14/06/2011 Newsnight Scotland

be made over the table and publicly. But we do not want to see

Tonight, Argyll and Bute Council backed down on their threat to

close rural schools but have they been subjected to intolerable

pressure from the government. I will ask Education Secretary Mike

Russell. And Norway has managed to say

�70,000 for every man, woman and child in the country. Should

Scotland have its own funds? The issue of school closures has

provoked a row of between the government and Argyll and Bute

Council over who should decide. A relief for these parents. For

almost one year, the axe has been hovering over 11 primary schools in

Argyll and Bute. They thought the council would say it is still

pushing ahead but instead... Today we have decided to call a

halt to the process and that is the end of the matter for us as a -- as

a council. Two weeks ago, Education Secretary

Mike Russell wrote to all of Scotland's councils requesting a

delay for a one year or any plans to close rural schools. Argyll and

Bute Council insist this is not a moratorium. They say they are

stopping the consultation in light of comments made by the Education

It would have been an appropriate for this Council to continue with

the consultation process in the knowledge and advice that the

legislation is defective. The consultation stop today with

immediate effect. It is unlikely there would be a fresh consultation

process in the life of this council and we will wait for new

legislation or guidance to take us through this difficult process.

This village has its own schools. It was one primary school

campaigners fought to save. Today they are declaring victory.

Delighted with the news. This school has been here since 1721 and

my grandchildren are there, the 5th generation of my family to attend.

I am delighted. It is not the first time I have

heard the word fight. They have saved their own skin, and they look

like they have taken the right decision for the right reasons but

we are aware there will be council elections next May and everyone is

looking forward to that. The 20 pupils at this primary

school have been very involved with the campaign. Here they are to take

- by getting their photo taken for the local primary schools. There

had been great uncertainty about at this school would be open last

December. I am happy. There is no more stress

about it and I am quite happy the school is staying open. Tell me why

you like your school? There are no police and it is a small school.

That is what I like about it. All of these schools except for two,

which had no pupils, are safe for now. But Argyll and Bute Council

has not made a U-turn according to The situation has calmed down and

the rural schools issue in Argyll and Bute will drift away until

after the council elections. But cuts are still to be made and did

it is not schools, inevitably it will be something else.

Before we came on air I spoke to the Education Secretary Mike

Russell. I began by asking him what he meant by his comments that the

current legislation was not working. I mean what COSLA have meant and

parents and most commentators. We have a piece of legislation that

was passed unanimously believing it would lead to a level playing field

in terms of the issues that arise in a rural school closer. This has

been sought for a long time and I was involved in this process in

20021001. Regrettably, we have found there are still disputes in

the quality of information, the way information is presented and rather

than creating a level of understanding, the difficulties

have continued to be very great, in many cases. This has resulted in a

far more schools being called in than expected. 35 cases in the last

year. 17 I called in due to doubts about the process. It seemed to me

that we had not answered the main questions - COSLA and local

authorities were saying this as well. It seemed best to step back

and ask what is the problem? I made a manifesto commitment to do that.

But to do more - let us understand more closely the relationship

between rural schools, the rural community and rural growth. It

seemed to be better to do that in a backdrop of people working together.

Argyll and Bute Council are making the point forcefully today that,

because they felt they had no choice but to do this, they still

are facing problems with too many schools and too few people in them,

and in their today do not have the money to pay for that.

There are a number of issues wrapped up in that. The present

legislation says that the basis of closer is not money but educational

benefit. Any local authority that says they cannot afford to run

these schools is actually running against the current legislation.

One local authority might say they have half-empty schools but another

with the same buildings will say, hours are well occupied. That is

part of the problem. The school intended to be seized the pupils

said they did not have become a collations the local authority was

using said they had a lot of space, and those are genuine difficulties.

We will not resolve those by shouting at each other but we will

if we sit down and look at them. It may not entirely be a problem of

money but are you saying to the councils that are considering

closing schools that you'll make money available to compensate?

There are already arrangements for rural schools. Some school closures

cost local authorities money. There is a report that looks at the

outcome, and most councils set a very little money if anything when

you take in the cost of increased transportation, and possible

changes to receiving schools. Those are things we need to study in more

detail. There is already a settlement. Calculations about her

what local authorities get forward will schools is too complicated. --

for rural schools. The general point that the COSLA is

making is that while you call in these decisions, fundamentally,

this should be up to local authorities and that you as the

Scottish Government are starting to look like you are trampling on

prerogatives that should be theirs. The legislation is very clear and

it gives the role to ministers. This was a matter of negotiation

between COSLA and the Scottish Government before I became

Education Secretary. It is also a matter of communities and there are

on a number of players and actors in this. They all need to be

involved. What I want to do is to see everyone playing their rule --

their role and not to be jealous of things.

This has been an ongoing issue for more than a decade. One of the real

problems with this issue is that communities often feel they are not

treated fairly. I think it is the right thing to do to step back and

ask if they are being treated fairly. That was the purpose of the

legislation. We should all look at that. It has not been invented in

the past week. Are you saying that COSLA's fears are groundless?

What I am saying is we should work together on this. That has been my

line, and I want to make sure everyone is doing best in the

interests of rural schools, not because of rural schools are

special per say, although I think they are, but they are an important

part of how we deliver things and sustain things in rural Scotland.

There is a report coming out tomorrow saying that a lot of

people going through teacher- training are ending up not getting

jobs, is that a problem and are you doing anything about it?

I think it is a problem that is being solved. When I came into the

post in December 2009 it was a big issue and these figures relate to

2010. We have reduced the number of training places caused -- because

it is not right to train people for whom there are not jobs. The

situation is coming into balance. I have described this issue as the

thing that has given me the most sleepless nights as Education

Secretary. It has been very difficult. Local authorities have

been cutting numbers but I believe we have a joint responsibility to

get this right and I think we are beginning to. I think the

settlement this year will allow us to bring teacher numbers into

balance. There are positive signs in the statistics, with the

claimant count for unemployed teachers following year on year or

so things are going up in the right direction, but it has not been good

and some people have had a Now, they are already buying up

large parts of the world's economy. Alex Salmond now wants one often

Norway has bought one and China has the biggest.

If you want to know where financial power lies, go to the governments

of countries with a lot of oil and gas. They have been putting cash

aside into funds which have been built up into gigantic Sovereign

Wealth Funds. Taken together, they are thought to be worth around five

trillion pounds. That is 50001000 million pounds. It represents a

significant and permanent shift in the world economic order. A select

gathering of banking and investment experts in Edinburgh today digest

the implications of how these funds already are invested around the

world. These funds are spread their risk out of oil and gas but

national governments are already investing heavily in that, too. The

Korean state energy company spent �1.9 billion last year to buy one

of Scotland's biggest companies in petroleum. And an investor from Abu

Dhabi is now one of the biggest in Aberdeen. There are some questions

about this. First, if they are big now, how much bigger campaign

group? In dollar terms, you are looking at about 67 trillion

dollars of asset value. In terms of the potential, Justin some of the

calculations I have done, with very little effort, the figure can be as

high as 10 times that much. Much of that could come from rising oil

prices, while China has huge trade surpluses. Armed with those, how

was it using its firepower? There has been a shift from the West to

the east of that financial power and China is the economy on the

front foot. It has built up its economic and financial might.

of the biggest players is closer to home. What about Norway? For the

past 20 years, it has been putting aside his oil wealth and the fund

is now worth around �370 billion. - - its oil wealth. Norway owns

between one and 2% of the world's stocks on the world's stock market

and they are big investors in UK all food extraction. -- UK oil. For

Scotland, these giant funds raised two issues. One is how do you

attract investment here to buy the bonds the Scottish government has

been told it is not allowed to issue? Making that pish, one a bit

tied for cash himself, the Scottish Finance Minister. -- are making

that pitch. When you look at the scale of opportunity, particularly

where the Scottish government has given clear direction for the

future of energy production in Scotland, we have significant

resources to invest. We will give them every encouragement to see us

as a place to invest and give them every opportunity to do so.

question is whether Scotland could use its remaining offshore oil and

gas funds to be spent on public services. We still have 40% left

where we can say, let's have a careful look at how we spend that

40%. Perhaps we should take a modicum of a lesson from the

Norwegians and start to spend some of those funds in creating a

stabilisation fund either one that represents capital for the future,

rather than just spending it on oil extraction. There has to be a

balance between the utilisation of gas and oil reserves in terms of

public expenditure and investing in the long term. What the UK

Government has done in the last 30 years is spend everything in the

short-term and spend nothing in the long term. What the Scottish

government is determined to do is to make sure that does not happen

and that is why it is important that we have powers and controls

over state revenues that of realised from a renewable sector to

enable us to invest for the long term. With a new government, new

momentum for that idea, and of course, one other rather

significant question. Where does this gigantic shift of wealth and

power to leave us in the world economic order?

The chair looking at those Sovereign Wealth Fund Star Wars the

head of The Scotsman. Is there hope that these organisations will buy

as some of it, all of it? You have got to remember that these are

colossal sales in terms of what the government has had to deal with

before. It dwarfs the British Gas privatisation in the 1980s so I

think what we will see his small slices of shares coming onto the

market next year if, perhaps about four, 5 billion out of the total

and I am pretty confident that some of the Sovereign Wealth Funds will

be buyers and we have already had discussions with Abu Dhabi and

their wealth fund to see if they might be interested in taking the

stake. Do you think there could be political opposition? Perhaps if it

goes over or above a certain level. The important thing is to be paid

dispersal of ownership. It would be a bit worrying if it all went to

one or two wealth funds. But you think these buyers could buy

packets of shares rather than, for example, one or two big banks

buying it and carving it up between them? That would certainly be a

preference. Just to come back to that word I used, it is dispersal

of ownership that is so important. We would love to have a tacit

campaign but the magnitude of this is going to have some element of

international buyers for the shares. This idea of North Sea oil, some of

it, the revenues being put into some sort of Sovereign Wealth Fund

or Scotland having its own one, where role we with that? I can only

say that John Swinney must have been drilling when he heard some of

the figures from the Norwegian investment fund. As Douglas Fraser

was saying, that is grazing $600 billion in value. A colossal bank

that it has built up. How Scotland could emulate that, I think it is

quite impossible. There would be enormous conflict between how much

you put into a long-term strategic fund such as this and how much you

have to devote to current spending, and also, of course, debt interest

and pay down. On the other hand, it Norway managed it and they have

been doing it since the 1970s. As John Swinney said, we have just

spent all of our money? We did in the 1980s. There was a very

interesting discussion we had as to whether that was the best thing to

do. I think there would be an enormous political pressure on any

government in the UK which built up a Sovereign Wealth Fund of anything

like that size. It would be a political target immediately for

the spending lobbies and everybody would be fighting, not necessarily

in an orderly queue, to say, we need the money for this sector or

this lobby or this part of the economy long before you were able

to build up a wealth fund of this size. So you are saying even if we

were to have for John Swinney ones, that would not necessarily mean we

would then behave in a sensible way like the Norwegians did? There is

no guarantee we would start to behave sensibly simply because we

were building up a Sovereign Wealth Fund. Thank you so much indeed. A

quick look at the front pages, starting with The Scotsman. It says

a radical overhaul plan for charity to generate cash from assets. And

then Alex Salmond launches scathing attack and comments that Alex

Salmond has made about a judge and Lord Hope. Schools are told to