06/03/2014 Newsnight Scotland

its place. However, it still needs to act within the law. There needs

to be accountability and scrutiny around what it is they do.

Should have been involved... ? Tonight on Newsnight Scotland:

The man who runs Alex Salmond's team of economic advisers tells us it

might be better if RBS became English if Scotland becomes

independent. Personally I think it would be a shame in many ways

because it has been a fantastic company as a Scottish company, with

a long and proud history, but I do not think it would matter and it

would spread risk dramatically and help us considerably.

Good evening. Well, yesterday Crawford Beveridge told us the

economics will trump the politics when it comes to the proposed

currency union between an independent Scotland and the rest of

the UK. Today, he conceded he has a strong economic case to answer. And

he said it might be better if RBS, which is several times larger than

the Scottish economy, was, legally at least, based in London. I'll be

talking to him in a moment. But first, here's Julie Peacock.

SNP says that if Scotland becomes independent, there will be a

currency union and Scotland will show the pound. People need to know

currency union and Scotland will that is not going to happen. He has

got to jealous if there is no currency union what we will be using

to replace the pound. That is the reality and nothing he says, no

matter how much he plasters, can change that fact. Standard life has

just told of their Plan B. Why will the Prime Minister not? The Scottish

Government's hand will be stronger if we have already at least mapped

out the ground around some alternatives, including an

independent currency. Did someone ask for a Plan B? If there is one,

it has not come from this group of economists. It has been just over

one year since the fiscal commission working group published the advice

on the best Monetary Policy Comittee depend

on the best Monetary Policy Comittee Their conclusion? Keep the pound and

maintained a monetary union with the rest of the UK. -- monetary policy

and independent Scotland. That advice stays the same. Now, they

have gone further saying the UK Government's analysis overstates the

risk of a monetary union and plays down the benefits. The group said a

union is in everyone's best interests. The argument is that

economics will trump politics so this group of the condiments are

sticking firmly to their first plan. I spoke to Crawford Beveridge, the

Chair of the fiscal commission working group, after their meeting

today. I began by asking him just who he was trying to convince when

he insisted all three Unionist parties would change their minds

over a shared monetary union. parties would change their minds

old days, selling computers, my boss used to tell me that when the

customer says no, they are making an objection and you want to go back

and ask what they are objecting to and taken off the table so that we

have a different conversation about whether they will buy. I think we

are trying to make sure that for all the Unionist parties that we

understand what the objections are and if we can overcome them, we may

not be able to, but if we can, we wanted to get those of the table so

we can understand what the real objection is to moving forward.

Meanwhile, there is a chorus of companies saying there are risks for

their companies associated with an independent Scotland. We have had

our theirs, Shell, standard life most notably. What do you make of

that? Think you need to remember that the regulatory authorities here

require companies to run a risk register and to put into the reports

every year, they do not say to give us the opportunity is, for our

investors, you must lay out what the difficulties are. One difficulty,

plainly, is when a company is holding a referendum to go

differently. There could be a risk if you went down a currency would,

for example, they did not like. In the same way they have got in there

reports the risk of staying in the UK and then the UK opting out of

Europe. Standard life or not just saying that but saying that they

will take measures starting now to set up companies in England to which

we could transfer some of business. That is going along with beyond just

think... It is but they were also saying they would do that in the

event that there were disruptions that they did not lie to their

business. The Scottish Government have been very clear that in the

event of a yes vote, the regulatory environment, and we hope the

currency moment, will not change so there will be no particular reason

to make that change. They are drunk each other in the protection for

their money from the 80% of people that they deal with those of the

border. That is all. You said yesterday that use on a currency

union eventually be economic would trump the politics. Even on what you

have said today, you clearly accept there are economic arguments against

the currency union and they are serious arguments. We believe some

of them are serious arguments but we think we can argue those in ways

that will take people's concerns of the table. I do not think there are

serious enough to say that it would not still be a great option for both

sides of the border, not just Scotland. One of the most obvious

ones, which has been made by the Treasury among others, is that there

is an imbalance. That should there be a currency union and should

something happen, either in a financial institution in Scotland or

indeed to Scotland as a sovereign state, which required intervention

from the yes of the UK, -- the rest of the UK, the cost of that

potentially, and we saw that only six years ago with RBS, could

massively outweigh, for the UK, any benefits to the UK from not having

transaction costs because they are still in the pound. And that is why

we need to settle out with the Treasury as far as they will tell us

what they think these risks are. The banking on, for example, with the

new regulation and the way in which risks are being shared mean that

that kind of risk is fairly small. At the moment, remember, the two big

banks they worry about, the Royal Bank and the bank of Scotland, are

mostly owned by the Treasury donor anyway. The risk to this big animal

call the rest of UK... Would it make more sense if this was to get off

the ground, or even if it does not, for a company like RBS to be an

English company rather than a Scottish company? You know, we have

seen in the last few days some thoughts from the EU's regulations

requiring that the move into the place where most of the business is.

Essentially, what we are seeing is please remove the brass plate from

the door up here to the door in Whitehall, it does not necessarily

mean that if they make that move and became an English company that it

would in any way need for them to move any of the staff or operations

from Scotland. But from the point of view of an independent Scotland,

would you think it would be better if they did do that? There is an

argument that that would solve a lot of the questions that the Treasury

have. Now the balance is back again in a way that makes Scotland much

less risky for them. And for Scotland itself, there would then

not be the risk of what might happen. Correct. The other side of

that is that people will watch what you're saying and say, "look, this

is getting older and older. What we have people arguing for an

independent Scotland and they seem to want nothing more than to leave

then immediately go back and and now they are telling us it would be

better for an independent Scotland not to have whatever biggest company

by far the! -- getting stranger and stranger. " Voters may think they

are getting confused. Remember, first of all, the government has

been very clear that it would want to set up a business environment

here in a way that did not require anybody to move. It would not change

the regulatory environment or currency environment so there is no

political reason for that. If there is a mandate from Europe having

somebody to move them, as I say, it does not necessarily mean that we

would lose any other banking skills. The bottom line is you it

probably would be better, for everyone, whether there was a

currency union or not, if RBS was a London company and therefore would

be backed up IP sovereign wealth of the United Kingdom. Personally I

think it would be a shame in many ways because it has been a fantastic

Scottish company, a long and proud history, but I do not think it would

matter a lot and would spread risk dramatically and helped

considerably. The other question is whether you or the Scottish

Government would really want the kind of currency union that might be

on offer. I mean, the Treasury, as you know, produced that the child

document the other week and can I just read you, there with me, and

above paragraphs from it? Buried in it there is actually quite a beetle

description of what they think a currency union would look like. --

YTD tilled description. "It may need to stretch beyond fiscal rules. This

includes efforts to minimise the risk of tax competition that could

lead to an erosion of the tax base. Put into plain English it means if

Alex Salmond goes on to a currency union, he is up a tree. We would see

this is entirely unnecessary. The Edinburgh agreement, that said in

the event of a bought the site would come together amicably and try to

agree a set of rules... But you have to admit the Edinburgh agreement did

not commit the United Kingdom should Scotland become independent to

agreeing to a currency union. No one at the time suggested it. The fact

that at the time they said this is how we would characterise it is

difficult to how we might want to, how we would characterise it is

which is why we have to talk and we will not get anywhere until people

start discussing which of these things are clear. I just want to

talk to you a little bit about the other options. I understand

politically why the Scottish government wants to say they are

just lying and once we get our yes vote things will change, but from a

purely economic point of view would not be more sensible to start

working on this range of options and see, if we get our currency union

that would be great, but surely some work needs to be done? If the

necessity is the tooth... Is that they are too central back,

necessity is the tooth... Is that not should not be not more than just

on a piece of paper? There's a feel a detailed examination, last resorts

and whatever it was... But it is bricks and mortar. Is there not a

case for starting the process? Remember, this is a purely technical

group. All it does is say here are the things that are feasible for

Scotland to do and options we would recommend to you. What we'd would

ask you to think about hard as a currency union. If they ask us to

explore another one we will go and do that. We need a beam it to do

that and we do not have one. We just had a dream it to get to the

options. Would you like one? I am totally open that is the way the

government wants to go but not I will not home and cry. Let me finish

by asking you a more personal question. One of the criticisms of

your working group is people saying, these are bunch of very talented

economic and business specialists, most of whom do not even live in

Scotland or at least not most of the time. This is great fun for them

coming up with intellectual exercise is about how you might run a new

country, but the bottom line is people say, we are going to have to

live with the consequences if it goes wrong. They can walk away but

we cannot. But remember, once again, all we are asking those people to do

is give us really good technical advice from the world wide

experience of how these things happen. You know how this has been

used politically. Alex Salmond and others trumpet the fact they have

this Council of economic advisers with Nobel laureates. It is being

used politically. That is for others to use it that way or not but all I

am saying is that group was chosen because we have people vast

experience of many countries in the world including Ireland and its

experiences. I think that is a really good broad experience to

this and I do not think anybody this and I do not think anybody

would feel we are just going to walk away at something went wrong. They

are all deeply committed to advice that is sensible and we argue all

the time about whether this is good advice. If it does go wrong you can

head for the airport? Many of them can but some of us have to live

here! Thank you. With me is the business and economy

editor Douglas Fraser. What did you make of his comments? Opinion seems

to be building if you look at what the credit rating agency were

saying, there is an attraction to getting the liabilities off the

books of a sovereign and Scotland in terms of its credit rating for

selling sovereign bonds. He seems to be supporting that idea. If you look

at what the Treasury has argued, it is in the region of ?1.8 billion of

liability, which kind of exaggerates things. Give them responsibility for

stuff that is happening in London, the SNP which usually tries to beg

up what is happening in the Scottish economy wants to minimise the scale

and says that Scotland sheers finances much closer to the UK

average, 8% have opposed to 25%. This transfer of RBS would be a way

of making clear that liabilities have moved out of Scotland. It might

initially be a legal thing that it would become a London company but

the dangerous thing is that over would become a London company but

time, actually jobs and all the rest of it drain away to where it would

then be based. The powerful jobs are already in London. The joint head

office is in Edinburgh and you might lose some of that, but the

attraction to these banks and other starter banks is that the skills

are, irrespective of independence the skills would still be there and

attractive to the banks based in London. This is not economic

nationalism? It is not. That was a care I heard from Alex Salmond.

Eight years ago it was ScottishPower is being taken over and he said that

the French can look after their companies why are we letting these

glittering prizes of the Scottish economy taken over by the Spanish

companies? There is absolutely no strategy for protecting headquarters

operations in Scotland. Perhaps emphasising that Scottish companies

can do well even operating outside of Scotland but this would be

strange that the biggest company of all, troubled as it is, would be

leaving for London. As we leave you tonight, our thoughts turn to the

very sad loss of the economist Professor Ailsa McKay. The First

Minister paid tribute to her many achievements in the chamber. As we

all know she was a leading voice in the campaign for gender equality,

not only through her work but as a founding member of the Scottish

women's budget group. We think it is important we now have astonishing

contribution as a feminist economist, both in arguing the case

for women into work but also being the principal author of an argument

for transformation of childcare which made that possible. I hope and

believe and know that her contribution will be recognised by

every member of this chamber. A wet night tonight for many of us

and the wet night tomorrow for England and Wales but the rain will

slowly peter out with bright skies following for Scotland and Northern

Ireland. Let's have a closer look at 3pm in the afternoon with bright

skies but a cold wind. Particularly cold over Scotland and it will be

getting down to low levels. Further south into northern England, chilly

but the sunshine compensating. For south, the winds are lighter and

where the sun breaks through it will be springlike. Temperatures 14

Celsius. Not bad going for March. It will feel quite cold. A little bit

of a breeze taking the edge of temperatures with a springlike day.

Pleasant enough tomorrow while in the sun breaks through but by

Saturday temperatures are starting to rise with Manchester up to 14

Celsius. Better brightness elsewhere and on more into Saturday, again

temperatures are definitely on the mild side because of the winds

coming in from the south. A wet start for Scotland and quite windy

across Northern Ireland.