12/12/2011 Newsnight Scotland

star well actually they were. But The First Minister has weighed in

after the veto. He has demanded an explanation for his decision and

has asked for a meeting. But is it his meeting -- business? We have

been to these areas. The business leaders seem to be keen on the bid

for control of corporation tax. Good evening. The Tory backbenchers

are delighted, the Liberal Democrats are crumbling and the

Scottish government are... Well, it is not that clear, actually. Alex

Salmond has said the Prime Minister a letter asking about the impact on

Scotland of his decision to veto the European Union treaty changes.

But what does he actually want? Things were not looking good even

before last week's meeting in Brussels. A kiss from Nicolas

Sarkozy but look at the body language between the French

President and David Cameron. For the cameras, it was easy to show

the Prime Minister as isolated, with the rest of Europe ganging up

about a new tax on the City of London. Today, he went to the House

of Commons. He got support from his own party but tough questions from

opposition Members are. Questions from north of the border as well.

The First Minister has written about the use of the veto. He said

it was an extraordinary state of a pairs and that he had blundered

into changing the British relationship with the European

Union. He said he had a number of Union. He said he had a number of

crucial questions to answer. What risk assessment it any did the

government and take about the Why has the Scottish government and

other devolved administrations not been consulted? In the house, the

MPs challenged the Prime Minister about his failure to consult

Britain's parliaments and assemblies. That did not happen on

this occasion. How will he explain to people in Belfast, Edinburgh and

Cardiff, that this isolation and abrogating the leadership is

anything other than damaging and dangerous? Obviously in the final

analysis it is a reserved issue for the government and the relationship

with the union. But this government has gone further than any previous

government on the issues that really matter to people in Scotland,

about the single market, Fisheries and decisions in the union to work

constructively with other administrations. When he used his

veto, he put the country on a different course, not just to

France and Germany but all 26 members. Alex Salmond's

intervention suggests the outcome of last week's meeting means that

he faces new pressure from north of I'm joined from London by two Euro

cheerleaders, the SNP's Treasury spokesman, Stewart Hosie and by the

Liberal Democrat, Malcolm Bruce. What is the point of Alex Salmond's

letter? Is he just annoyed David Cameron did not call him in the

dead of night? It is not about being annoyed at not getting a

telephone call. It is because of a specific situation about how policy

is formulated. That requires the UK government to engage with devolved

government in the formulation of policy. David Cameron needed Alex

Salmond's permission? He did not but we have got a protocol and a

place for these things to be discussed to insure not just the UK

national interest, but the Scottish and Welsh national interests must

be protected from stupid decisions like opting out and allowing the UK

to be completely isolated, abandoning traditional allies. We

have now got 26 members and the UK and that is potentially very

damaging to Scotland. You would have gone along for a financial

transaction tax? We would like that on a global basis. It is no good if

it is just in one region. You do not disagree with David Cameron?

The point is that if we agreed to discuss a Treaty, you discuss and

you try to protect national interest. Even Sir John Major and

Margaret Thatcher had reasonings but he has abandoned and leadership

and walked away and it is buried damaging. A this episode another

stunning endorsement for the Liberal Democrats in government?

They are supporting a coalition tackling deep financial crisis with

more credibility than the Eurozone of. But that is not a traditional

position for the Liberal Democrats? We are in a difficult position

across the world, more than before. We have got our own currency and

policy for the financial crisis. The Eurozone has not got a policy

and is in a state of confusion and panic. They did not response to

reasonable demands in any way and under these circumstances it seemed

the right thing to do was to say that we want you to solve your

problems and you should and you must. We are tackling our problems,

you tackle yours and we must do that on a parallel track and keep

in touch and not diverge. But we must recognise different spaces.

The position has been junked? fact is that our position about the

European currency was that subject to conditions, we could and should

have joined but these conditions were not met. But they have let

members in that have not met the conditions and it has been torn up

by Germany and they are in a mess. But your position was that he would

have gone in but you have not got any in other words on the system

governing the currency because of the decisions in the past few days.

I do not accept that. But how will you? 26 countries have said they

want to move forwards and they have not said how, where or when. They

have not got a credible form of enforcing policies. The British

position is to say, we want you to do that. We have our currency, you

have yours and we should not run each other's and work together.

Alex Salmond's position is ludicrous. He wants to leave the

United Kingdom, surrender control to a bank. To suggest he should be

consulted on a decision he wanted to opt out of any weight is absurd.

He said we should have signed up and he could not have protected

Scotland. At least David Cameron offered leadership. What red lines

with Alex Salmond have had? We need to understand what was on the table.

Financial transaction tax. Changes that would have seen members

potentially adding to send their budgets to the European Commission

before the national parliaments could scrutinised. Quite

significant changes were agreed. There were things agreed in terms

of the things being replaced by the financial stability fund. We have

looked at the facility of bilateral aid with the International Monetary

Fund. These things are to help the Eurozone. But we have inflated the

issue was the fact that all 26 countries except the UK and the

nine countries not in the currency have gone in a different directions.

If you offering leadership, you do not sit back, threw toys out of the

pram, you look at the best interests. Fabricating leadership

and leaving the country isolated is not good at all or stop this is a -

-.. The fact that it seems isolated as a result of what has happened,

does that not mean the coalition is not the right arrangement for the

Liberal Democrats? It is not about an arrangement for the Liberal

Democrats. It is about the national interest. We are tackling a

financial crisis. For now, frankly, I'd think it is right to

concentrate on the plans to deal with the crisis here and then to

look at that. We are in separate places. We have to leave if there.

The Scottish Government would like the opportunity to do the same here.

Is it a good idea? Ian Hamilton has been to our closest neighbours to

get their views. I have been sent on a mission to

find out how corporation tax has an impact on different parts of the UK.

The idea is to go from Newcastle in the north-east to Newcastle here,

in Northern Ireland. There are some basic things that you need for a

road trip. A camera and a really cool car. Rubbish.

In Scotland, the Government want to have control over corporation tax

so that they can attract more business. If you see it every day

when companies are thinking about coming to the UK. They look at a

number of different countries and one of the first things they look

at is the headline rate of corporation tax. The British tax

system has evolved over many decades and is highly complex and

sophisticated. There are currently roundabout 40 consultations going

on in the UK. At one of the concerns that companies have is the

additional administration compliance that they face if they

have to deal with a UK tax system and also a Scottish system. This is

going to be great for accountants, isn't it? Haven't to strip that out,

it would be great. Cut, cut! I head south, to find landmarks,

concerned politicians. And cold weather. I have battled my way to

North Tyneside council to meet their Mayor, -- meet their mayor.

You are mentioned in the Scottish Parliament, how do you feel about

that? I was quite surprised. mentioned the senior Conservative

in the north-east of England. And she has been engaging in a range of

activities which a well-documented including going to the Conservative

conference in Manchester to lobby the Chancellor about the success

and firepower of Scotland in attracting thousands of jobs.

doing the same thing that Alex Salmond would do, but in the

argument forward. -- putting up the argument forward to ministers about

the north-east, and I'm sure that Alex Salmond and others would do

exactly the same. This political argument is about the threat of

jobs and investments draining away from the north-east and into

Scotland. Scotland and ourselves are looking at the same piece of

work. Because of the offshore wind, Scotland were offering a reduction

in corporation tax, if that happened it would be a concern for

us. This factory is all about the future. They make electric vehicles.

When companies relocate or invest in new areas, they have to consider

more than just taxation. We have a specialised engineering team

looking after the mechanical side. It is very difficult in this area

to procurer those skills. For us to move, we would need to check for

local Labour market to make sure those skills were available before

relocating. We need every job we can get. We desperately want the

same baseline with which to work with. This is what London does not

appreciate, the rest of England is not as involved with the Scottish

market. The north-east market is quite small and we are much more

mingled with the Scottish market. We could just redraw the border.

am told that if you look just north of all Turner, there is a small

area where the border is still dotted and it says "To be agreed."

So maybe we could just have a big loop down. I'm moving on, to catch

a ferry to Northern Ireland. Southerly winds across the country

are reaching gale force across In Northern Ireland, on the side

the border they are paying 26% corporation tax. Over my shoulder,

they are paying 12.5%. Northern Ireland and the Republic of Ireland

have similarities in terms of similarities and the fact that they

are in the right time-zone, part of the EU. If you look at the

differences, currency is one of those but you can always hedge your

currency exposures. Then it comes to taxation. If a company is going

to make �1 million of profit a year, is to locate in the south of

Ireland, they will save over �130,000 of tax each year.

Northern Irish say that they have an economic argument for taking

control of their corporation tax. But with Scotland's demanding the

same powers, it could delay the UK Treasury from making any firm

decisions. There is a concern that the process is taking longer, and

we are certainly not feeling that we have the tax opportunity in the

back. There is more effort to be made to ensure that. We have to

make sure that the decision-makers at the Treasury are convinced of

the arguments. Do you almost wish that they kept it out a bit longer.

We are a frankly, yes. -- quite frankly, yes. In Newcastle in

Northern Ireland, it is off-season. Money and jobs are short. Northern

Ireland will have to find �200 million a year to pay for a cut in

corporation tax. The Northern Irish tell me that this is not just about

cutting tax. It is also about creating 90,000 jobs. This would

give the region a bright future. That is if they have got their sums

right. We did some studies 18 months ago to work out what the

course return would be. If you're looking at the time it would take

to recover corporation tax, a so there would be more corporation tax

lifted because of foreign investment, that could take 15 or

20 years. The key is to look at all the other taxes as well, that would

be generated, such as National Insurance and VAT. When you look at

that, the break-even position comes within 5p -- five or six years.

Thereafter, there is a surplus, with more taxation. To see similar

cuts in Scotland, it could cost us �2 billion a year. As a UK

government -- as the UK Government is planning on cutting the high

rate of corporation tax in the next two years, some question whether we

could make cuts big enough to make it advantageous for companies to

come to Scotland. On this road trip, I have been car sick, seasick, cold

and hungry. The next time and set on our road trip, let us hope it is

the Bahamas and not Belfast. -- sent on a road trip.

A quick look at tomorrow's papers. The Scotsman has a picture of a

The Scotsman has a picture of a panda and the story is "RDS warned

about good win eight years ago. The latest report said that he had an

assertive management style. The Guardian: Recriminations mount over

EU summit. The picture is about to the deer shot last year, whose head

has now reappeared. Join us has now reappeared. Join us

It will be a blustery day on Tuesday with strong wind making it

feel cold. Showers turning increasingly wintry across northern

went -- northern Britain. Not too many showers getting into

Lincolnshire and East Anglia. Sunny, by and large. There may be sleet

mixed in with those. Over the hills and mountains of Wales, there will

be snow, and even at low levels and cross parts of North Wales. --

across parts of North Wales. By the end of the afternoon, there could

be a covering in some places in Northern Ireland. Western Scotland,

the snow showers continue to feed in across the Highlands. As we go

through Wednesday, it is looking showery and chilly, but maybe not

so many showers. Further south, there will be more sunshine and not

so many shared around. It will still feel chilly even though the

wind will be lighter. There will still be snow on Wednesday, over

the hills of western Scotland and Northern Ireland. Also, the hills

of England and Wales could see further snow. Temperatures in