John Swinney makes emergency parliamentary statement
28 October 2010
The Cabinet Secretary for Finance and Sustainable Growth, John Swinney, makes an emergency parliamentary statement on the economic and social impacts of the SDSR.
The Cabinet Secretary for Finance and Sustainable Growth (John Swinney): Last week, the Prime Minister announced the results of the United Kingdom strategic defence and security review. The decisions that have been made will have a considerable impact in and for Scotland, and as a result we have taken a number of actions over the past week. I want to take the opportunity to outline to Parliament our initial analysis of that impact and the steps that we are taking.
Parliament will wish to join me in welcoming the decision that the £5 billion carrier project will continue, which will protect directly and indirectly the more than 5,500 jobs on and around the Clyde and at Rosyth that contribute heavily to the UK and Scottish economies. That reflects the record of excellence that is inherent in our shipbuilding tradition. There are aspects of the naval decisions on which we will seek clarification in due course.
The situation that the bases in Moray face, however, is an issue of national importance to Scotland, and that is how the Scottish Government intends to treat it. The Scottish Government has grave concerns about the threat to the people and community of Moray as a result of the UK Government's decision on RAF Kinloss and the uncertainty over the future of RAF Lossiemouth. Moray and the economy of the surrounding area are heavily reliant on the bases indeed, Moray is the most Royal Air Force-dependent community in the UK and the loss of both bases would be catastrophic. We welcome the commitment that the Prime Minister made in the House of Commons to engage with communities before final decisions are taken on their future, and the Scottish Government will continue to hold the UK Government to its promises in that respect.
On Tuesday, the First Minister and I, along with the MSP for Moray, Richard Lochhead, met the emergency task force and heard from it at first hand about the consequences that are already becoming a reality on the ground contracts are being cancelled and jobs are being put at risk, which is creating uncertainty among businesses. The task force, which was convened last week, is made up of representatives of the local authority, Highlands and Islands Enterprise, business leaders and the voluntary sector, and it has the full support of the Scottish Government. The task force is investigating the impact of the SDSR announcements on Moray and the surrounding areas as a matter of urgency. It was clear from our meeting on Tuesday that the people of Moray are determined to fight and to build on the strengths of their communities.
Approximately 5,700 jobs depend directly on RAF Kinloss and RAF Lossiemouth, which generate an estimated £150 million a year for the local economy. The loss of those jobs and that income would devastate communities that have provided decades of support to the personnel at the bases, who are an integral part of the county of Moray.
The Moray task force will shortly present to the Secretary of State for Defence a strong case for the future of RAF Lossiemouth, which will involve it being used as the home of the UK's Tornadoes. The community, businesses and the public sector in the area are united in making the strongest representations possible to the Ministry of Defence in advance of the decision about the future of the base. They will also make the case for responsible withdrawal from RAF Kinloss.
I highlight the fact that the recent SDSR announcement failed to address a number of important matters relating to the future of the bases, particularly around timescales and support for personnel. For the people of Moray, who have arguably been hit harder by the announcement than any other community in the UK, that lack of clarity only serves to heighten the anxiety and distress that are felt at local level. With that in mind, I would like to make particular points on the consequences of the decisions.
The Scottish Government is dismayed at the decision to close RAF Kinloss as an RAF base. Kinloss celebrated its 70th anniversary as a home to the armed forces in July last year, and the reaction in Moray demonstrates that the announcement has dealt a huge emotional blow to the community. If the UK Government intends to take that decision, it must accept that there are far-reaching implications for the people of Moray and for Scotland, and must be prepared to step up and deal with the consequences as a matter of urgency.
The Government has strong concerns about how the announcement has been handled by the UK Government. Moray has given a great deal of support to the armed forces over the years, and although we have supplied the MOD with substantial data on the socioeconomic implications, there has been a marked absence of transitional support from the UK Government for the community in Moray.
In his letter to the defence secretary this week, the First Minister made it clear that he would like to be given an indication of what practical assistance and package of support the UK Government intends to provide to handle the aftermath of the announcement. The Government advocates a substantial increase to the UK rapid response fund, which would increase Scotland's share of that pot to assist those who will be facing redundancy. I hope that the Parliament will join the Government in advocating that.
There is evidence that the consequences of the potential RAF withdrawal are already being felt within the local economy. Our initial analysis suggests that withdrawal of the bases would remove at least £0.5 million pounds from the Moray economy for every week that the bases are inactive. The knock-on costs to the taxpayer of benefits payments and the indirect impacts on housing, health, education and mental health also need to be considered. Those economic considerations should be factored into any decisions by the UK Government on the future of RAF Kinloss and RAF Lossiemouth.
Given the devastating decisions about RAF Kinloss, the Scottish Government firmly believes that the Tornadoes should be based at RAF Lossiemouth. The sense of loss in Moray is dramatic, and it is worth noting that local community and business leaders powerfully describe the possibility of losing both RAF bases as "unthinkable". A decision to base the Tornadoes at RAF Lossiemouth would give the community hope and help to limit the social and economic damage that will be inflicted by changes at RAF Kinloss. It would also make good economic sense, given the facilities that are already there and the record of excellence that both bases can boast. We are working with the Moray task force to examine the economic case and we will present our case in the strongest possible terms in the coming weeks.
Although it is clear that communities in Moray will bear the brunt of the impact of the SDSR, there are significant implications for the rest of Scotland. Although our primary focus is on pressing for the future of the base, officials in the Scottish Government, HIE and the local authorities are learning from examples elsewhere of how to mitigate the impact of such decisions, and they are looking at how best to deploy the resources and levers that are at our disposal. I will outline the current thinking in relation to mitigation approaches.
Skills Development Scotland has already activated partnership action for continuing employment to ensure that staff who are affected by the decision to withdraw the RAF are given appropriate support and resources. PACE offers a range of support and resources to help with large-scale redundancies, and it is the centre of excellence for such incidents.
As well as the immediate issues facing Moray, the Government is particularly concerned about decisions that are still to be made in relation to Craigiehall and Fort George, which, when combined with the potential losses in Moray, could mean that we run the risk of leaving only 8,000 service personnel in Scotland.
The Scottish Government is working closely with the community in Moray to identify further key questions and focus on the steps that will be needed to mitigate the impact, but we cannot do that without accurate information, resources and practical assistance from the UK Government, and we are continuing to work constructively in order to retrieve that information.
The Scottish Government appreciates that tough decisions must be made in times of financial constraints. However, such decisions must also be fair, balanced and responsive to wider long-term social and economic impacts. We are keen to work constructively with the UK Government and with the team in Moray to consider the true consequences of the recent announcement, and to take direct steps to avoid making a bad situation worse.
During the past few weeks, Parliament has been able to put aside differences to make the strongest case for Scotland's defence capability, the defence industry and the communities that they support. In the first joint submission from all the main parties in eleven years, we outlined the clear need for SDSR decisions to take socioeconomic consequences into consideration. The submission, which was sent to the MOD and the UK Government, demonstrated the way in which the defence footprint and defence industry are closely woven into the fabric of society, showing, for example, that a fifth of the children in the Forres academy catchment area primary schools are the children of RAF personnel. It is indicative of the strength of feeling on the matter that we were able to create a cross-party submission and to set aside our differences for the sake of the greater cause. This week, the Scottish Government wrote to Opposition party leaders to ask for their continued support for the Moray task force and for the case for RAF Lossiemouth.
In that spirit, the First Minister accepted an invitation from the save RAF Lossiemouth action group to attend and address a rally in Lossiemouth on 7 November. We must continue to fight to defend those communities, and I encourage other party leaders to join us at that rally as we take forward the campaign to defend the interests of the people of Scotland and the people of Moray.
The Presiding Officer: The cabinet secretary will now take questions on the issues raised in his statement. We have 20 minutes for those questions, after which we must move on. I will endeavour to fit in as many questions as possible.
David Whitton (Strathkelvin and Bearsden) (Lab): I thank the minister for early sight of his statement.
On this side of the chamber, we are fully committed to supporting Scotland's defence-related industries, whether that be aircraft carriers built on the Clyde and in Fife, nuclear submarines operating out of Faslane, or fighter and reconnaissance aircraft operating from bases in the north of Scotland. In that regard, I have been asked by Labour leader Iain Gray to say that he will be in Lossiemouth on 7 November for the rally being held there.
As we have heard, defence-related industries make a vital contribution of more than £2 billion annually to the Scottish economy, providing 40,000 direct jobs from graduates to craftsmen and women and apprentices. Labour recognises the decision of the United Kingdom Government to honour the contracts agreed between the aircraft carrier alliance and the MOD, but we have concerns about the implications for the future of ship refitting at Rosyth after the Government's bizarre decision to remove one of the new carriers from service. Is the Scottish Government aware that that will mean a significant reduction in work available from the MOD and will lead to an overcapacity of workers employed in ship refitting across the UK? Has the Scottish Government met, or does it have plans to meet in the near future, Babcock or the trade union representatives to discuss the future implications for ship refitting at Rosyth?
John Swinney: I thank Mr Whitton for his remarks and for his specific comment that Iain Gray will participate in the event on 7 November. The information that I have is that Annabel Goldie and Tavish Scott have also confirmed their attendance, which we also welcome.
Mr Whitton made a number of points in relation to the support for the defence industries and facilities in Scotland, which I have covered in my statement. I endorse the points that he made about their economic significance.
Mr Whitton made a point about the capacity at Rosyth. Of course there are implications to the decisions that have been taken. I said that there were further decisions on naval issues on which we would seek clarification in due course, and Mr Whitton has raised one of some significance and substance. As part of the Scottish Government's effort in recognising that there is a significant social and economic impact, ministers will be happy to engage in dialogue with the relevant trade unions that are involved in Rosyth and to ensure that their contribution can be part of the response that we make to the United Kingdom Government on the issues that remain outstanding as a consequence of the recent decisions.
Murdo Fraser (Mid Scotland and Fife) (Con): I thank the cabinet secretary for his statement and for advance sight of it. I join him in welcoming the decision to continue the building of the two aircraft carriers, which is an important one for the Scottish economy, and I also welcome the fact that there will be no reduction in the Scottish infantry as a result of the defence review.
We are all acutely aware of the threat to the Moray economy. My father served in the Royal Air Force and was stationed at Kinloss for a while. The loss of the base will be keenly felt. The Scottish Conservatives will be part of the cross-party campaign to support the Moray task force. Annabel Goldie has already been in contact with the Prime Minister and the Secretary of State for Defence to make a robust case for Moray, and I can confirm that she will attend the rally on 7 November.
Will the cabinet secretary say what consideration is being given to making a case to the Ministry of Defence for Kinloss to be used as a location for other defence establishments, such as a base for infantry regiments returning from Germany, and whether that process, currently scheduled for 2015, might be accelerated? Furthermore, are Scottish Enterprise and HIE involved in trying to identify how the existing skills base in the area could be used to attract inward investment?
John Swinney: I thank Mr Fraser for his remarks and make a particular point, which is that the contribution that Annabel Goldie and her colleagues can make constructively through their dialogue with their party-political colleagues in the United Kingdom Government, be it the Prime Minister or the Secretary of State for Defence, will be welcomed by the Scottish Government to ensure that the correct decisions are arrived at in relation to RAF Lossiemouth.
Murdo Fraser made a point about the possible deployment of Army personnel to Kinloss, and the key word that he used was "accelerated". The key question is about the length of time between the closure of Kinloss as an RAF base and its opening as another defence location. I made a remark about the loss to the Moray economy on a weekly basis if that base is not functioning. That is a huge gap in the Moray economy.
That takes me on to Mr Fraser's final question about the skills base and the possibilities for inward investment. We must have clarity about the plan and the timescale for a continued military use of RAF Kinloss. If the time between closure and reuse is too long, the impact on the Moray economy will be severe; if it is shorter, the effect will be minimised. If the gap is of the length that has been stated by the Prime Minister, we must, as a matter of urgency, establish other economic development measures to attract users to the facilities at Kinloss which are of a high quality and where high-quality skilled personnel are employed for wider economic purposes.
The key question, however, is whether the decision about the location of other military personnel can be accelerated from the timescale that has been given by the Prime Minister. On that point, any intervention from Ms Goldie and her colleagues would be welcome.
Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD): I thank the cabinet secretary for the advance copy of his statement. As I said at First Minister's question time, I have the privilege of representing a military base in my constituency the second-biggest infantry barracks in Scotland. Just yesterday, I took some children of military personnel on a tour around the Parliament. I fully understand the positive socioeconomic impact of military and defence expenditure in Scotland, and I think that the member for Moray is doing exactly the right thing. The retention of the carriers, as stated, has a positive economic impact for the whole of Scotland in spite of the MOD capital expenditure deficit. Using the input-output model of the Government, that is the equivalent of 84,000 direct and indirect jobs.
The cabinet secretary omitted to say that the Secretary of State for Scotland was in Moray within 48 hours of the Prime Minister's statement and that the Scotland Office is open to using all the UK Government departments, other than the MOD, to support the Moray community and the task force. As the cabinet secretary said, Tavish Scott has also indicated his full support and has confirmed his attendance at the Lossiemouth rally.
Will the cabinet secretary establish a high-level defence expenditure working group that includes all areas of the devolved government and its agencies including Scottish Enterprise, local authorities, Skills Development Scotland, universities and research institutions so that we can put forward the best case for all Scotland's economy in trying to win new jobs and defence contracts and in defence procurement? This is a long-term and sustainable part of the Scottish economy, and all parts of devolved government should work together towards that.
John Swinney: I thank Mr Purvis for his remarks.
The Secretary of State for Scotland was in Moray shortly after the Prime Minister's announcement. I welcome the fact that the Scotland Office will make available access to other UK Government departments on the issues that are raised. I hope that, as part of that process, we will have early responses to our requests for information on the specific points that I raised in my statement. I also hope that we can have some input from the relevant UK departments, particularly the Ministry of Defence I am not concerned whether it comes through the Scotland Office or any other means to address the issue that I dealt with in response to Mr Fraser's question. That strikes me as utterly material to the future economic use of RAF Kinloss. If the Scotland Office can assist by responding timeously to our requests for information and further advice, that will be welcome.
On the work of agencies, I confirm that a number of public sector partners will meet Highlands and Islands Enterprise in Moray on 5 November, drawing together all the organisations to which Mr Purvis referred that have a locus in relation to the Moray economy. Highlands and Islands Enterprise has undertaken some fantastic economic analysis of and preparatory work on the military bases at Lossiemouth and Kinloss and it has previously worked on the Hebrides rocket range. It has excelled in that respect and has ensured that we have a full understanding of the risks and the dangers. That information has been deployed to our advantage in relation to the case that can be put forward and will be deployed in relation to RAF Kinloss.
On the point about defence procurement and the defence sector, our enterprise agencies are fully involved in seeking the opportunities for all areas of economic and business development, from research and development through innovation and into commercialisation, production, manufacturing and internationalisation activity. Of course, the defence sector will be part of the areas of interest and responsibility of the agencies.
The Presiding Officer: We come to backbench questions. Nine members have indicated that they would like to ask a question, and we have the same number of minutes, so everyone should keep it short and sharp.
Dave Thompson (Highlands and Islands) (SNP): As a Lossie loon, I was disappointed by David Cameron's flippant remarks yesterday. The loss of defence jobs in Moray is no laughing matter. Unlike David Cameron, the cabinet secretary is aware that Scotland is not just one region, but several, and that carriers in the central belt are no compensation for cuts in Moray. The average wage in Moray is £407.50 a week, which is 13.7 per cent less than the Scottish average. With the loss of the higher wages at the bases, the Moray average will drop even further below the Scottish average. It is unacceptable that Moray should suffer in that way, especially as the United Kingdom Government.
The Presiding Officer: Question, please, Mr Thompson.
Dave Thompson: Okay. The UK Government takes in hundreds of millions of pounds a year from whisky in Moray. I am pleased—
The Presiding Officer: Could you please just ask a question? You are going to stop someone else being able to ask a question.
Dave Thompson: Okay. I am pleased that the cabinet secretary agrees with me, but does he have confidence that the UK Government will rise to the challenge of putting in place a substantial transition fund in Moray?
John Swinney: That is one of the unanswered questions about the strategic defence and security review. I have charted the economic impact on Moray. Information has been well prepared by Highlands and Islands Enterprise and is available for public consideration. The economic impact will be significant, and we will be pressing the UK Government to co-operate fully on the question of transitional support for the Moray economy at what will be a difficult time.
David Stewart (Highlands and Islands) (Lab): I thank the cabinet secretary for his constructive and helpful statement. Further to my question to the First Minister earlier today, could Mr Swinney estimate the timescale for creating special enterprise zone status for Moray and say whether there are plans to relocate Scottish Government posts there? Finally, is Skills Development Scotland in discussion with the European Union, through the European economic recovery plan, to draw down additional structural funds, such as European structural funds?
John Swinney: The Government will leave no stone unturned in terms of identifying the opportunities and approaches that could help to assist economic recovery in Moray. Mr Stewart will be aware that only a portion of the county of Moray is included in some of the assistance areas. Clearly, that is not within our decision-making power, but we are actively considering how that can be changed. I assure Mr Stewart that every opportunity will be taken to address the questions that he has raised, which are material to economic recovery in the county of Moray.
Mary Scanlon (Highlands and Islands) (Con): Due to the exceptional pressure on the Moray economy and infrastructure, would the cabinet secretary consider focusing infrastructure investment in the area, making the most of available regional selective assistance and introducing targeted incentives to support new and existing businesses in the Moray area, whether or not it is called an enterprise zone?
John Swinney: I assure Mary Scanlon that many companies in the Moray economy, some of which Mr Thompson mentioned, will be deeply engaged in the economic development work of Highlands and Islands Enterprise and will be supported by that and by other support services, such as the business gateway. The Scottish Government attaches great priority to ensuring that that support is in place, whatever the designation.
It is vital that we retain our focus on the fact that there is an economic impact being created by the decision-making of the Ministry of Defence, and I do not think that we should take the approach that the picking up of the pieces should be left exclusively to the Scottish Government. A major blow has been delivered by the Ministry of Defence, and it must be part of delivering the type of support that I referred to in my statement, to address the economic impact.
Jim Tolson (Dunfermline West) (LD): I thank the cabinet secretary for welcoming the UK Government's commitment to build both the aircraft carriers on the Clyde and the Forth, which includes the one in my constituency. That commitment is vital to the local economy in each area and to the strategic defence of the United Kingdom. Does the cabinet secretary recognise that such a crucial contract would be possible only on a United-Kingdom basis?
John Swinney: We can always rely on Mr Tolson to lift the quality of the discussion in the Parliament on a Thursday afternoon. Let us follow the logic of Mr Tolson's argument for a second to remind him just how futile a point he has made. The economic devastation of Moray is the unreserved responsibility of the United Kingdom Government as a consequence of its decisions. Perhaps some more thoughtful consideration from Mr Tolson before he blunders into his next question would not go amiss.
Rob Gibson (Highlands and Islands) (SNP): The enforced mass removal of service families from Moray, both of children as pupils and adults as employees, who contribute so much to the social and economic life of Moray, is a tragedy. Has a review been conducted of the impact on local schools and health services in Moray of the proposed closure of the two bases?
John Swinney: Mr Gibson touches on a significant issue, which is part of the economic analysis on Moray. If fewer people are living in the locality there will be knock-on effects on the demand for public services and the ability of some of those services to attract staff, who might be the spouses or dependants of RAF personnel who are located in Moray. There are clearly implications for public services and public facilities, which will be considered as part of the support effort that the Government puts in place.
Jackie Baillie (Dumbarton) (Lab): I very much regret the proposal to close RAF Kinloss and the wider defence cuts, which will have an impact on Faslane, with job losses expected. Will the cabinet secretary extend the assistance provided to Moray to include Faslane, should that be required, and does he recognise that the Nimrod planes based at RAF Kinloss provide air support for Trident submarines? Will he therefore join me, in order to help secure the future of RAF Kinloss, in making the argument that the operation and safety of Trident could be compromised?
John Swinney: I do not think that the issue is limited to just the security of the Trident missiles. There are huge implications for aerial surveillance and security as a consequence of the Nimrod decision. I do not think that Jackie Baillie should limit the canvass of her question.
On economic impact, I said in my statement that there are aspects of the naval decisions on which we will seek clarification in due course. Clearly if there is an economic impact in the Faslane area, the Government will consider it. However, I return to the point that I made to Mary Scanlon: we should not lose sight of the fact that the negative impact is a consequence of decisions taken by the Ministry of Defence and the Scottish Government should not be left to pick up the pieces. The Ministry of Defence must be part of the recovery package, if it is required.
Maureen Watt (North East Scotland) (SNP): Given the fact that Nimrod aircraft based at RAF Kinloss have been critical to rescue operations in the North Sea, not least for the Piper Alpha disaster and last year's helicopter crashes, does the cabinet secretary share my concern that the cancellation of the Nimrod MRA4 is putting at unnecessary risk the lives of not only those working on offshore installations, but those aboard ships in Scottish waters, such as in the recent case of the fish-processing ship, Athena, which was deemed too far out to sea for other aircraft to reach?
John Swinney: Maureen Watt makes the point that I was making to Jackie Baillie, that there are wider implications of the Nimrod decision that can affect security and safety for personnel in a variety of situations. She refers to one of those practical implications of the Nimrod decision, which causes a significant impact on wider areas of activity. Clearly, measures have to be put in place to ensure that individuals are properly supported and made safe in what can be particularly trying circumstances and difficult terrain.
The Presiding Officer: That must conclude the ministerial statement and questions on the economic and social impact of the strategic defence and security review, I apologise to the two members whom I could not call.
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