:00:11. > :00:17.It's a tax increase on public On Newsnight Scotland tonight: The
:00:17. > :00:21.economic pain and gloom are not necessarily confined south of the
:00:21. > :00:29.border I will ask the government government whether it believes the
:00:30. > :00:31.assurances. We will ask who are the winners and losers. Good evening.
:00:31. > :00:36.Shudderingly awful downward revisions for economic growth,
:00:36. > :00:38.meaning additional years of pain. Though there will be some
:00:38. > :00:40.sweeteners, including almost half a billion extra money for the
:00:40. > :00:49.Scottish government over three years. Our business and economy
:00:49. > :00:53.editor, Douglas Fraser watched it all unfold. Slower growth, more bow
:00:53. > :00:59.oring a sluggish recovery the cuts go on for two years. Was there
:00:59. > :01:02.anything to cheer us up about this autumn Statement? There is a growth
:01:02. > :01:07.strategy now around infrastructure spend, business deleg regulation
:01:07. > :01:12.and education reform, at least for England. Some of it reaches to
:01:12. > :01:20.Edinburgh, one of ten super connected digital cities. Scottish
:01:20. > :01:26.long distance drivers can applaud the postponed fuel tax increases.
:01:26. > :01:33.The big ticket for Holyrood is �150 million extra capital budget. It
:01:33. > :01:36.will oos ease the spending squeeze. We don't know if there is extra
:01:36. > :01:46.revenue along with that capital. Whitehall is negotiating over the
:01:46. > :01:51.pay bill. �50 million to renew the cross-border sleeper trains. Scott
:01:51. > :01:55.Scottish ministers will decide how to spend the extra allocation.
:01:55. > :02:03.There could be a new Glasgow college campus. They will have to
:02:03. > :02:08.see how it fits their strategy, due for announcement next month for
:02:08. > :02:12.Scotland's infrastructure and enterprise zone. Also whether to
:02:12. > :02:17.implement the tight squeeze on public sector pay. They can see
:02:17. > :02:22.that the prolonged, sluggish economic recovery threats their
:02:22. > :02:28.political plans. Go had hoped to get the economy on the turn,
:02:28. > :02:34.heading for growth when he next faces the electorate in May 2015.
:02:34. > :02:40.That now looking less likely. The austerity will go on through that
:02:40. > :02:47.campaign making re-election a tougher sale. It will go past the
:02:48. > :02:51.Holyrood election in 2016. Before then there will be a referendum on
:02:51. > :02:55.independence. Could it make Scots feel more downbeat and less
:02:55. > :03:05.confident? Will it make the United Kingdom feel a less attractive
:03:05. > :03:07.
:03:07. > :03:11.prospect for Scotland's future? The Minister of State at the skaufs is
:03:11. > :03:16.Conservative MP David Mundell. I asked him if the �433 million over
:03:16. > :03:20.the three years, which is coming to Scotland byway of the Barnett
:03:20. > :03:23.Formula is new money? This is money that the Scottish Government hadn't
:03:23. > :03:27.anticipated or hadn't budgeted for. It's additional money for their
:03:27. > :03:31.purposes. I would hope they would welcome it. At the moment, they
:03:31. > :03:35.seem to be the only government in the world who, when they do get
:03:35. > :03:39.additional money they haven't budgeted for they seem always to be
:03:39. > :03:43.able to find something wrong with it. George Osborne made great play
:03:43. > :03:47.of the fact that this money for spending onical capital projects
:03:47. > :03:54.would be transferred from the current budget and, therefore,
:03:54. > :03:59.would be neutral on its spending plans? It will be neutral over all.
:03:59. > :04:05.In terms of the Barnett. Scottish government can expect a
:04:05. > :04:09.cut in its current budget? certainly shouldn't expect a cut in
:04:09. > :04:14.its current budget. Scotland's share of the UK cake is determined
:04:14. > :04:23.by the Barnett Formula. That formula is based on how different
:04:23. > :04:27.elements of funding is spent across Whitehall departments. Whether they
:04:27. > :04:31.are reserved or devolved matters. It's pleatly wrong for the Scottish
:04:31. > :04:34.government to jump to the conclusion that the current account
:04:34. > :04:39.spending would be reduced. That will definitely not be the case.
:04:39. > :04:44.George Osborne is going to finance this capital spending, by
:04:44. > :04:47.transferring, by extra cuts in current spending, I'm not clear
:04:47. > :04:52.exactly why Scotland should be earthquakes sefrpt from that?
:04:52. > :04:56.Scotland's share of the cake, as I've said, is determined by the
:04:57. > :05:01.Barnett Formula. That formula relates - Yes, I understand. We
:05:01. > :05:05.understand that. The point is, if money is being transferred from
:05:05. > :05:10.current budgets, to capital budgets, and, therefore, there will be more
:05:10. > :05:14.public spending cuts on current budgets to finance this transfer to
:05:14. > :05:18.capital spending, that will, presumably, hit most departments,
:05:18. > :05:23.other than, for example, perhaps the NHS, where you have made
:05:23. > :05:26.certain commitments. Are you saying there will be no Barnett
:05:26. > :05:32.consequencals of cutting current spending by the same amount you
:05:32. > :05:38.want to increase capital spending? Not for Scottish funds. It is
:05:38. > :05:41.because of the way in which the Barnett Formula works across
:05:41. > :05:45.departmental spending. Scotland benefits when the government
:05:46. > :05:50.increases spending in England on the areas which are devolved.
:05:50. > :05:55.That's what has happened in this case. There will be extra money for
:05:55. > :05:59.Scotland in capital, �433 million, which I would like to think that
:05:59. > :06:05.the Scottish government would welcome. It's an opportunity for
:06:05. > :06:10.spending on economic growth, on jobs, on infrastructure. It should
:06:11. > :06:16.be a positive thing - There will be no redctionduction in current
:06:16. > :06:21.spending? There will not be a cut in current spending for the
:06:21. > :06:25.Scottish government. When the Chancellor is able to confirm the
:06:25. > :06:30.exact figures the Scottish government will see this. Instead,
:06:30. > :06:34.they would prefer to leak to a -- leap to a negative conclusion so
:06:34. > :06:38.that somehow they can pour cold water on what is a good settlement
:06:38. > :06:43.for Scotland. This is a government that is determined, even when there
:06:43. > :06:47.is good news, even when there is additional money, to talk it down.
:06:47. > :06:53.So, I'm sure they will be delighted when you have explained that to him.
:06:53. > :07:00.Can you explain to us, if you are still in office, there are to be an
:07:00. > :07:07.extra �8 billion of cuts in current spending across the UK in 2015/16
:07:07. > :07:11.and �15 billion of extra cuts in public spending in 16/17. Will the
:07:11. > :07:16.Scottish government also be exempt from that? They will. Pen when the
:07:16. > :07:21.next spending review is determined, they will know what their budgetary
:07:21. > :07:27.allocations are. They will then be able to work on the basis of those
:07:27. > :07:32.allocations to determine how they best spend money within Scotland.
:07:32. > :07:35.So, those are - It might be or it might not be? They are decisions to
:07:35. > :07:38.be taken in the next spending review. The case in this spending
:07:39. > :07:43.review is that the Scottish government will get more money than
:07:43. > :07:46.they had anticipated. They will have an additional opportunity to
:07:46. > :07:50.invest in infrastructure and in jobs. Do you expect the measures
:07:50. > :07:57.announced today to help growth in the British economy? I very much
:07:57. > :08:02.hope that they will help. Can you explain why, in that case, the
:08:02. > :08:04.office of budget responsibility say they have not made any adjustment
:08:04. > :08:11.to their economic forecast as a result of the measures announced
:08:11. > :08:16.today? I welcome the fact that the office of budgetary responsibility
:08:16. > :08:20.is cautious in their outlook. on. You announced a budget for
:08:20. > :08:25.growth. Your own office of budget responsibility said says, as far as
:08:25. > :08:29.they can see, it will have no effect on growth? I don't accept
:08:29. > :08:33.the analysis it would have no effect on growth. It's not my
:08:33. > :08:38.analysis. It's what they say. They say they have not made any
:08:38. > :08:42.adjustment to the economic forecast as a result of today's measures?
:08:42. > :08:48.don't want the office of budget responsibility of making outrageous
:08:48. > :08:52.forecasts, as we saw the previous government doing. What we are doing
:08:52. > :08:58.today is taking forward solid measures to help the economy.
:08:58. > :09:01.Bringing forward measures to assist youth unemployment. Easing access
:09:01. > :09:05.to credit it taking specific measures to help businesses all of
:09:05. > :09:13.which we want to see delivering growth. If the office of budget
:09:13. > :09:20.responsibility, which is supposed to analyse these things forecasts
:09:20. > :09:27.that George Osborne's's project for growth you would explain that as
:09:27. > :09:31.outrageous? I wouldn't - You just have done? I said I welcome the
:09:31. > :09:35.cautious of the office of budget responsibility. Let's be judged on
:09:35. > :09:41.the affect of our measures when they had a chance to take affect.
:09:41. > :09:44.Clearly, a lot of the decisions following on from this statement
:09:44. > :09:47.will land at the door of the Scottish Government. Earlier, I
:09:47. > :09:50.spoke to Finance Secretary John Swinney and asked him if he
:09:50. > :09:55.expected to lose any current money to compensate for the increase in
:09:55. > :10:01.capital money he was getting from the Treasury.
:10:01. > :10:05.I need to have clarity on that point and it is a very unusual
:10:05. > :10:10.circumstance that I get autumn budget statement information from
:10:10. > :10:15.the Treasury which has only got one side of the picture, the capital
:10:15. > :10:22.allocation. I can only imagine that means we will have some form of
:10:22. > :10:28.budget reduction in the resource aerial. I maybe able to bring you
:10:28. > :10:32.good news. I had just interviewed David Mundell who appeared it to be
:10:32. > :10:37.claiming there would be no cut in your current budget as a result of
:10:37. > :10:43.this. That will be interesting and I look forward to receiving the
:10:43. > :10:51.written confirmation. But I can say to you that I am in the very
:10:51. > :10:55.unusual situation that the Treasury have been unable to tell me tonight
:10:55. > :11:00.what the resource implications of the Autumn statement will be for
:11:00. > :11:04.Scotland which I find quite extraordinary. David Mundell must
:11:04. > :11:09.have the information before the Treasury. A as I say, I will be
:11:09. > :11:12.delighted to receive that confirmation if it is the case. But
:11:12. > :11:21.you will forgive me if I wait broader the letter from the
:11:21. > :11:26.Treasury first. -- wait for the letter. George Osborne said that
:11:27. > :11:35.public sector wages will be capped after 2013, is that a policy you
:11:35. > :11:40.will follow? After the next year of pay restraint, we expected it to be
:11:40. > :11:45.in a position where we could move to modest increases in pay. An
:11:45. > :11:49.increase of 1% would fit the bill of being a modest pay increase. We
:11:49. > :11:54.set our pay policy after consultation that the trade unions
:11:54. > :11:57.in advance of the financial year in question so be it will have those
:11:57. > :12:02.discussions with the trade unions but we will be trying to deliver an
:12:02. > :12:11.approach which it does deliver modest increases in public sector
:12:11. > :12:16.pay at that stage. But 1% would be about right, because presumably it
:12:16. > :12:21.would be difficult to pay anymore than the UK Government is proposing
:12:21. > :12:28.to pay its employees? That is correct. The 1% figure seems to fit
:12:28. > :12:30.into the category of being modest and given the fact that our work
:12:30. > :12:37.funding situation follows very directly the decisions taken by the
:12:37. > :12:47.delighted Kingdom government, it strikes me that it will be a in
:12:47. > :12:47.
:12:47. > :12:53.that margin. -- United Kingdom government. George Osborne has
:12:53. > :13:00.asked whether pay increases or pay scales could be more reflective of
:13:00. > :13:05.regional markets, would you welcome that? We will look at the analysis
:13:05. > :13:10.that is identified as a consequence of that. I suspect we will not have
:13:10. > :13:15.quite the regional disparity in the Scottish Labour market that the
:13:15. > :13:19.United Kingdom government experiences around the market.
:13:19. > :13:25.implication could be that pay scales would be law in Scotland
:13:25. > :13:35.than they might be in other parts of the south-east of England. --
:13:35. > :13:35.
:13:35. > :13:41.would be lower. We said many aspects of pay policy in Scotland.
:13:41. > :13:46.We are mindful of their experience in Scotland. It does not strike me
:13:46. > :13:51.as a particular problem for the situation in Scotland. Clearly, if
:13:51. > :13:56.that was to have any affect on the funding arrangements that are
:13:56. > :14:00.reflected, that essentially drive public expenditure in Scotland, I
:14:00. > :14:04.would have a strong opinion about that. The Office of budget
:14:04. > :14:10.responsibility has raised its estimate on the number of public
:14:10. > :14:20.sector jobs that will be lost through red the UK -- throughout
:14:20. > :14:21.
:14:21. > :14:26.the United Kingdom up to 700,000. Given that, can you still have a
:14:26. > :14:30.policy of no compulsory redundancies in Scotland? We have
:14:30. > :14:34.taken that forward for next year and we will continue to sustain
:14:34. > :14:44.that policy it. We think it is possible to do that in the
:14:44. > :14:46.constraints within which we operate. We are trying to work
:14:46. > :14:51.collaboratively to maintain public sector employment in Scotland
:14:51. > :14:56.because it matters as an economic driver in Scotland. We believe it
:14:56. > :15:03.is a significant contributor to delivering economic score --
:15:03. > :15:08.economic growth in Scotland. government to see it will put up
:15:08. > :15:13.�50 million if you will match the sweeper improvement. We will try to
:15:13. > :15:19.make that work. They will have to a talk with the United Kingdom
:15:19. > :15:23.government to Take That forward. We will engage very constructively to
:15:23. > :15:28.make that happen. The steeper service is very important to
:15:28. > :15:33.Scotland. I'm joined now by John McLaren,
:15:33. > :15:38.economist with the Centre for Public Policy for Regions.
:15:38. > :15:46.You have the honour of being the only non politician on the
:15:46. > :15:54.programme tonight. When it you saw this Office for Budget
:15:54. > :16:02.Responsibility report and its forecast, how bad is this? It is
:16:02. > :16:07.pretty bad, but I think most people could see it coming. The revisions
:16:07. > :16:16.in the Bank of England's forecasts have been pushing this way.
:16:16. > :16:21.Yesterday, with the OECD report coming out, it is almost
:16:21. > :16:28.automatically that you move that on to what is happening in the
:16:28. > :16:38.government's finance balance. If anything, what has not come out
:16:38. > :16:44.
:16:44. > :16:54.today has been a implied. This is an optimistic forecast. In America,
:16:54. > :16:58.if they do not pass new fiscal rules, they will be tightening it a
:16:58. > :17:03.lot more next year. If they eurozone and that happens to go
:17:03. > :17:13.there, that could mean it two years of negative growth in the United
:17:13. > :17:15.
:17:15. > :17:25.Kingdom. It is much more likely that the bride's side it will
:17:25. > :17:26.
:17:26. > :17:35.happen -- the bad side will happen? Yes. The belief is that the
:17:35. > :17:40.negative forecast is more likely. This central argument that the
:17:41. > :17:45.coalition government has had is that unless they do this, the bond
:17:45. > :17:55.markets will lose faith and Britain will have to pay higher interest on
:17:55. > :17:58.
:17:58. > :18:02.its debt. Is that still credible? This year, we will be borrowing
:18:02. > :18:12.more money as a country than we would have been under Alistair
:18:12. > :18:13.
:18:13. > :18:21.Darling's plans. It is staying with its gamble, that it is less of
:18:21. > :18:31.arrested to keep the market happy - - the that it is less of art risk
:18:31. > :18:40.to keep the markets are happy. It is taking the risk that that is
:18:40. > :18:49.going to have a better impact than doing some short term it stimulus,
:18:49. > :18:59.fiscal stimulus. It might be positive, but if that led to a
:18:59. > :18:59.
:18:59. > :19:07.negative knock on effect... So the markets and economists would
:19:07. > :19:12.disagree with Labour's argument that if you had start to their
:19:12. > :19:18.plans, you would have growth in the economy, people are not convinced
:19:18. > :19:28.of that? I think a number of economists say you should have more
:19:28. > :19:31.
:19:31. > :19:35.of a fiscal economist. -- fiscal stimulus. But most are fairly less
:19:35. > :19:43.certain of that. They are fairly happy with the profile of the
:19:43. > :19:47.current government's spending plans. The markets are happy to keep that
:19:47. > :19:51.tightness there. It is a fine balance. The Government has decided
:19:51. > :19:59.to go with more austerity rather than more stimulus because it
:19:59. > :20:01.thinks the risks are better on that side. Thanks very much.
:20:01. > :20:05.So with public sector pay restrictions and gloomy predictions
:20:05. > :20:08.that our wages will no longer go as far as we'd like for several years
:20:08. > :20:11.to come, will we spend less in the shops? And what will it mean for
:20:11. > :20:21.trade in Scotland? Laura Bicker has been gauging reaction from across
:20:21. > :20:22.
:20:22. > :20:27.The Chancellor tried to grasp at the helm, to keep the economy on
:20:27. > :20:31.course. But the burden of debt and the dark clouds gathering over the
:20:31. > :20:36.eurozone mean we are now de navigating stormier waters and
:20:36. > :20:42.wondering how long it will be before be beach stable economic
:20:42. > :20:46.shores. As they predictions for the economy grow bleaker, there was
:20:46. > :20:55.little him today's statement by the Chancellor to give cheered to
:20:55. > :21:01.consumers. Average income for household has fallen by 2.3%. And
:21:01. > :21:08.incomes will continue to fall for at least the next two years. All
:21:08. > :21:16.this at a time when we are being encouraged to spend money. Workers
:21:16. > :21:25.are aware there hard am to cash will not go as far -- hard earned
:21:25. > :21:32.cash. Postop the most disturbing aspect of today's statement is the
:21:33. > :21:40.reassessment of growth rate. That was a dramatic reduction. It drags
:21:40. > :21:45.out the slow recovery for at least another year. But it is not all bad
:21:45. > :21:53.news. Our traditional industries are coping with the crisis and
:21:53. > :21:58.finding new markets. They euros re -- of the eurozone does not look
:21:58. > :22:03.particularly strong, but in other parts of the world, there are
:22:03. > :22:09.trading opportunities which remain robust. The engineering sector and
:22:09. > :22:17.the whisky sector have markets that can be exploited. There are still
:22:18. > :22:21.opportunities to go out into world markets and make a mint. As the
:22:21. > :22:27.Federation of Small businesses met in Inverness today, they welcomed
:22:27. > :22:31.the Chancellor's plans to cancel fuel duty rises and Investment Bin
:22:31. > :22:36.road and rail. We are highly dependent on people travelling and
:22:36. > :22:46.coming out in cars and vehicles. We have notice that people are
:22:46. > :22:53.starting to assess their mileage. It is great the government is
:22:53. > :22:56.looking at it and trying to help small businesses. The amount of
:22:56. > :23:04.hurdles that are put in place, it is a bit discouraging as an
:23:04. > :23:08.employer. You want to look after the people you have got. But public
:23:08. > :23:17.sector workers will feel the pinch. The Chancellor announced that wage
:23:17. > :23:22.rises will be capped at 1%. public sector workforce are very
:23:22. > :23:29.determined. We will see a huge show of determination and solidarity
:23:29. > :23:33.tomorrow. What this Government is doing is affecting every worker in
:23:33. > :23:38.this country, public and private sector. Workers are taking a
:23:38. > :23:48.hammering from this Government. The Government has to realise that.
:23:48. > :23:48.
:23:49. > :23:58.Today, the good ship collision it set a new course in an attempt to
:23:59. > :24:03.
:24:03. > :24:06.the dust to shelter. Where we will I'm joined now from our London
:24:06. > :24:08.studios by Labour Treasury Shadow, Cathy Jamieson and by Edinburgh
:24:08. > :24:15.Liberal Democrat, Mike Crockart and by the SNP's Mike Weir. Cathy
:24:15. > :24:19.Jamieson I want to pick up on one of the things, the risk that if the
:24:19. > :24:23.British Government changed course and did what you want to do, that
:24:23. > :24:28.it really could jeopardise Britain's credit rating. That once
:24:28. > :24:32.this's done, it's almost impossible to claw back from there? Well, I've
:24:32. > :24:36.heard those arguments put in Parliament today. On the other side
:24:36. > :24:41.of this, many people have been predicting how bad things were
:24:41. > :24:44.going to be, as John McLaren outlined. We have been saying for
:24:44. > :24:48.18 months now that the government needed to change course. That the
:24:48. > :24:54.cuts were too fast. They were going too deep. They were causing more
:24:54. > :24:58.problems than they were solving. We have seen some moves today which
:24:58. > :25:01.may, if we get more information, will be of help in Scotland. The
:25:02. > :25:05.people hit Hart hardest in all of this are ordinary working families.
:25:06. > :25:10.There won't be that stimulus to get money back into the economy if the
:25:10. > :25:15.squeeze continues on those working people. Yes. That doesn't quite
:25:15. > :25:19.answer the point, that the coalition make, which, is if they
:25:19. > :25:24.jep advertise diezed the rating on UK government debt, in the way that,
:25:24. > :25:29.for example, Italy has, the consequences for all these ordinary
:25:29. > :25:33.people you are talking about, of having to finance the current
:25:33. > :25:36.levels of British debt at higher interest rates would be
:25:36. > :25:40.catastrophic? When people are raising these issues, it's
:25:41. > :25:44.important to point out that some of the problems emerged in the
:25:44. > :25:49.eurozone crisis, our economy was back sliding, was flat lining
:25:49. > :25:52.before all of this came into the public domain in the way that it
:25:52. > :25:56.has recently. We have been saying consistently that the way to deal
:25:56. > :26:00.with this was to have a plan for growth. Labour put forward a five-
:26:00. > :26:04.point plan for growth. The problem has been that the government has
:26:04. > :26:08.simply cut. They cut the public sector. Cut spending. They haven't
:26:08. > :26:14.actually put the stimulus in place for growth. That is what we have
:26:14. > :26:17.been arguing about. It remains to be seen, in terms of Scotland,
:26:17. > :26:21.unanswered questions about how I want to see the money coming into
:26:21. > :26:28.infrastructure. I hope it will be additional money. I hope the
:26:28. > :26:31.Scottish government will get people back to work using those resources.
:26:32. > :26:37.Mike Crockart the obvious count to that, the justify case made for the
:26:37. > :26:40.austerity programme that you brought in was that, if we fold the
:26:40. > :26:45.plans of the previous Labour government that would have led to a
:26:45. > :26:51.level of debt that would have been catastrophic and Britain like Italy
:26:51. > :26:54.would have had its credit rating jeopardised. You are proposing to
:26:54. > :26:59.borrow more than Alastair Darling was proposing to borrow. He would
:26:59. > :27:03.not have had the levels of public spending cuts that you have had?
:27:03. > :27:10.Well, the figures that Alastair Darling had are now 18 months to
:27:10. > :27:13.two years old. They don't reflect the circumstances that have ensued
:27:13. > :27:18.over the last 18 months. I think we can take it for granted those
:27:18. > :27:23.figures would have changed a great deal if he had been phased with the
:27:23. > :27:29.collapse of the eurozone, where 60% of our trade goes. If you had been
:27:29. > :27:34.faced with 40% rise in fuel costs over the last 18 months. It simply
:27:34. > :27:41.isn't fair to compare those two figures. It's not comparing like-
:27:41. > :27:46.for-like in time. What we are - Hang on. Where it is fair, even if
:27:46. > :27:49.you forget Alastair Darling agencies's figures you are not
:27:49. > :27:54.reducing borrowing at anything like the rate you were proposing to do
:27:54. > :27:58.under the original austerity plan. By your own logic, the rating
:27:58. > :28:01.agency should be considering withdrawing Britain's triple-A
:28:01. > :28:09.rating. Despite mutterings tonight there isn't any indication this
:28:09. > :28:12.they are doing that? They, alooning with the OECD and the IMF I agree
:28:12. > :28:18.that the cooling government's plan is a good one. It's a strong one.
:28:18. > :28:21.That is why our borrowing rates are so low. Our rates right now are
:28:21. > :28:26.lower than Germany. It's purely because of those sorts of figures
:28:26. > :28:31.that we are able to do the types of things that George Osborne was able
:28:31. > :28:35.to announce today. The fact - our credit easing. We are able to do
:28:35. > :28:39.that because the rates the government is able it get from
:28:39. > :28:44.borrow something lower than the market. We are able to pass those
:28:44. > :28:49.rates on and ensure that many small and medium enterprises across the
:28:49. > :28:54.country are guaranteed the sort of credit that they need to be able to
:28:54. > :28:59.grow the economy. Mike Weir, which side of the fence is the SNP?
:28:59. > :29:03.Scottish government has been pushing capital projects to - keep
:29:03. > :29:12.Scotland's economy going. We continue to do that. The main thing
:29:12. > :29:16.to come out of the report today was, 2012 growth slipped from 2.5% to
:29:16. > :29:21.0.7%. Most of the money for these capital projects is not coming in
:29:21. > :29:25.until well after 2012. There is a real question as to how he will
:29:25. > :29:30.feed into helping growth in Scotland and indeed the UK.
:29:31. > :29:34.interested in which side of the fence you are on. Do you agree with
:29:34. > :29:40.Cathy Jamieson that spending has been cut too far and too fast and
:29:40. > :29:44.there should be a complete change of course to pump stimulus into the
:29:44. > :29:48.economy? Do you agree with Mike Crockart that doing that would
:29:48. > :29:52.jeopardise Britain's credit rating and actually could end up
:29:52. > :29:57.impoverishing all of us? Scottish government are already
:29:57. > :30:00.taking action within the powers that they have to put money into
:30:00. > :30:04.infrastructure. To make sure that Scotland keeps working. To keep
:30:04. > :30:08.people in jobs. That is the proper way forward. We have been calling
:30:08. > :30:12.for a Plan B for a long time now. George Osborne has come a little
:30:12. > :30:16.way along the road with that today. There is a lot to do. There is real
:30:16. > :30:22.questions about how this money, how soon this money will come into the
:30:22. > :30:25.economy and how it will be put into infrastructure projects. Looking at
:30:25. > :30:30.a situation where we could have sharply rising unemployment over
:30:30. > :30:36.the next year. The money for capital infrastructure is not
:30:36. > :30:41.coming in to play until after that. If you look at the old BR report,
:30:41. > :30:46.down to 0.7% in 2012, there is assumption of growth there after.
:30:46. > :30:50.You do have to worry as to whether that is relistic. Cathy Jamieson,
:30:50. > :30:53.do you think kick starting a few infrastructure projects is enough?
:30:53. > :30:58.The implication of what you have been saying, or what Labour have
:30:58. > :31:03.been saying, is you actually want an all out boost to demand? For
:31:03. > :31:06.example, cut VAT, cut taxs to put money in people's pox pockets to
:31:06. > :31:10.get them spending now? We recognise people are feeling the squeeze at
:31:10. > :31:13.the moment. Ordinary families are feeling it on rising fuel prices,
:31:13. > :31:17.on energy prices. The food that they are buying in the shops. A
:31:17. > :31:22.whole range of things. We do believe that one of the ways to
:31:22. > :31:26.deal with this would be to reverse the VAT rise, for example, to look
:31:26. > :31:31.at how we can boost spending on home improvements. Also
:31:31. > :31:37.infrastructure is important. There are pretty shocking figures today.
:31:37. > :31:40.The notion there will be another 700,000 public sector jobs lost in
:31:40. > :31:45.the coming years is quite frightening. Who will carry out the
:31:45. > :31:50.necessary work that we need? These are the jobs we all rely on. It's
:31:50. > :31:53.not good enough to at every turn take the money out of the money of
:31:53. > :31:58.pockets of familiar familiar families. We have seen further
:31:58. > :32:03.examples today in terms of tax credits. Another obvious point is,
:32:03. > :32:07.you said when you introduced the austerity programme you wanted to
:32:08. > :32:10.eliminate the structural deficit by 2015. You didn't want to make
:32:10. > :32:14.commitments into another parliamentary term where you might
:32:14. > :32:17.not be the government because the markets could only believe you if
:32:17. > :32:22.you told them what you had an ability to do. Now, you turnaround
:32:22. > :32:29.and tell us you will not do that at all? Absolutely. These are tough
:32:29. > :32:31.times. There are things we would like to do. And, that's one of them.
:32:31. > :32:37.Unfortunately, the economic circumstances haven't turned out
:32:37. > :32:43.the way - You said the credibility of your strategy depended on that?
:32:43. > :32:47.That is what we wanted to do. If you are inflexible then that is
:32:47. > :32:52.worse than not having a plan to begin with. OK. What we have done,
:32:52. > :32:56.not just about kicking off a few infrastructure projects, by the way,
:32:56. > :32:59.it's about trying to get the confidence back into business to
:33:00. > :33:03.remove - I feel a list coming out. We are out of time much we will cut
:33:03. > :33:06.you off there. Thank you for joining us. A quick look at
:33:06. > :33:12.joining us. A quick look at tomorrow's front pages: The autumn