Good Evening Ladies and Gentlemen.
I am delighted to attend tonight's Executive Committee dinner.
I know that some of you had a very worthwhile meeting with Gordon Brown last month. I hope we can have similarly useful discussions.
I was interested to see that your trends survey for the quarter to September was your most encouraging for some time. But I share your concerns that major indicators in the sector remain negative.
Peter Hughes' comment that the recession 'may well be bottoming out' echoes other surveys suggesting that we might be past the worst.
The Institute of Chartered Accountants recently reported that businesses are moving away from a defensive mindset and are beginning to consider 'careful growth'.
Signs of stabilisation and some indications of recovery are of course welcome.
Tonight I will outline the UK Government's actions to counter the downturn. But my main focus is to celebrate Scottish engineering - a sector with a proud past, vibrant present and an exciting future.
I know that you are reaching out to young Scots. Your excellent website outlines career opportunities, apprenticeships and case studies. And Peter's tireless work in promoting engineering in our secondary schools was appreciated by the Prime Minister.
We live in a global society, an interconnected, interdependent world of instant communication. And this has been the first economic crisis of the global age.
However, the global response to tackle it has shown what strong, active government can do.
The world has endured the worst recession since the Great Depression, when governments failed to work together and the repercussions were dire. In contrast, today's G20 governments have acted decisively nationally and internationally under a UK Presidency.
We moved quickly to stop banks failing.
Think back a year. On 15-16 September 2008 Lehman Brothers collapsed. On 17 September stricken HBOS was bought by Lloyds TSB.
The storm was brewing. Renowned Scottish financial institutions were dreadfully exposed. The terrible prospect of colossal bank failure loomed large - with potentially devastating consequences for Scottish businesses, families, savers and pensioners.
For Scottish banks the financial crisis meant 'Britain or bust'.
During the following weeks the Government saved the banks.
We were hours away from the closure of cash machines and the suspension of deposits. Branches across Scotland would have been bolted shut. Only the UK Government could save Scotland's banks.
Since then we have supported financial stability and provided real help. The actions of the UK Government and Bank of England to stimulate the economy, reduce interest rates and increase the money supply slowed the pace of economic decline considerably.
An unprecedented fiscal stimulus package - a policy followed in economies worldwide.
The list of Real Help measures is long, but I would like to highlight some that are helping Scottish households and businesses right now.
Basic taxpayers are paying less and there is targeted support for families and pensioners through benefits and tax credits increases.
The VAT cut has put an additional £1 billion each month into the pockets of shoppers and the retail sector.
Almost 13,000 Scottish firms have rescheduled £224 million of tax payments.
Around 365 Scottish companies have been offered Enterprise Finance Guarantee loans totalling almost £49 million.
We are determined to get the banks lending again. Government has secured agreements with RBS and Lloyds to increase their lending to business up to £27 billion. RBS has pledged to lend an additional £250 million through the 'Scottish SME Fund' launched in February.
And the vehicle scrappage scheme has resulted in 13,650 new car orders across Scotland.
As the Chancellor said last week there is growing evidence that this decisive action, nationally and internationally, has prevented the global recession sliding into outright depression.
And the Government believes that if we continue with the policies we have put in place, the UK economy will return to growth by the turn of the year.
We know that the recession has struck young Scots particularly hard. We will not repeat the mistake of previous governments and condemn generations of Scots to worklessness.
The Future Jobs Fund is generating jobs for those unemployed for over 10 months, particularly in the 18-24 age group but also in areas of high unemployment. We are working with a range of stakeholders. Over 3,200 jobs have already been created.
The UK Government is responsible for the big levers of macro-economic policy but the devolved administration is responsible for skills. That's why we must work together today and prepare for the future.
Earlier this month I announced that we will hold a Get Scotland Working summit before the year's end. Our two governments, their agencies, business organisations, trade unions and others will work better together for a stronger, more successful Scotland.
This has to be more than meeting the short-term challenge of tackling current unemployment. It is about laying the foundations for tomorrow's economy in which advanced manufacturing and engineering have a critical place.
Your businesses are the beating heart of our enterprise economy. They destroy the myth that Scotland is a post-industrial economy and we don't make things anymore.
While we are justly proud of our engineering past, we must be as proud of what we are doing today and proud of our future.
There is no more apt place to speak about Scotland's engineering heritage than Glasgow. In 1821 Glasgow became Scotland's biggest city. Three years later, in 1824, Glasgow was first described as the 'Second City of the Empire'.
By the turn of the 20th century more than half of Britain's shipping was built by the banks of the Clyde and Glasgow was building one-quarter of the world's locomotives.
The 1920s slump and the 1930s depression hit traditional heavy industries hard. Markets closed or contracted. But I am struck by the industrial renaissance of the Second World War and proud at how Scots rose to the challenge in Britain's gravest hour of need.
Professor Tom Devine recently described Scotland as 'the great arsenal of the Allies'. Tom added: "The Clyde was rejuvenated, turning out an average of five ships a week from 1943 to compensate for the terrible losses sustained in the Battle of the Atlantic."
In total war there was little thought about post-war diversification. Scotland's job dependency on heavy industry increased by over 50% during the war.
Three decades of post-war state intervention ended in the 1980s. Waves of industrial closures swept Scotland during that decade. Some economists blamed outdated technology, outclassed industrial sectors and substandard business models.
Those firms who came through this furnace modernised and diversified.
And that's why Scottish engineering is more than the past. Travelling around Scotland, I've seen the sector in action and admired your finished products - from bionic arms to advanced defence components.
It is an engineering sector transformed - barely recognisable from the smokestacks of yesteryear. It is high-tech, innovative and, in our increasingly knowledge-based economy, more inclined towards the muscle of the brain.
At Touch Bionics in Livingston there is world leading research, development and manufacture. To produce cutting-edge devices which transform the lives of amputees.
The defence sector also showcases Scotland's shining talent.
At Selex Gallileo in Edinburgh I heard about the UK Government defence contracts for fighter jet and torpedo work.
In Glenrothes, Raytheon Systems are working on a wide range of electronic solutions from premature baby monitoring systems to satellite systems.
Scotland's future has to be high skilled, high productivity and high value. Engineering has a vital role to play in our modern manufacturing sector. The UK is the world's sixth largest manufacturer. And high-tech manufacturing already comprises a higher percentage of our exports than those of our rivals.
It's now about building high quality components rather than completed consumer goods. It's about cutting edge manufacturing embracing science and technology - harnessing our sophisticated skills in innovation, design and production.
We have entered a new era of industrial activism. Government has the unique resources to create and nurture an enterprise economy but we are not seeing a return to old economics.
That's why we launched Building Britain's Future - with commitments to invest in skills, research and development, transform our digital infrastructure, construct a low-carbon economy and reform our public services.
The UK Government is actively supporting enterprise. Government must create the right circumstances and environment for firms to prosper. Our job is to free businesses from the barriers hindering innovation and growth.
Government will complement the market. Targeted public investment is essential for promoting the global growth industries that will deliver tomorrow's well-paid, high-skilled jobs.
That's why we are supporting
And we are encouraging exports, supporting inward investment, promoting research and development - all ways of harnessing business expertise and know-how.
We are committed to green growth. We have planned for low carbon transition and we are on the verge of a low carbon revolution. The UK is the world's sixth largest economy for low carbon goods and services - worth £106 billion, employing 900,000 people and growing, even during the downturn. As we progress towards meeting our binding renewables targets through wind and wave and as we discover the full potential of clean coal technology, opportunities in this sector will abound.
Engineering is a key component of Scotland's future prosperity and our economic mix. Your exports will help underpin our recovery from recession. And your leading edge products will penetrate the growing markets of the world's emerging economies such as China and India.
As Secretary of State I am keen to promote debate on the economics of devolution.
You and your businesses understand the critical importance of the interdependence of the Scottish economy with the UK and European economies.
Scottish firms survive and thrive in the wider UK economy. The aerospace, defence and marine sector employs over 16,000 Scots, earning on average one-third more than the Scottish average wage.
This sector knows that we are stronger and better in the UK. That's why I would welcome your views on broadening the understanding of the economics of devolution.
The case for devolution has never been stronger. The arguments for breaking up Britain have never been weaker.
Britain makes Scotland stronger. Scotland makes Britain broader.
We are taking forward the recommendations of the detailed Calman Commission on Scottish Devolution. We are enhancing a successful settlement backed by most Scots. I want to maintain cross-Party consensus and momentum so that we can set out our plans for devolution's future in the autumn.
Saving the banks and boosting the economy was extremely expensive. But it was the right thing to do and was replicated across the world.
Borrowing and debt will rise across the G7 countries. It is not a peculiarly British phenomenon. But once recovery is firmly established, we must all rebuild our fiscal strength.
We do need to return to sustainable public finances. Families and businesses have tightened their belts. They expect government to do the same. Next year the Scottish and UK government budgets will rise. Indeed the Scottish Government's budget has doubled during its first decade. Efficiencies must be found - next year the UK Government is committed to save £5 billion without cutting frontline services. Scotland should also pay its share - £367 million.
We are not calling for immediate, indiscriminate cuts across the board. As the Chancellor said last week, 'To cut spending now would run the real risk of choking off the recovery even before it started.'
I believe that Government can help build the foundations for recovery. But we need your enterprise, your vision, your drive and your competitive edge to get to our goal.
I have called for a 'Team Scotland' approach to tackle rising unemployment. Working together and in partnership can succeed on many levels in the fight against recession. This is the positive political activism most Scots want to see.
We went into this recession together. Through working side by side we will come out of it together and stronger.
I look forward to hearing your thoughts on the wider issues affecting your businesses.