:00:11. > :00:16.will be pushing that through the Tonight on Newsnight Scotland, the
:00:16. > :00:21.latest study of the Scottish economy suggests it is doing even
:00:21. > :00:31.worse than we thought it was. Is it time for a change of policy in
:00:31. > :00:37.
:00:37. > :00:41.Can industry pay the way to a wealthier future? The latest Fraser
:00:41. > :00:47.of Allander report bricks were pretty gloomy reading for
:00:47. > :00:51.politicians. Recovery here is slower than the UK. Is as much the
:00:51. > :01:01.same thing about employment. Many of the arguments used by the
:01:01. > :01:03.
:01:03. > :01:09.coalition government in London to The Fraser of Allander report
:01:09. > :01:16.clearly goes into forecasting where others fear to tread. It did so
:01:16. > :01:24.again today. Scotland's economy growth has gone down to 0.4 %. Next
:01:24. > :01:34.year, it is being downgraded again. That puts Scotland a long way
:01:34. > :01:36.
:01:36. > :01:42.behind independent forecasts for So what is going on? There is the
:01:42. > :01:45.big picture. Scotland may seem a long way from Athens and Rome,
:01:45. > :01:50.added has a different currency, but we are not protected from
:01:50. > :01:53.uncertainty in the euro-zone. quite clear that the UK and
:01:53. > :02:00.Scottish economies are weakening. They are also might -- almost
:02:00. > :02:05.stagnating. It is sad that this has come to pass. What is driving this
:02:05. > :02:09.is the hangover from the credit crunch. Household spending
:02:09. > :02:14.continues to be weak, particularly in Scotland. That means obviously,
:02:14. > :02:18.the demand for locally produced services particularly as being
:02:18. > :02:24.affected. The service sector has hardly recovered a tour in Scotland.
:02:24. > :02:34.Let's bring the questions closer to home. Standard Life was shedding
:02:34. > :02:39.
:02:39. > :02:46.jobs today, and 507 and 80 staff were facing redundancy at a chain
:02:46. > :02:53.of care homes. Aberdeen is dominated by boil and gas, and that
:02:53. > :02:57.is strong. Oil prices have been high for some time. Come down to
:02:57. > :03:02.the central belt, and it is different. There has been some
:03:02. > :03:09.contracture for me bigger banks, but they have been lots of start-up.
:03:09. > :03:14.Move across to Glasgow, and you have a much different service and
:03:14. > :03:18.manufacturing sector. It is much tougher. Companies have done well
:03:18. > :03:22.to tidy up the balance sheet. But where is the growth going to come
:03:22. > :03:28.from? It is the poor showing I in the business and financial sector
:03:28. > :03:33.that is identified as a particular problem by the Fraser of Allander
:03:33. > :03:41.report. It has gone down 11 % since the downturn began. This company is
:03:41. > :03:48.doing quite well. It is using its document handling technology
:03:48. > :03:53.to/payroll costs. The general everyday small to medium-size
:03:53. > :03:56.enterprises tend be holding onto their equipment as long as they can,
:03:56. > :04:00.because they are feeling particularly tight. That affects
:04:00. > :04:04.our business, because they are not replacing the equipment as often as
:04:04. > :04:09.they used to. There's the gap two big questions coming out of the
:04:09. > :04:19.forecast. Why is Scollan grown more slowly than the rest of the UK?
:04:19. > :04:26.
:04:26. > :04:33.Westminster... What is the best way The problem for Scotland is the
:04:33. > :04:37.problem of a small, open economy. Even if you do spend in the economy,
:04:37. > :04:43.it is going to leak out. We are dependent upon what is happening in
:04:43. > :04:51.the rest of the United Kingdom, and what is happening in Europe. We
:04:51. > :04:56.export significant amount. We rely much more on exports, and much more
:04:56. > :05:06.on external demand. Whatever the local government can do to
:05:06. > :05:07.
:05:07. > :05:13.stimulate growth is why we are so much buffeted in -- by what is
:05:13. > :05:23.happening in London, and Brussels and Frankfurt. Where is the extra
:05:23. > :05:29.
:05:29. > :05:33.capital spending to come from? The I am joined by MPs in London. John
:05:33. > :05:39.Thurso for the Liberal Democrat and Stewart Hosie for the SNP. John
:05:39. > :05:44.Thurso, the implication of all this, let -- yet another cut in growth
:05:44. > :05:47.forecasts, is it something that really needs to be done? Your
:05:47. > :05:52.government says that everything has to go the same way and nothing can
:05:52. > :05:56.change. I think the first thing to say is that there is no great
:05:56. > :06:00.surprise in this report, and anyone who has been following the Scottish
:06:00. > :06:07.economy would have expected something like these numbers to
:06:07. > :06:11.appear to reflect what is happening in the wider UK, and as his what is
:06:11. > :06:16.happening in the US and other countries in the Western world. The
:06:16. > :06:19.question is what should be done about it. We need to hold steady to
:06:19. > :06:25.the deficit reduction programme. The report quite rightly pulls --
:06:25. > :06:30.points out that while Scotland is suffering more now is because stop
:06:30. > :06:36.-- the Scottish government decided not to stop this austerity
:06:36. > :06:41.programme -- programme last year. But the report also describes as a
:06:41. > :06:50.myth the idea that you can Engineer economic recovery in a situation
:06:50. > :06:55.like the one we are in now. I beg to differ. The problem we have now
:06:55. > :06:58.is a massive debt legacy. We are not cutting the debt. It is
:06:58. > :07:02.increasing every year of this Parliament. We are cutting the rate
:07:02. > :07:07.of increase in the dead. That is what we are doing. If we do not do
:07:08. > :07:12.that, we end up in a completely unsustainable place that Greece was
:07:13. > :07:19.in, and what it really looks like it might be going towards. That is
:07:19. > :07:24.clearly not somewhere where the UK wants to be. The best thing you can
:07:24. > :07:30.do in a recession it is to keep your interest rates down. Our cost
:07:30. > :07:33.of borrowing is low because of the action taken by the government. I
:07:33. > :07:43.hope the government are not complacent about that. That is why
:07:43. > :07:47.I applaud the decision for quantitative easing. Other like
:07:47. > :07:56.Seymour Investment. It is question of pulling it forward. -- I it
:07:56. > :08:05.would like to see more investment. If it wasn't for the austerity
:08:05. > :08:12.programme that you put into place, Britain would risk finding itself
:08:12. > :08:17.in the same position that Italy is in. I think George Osborne
:08:17. > :08:26.overstate their at. It is growth we need as much as anything. -- he
:08:26. > :08:32.overstate that. I am assuming that is what is meant. The report was
:08:32. > :08:39.untrue -- extremely interesting. They identified the global downturn,
:08:39. > :08:44.the contagion in the eurozone and the global sovereign markets. It
:08:44. > :08:48.also identified specific issues like access to business finance for
:08:48. > :08:51.those businesses that want to grow, and that is one of the measures
:08:51. > :08:57.that we have found vitally important to get the growth in the
:08:57. > :09:00.economy that we need. It also did not say much for some of the claims
:09:01. > :09:05.that the Scottish government has been making about how it has been
:09:05. > :09:10.managing the crisis. It found that while it is true that the recession
:09:10. > :09:15.in Scotland was shallower than the rest of the UK, the recovery is
:09:15. > :09:21.slower than in the rest of the UK, and recovery in employment is also
:09:21. > :09:26.slower than the rest of the UK. was shallower because of the
:09:26. > :09:36.actions of the Scottish government. It is slightly slower because there
:09:36. > :09:37.
:09:37. > :09:42.is less capacity, precisely because of it being lower. None of this is
:09:42. > :09:47.surprising. The question is, how do be boost the growth, given that it
:09:47. > :09:50.cannot be export Les -- export led with the difficulties in the euro-
:09:50. > :09:56.zone and the United States. How do we stimulate the demand and create
:09:56. > :10:00.the jobs that we need to put vibrancy back into the economy?
:10:00. > :10:05.answer to your own question is what? Now three significant
:10:05. > :10:10.components. There should be a breeze to capital investment. The
:10:10. > :10:14.second is access to business finance but the report identified.
:10:14. > :10:23.The third is confident. As far as possible, trying to keep people in
:10:23. > :10:29.This point about interest rates on government debt. You heard in the
:10:29. > :10:32.report, it significantly rejects the argument you just made. He
:10:32. > :10:35.argued that the reason is because one, it reflects an expectation
:10:35. > :10:40.that growth in the economy will be very low for a long time and
:10:40. > :10:44.secondly, it reflects a flight to safety, people putting money into
:10:44. > :10:47.US government debt, British debt, German debt, simply because they
:10:47. > :10:52.don't want to invest it and do productive things in the real
:10:52. > :10:56.economy. He is entitled to his opinion, but I was reading the Bank
:10:56. > :11:03.of England quarterly report not long before I came in and what they
:11:03. > :11:08.put forward is very much the case that prudent fiscal management is
:11:08. > :11:12.actually a major factor in keeping the cost of government borrowing
:11:12. > :11:17.down. The counter fact to that is to look at what has happened in
:11:17. > :11:24.Italy, which is a major economy, third or 4th largest economy in
:11:24. > :11:29.Europe, which has seen its cost of debt shoot up Ed a period of two,
:11:29. > :11:33.three months, simply because it hasn't got a grip on its finances -
:11:33. > :11:36.- in a period. Whether we are cutting too far, there is a
:11:36. > :11:41.perfectly legitimate argument, but what is absolutely clear is where
:11:41. > :11:45.week -- were we to have cut too little, we would now be sitting in
:11:45. > :11:50.a position not dissimilar to the Italian economy and that would be a
:11:50. > :11:54.very uncomfortable place to be. So I would rather see the Government
:11:54. > :11:57.bearing on the side of caution, it is a better place to be for
:11:57. > :12:02.building for the future than the chaos that is happening to those
:12:02. > :12:07.countries that have been overtaken by the markets. You don't seem to
:12:07. > :12:11.be fundamentally challenging the Government. I thought the SNP's
:12:11. > :12:14.view was that the whole thing was wrong-headed, that we need fiscal
:12:14. > :12:18.expansion in the current situation in order to get growth back into
:12:18. > :12:21.the economy, not just a little bit more capital spending and some
:12:21. > :12:27.fiddling around with the banks to get them to lend more to small
:12:27. > :12:32.businesses. Do. We made about the Government's plan -- of the point
:12:32. > :12:37.we made about the plan was that the time to remove the structural debt
:12:37. > :12:40.over one Parliament, a fixed time frame, was very foolish, but we are
:12:40. > :12:46.where we are with an autumn statement coming up in November and
:12:46. > :12:49.I am hoping the Chancellor will see sense, whatever plan he calls it,
:12:49. > :12:52.but takes some of the measures I have outlined and some of the
:12:52. > :12:55.measures other people have outlined to try and do something to
:12:56. > :13:01.stimulate the economy and get the growth we need, even if it is only
:13:01. > :13:05.for the UK government to keep to its target, which was bad enough.
:13:05. > :13:09.There has been all of this talk about alternative plans, we don't
:13:09. > :13:13.care about the name, but this idea of setting up some sort of
:13:13. > :13:23.mechanism to lend money to small businesses. Is that really in the
:13:23. > :13:28.pipeline? I have no idea what is in the Autumn Statement. I hope it is
:13:28. > :13:33.not a plan rubbish, which is what is coming out of Edinburgh. It is
:13:33. > :13:37.pretty much what George Osborne has been saying it, isn't it? What I am
:13:37. > :13:42.looking for his things the Government are already doing to
:13:42. > :13:46.start to take effect -- is things. The regional growth fund,
:13:46. > :13:50.Enterprise Zones, a look at the consequential for Scotland that
:13:50. > :13:55.come out of that. Look at the extra money that will be available. Will
:13:55. > :13:59.it be invested in Scotland or will it just be spent on things we don't
:13:59. > :14:01.particularly need? We will have to leave it there, thank you both very
:14:01. > :14:04.much indeed. Could science hold the key to
:14:04. > :14:07.reviving the national finances? Tomorrow in Edinburgh, the annual
:14:07. > :14:10.Science and the Parliament event will bring together scientists and
:14:10. > :14:15.politicians to discuss what science can do for the economy - and vice
:14:15. > :14:18.versa. And timed to coincide with it, a pointer from the past - it's
:14:18. > :14:20.been announced in the past few minutes that the Royal Society of
:14:20. > :14:23.Chemistry is to honour the Scottish scientist who became the world's
:14:23. > :14:33.first oil baron. Our science correspondent Kenneth Macdonald has
:14:33. > :14:36.
:14:36. > :14:46.By the time this film was made in 1937, James Young was already
:14:46. > :14:48.
:14:48. > :14:53.history. He distilled hydrocarbons, creating a light oil for lamps,
:14:53. > :14:58.heavy oil for lubrication and the modern oil industry. He opened the
:14:58. > :15:01.first oil refinery in West Lothian. He was the one who thought of
:15:01. > :15:06.getting it from the she'll or oil in the first place, are nothing to
:15:06. > :15:10.have these discoveries, -- and nothing to have these discovered,
:15:10. > :15:17.and we have a large number of them we can call our own, he has never
:15:17. > :15:27.been celebrated. There is as yet no stay tuned to paraffin young. But
:15:27. > :15:29.now the Royal Society of chemistry is to commemorate him. Paraffin
:15:29. > :15:35.Young is and forgotten in West Lothian, where there is still
:15:35. > :15:39.plenty of evidence of the shale oil industry. Scotland does have a
:15:39. > :15:48.tendency to dwell on its scientific past. But what does the future
:15:48. > :15:54.hold? Paraffin Young attended what is now Strathclyde University,
:15:54. > :15:58.where this man holds the chair in chemistry. Before recent materials
:15:59. > :16:02.in use of display screens and lasers are among many other
:16:02. > :16:05.developments being worked on here. The professor says a multi-
:16:05. > :16:11.disciplinary approach will pay dividends for the Scottish economy.
:16:11. > :16:15.We need chemists to make materials, we need physicists to understand
:16:15. > :16:19.the properties of the systems when they are working in devices, unique
:16:19. > :16:23.the electronic engineers to try and optimise them and once you have
:16:23. > :16:26.everything in a nutshell and good efficiency and a product that lasts,
:16:26. > :16:31.which is a key issue, and you get the price down, you have really got
:16:31. > :16:35.a product. If you look at Scotland's cross section across
:16:35. > :16:42.academia, and technology, we have all of that and we can exploited.
:16:42. > :16:47.There are areas like Fawlty -- photovoltaic that we can expand on,
:16:47. > :16:50.and we can end up with a product that will not necessarily be for
:16:50. > :17:00.the 5 million plus in Scotland it will be for a whole world, so the
:17:00. > :17:00.
:17:00. > :17:07.market is huge. So what else might be on the horizon? I think we can
:17:07. > :17:13.safely say that many of the future discoveries that will be important
:17:13. > :17:22.in medicine will come from Scottish Science. I think if we look at
:17:22. > :17:26.renewable energy, then wave, tide, water, Hydro-Electric, whatever...
:17:26. > :17:30.Interestingly, I think we can look at solar energy as well, I think
:17:30. > :17:34.all of the renewable energies we can look at from Scotland and I
:17:34. > :17:39.would be very surprised if Scotland didn't have a big part to play in
:17:39. > :17:47.helping drive forward, if you want the green agenda. A like James
:17:47. > :17:51.Young, he was very much embedded in the fossil fuel age -- unlike. We
:17:51. > :17:56.are now at a time within science where we are trying to address
:17:56. > :18:00.energy issues, which are partly created by the things that James
:18:00. > :18:06.Young and his technologies the bid. So we are trying to reduce carbon
:18:06. > :18:10.dioxide emissions, we are trying to... Where my research fits in is
:18:10. > :18:15.an area which will create more efficient devices, that will use
:18:15. > :18:20.far less power and can use green power, green electricity. We are
:18:20. > :18:27.also producing devices, Organic sells for example, that can convert
:18:27. > :18:31.sunlight into electricity and provide a clean source of energy.
:18:31. > :18:34.The questions of how Research like that can sustain an economy and has
:18:34. > :18:39.Scotland can support the research will be central to tomorrow's
:18:39. > :18:42.Science and the Parliament event. It is tempting to think as paraffin
:18:42. > :18:47.are something distinctly old- fashioned, that your daddy used to
:18:47. > :18:52.put in a room heater, but if you want to get the full scale of
:18:52. > :19:00.change young's legacy, you only have to look up. -- James Young's
:19:00. > :19:04.legacy. The rest of the world calls it kerosene, jet fuel. Sir James
:19:04. > :19:07.Young's developments continue to underpin our fossil-fuel economy.
:19:08. > :19:11.Will Scotland have a similar stake in a future driven by renewable
:19:11. > :19:15.energy? That will be up to our current generation of scientists
:19:15. > :19:20.and politicians. A quick buck that tomorrow's front
:19:20. > :19:27.pages, starting with The Scotsman. -- a quick look. This is a report
:19:27. > :19:31.which says Scotland would have to pay into the bail-out fund if they
:19:31. > :19:37.joined the eurozone. The Guardian leads on that it was the Euro that
:19:37. > :19:47.got him, Berlusconi fought -- forced out. That is all we have
:19:47. > :19:51.
:19:51. > :19:54.time for tonight. I'm back tomorrow. Good evening. I cloudy, damp and
:19:54. > :19:57.misty night tonight but temperatures will hold up into the
:19:57. > :20:03.mild levels but it does mean a rather dismal start to the morning.
:20:03. > :20:08.More rain and drizzle around, baby bride has to was the north of
:20:08. > :20:13.Cumbria in the afternoon -- maybe. But most of England will hold on to
:20:13. > :20:16.the cloud and drizzle. Across the Midlands and East Anglia and the
:20:16. > :20:21.south, at the chance that after the dismal start, things may brighten
:20:21. > :20:25.up enough to allow some outbreaks coming through the cloud,
:20:25. > :20:28.temperatures around 16. The South West will hold on to cloudy
:20:28. > :20:33.conditions throughout, and Wales, and heavier pulses of rain
:20:33. > :20:38.throughout the day. Once that he's is during the afternoon, you might
:20:38. > :20:41.see some brightness. -- eases. The same in Northern Ireland, but
:20:42. > :20:45.predominantly damp. Damp and cloudy across southern and eastern
:20:45. > :20:50.Scotland, but the far north, even though there will be more cloud
:20:50. > :20:53.than today, should be reasonably bright. Thursday, the difference is
:20:53. > :20:57.not usually discernible. If anything, the rain across some
:20:57. > :21:02.parts of Scotland, Western in that that Wales could be heavier and
:21:02. > :21:07.more persistent. -- Western in that. Either side, there should be some
:21:07. > :21:12.sunshine. Brightening up from the West, the eastern fringes of