S2M-3031 Economic Development (Cross-cutting Expenditure Review)

Scottish Parliament

Thursday 30 June 2005

[THE DEPUTY PRESIDING OFFICER opened the meeting at 09:15]

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Economic Development
(Cross-cutting Expenditure Review)

The Deputy Presiding Officer (Trish Godman): The next item of business is a debate on motion S2M-3031, in the name of Des McNulty, on behalf of the Finance Committee, on its second report of 2005, entitled "Cross-cutting Expenditure Review of Economic Development".

09:16

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09:54

Stewart Stevenson (Banff and Buchan) (SNP): I feel that we are beginning to get into quite an interesting debate, in which we should have the liberty to put forward some new ideas rather than unduly pursuing partisan positions—so I will not, although my colleagues will.

The word "growth" has come up one or two times during the debate. According to my count—which the Official Report will confirm tomorrow—Des McNulty used it 15 times. It occurs 22 times in the report, which means that, in percentage terms, Des McNulty used it three or four times as much as the report did. The report uses other interesting words. The word "expenditure" occurs 61 times, but the word "benefit" is used only 11 times and the word "return" only twice. The phrase "rate of return on investment" does not occur at all and neither does the word "competition" or its derivatives such as "competitive". The word "asset" does not appear, but "infrastructure" occurs nine times and "comparative" or "compare" four times. "Succeed" and "fail" do not appear at all.

What does that tell us? It tells us something about the emphasis of the report and about the real difficulty that the committee had in engaging with the issue. We do not know how we are doing or what bangs we are getting for our bucks, so inevitably the committee focused on the bucks. I do not unduly criticise the committee for doing that, but that approach limits the effectiveness of the analysis in the report and tells us something about the challenges that will face the committee—and all of us, as parliamentarians—in the future.

We have already heard some spurious comparisons between the public and private sectors. I say that they are spurious because, of course, the public sector is a major contributor to economic activity and is not simply a drain on the public purse. The public sector is capable of delivering services more cost effectively than the private sector and in many instances it does so. I ask members to consider the cost of health care as a share of GDP in the United States and in this country. The cost in the US is twice the cost here. Not only that, but child mortality is higher in the US and its figures on many other health measures are also worse than those for the UK. The comparison between the public and private sectors is spurious. It is not the case that one is good and one is bad. We must look at things analytically.

The problem is largely down to us. The public sector has a major millstone around its neck. We expect the public sector to be more risk averse than the private sector. When we have a risk-averse sector trying to encourage a risk-taking sector, however, there is a mismatch in expectation. The report does not entirely develop that point. I meet small businessmen—after all, almost all our entrepreneurs are in small businesses—whose major problem in growing their businesses is access to risk capital. That is undoubtedly a subject to which we should return.

One of the difficulties with the statement that the rural third gets two thirds of the economic support is that a lot of that support is not economic support. There is a miscategorisation. In many cases, it is social support and I defend it on that basis. We must be careful—fishing and farming account for 2 per cent of economic activity, but they create the environment within which large amounts of manufacturing can take place. The interactions between different parts of our economy—public and private—are much more subtle than this debate allows us to recognise.

Perhaps we are in a cul-de-sac, but perhaps we are in a laager of our own making. We are boxing ourselves in. We must not artificially pose social responsibilities against economic ones. The reality is that we need economic development so that we can pay for our social objectives.

09:58