16/08/2011 Newsnight Scotland

and the controversy will be continuing about how they should be

Good evening. Tonight, when is a second league not a new league? The

spill at Gannet Alpha has now become an argument about what words

to use to describe it. I will be asking the company why they have

not been more open with the public. And I'll be asking the finance

secretary whether he has a coherent argument for devolving powers over

corporation tax and businesses to Scotland.

Shell UK revealed this morning that it's found a second leak from its

Gannet alpha platform in the North Sea. The company has told us that

its tiny and is releasing around two barrels a day. It may be coming

under control but Shell's response to this incident has been heavily

criticised. Not least because it spent much of today clarifying

whether this second leak is a new leak. I'll be asking Shell what's

going on in a moment but first here's Julie Peacock.

It took five days for these first pictures to appear. Here, you can

see the long thin train of loyal on the surface of the sea. -- trail of

oil. We have relied on the Shell UK to give us information about the

extent of the spill. That has not given as much to go on. In this

case, we seem the story come out in bits and pieces and I think that is

unsatisfactory. I don't think it is very clever. They think they will

know from their inexperience and the experience of other companies

in the oil industry that it is important to have public confidence

in what you are doing. It was Wednesday when the shell UK first

reported the leak to the UK government but it was not until

Friday that the news was made public. On Saturday, there was no

further comment from the company until 4pm but its statement said

the oil covered an area of around 31, says. But it gave no indication

of how much oil had escaped. That was left to the First Minister, who

estimated around 100 tonnes had been leaked. The next day,

conservationists called for greater transparency from Shell but still

no interview. It was only yesterday, at around 4pm, that they estimated

the two hundred and sixteen tons. It took us until Friday to gain

access to where the leak is occurring. We d pressurised that

line which caused substantial reduction in this bill. And now we

have a very minor for relatively minor leak. This footage, filmed on

Sunday, shows exactly how my mother Leakeys but cannot the same be says

for the damage done to Shell's reputation. It is amazing to me, as

a journalist, that companies don't seem to learn the basic rule of

public relations, which is if something is going wrong, be the

first to tell everybody about it and tell people about it as soon as

you can. It took two days before they confirmed an incident had

taken place and five or six days before we got there first -- full

details, if indeed we have the full details now. For charities like the

RSPB, the lack of information has been frustrating and unhelpful.

vacuum in the news doesn't help anybody. We needed to know the type

of oil, the wind conditions out there, the amount of oil, because

the response that is required does depend very much on these factors.

This is a light crude. If it had been a heavy crude, it would have

taken longer to break up. These facts were not available at the

time and I think they could have been a lot more clear, quickened

concise in dealing with bodies like our own, because we have a lot of

data which can help them make the right decisions. On Saturday

morning, I spoke to the health and so fitted executive and to the

Department for energy and climate change. They asked them

specifically how much oil had been spilled. But they told me that if I

needed to know those figures, I would need to speak to shelf.

of the issues raised by this spill and the way it has been handled is

the issue of how effective the Independent government inspection

of the oil industry is. There is a body of critics which suggests that

the industry is to responsible for regulating itself and that

government should be more proactive and there should be more resources

in independent regulation. By after days of criticism from the press

and from charities, he would think Shell would have got the point. But

today the company devoted much of its press updated to clarify and

that this secondary league is not a new league but is in fact a second

leak from the same source. What difference that makes is unclear

but needless to say, the pipe is still leaking.

I'm joined by Steve Harris from Aberdeen, the head of external

affairs for Shell in Scotland. What is the latest? 216 tons, something

like that? Yes, that is a fair assessment. Good evening. Can I say

before going into any Woody's about that but obviously we deeply regret

that this has happened. We spend an awful lot of time, an awful lot of

energy, an awful lot of Investment making sure these things don't

happen and so when they do, it cuts as to the quick. We have to pull

ourselves up short and we are doing everything we can to put it right

as good as you can. But in the meantime, we have to say we are

deeply regretful. What happens next? This sleek, whether it is one

or two leaks, it is the same line... He said something in your released

today about taking litigating action. Explain what you are going

to do to stop this leaking any more. The what we have now established is

that we now think it is less than one barrel a day leaking from what

is called her release valve that is attached to these pieces of kit. We

need to be able to go there, be able to turn it off effectively. It

is in a very difficult place to access. We need to be up to do it

safely. It is going to require a diver going down there to do it. It

takes time. We need to make sure we do it safely and not put anybody at

risk in doing so. Once we are able to do that, we will carry out that

work and hopefully we will be able to stop a small leak that still

continues. But you don't know yet when you will deal to do that. I

very much hope it will be days rather than weeks. But it is

important we conduct this works safely and we will not carry the

workout until we are sure that we have a very good chance of success

and that we can do it safely. about... Coming back to your first

point, there has been criticism of your company. You heard for the

RSPB. Their concern wasn't just to save the bird -- birds. They have

databases of information which can have to deal with this. Given what

happened in the Gulf of Mexico last year, he seemed to be reticent.

You're sitting here now but it is a week since this happened. Why

didn't you do what was suggested there and come out straight away

and say this has happened, we are sorry, here is exactly what we know

and what we are planning to do? we had come out straight away on

Wednesday, we obviously had for agencies that we were required to

inform and we did that. Them... They're working with us to try to

find solutions to the challenges we face. If we had told you what we

knew on Wednesday, we would have been dull because it takes time.

This is happening 300 ft below the surface of the city, not on your

high street. We have to establish what happened. We wanted to make

sure we had accurate data. If Tory from your point of view, it would

be much better if you had boss people Lassen, that company is

extremely dull, rather than saying that company is like BP in the Gulf

of Mexico. We have tried to bring forward as much data as we can when

we are confident of it and that we can stand in front of people like

yourself and be confident that the a telling you what we honestly

believe to be accurate. If we had come out on the Wednesday and had

to change our figures dramatically on Thursday and on Friday, you

would rightly have criticised us for doing that. One can only

proceed at the pace that the information becomes available. Her

specific regard to RSPB, there are things we can learn and I think we

know that we would really have liked to have contacted the RSPB

earlier. We have been in good contact with them ever since.

you very much indeed. Envious glances aplenty across the

Irish Sea as the Scottish Government today made the case for

devolving corporation tax to Holyrood. Indeed their paper made

specific reference to ongoing negotiations between Stormont and

the Treasury, adding that it is now essential that Scotland is granted

similar powers. But what exactly is the economic case for doing so

here? I'll be speaking to the Finance Secretary in a moment but

first here's our Business and Economy Editor Douglas Fraser.

Corporation tax, the bit of a larger companies' profits that

Customs wishes to share with the rest of us. It raises about �1 in

every �16 of the revenue take in Britain. They deduct 26 %, to �0.6

billion of business activity in Scotland was sent south to the

Treasury the year before last. What if Scotland got the powers to

target tax cuts to help some businesses invest? Perhaps more

growth, more jobs, more tax revenue. That is what the SNP government

argues. But the Westminster government has a warning. The

Treasury recently estimated that cutting corporation tax to the same

level as Ireland would mean a drop in Scottish tax revenue of up to

�2.6 billion a year. Today's discussion paper is sometimes very

cautious in its language. Experience has shown, it says, that

particularly over the medium to long term, a more competitive

corporation tax strategy may not necessarily imply lower revenues.

But also the Scot and Secretary's warning that �2.6 billion gap,

seems to suggest that Scotland would receive nothing from

corporation tax at all. How could that be? It implies that the price

Hollywood would pay would be all the revenue lost to the Treasury

has company's shift operations to the lower tax regime or pretend

they're doing so. Effectively including a �1 billion penalty

clause. All of this assumes that tax cuts lead to tax revenue

increases. They can, but will they always, particularly if other parts

of the UK compete to undercut the Scottish tax rate? What could it

cost business... Even if the current Scottish government says it

wants to cut tax on business, isn't this the same government that

wanted to tax supermarkets more last winter? What of future

governments? They could prioritise public services. Today's is a

discussion paper about the economy. It is highly political, preparing

the ground for the referendum on independence and raising rather

more questions than it answers. Earlier we spoke to the Finance

Minister John Swinney. I began by pointing out that this afternoon,

Angela Merkel, the German Chancellor, and French President

Nicolas Sarkozy called for harmonising business tax across the

eurozone and suggested he was going in the opposite direction. A There

are different corporation tax and business tax arrangements that

exist within different jurisdictions. -- clearly, thereof.

Countries are well accustomed to dealing with the fact that whilst

they operate in International Cup - - markets, they paid different tax

in different parts of the world. The fact we have an aspiration to

put Scotland at a competitive advantage is our approach and our

If you ever get your independent Scotland which would like to join

the euro-zone, it is inconceivable that the other countries in the

European Union would allow Scotland, which would hardly be a struggling

former member of the Soviet bloc, the idea that it would lead

Scotland joined the European Union with Irish style corporation tax is

increasingly inconceivable. I don't accept that analysis. Across Europe

you will have a multiplicity of different corporation tax rates,

and that is just within the euro- zone, across the wider

international community. So you think that Angela Merkel and

Nicholas Sarkozy - that was just hot air? It is not the view that we

take. It is not the view that countless other countries take of

the aspiration to use a sensible approach to competition around

business taxation to increase their competitive prospects. Therefore,

their ability to create new employment in their economies and

deliver economic growth. At the heart of what the Scottish

government has been trying to do over last four years, and which

would be at the heart of our administration for years to come,

is to make the Scottish economy as successful and dynamic as possible.

What is striking about your paper is that you don't produce any

evidence for the assertions you make. Take the controversial idea

that somehow or other lowering tax rates generates additional tax

revenue. There is no evidence in your paper for that assertion

whatsoever. The there is a number of studies that we site, studies

that have emerged from analysis of economic policy by economists in

the United States. Week site OECD analysis... Hang on, the whole

point about this idea is that it depends on what the taxation rate

is. There is a point at which the economy - macro economists who

believe in this sort of stuff argue that lowering tax can generate more

revenues, but you have to know what that point is, and you make no

attempt to analyse, either in the context of the UK or in the context

of Scotland. For example, there are some studies which have been done

which say that the UK corporation tax now, never mind when George

Osborne has finished producing them, are already way below the level at

which your argument could have any effect. You said a moment ago that

there was no evidence in the paper that lowering corporation tax can

actually result in higher economic growth, and I have said that there

is plenty of evidence in the studies that we have quoted. If you

look at the analysis that has been worked on recently with the

Northern Ireland Executive, which has looked at the fact that if

Northern Ireland was to reduce its corporation tax it would lead to an

increase of about 50,000 jobs in the north of Ireland, and would

increase GDP by a 1%. These are substantial economic impacts. I

think the analysis Marshalls that point very strongly, and makes it

clear that there is a clear path that can be taken to improve

competitiveness. But if the argument is that lowering taxes

will generate more economic activity, and therefore reduce tax

revenues, that is one thing. And stressing you don't have evidence

for that. But if you are saying that lowering tax raised in one pot

of the UK will increase GDP in that part of the UK basically by

shifting economic activity around from Air -- from one area of the UK

to another, is that really what you are saying? You want to get jobs

into Scotland that would otherwise have been in England? No, a further

piece of evidence, in addition to the OECD analysis, which reinforces

the point that I am making about the economic impact of reducing

corporation tax, but there are other aspirations about economic

growth in Scotland and they are not fuelled by just what economic

activity we would want to displace in other parts of the UK. It is

about giving Scotland, in addition to the strength that we have, in

relation to infrastructure and skills and people development

within our country, that we can obtain competitive advantage

through taxation in a global economy and try to attract the type

of business that would ensure that Scotland is an attractive location

to grow businesses. But you argue that if Northern Ireland get this

power over corporation tax, then it is a matter of principle that

Scotland should have this. Then you would presumably agree that as a

matter of principle Wales and regions of England should have this.

Your argument is that it is not fair that a business in Stornoway

is disadvantaged by paying the same corporation tax as a business in

London, but that applies equally to a business in Devon or Cornwall or

rural areas of Northumbria. Presumably you would argue that

English regions and Wales and Northern Ireland and Scotland

should all have this? proposition I am advancing is on

behalf of the Scottish government. I simply cite the evidence that has

been discussed and used Northern Ireland as an example. The Scotland

Bill Committee in the last Scottish parliament took the view that if

this power was deployed to Northern Ireland, devolved in Northern

Ireland, then it should also be devolved to Scotland into the

bargain. I think Scotland would be in a stronger position if we had a

wider range of fiscal levers at their disposal. But the point is,

if regions of England and Wales and Northern Ireland and Scotland all

did this, it is just self-defeating. The anything that would happen is

there would be no more economic activity, but much less corporation

tax revenue. I think that ignores the fact that Scotland is a

jurisdiction in his own right. We have a certain range of tax powers

at pressure -- present, and we will have more in the years to come. It

also ignores the fact that there are competitive incentives and

differences across different parts of the UK already. In 2007, as part

of the SNP government, we introduced the most combative

approach on small business rates, for example. I understand that, but

your proposal only works if you and Northern Ireland get this. You seem

to be accepting that people in the North of England would of course be

saying there would like this, so you are saying this is self-

defeating? The example of the north-east of England. I would not

be surprised if the United Kingdom government, for example, decides to

determine the north-east of England as Enterprise Zones as part of what

they are taking forward, and that will more than likely give a

preferential approach on business rates. But not on corporation tax.

But on capital allowances, which is crucial around business investment.

The point I am making to you is that already, within the UK, there

are differences in the approach to corporation tax and incentives, so

one port of the United Kingdom to the other -- one part. This

proposal gives us the opportunity to seek a competitive exam --

advantage for Scotland and use that to strengthen economic recovery in

our country. Before we finish, a slight change of subject. Is it

true this story in one newspaper this morning that you have made

almost �60,000 profit from selling a house, on which you claim

mortgage interest payments from the Scottish parliament? The Scottish

parliament decided to establish a scheme that enables members of

parliament to buy properties in Edinburgh and to have those

mortgage payments supported by contributions from the Edinburgh

allows scheme. Parliament decided to stop that arrangement. It

consulted independently to determine what was the basis of

winding up that scheme, and in that respect, I followed entirely the

approach that was set out in that process. One of the important point

of all of this is that any of the proceeds that I made on that sale

is a liability for capital gains tax, which are well paid in full.

Sure, but this is not just a legal matter. If you have made �60,000

profit, which I notice you are not denying, you are the man - you are

the man telling public sector workers in Scotland that they have

got to have a pay freeze for two years. This chap has claimed all

these men -- mortgage payments from the Scottish parliament, it just

doesn't seem right in the current atmosphere that the very person

asking them to make sacrifices made a profit which -- from something

which has been subsidised by the taxpayer. The arrangements are put

in place by Parliament in relation to the schemes that are available

for members of parliament. We all follow them in good faith, people

from all political parties. That is what I have done in good faith. I

have followed the arrangements that were put in place to resolve that.

I have done that to the letter, and there will be paying a substantial

amount of tax in relation to that. These are the roles that were put

in place and the arrangements that have to be followed as a

consequence of all of that. John Swinney, thank you.

A quick look at tomorrow's front pages. The court -- Guardian,