:00:09. > :00:11.there. It is terrible. Thank you. On Newsnight Scotland: Amid the
:00:11. > :00:14.economic turmoil in Europe, Scotland appears to be bucking the
:00:14. > :00:19.trend when it comes to unemployment figures. So does that mean Holyrood
:00:19. > :00:22.has the right strategy and Westminster should follow suit? And
:00:22. > :00:29.new papers reveal Tony Benn's ambitions to take control of all of
:00:29. > :00:32.BP's North Sea assets when he was Energy Minister. Good evening. Are
:00:32. > :00:34.there signs tonight that the UK Government may be relaxing its
:00:35. > :00:39.austerity measures as the deputy Prime Minister talks of stimulating
:00:39. > :00:42.growth by delivering infrastructure. With the private sector in Scotland
:00:42. > :00:45.creating more jobs than are being lost, at the moment, the First
:00:45. > :00:49.Minister has urged the coalition to take a look at the Scottish
:00:49. > :00:59.approach and come up with a Plan MacB. So is the SNP strategy
:00:59. > :01:02.
:01:02. > :01:06.sustainable? Here's David Allison. When it came in 1996, the end for
:01:06. > :01:11.the Ravens Craig steelworks was quick enough, but the up and Down's
:01:11. > :01:15.of industry and economics in Scotland are always there. In the
:01:15. > :01:23.intervening years there has been development, but most of the area
:01:23. > :01:28.around the former plant remains a barren, brownfield site. The great
:01:28. > :01:36.depression of 1930 cast a long shadow and showed how something
:01:36. > :01:42.happening far way ain -- on Wall Street could impact here. Today it
:01:42. > :01:48.is the eurozone crisis, with Germans debating how much longer
:01:48. > :01:52.they should bail out Greece. And a default by Greece a real
:01:52. > :01:58.possibility. It is fact for the political future of Europe. It is a
:01:58. > :02:03.fact for what Europe represents in the world. This is a fact for
:02:03. > :02:07.European integration itself. Add to that, the legacy of the global
:02:07. > :02:13.financial crisis from junk mortgages in the United States and
:02:13. > :02:18.you have the backdrop to high streets here that tell their own
:02:18. > :02:23.story. It is the second worst annual drop in sales in more than a
:02:23. > :02:29.decade. Don't think anyone can deny the high street has problems, but
:02:29. > :02:34.we go through cycles and this is one of the most severe we have seen
:02:34. > :02:38.in 16 years. People have been more careful, they're eating in, not
:02:38. > :02:43.buying big items. We could do with a stimulus in the house building
:02:43. > :02:47.and that would stimulate the high street so people would buy floor
:02:47. > :02:54.coverings and furniture and carpets. But at the moment we're not seeing
:02:54. > :03:00.that. While sales are down in the high street, another survey, the
:03:00. > :03:08.Bank of Scotland's purchasing managers' indx said manufacturing
:03:08. > :03:15.production increased at its sharpst pace for four months. On
:03:15. > :03:19.unemployment, the UK rate is 7.9%. In Scotland it is less, 7.5% and
:03:19. > :03:25.north of the border the number out of work has fallen by 3,000 with
:03:25. > :03:31.those in work rising by 23,000. Oufr the STUC said at least one in
:03:31. > :03:36.six people in Scotland are still unable to secure a full-time job.
:03:36. > :03:41.The headlines figures are not telling the full story of what is
:03:41. > :03:45.happening. You dig under neath and look at the people described as
:03:45. > :03:49.underemployed, that is working part-time who want to work full-
:03:49. > :03:53.time. People identified as economically inactive, but wanting
:03:53. > :03:59.a job. The picture is different and these trendss are not improving.
:03:59. > :04:03.They're getting wor. Scotland is still outperforming the UK as a
:04:03. > :04:08.whole, which saw economic growth stagnate in August. But the First
:04:08. > :04:14.Minister wants the UK Government to reconsider its cuts programme.
:04:14. > :04:22.concern, if you look at the ingredients of Scottish success,
:04:22. > :04:27.its has been axe sell rating investment. We want to do that. But
:04:27. > :04:31.we're facing a 40% decline from wom in capital investment. I'm urging
:04:31. > :04:38.the Chancellor to look at the Scottish experience and see within
:04:38. > :04:46.that experience some of the ingredients of how to get through
:04:46. > :04:52.this recession. I'm urging not just a plan B, but a plan MacB.
:04:52. > :04:57.Scottish want want more powers. And they're coming under scrutiny over
:04:57. > :05:06.what they're doing with the powers they have to help Scotland through
:05:06. > :05:15.these turbulent times. Putting thing back as they were is rare lay
:05:15. > :05:23.realistic oopion and the combination -- rarely a realistic
:05:23. > :05:25.option. Now with -- With me now in the studio is Professor Brian
:05:25. > :05:27.Ashcroft, an economist with the Fraser of Allander Institute at
:05:27. > :05:34.Strathclyde University. And in Edinburgh is the journalist George
:05:34. > :05:38.Kerevan, who stood as an SNP candidate in May. When you look at
:05:38. > :05:43.the employment and unemployment figures in Scotland and the retail
:05:43. > :05:48.figures in Scotland, what does that tell you is going on? We need to
:05:48. > :05:53.separate the labour market from the wider economy. If you look at the
:05:53. > :05:57.figures, employment is growing in Scotland and unemployment is better
:05:57. > :06:01.than in the rest of the United Kingdom. But going back to the
:06:01. > :06:06.start of recession, there was a significant fall in employment in
:06:06. > :06:12.Scotland, I fell off a cliff between 2009 and 2010. Probably
:06:12. > :06:16.over shot, whereas it didn't do that and we lost about 4% of
:06:16. > :06:22.employment in Scotland. So what is happening we have started to bounce
:06:22. > :06:28.back more quickly. Of course this is not the rubbish it. It is good
:06:28. > :06:31.to see. But the problem is output growth is weak. The Government, the
:06:31. > :06:37.Scottish Government's own figures show broadly that Scotland is
:06:37. > :06:42.lagging the rest of the UK. The service sector has hardly had any
:06:42. > :06:46.recovering. Manufacturing has had some. We're almost thee and a half
:06:46. > :06:51.years from the start of the recession and we have still hardly
:06:51. > :06:57.recovered very much. Also if you look at the employment figures and
:06:57. > :07:01.the labour reserves in the economy, we are still about 4% below the
:07:01. > :07:05.pre-recession peak. So we are not talking about a buoyant economy.
:07:05. > :07:09.But what about this point given the situation, everyone is in, the key
:07:10. > :07:14.point that the private sector is creating job and mopping up job
:07:14. > :07:17.being lost in the public sector in a way that is not happening in
:07:17. > :07:21.England. It didn't happen to the same extent, that is true, the
:07:21. > :07:26.private sector is creating jobs, that is good news. But we have to
:07:26. > :07:32.accept that it is still a weak recovery. We still in the labour
:07:32. > :07:37.market are four years in to the pre-recession peak and we are still
:07:37. > :07:41.in employment term 2% below. So we're still weak and some of this
:07:41. > :07:46.recovery is part of bounce back in the labour market, given the weak
:07:46. > :07:51.growth inout put, our prediction this a unemployment will start to
:07:51. > :07:57.rise again in Scotland. What do you read into the figures and what do
:07:57. > :08:02.you think about the SNP's strategy in relation to that? I think Brian
:08:02. > :08:06.is being his usual Jonah. Something interesting is happening here. In
:08:06. > :08:11.Scotland for every one job lost in the public sector, two jobs are
:08:11. > :08:15.being created in the private sector. Down south it is the other way
:08:15. > :08:20.around andy two jobs lost in the public sector only one is being
:08:20. > :08:26.created in the private sector. To explain what Brian was saying about
:08:26. > :08:30.the Scottish market, Scottish firms laid off labour rapidly. That was
:08:30. > :08:37.sad for the people concerned, but what happened was Scottish firms
:08:37. > :08:43.were trying to get laner and fitter. So that what has happened is the
:08:43. > :08:46.export economy picked up, they could put on jobs. In England they
:08:46. > :08:50.didn't lay off labour to the same extent and put them on part-time
:08:50. > :08:54.and what has been happening is they have been taking workers off part-
:08:55. > :08:59.time and giving them longer hours, but not hiring new workers. That
:08:59. > :09:06.has had an effect on confidence in England. If you look at Scotland,
:09:06. > :09:12.confidence is stronger. That is the key lesson. Although not consumer
:09:13. > :09:16.confidence. But we are back where we were in 2009. Accept that.
:09:16. > :09:22.saw an improvement in productivity that has not fed through an
:09:22. > :09:25.improvement in output. If in this picture we hear the First Minister
:09:25. > :09:31.talking about a billion pounds coming out 069 capital spend,
:09:31. > :09:35.because of the cuts and because there has been this accelerated
:09:35. > :09:43.expenditure in Scotland, do you think the Government here's
:09:43. > :09:46.advantage has gone? No, what Scotland is trapped in a UK economy
:09:46. > :09:50.where capital spending has been slashed and confidence has gone and
:09:50. > :09:54.things are slowing down. Plus you have the euro crisis whra. The
:09:54. > :09:59.Scottish Government has been able to do is bring forward a lot of
:09:59. > :10:05.capital spending, not enough, but it has kept the construction
:10:05. > :10:09.industry better tan in England. John Swinney if you read his latest
:10:09. > :10:15.economic plan, he is the past master at creating little projects
:10:15. > :10:18.to improve productivity across the economy. Most people think it is
:10:18. > :10:24.boring, but they're important, because the way you run economy is
:10:24. > :10:28.not just to turn the steering wheel, but you make fine adjustments and
:10:28. > :10:32.that maintains confidence and growth. But essentially that is
:10:32. > :10:37.about improving the growth of the economy. And improving the growth
:10:37. > :10:41.potential. That is important. But where we're at now is a situation
:10:41. > :10:45.where there is deficient demand and we have significant unemployment
:10:45. > :10:51.through deficient demands. This is not simply or only because Scotland
:10:51. > :10:55.is part of United Kingdom, this is a worldwide problem. It is a
:10:55. > :11:00.European-wide problem. The world economy is long wishing in large
:11:00. > :11:03.parts in the western part of it, in a stagnation period that is will
:11:03. > :11:09.last for many years and we have seen the developments in Europe are
:11:09. > :11:14.such that we could see the mother of all banking crisis sweeping
:11:14. > :11:20.across Europe in the next few weeks. That will have catastrophic
:11:20. > :11:25.implication for our export marks, our bank ast the economy. I may be
:11:25. > :11:31.a Jeremiah, but a lot of people share this view. We will look at
:11:31. > :11:36.the potential impact if there is a Greek default. Do you have any
:11:36. > :11:40.sense that you're getting any inclination from what Nick Clegg is
:11:40. > :11:43.saying, he is talking about stimulating growth by
:11:43. > :11:49.infrastructure, investments, do you think that there is any indication
:11:49. > :11:56.that Westminster will be forced to relax the asterty measures? They
:11:56. > :12:02.are moving in that direction. There is a de-- deficiency of demand. The
:12:02. > :12:06.key is how do you get deup without sending the markets into hysterics?
:12:06. > :12:14.We need targeted cuts in VAT and particularly in house repairs and
:12:14. > :12:18.the housing market. That would be a key thing. With that you reduce
:12:18. > :12:22.revenues. There noise historic problem in the markets. UK bond
:12:22. > :12:27.yield are the low nest a generation. People are buying UK Government
:12:27. > :12:31.debt. There is not problem here to expand through tax I cuts or
:12:31. > :12:36.infrastructure. The problem with infrastructure problems, projects
:12:36. > :12:44.is you need shovel ready projects that go Aled tomorrow, so they can
:12:44. > :12:50.add de -- demand in the economy. If you want the pump in demand you
:12:50. > :12:56.have to go down the route of tax cuts, payroll tax cuts, that thing.
:12:56. > :13:02.But that reduces rev news. No, it allows the, the big problem is how
:13:02. > :13:06.hold debt hangover. They are not spending. They the biggest item of
:13:06. > :13:11.spend and we need to encourage them to spends and then that will bring
:13:11. > :13:16.back tax revenues. So there is a multiplyer effect. If we look at
:13:16. > :13:21.the growth and this strategy about how you get growth back into the
:13:21. > :13:28.economy, there is a report by a economist at the Bank of America
:13:28. > :13:30.saying that while austerity could help the longer outlook,
:13:30. > :13:34.consolidation threatens the recovery in developed economies and
:13:34. > :13:39.make the distinction between Greece that is already in a crisis and
:13:39. > :13:44.saying if you want the investors to invest, ease off on the austerity.
:13:44. > :13:49.Do you think that in some way Westminster is out of step with
:13:49. > :13:53.international think something Certainly. Look at last week in
:13:53. > :13:58.America, Barack Obama announced a major package of fiscal expansion.
:13:58. > :14:02.And there are countries, not all of Europe is a disaster. Some of the
:14:02. > :14:06.smaller countries are doing well, because they have maintained
:14:06. > :14:10.demands and business investment and a lot of the arguments that the
:14:10. > :14:16.Scottish Government has about devolving corporation tax is
:14:16. > :14:20.Germaine to how we go forward. It is the norm in many country for
:14:20. > :14:24.business taxes to be devolved to regional economys, because they're
:14:24. > :14:30.different and I think that devolcano ving corporation tax
:14:30. > :14:34.would have a bill big impact because it is a plan for cuts in
:14:34. > :14:44.corporation tax would give business confidence to invest. That is key
:14:44. > :14:48.
:14:48. > :14:54.in small businesses that is where Let's not... Let's be clear,
:14:54. > :15:00.corporation tax is about improving growth potential. The problem of
:15:00. > :15:03.the Scottish economy is not because capital is too high. We did hear
:15:03. > :15:09.that Scotland has flowed around because the course of capital is
:15:09. > :15:16.too high and that is what that tax cut tyres. It allows more
:15:16. > :15:20.investment. There are issues, there is no silver bullet, not many non
:15:20. > :15:23.national jurisdictions have it. It could work but it might not work.
:15:24. > :15:28.We would lose revenue in the short term was to but not clear how long
:15:28. > :15:38.it would be. We would have to forgo the block grant for a period of
:15:38. > :15:38.
:15:38. > :15:42.time. This is a scary project which might work but there is no
:15:42. > :15:48.guarantee and it is not a solution to stimulating demand in the short
:15:48. > :15:53.run to get the economy back to its potential. Less than 30 questions -
:15:53. > :15:59.- 30 seconds, do you think it is inevitable that Greece will do for?
:15:59. > :16:02.I think it has been inevitable for 18 months and part of the problem
:16:02. > :16:06.is that the European leadership is refusing to accept that which is
:16:06. > :16:11.why the markets are taking it out of them. The big problem would be
:16:11. > :16:16.his if we have an and controlled default, it will send dangerous
:16:16. > :16:22.waves through the whole banking and credit system. -- and control. You
:16:22. > :16:30.could teeter back to where we were in 2008, where the credit mechanism
:16:30. > :16:32.goes into a temporary freeze. The issue of who controls North Sea
:16:32. > :16:35.oil revenues raised its head at Prime Ministers Questions as David
:16:35. > :16:38.Cameron dismissed as stupid a suggestion from the SNP's Angus
:16:38. > :16:40.Macneil it should be devolved to Scotland. Mr MacNeil has asked for
:16:40. > :16:47.an apology and the First Minister described the Prime Minister's
:16:47. > :16:49.attitude as arrogant. Papers published today have shed light on
:16:49. > :16:55.the same debate back in the 1970s, when the Labour government
:16:55. > :16:57.considered taking over all of BP's North Sea assets. Professor Alex
:16:57. > :17:00.Kemp has spent a decade trawling through government documents,
:17:00. > :17:03.revealing new details about how it tried to prevent the nationalist
:17:03. > :17:13.movement cashing in politically. Kevin Keane reports on some of his
:17:13. > :17:18.
:17:18. > :17:23.It is this that makes the prospects... The year is 1975 and
:17:23. > :17:27.Tony Benn is making his first visit offshore to see oil being taken
:17:27. > :17:32.from the North Sea. It was a process that would bolster the UK's
:17:32. > :17:36.economy for decades but while BP was glad handing the minister on
:17:36. > :17:40.its new platform, he was making plans to strip them of all their
:17:40. > :17:50.North Sea interests and hand them to the newly emerging National Oil
:17:50. > :17:55.
:17:55. > :17:59.Corporation. Tony Benn wanted the corporation to have a very big role
:17:59. > :18:08.indeed. The other person felt unhappy that for some time it was
:18:08. > :18:15.more a paper company than a real company. He had quite radical ideas
:18:15. > :18:19.including taking over all of BP's assets. That is the boss for --
:18:19. > :18:21.bottle of North Sea off also today, Tony Benn stands by his initial
:18:21. > :18:26.ambitions and was perfectly open about them with the industry.
:18:26. > :18:32.Nevertheless, he was reined in by Harold Wilson, who thought the plan
:18:32. > :18:36.was too radical and too expensive. If we had been able to do that, it
:18:36. > :18:40.would have meant more money coming to us, greater control of the oil
:18:40. > :18:43.because depletion was very important. We were anxious to see
:18:43. > :18:51.the whales not depleted so rapidly that you were left with empathy
:18:51. > :18:55.feels. -- the oil was not depleted so radically that we were left with
:18:55. > :19:00.empty fields. They knew what I was doing and I told them openly what I
:19:00. > :19:06.was doing. We negotiated as best we could. Much of the industry's
:19:06. > :19:09.history is well-documented, both in books and in this maritime museum.
:19:09. > :19:14.What Professor Kemp has been allowed is unlimited access to
:19:14. > :19:18.official documents which reveal the thinking behind key policy
:19:18. > :19:23.decisions of successive governments. It covers taxation, licensing, the
:19:23. > :19:33.roles of the national oil and gas companies and privatisation. It
:19:33. > :19:40.
:19:40. > :19:44.also gives an interesting insight In for 1974 elections, nationalism
:19:44. > :19:48.was bleeding. The SNP riding high on a campaign that it was in fact
:19:48. > :19:52.Scotland's oil. The official history reveals that the economic
:19:53. > :19:58.benefits of oil were being actively downplayed by the Government, as a
:19:58. > :20:04.deliberate move to suppress that nationalist movement. The UK
:20:04. > :20:10.government did not want to encourage that it also in any
:20:10. > :20:15.pronouncements, the size of the future benefits like the tax
:20:15. > :20:20.revenues, were certainly not exaggerated. The history chance
:20:20. > :20:25.Shetlands battle with the government over oil revenues. This
:20:25. > :20:28.one being officially opened by the Queen. It had become a
:20:28. > :20:32.strategically important site for an oil terminal. The Treasury wanted
:20:32. > :20:36.any disruption payments to be paid directly to them. They even
:20:36. > :20:44.threatened to cut of grants which the islands relied on. After a
:20:44. > :20:47.fight, they eventually backed down. We held all the cards. The
:20:47. > :20:54.technology of the Damant the oil pipelines had to come to the
:20:54. > :21:01.nearest land form. -- technology of the day. The government eventually
:21:01. > :21:07.gave in. There was a worry this could lead to other local
:21:07. > :21:14.authorities... Saying that they should also give a share. The
:21:15. > :21:19.Shetland council had to begin their deals -- heels and fight hard.
:21:19. > :21:23.Aberdeen, Scotland and the UK have all undoubtedly grown because of
:21:23. > :21:27.oil, although some civil servants thought that growth had not been