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Meeting of the Parliament 23 February 2012

23 Feb 2012 · S4 · Meeting of the Parliament

Item of business

Economy and Recovery

Swinney, John SNP Perthshire North Watch on SPTV

The short-term priority for the Government, within the powers that are at our disposal, is to ensure that we obtain the necessary capital investment to boost infrastructure in Scotland, which I would have thought Mr Findlay would welcome.

Clearly the Government does not have the power and the responsibility to reduce corporation tax now, but we are committed to ensuring that, within a responsible fiscal framework, we reduce corporation tax to boost the competitiveness of the Scottish economy and to ensure that we put Scotland at a competitive advantage.

The Government has delivered major new infrastructure such as the M74 and M80 completion projects and we are pressing ahead with the Forth crossing. In the budget bill, I announced additional capital investment of around £380 million over three years, which will support infrastructure developments and jobs the length and breadth of Scotland. When that is added to the other interventions that I set out in the budget, by 2014-15 our overall capital investment in Scotland’s economy will be 25 per cent higher than it is this year, despite the falling capital departmental expenditure limit settlement.

Through the infrastructure investment plan, which Mr Neil launched in December, we have set out our long-term investment priorities, which provide a clear direction in order to give confidence and certainty to the private sector in Scotland.

The Government’s procurement reform programme is making it easier for businesses, particularly small and medium-sized enterprises, to access the new capital investment and other public sector expenditure. SMEs currently receive 75 per cent of all contracts that are awarded through Public Contracts Scotland. SMEs account for 45 per cent, or more than £4 billion, of public sector procurement expenditure. The Government will intensify its efforts to strengthen the use of procurement in the forthcoming sustainable procurement bill.

The second element of our focus as a Government has been on boosting private sector investment. On-going uncertainty means that many large companies are putting off investment, while smaller companies continue to struggle to secure finance even if they are keen to invest. That was demonstrated by the project Merlin figures that were released last week, which show that the big five banks failed to meet their SME lending targets. Yesterday, I received a regional breakdown of project Merlin figures from the Chief Secretary to the Treasury. The figures confirmed what I expected: Scottish SMEs’ share of that below-target lending was only 4.8 per cent, despite Scottish SMEs accounting for 6.4 per cent of the UK total.

Even more worrying is that that is gross lending. It includes facilities that have not been drawn down and the rollover of existing facilities; it does not report new lending. What we know from Bank of England data is that the more important net lending figure was negative in each quarter of 2011, which gives me even less confidence that finance is getting to the companies that need it, which reinforces the contents of the Government’s access to finance survey.

For those reasons, we have set up the Scottish Investment Bank, which is open and is investing in Scottish companies; we continue to attract major international investment to Scotland through companies such as Amazon, Mitsubishi, Michelin and Avaloq; and we have in place the small business bonus scheme to support small companies in the Scottish economy.

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Meeting of the Parliament 23 February 2012

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