Meeting of the Parliament 14 June 2017
That commission is not related to the Government. It is not part of the Government, so we do not report on it to the Parliament. I know that Murdo Fraser knows that, but I do not know why he failed to take the opportunity to ask the UK Government to explain why its unemployment figures are so much worse than Scotland’s. That was his first chance to do that, and he has failed.
As I said, the chief economist’s report points to the challenges that the oil and gas sector faces, which are why we continue to support it. Nevertheless, we are seeing encouraging signs that conditions are improving for oil and gas companies. Yesterday’s oil and gas survey by Aberdeen and Grampian Chamber of Commerce shows that confidence is rising among North Sea oil and gas firms and now stands at its highest level since 2013, while the Bank of Scotland purchasing managers index for May signalled growth across manufacturing and services sectors.
However, it is clear that the UK faces economic challenges. At 0.2 per cent, UK GDP growth in the first quarter of 2017 was lower than that of any other country in the EU, and rising inflation is squeezing household incomes. Those pressures are particularly acute for families that are being hit by the UK Government’s benefits freeze.
It is also time to look again at the pay restraint that is faced by the public sector. I recognise that the pay restraint has been hard for public sector workers. It has been in place at a time of UK Government-imposed austerity in order to protect jobs and public services, but, at a time of rising inflation—with the Tories failing to control inflation and failing to control debt, having added £100 billion to the UK’s debt every year since they took office—it is clear that the restraint is putting pressure on public pay. We will take a fresh look at next year’s pay policy in order to address that issue. We must ensure that pay rises are affordable now and in the future, but they must also reflect the real-life circumstances that people face.
That brings me to the main risk that is facing Scotland’s economy: the UK Government’s continued determination to impose a hard Brexit on Scotland. I will reflect particularly on the significant contribution that European structural funds and European territorial co-operation make to Scotland’s economy.
European structural funds programmes are worth around £828 million to Scotland over the period from 2014 to 2020, which is a very significant investment at a time when public sector budgets are under pressure. To date, more than 200 projects have been approved, committing over £383 million of European structural funds across Scotland to boost small and medium-sized enterprise growth as well as to support innovation and skills and reduce poverty and social exclusion. I am pleased to have been able to make a number of announcements in that regard over the past year, including our investment in the £250 million SME holding fund, which is projected to support innovation in 500 businesses and create 2,000 jobs.
Alongside that, the European territorial co-operation activities complement and strengthen the investments that are made through structural funds to support growth and jobs in Scotland and across Europe. Many organisations in Scotland benefit from working on projects with organisations from different countries to tackle common challenges and develop shared opportunities. Those investments include the €3.2 million award to the funding ocean renewable energy through strategic European action—or FORESEA—project, which is led by the European Marine Energy Centre in Orkney, to develop ocean energy technology and the €3.5 million award to allow our enterprise agencies to work alongside Invest Northern Ireland and InterTradeIreland to support innovation co-operation between SMEs and research institutions.
Such projects demonstrate the vital role that European funding plays in supporting sustainable and inclusive growth in Scotland, which is why it is essential that the UK Government commits to replacing that funding in full following Brexit. Will the Conservatives guarantee that Scotland will retain the equivalent amount of money in the longer term if they are successful in dragging Scotland out of the EU—