole economy, as Donald Trump is trying to do, back to manufacturing, but there are areas in which Scotland is already good. I have previously spoken, as I did at the Business for Scotland conference, which Murdo Fraser referenced earlier, about scaling up already successful Scottish businesses. In Scotland, we already have—[Interruption.] I will come to the Deputy First Minister in a second—or was that an accident?
Many successful small and medium-sized enterprises in Scotland already supply components to the renewables industry and to the oil and gas industry and have the scope to scale up. It seems to me that the piece of the economic puzzle that we are missing in Scotland is support for those SMEs—I am thinking specifically of engineering-related businesses, because that is the industry with which I am most familiar—to scale up to supply not only Scotland but countries that are further afield.
There seems to be substantial agreement across parties that increased UK Government investment is required and that the cost of energy is a major barrier. Unlinking the artificial connection between gas prices and electricity prices in the UK would go a long way to resolving some of those problems.
I feel a great deal of dismay at Fergus Ewing’s intervention, which ignores the UK’s historical emissions and contribution to climate change in the world. At least Murdo Fraser acknowledged the offshore component of our emissions.
Fergus Ewing rose—
I will come to the member in a moment.
Tackling climate change is a collective endeavour. Our individual emissions are trivial on the global scale, but every one of us around the world needs to do our bit to meet the collective challenge. Saying that we should get away with bad behaviour while expecting others to behave well is cynical and will not resolve the problem of climate change, as is needed.
The point is that it is good behaviour. For example, the analysis of Rosebank shows that it will emit 14kg of carbon per barrel and that, if electrification of the platform—another innovative method of cutting carbon emissions—takes place, that will go down to 4kg. President Trump’s fracked gas produces 78kg of carbon. Not all oil and gas is equal. Surely it makes sense to use the methods of production that reduce to an absolute minimum the carbon emissions from production. Why does Lorna Slater consistently ignore those facts?
The member consistently ignores the facts of the international market. We do not control American policy on gas extraction, but the Americans sell that on the market to our gas suppliers here, based entirely on price. I absolutely am sceptical about the ability of capitalism and global markets to tackle climate change, but the member cannot suggest that that is a way to reduce carbon emissions, because our energy suppliers in the UK will buy the cheapest gas available. If he is proposing that the UK implement some sort of law requiring gas providers in the UK to buy lower-carbon production, that would be interesting to contemplate. However, he is not doing that. He is still a proponent of the market-based energy system, and so that is what will happen.
The way that we manage our emissions is to reduce demand for gas in Scotland through, for example, insulating our homes properly, getting people out of cars and taxing aviation. Those are all things that we could do in Scotland to rapidly reduce our dependence on oil and gas.
In fact, I would agree with many members about the importance of steel production and the importance of unlinking that from fossil fuels. A feasibility study undertaken by British Steel and EDF in 2022 on using hydrogen for steel production had good results. It said:
“A full conversion of TBM’s furnace to hydrogen could reduce its direct CO2 emissions by 94% or 71,000 tonnes based on 2021 emissions data.
Indeed, the main challenge noted in the conclusion was that of a mature and reliable supply of hydrogen, which is clearly a significant opportunity for Scotland. The production of green hydrogen requires cheap electricity and water—something in which Scotland is abundant.
Many of the problems noted with Scotland’s challenges in industry could be resolved by our rejoining the EU. It is about access to research funding, access to labour and skills, access to the results of research, and access to the European common market—all of which would improve our economy and our industrial strategy. If the UK cannot be prevailed upon to rejoin the EU, Scotland should be given the choice and allowed to do so.
I call Daniel Johnson to close on behalf of Scottish Labour.
16:37
I will begin my summing-up contribution in the same way that I began my opening one. We all need to think about the 400 workers at the refinery at Grangemouth: this will be a very difficult day for them, as operations cease. Indeed, I wonder what those workers would make of today’s debate. [Interruption.] It will perhaps ring a little bit hollow, and we need to be mindful of that. [Interruption.] I am very happy to take interventions, but it is a little bit distracting if people speak in my left ear from a sedentary position.
To go off on a bit of a tangent, I would also like to reflect on what Elena Whitham said at the beginning of her speech. I know that Alex Cole-Hamilton never likes it when I claim that the Liberals are in some sort of pact with the Labour Party, but the Liberal result in Canada is something to hold on to as we hope for more enlightened and progressive forces in politics. We can all reflect on the fact that Mark Carney has done far better than any of us in becoming Prime Minister and being elected for the first time all in the same day. That is a very strong political performance.
Let me attempt to draw the various strands of the debate together, because there are some points of consensus as well as some points of disagreement. Despite the fact that Lorna Slater and Fergus Ewing might be in disagreement, some of the most important points were made by those two members.
Fergus Ewing is absolutely correct to say that, if we want our industry to be competitive, we must look very seriously at electricity prices and energy prices more generally. As long as those prices remain higher than those of our comparator economies, our business and industry will struggle to compete. That is, and has always been, a fundamental point.
The reason that Britain was so successful in the 19th and early 20th centuries was that it had access to coal. The reason for the US being so successful throughout the 20th century, and the 21st century to date, is its access to cheap and reliable oil supplies. I agree with Lorna Slater that our future economies will be built by the countries that secure the most reliable and robust renewable energy supplies. Those matters are not in dispute. The question is, how do we get there reliably? We should make no mistake: such a transition is vital.
Does Mr Johnson agree with, for example, Daniel Yergin, who has said that there is no chance of achieving net zero by 2030? Most Governments in the world, and most commentators, agree that, for a series of very practical reasons, any chance of achieving it by 2050 is also receding.
We must look at that very earnestly. First, let us be clear about the target for 2030, which is decarbonisation of our current electricity generation. We must also recognise that each household currently consumes three times as much energy in heating its building by gas as it consumes in electricity. The challenge presented by electrification, which is fundamentally what the transition is about, is huge. We must look very seriously at our plan to deliver it, because we have to do so.
I will accept the temptation to go down the rabbit hole of electricity prices, as Murdo Fraser invited me to do. First, he is right that the issue is not simply about electricity. However, he ignores the point that I have just made, about our gas consumption coming not only through electricity generation but through heating our buildings. That is a fact. Other countries are less reliant than the UK on gas to heat buildings. Secondly, the analysis shows that we mainly use the marginal cost of the last generating unit of power as the fundamental benchmark for the cost of our electricity. That means that the most expensive bid is the one that sets the price for everyone. Gas has been the most expensive source. Therefore, the fact that we have that structure in place is one of the reasons for our difficulty.
The other aspect is infrastructure, in which we have failed to invest. The point that I was trying to make in my intervention on Mr Fraser is that, in 2017, we sold off our gas storage, which meant that we were more exposed to fluctuating gas prices than any other country in the western world. We had no resilience and no ability to smooth those prices. Taken in turn, those factors are the reasons we now find ourselves in the electricity price review. I remind Murdo Fraser that his party was in government between 2010 and 2015, when it could have done something about that but did not. The energy market review that is being undertaken by the Department for Energy Security and Net Zero is examining that.
I do not want to go down the other rabbit hole of zonal pricing, but the reason for mentioning it is that DESNZ is looking at such things. That is important, but the main point is that we all need to acknowledge the roles that various Governments play. [Interruption.]
I do not have time to take an intervention.
The fundamental question that has been posed today is whether we should have considered the same factors in the case of Grangemouth as we did in relation to Scunthorpe. I have set out why I think that there are salient differences. However, I also gently point out to the Government that, if it had been so serious about the issue, it should have raised it with the UK Government. My understanding is that it has not raised it once in the dozens of discussions over the many months that our ministers have been discussing the future of Grangemouth. Beyond that, it has not even asked for it to be put on the agenda.
If that is incorrect, I am very happy to be corrected by either the Deputy First Minister or Tom Arthur in summing up, but that is my understanding. If the Government wants the issue to be taken seriously, it needs to take it seriously itself. The fact that it has not put it on the agenda probably gives an indication of whether it is making a serious point or taking a bit more of an opportunistic approach, which has been foisted on it by the party’s leader at Westminster.
Will the member take an intervention?
I will be happy to give way to the Deputy First Minister.
Please be brief.
For clarity, what is Daniel Johnson saying that we did not put on the agenda? I am sorry—I did not quite follow that.
My understanding is that, at no point in the many meetings between the two Governments regarding Grangemouth did the Scottish Government request that the possibility of nationalising the facility be discussed. We know that both Governments and the relevant ministers—Michael Shanks and Gillian Martin—have met dozens of times in recent months. They have had a number of discussions, which have been described as constructive. If the Government wants us to take its point seriously, perhaps it needs to explain why it has never raised the issue in its discussions with the UK Government. Those are the facts, as I understand them.
I call Craig Hoy to close on behalf of the Scottish Conservatives.
16:44
This has been a full debate. It is increasingly clear that business confidence in Scotland and in the UK has slumped in recent months. As this debate has illustrated, we now have two Governments that, by their actions—or sometimes by their inaction—are failing Scottish businesses, including SMEs, the retail sector and light and heavy industry.
On the substance of the motion and our amendment, I share Murdo Fraser’s cautious welcoming of the intervention in support of British Steel. I also share in the lament that we have had across the chamber for the loss of oil refining at Grangemouth, which surely undermines our national resilience and which is in part a result of the SNP’s contradictory energy and economic policies. In pursuing net zero with such aggression, the SNP is hampering Scotland’s economy and industrial base, most notably our precious oil and gas sectors. On Grangemouth, for example, the SNP’s response was too slow, and it was lacking in ambition and agility. In some areas, the SNP is going too fast, and in other areas, it is going too slow—for example, in relation to the development of a coherent industrial strategy.
Both Governments must now do more to save Grangemouth and to give the workforce a future, whether in alternative energy technologies or something else. I therefore urge both Governments to drive project willow forward as timeously as possible.
I welcome the contribution of my colleague Pam Gosal, who made it clear that businesses across Scotland are grappling with the effects of the national insurance increases that have been imposed by the UK Labour Government. At a round-table discussion with retailers that I attended recently, the devastating effect of the national insurance increases became blisteringly obvious. Those increases are hitting all sectors across the Scottish economy, but, as Ms Gosal made clear, the Scottish Retail Consortium has said that
“Scotland’s retailers will face a £190 million increase in their tax bill”,
which will inevitably lead to a rise in the costs of operating a retail business. Those increased costs will not simply be absorbed by businesses; they will be felt by consumers, they will be felt by businesses further along the supply chain and they will be felt by workers in their pay packets. Wage growth is likely to be held back because of Labour’s tax on jobs. There will be an impact on investment across all industries.
I also welcome the contribution of Alexander Stewart, who pointed to the other storm clouds that are hanging over commerce and industry, including Labour’s employment reforms, which will put a further burden on businesses when many are already struggling. He was right to point out that Labour’s own impact assessments suggest that those reforms could cost UK businesses an extra £4.5 billion—something which, he correctly noted, will impact Scottish industry.
Murdo Fraser was also right when he warned of the pressure on input costs, whether labour costs or energy costs. I welcome his comprehensive knocking down of Labour’s claim that we pay more for electricity because of our reliance on gas. That was yet more false testimony from Labour’s Cabinet, which now has a reputation for broken promises, particularly in relation to the energy sphere, where Scotland was promised low energy bills as a result of the creation of GB Energy.
I also welcome the sage and characteristically correct statements from Fergus Ewing. I share his concern—it is a very real concern—about the fact that, as an oil-producing nation, we now have no oil-refining capacity.
I congratulate Jamie Greene on his first speech from the Lib Dem benches, and I welcome a lot of what he said. I see that since his move to the Liberal Democrats, he has retained the beard—I am just not sure, as of yet, whether he has acquired the sandals. I could not see that from my vantage point.
In Scotland, it is time for ministers to act robustly and comprehensively to reduce the burden of regulation and red tape. That includes in the planning system, where delays are due in part to the pressures that are faced in council planning departments. Business says that that is choking off investment around Scotland. I accept that there are areas where the UK Government must do more or where the past UK Government should have done more—in particular, as was mentioned, on delivering grid connections. Delays to those are holding back industrial development and investment.
Turning to some areas of the macroeconomy that have not been touched on today, it is no wonder that, since Labour’s budget, the IMF has slashed UK growth forecasts for this year and the next. Inflation is set to rise and GDP per capita will barely budge this year. Borrowing—and, more importantly, the cost of borrowing—will soar under Labour.
It was—as I think that Daniel Johnson may now accept—a bizarre form of economic masochism for Labour to talk down the economy. Labour did wilful damage to our economy and our investment prospects, and it will reap the results of that now and into the future, whether that is in our light or heavy industries, in retail or in areas such as banking and finance. The budget and the spring statement have slashed business confidence—that is clear.
At the recent retail round table that I attended, another important issue arose, as it does in all my outreach with businesses, including in industrial and manufacturing forums, which was that preserving and strengthening skills in the workforce is one of the most important ways in which a Government can support industry. With a more well-educated, highly skilled workforce, our industry can be more resilient to potentially damaging international shocks, and it can take on more opportunities for growth.
Apprenticeships are a vital part of developing workforce skills. On paper, that is why Scottish businesses pay an apprenticeship levy: to help to renew workforce skills and benefit everyone, including themselves. Unfortunately, however, the SNP Government has a very poor track record on ensuring that those funds go towards benefiting our industry through apprenticeships. Instead of the levy being used as it should be—namely, to deliver apprenticeships—it appears to be disappearing into Government coffers.
Earlier this month, the trade body Select called for all revenue from the apprenticeship levy to be ring fenced and for further incentives to be introduced for employers to invest in accredited training, because that will drive growth. The question that I now have for ministers—perhaps the minister can amplify this in summing up—is, where are the proceeds of the Barnett consequentials for the apprenticeship levy going? It looks as though the money is being pocketed by the SNP, leaving businesses to pay for apprenticeships and skills development twice.
If the Government is serious about wanting to support Scotland’s industry, it should heed those entirely reasonable calls and ensure that apprenticeship levy funds are actually being used for apprenticeships. If the Government is planning on reforming the system, it must make sure that that is a central aspect of any new approach to apprenticeship funding.
To return to the main thrust of my party’s amendment and our argument, the Government does not understand how to deliver growth—green or otherwise. That is not just my view, but the view of Michelle Ferguson, the director of the Confederation of British Industry Scotland, who warned:
“Scotland is underperforming in areas crucial to our long-term prosperity, such as business investment and businesses desperately lack access to the people and skills that they need to succeed.”
I will close on this. The CBI’s call is clear. It wants
“more competitive tax policies and business working with the Scottish Government to co-create policy that protects Scotland’s competitiveness and avoids short-changing our long-term growth ambitions, especially in green jobs and offshore wind.”
It is now quite clear that the Government’s interventions in industry, whether in Ferguson Marine or in BiFab, have all but extinguished any confidence that is left that the Government understands the principles and drivers of business. It is a sorry state of affairs, and one that will be reversed only by a healthy dose of commonsense Conservatism, through a pro-growth and pro-business economic and industrial strategy.
16:53
At the outset of my remarks, I express my solidarity with, and thoughts for, the workforce at the Grangemouth refinery on what I know will be an extremely challenging day for them, their families and the wider community. I reiterate the Scottish Government’s commitment to securing a long-term and sustainable future for the site by progressing the proposals that were identified in project willow through our £25 million to establish a Grangemouth just transition fund to take forward those proposals as well as other opportunities across the industrial cluster.
I will now turn to the contributions from members on all sides of the chamber. The debate has been very worth while, and, although there are clearly differences of opinion, there is a broad degree of consensus. We have focused on some very specific and hugely important practical matters—in particular, the cost of energy, and specifically electricity. Murdo Fraser raised that point, and Fergus Ewing spoke about it at some length. The cost of energy is central to the debate and, more widely, to the cost of living pressures with which the UK and other countries have been wrestling.
Implicit in some of the contributions that we have heard, including from Christine Grahame, have also been wider questions about whether there is still the same broad consensus on globalisation that existed a decade or two ago. Those questions are reflected not just in the reaction to the developments around tariffs, but in concerns over how we relatively prioritise domestic industries, whether as a matter of purely economic security or because of concerns about geopolitical security.
I am sure that there is a lot of consensus around the geopolitical issues that all western economies face.
The one thing that came out very clearly in today’s debate is the continued critique of the Scottish Government’s lack of a coherent industrial strategy. That came across in multiple independent reports and pieces of analysis. Will the minister respond to those criticisms?
The Scottish Government has set out its clear priorities through our national strategy for economic transformation and our recently published green industrial strategy. From engagement with investors and business more widely, I know that those publications are welcome because they provide clarity on the Scottish Government’s priorities and reflect where our comparative advantages lie.
Let me touch on some of the contributions in turn. Murdo Fraser highlighted the business in the Parliament event, which I had the opportunity to participate in last week. I commend the Parliament for its work, and I commend you, Presiding Officer, for your leadership in that. The event is an example of what is required to ensure that we collectively, as an institution, reflect the economic priorities of the business community in Scotland and the country more widely. It is only through that type of close listening and engagement that we can ensure that our collective policy making is aligned.
Daniel Johnson spoke about this being a time of profound economic change. Of course, the end destination remains highly uncertain, as we can recognise from the pace of policy developments internationally over recent weeks. As per the motion, there has been a clear focus on the UK Government’s intervention in Scunthorpe. The Scottish Government welcomes the recognition of the strategic importance of that site as well as the opportunities for Scottish sites to benefit directly from it. However, the central point that I and others have been seeking to articulate is that we lack a commensurate intervention with regard to Grangemouth, which would have been on a par with the commitments that the Labour Party gave ahead of the general election in 2024. I reiterate that the Scottish Government is committed to doing all that we can to secure a sustainable future for the Grangemouth site and will work constructively with the UK Government and other partners.
Lorna Slater spoke about the key word being “transition”. She also raised an important question—it was implicit in her remarks—about our time horizons. The time horizons that are involved in the transition transcend any individual parliamentary cycle, which creates a challenge around policy making. It is important that, when addressing such issues, we do not regress into thinking in very short-term timeframes. That will not enable us to achieve the strategic change that we ultimately have to realise if we are to meet our obligations in 2045 and meet the need for energy security and the geopolitical security associated with that.
Elena Whitham touched on an important point that a number of members covered in their speeches, which is the primary importance of regional economics. In the UK as a whole, we have a significant challenge of economic imbalance, which creates economic instability, which begets social instability, which begets political instability, which begets further economic instability. In seeking to understand the political instability in the UK today and more widely in the world, we must understand the question of regional economic imbalance. Ayrshire is an outstanding example of a region in Scotland that is seeking to address that imbalance through the work of the Ayrshire growth deal and the community wealth building that has been taken forward there.
Colin Smyth’s speech also highlighted the south of Scotland and the need to have regard to all parts of Scotland if we are to see the country flourish as a whole. Gordon MacDonald spoke of the imbalance in the UK economy. Christine Grahame touched on the lessons of history and took into account the constraints that we operate under as a devolved Parliament.
Alexander Stewart spoke about the role of tax, and Clare Haughey made an important point about the need to understand the context in which we are operating, which is a series of challenges going back to the financial crash of 2008, Brexit, the global pandemic, the cost crisis and the current instability of the global trading environment.
Overall, this has been a worthwhile debate. There is much consensus to be found from it, and I look forward to engaging with colleagues constructively as we take forward the shared agenda.
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