07/03/2012 Newsnight Scotland

Lincoln yesterday to have a look. - Tonight on Newsnight Scotland: Is

this the end for Rangers Football Club, at least in its current

incarnation? As talks on wage cuts break down, for the first time, the

administrators say the club may not be able to play on to the end of

the season. Is there now any way out of this mess? And the other

GERS, the Government Expenditure and Revenue for Scotland. Both

sides in the referendum debate prove new figures back their case.

We'll try to cast some light on who's right. Good evening. Well,

we're used by now to days of drama at Rangers but this one stood out.

Despite all the expressions of support from fans, politicians and

indeed hopeful noises from the administrators themselves, today

the officials running the club said it might not be able to continue

playing football to the end of the season. Are they facing up to the

brutal reality, or is this a final attempt to browbeat the players

into accepting huge wage cuts? We'll discuss that in a moment.

Today is blue skies of Ibrox did not last for long. The storm clouds

returned and with them the real prospects that Rangers could go to

the ball. Players arriving at Murray Park for another day's talks.

They were told that liquidation was a real possibility. Duff and Phelps

announced they were speeding up attempts to sell the club because

diluting the playing squad would Rangers director Dave King, seen

here emerging with the manager from talks with administrators at Ibrox,

also gave a stark warning about his Today, the current owner countered,

saying he believe that Rangers would come at of administration by

way of a company voluntary agreement. It appears Mr King knows

quite a lot about liquidation. This �10 million Whineray used to belong

to him. He was forced to liquidate it to pay debts to the tax

authorities. The decade-long dispute, in which the South African

taxman is claiming �225 million, is over tax-free capital gains over

taxable earned income. Judges are growing weary of dealing with Mr

King. A year and a half ago he was Dave King is the second biggest

shareholder at Ibrox. He revealed today in his statement that he is

pursuing Sir David Murray, the former chairman. He said at the

time he fell to properly disclose the true financial position of

Rangers. David Murray had something Meanwhile, another former Rangers

director, Paul Murray, said they were still many questions needing

answered, not least about the tax cases with the Inland Revenue.

Players headed off tonight after another day talking rather than

training and no doubt wondering what the next few days would bring.

With me here is sports journalist Graham Spiers and in Edinburgh is

our resident expert on football finance, Stephen Morrow, from the

University of Stirling. Just watching that, this public dispute,

the words ferrets and sacks come to mind. What a suburb! This is quite

astonishing. -- saga. It is astonishing that one of the

saviours of Rangers might be Dave King. Inland Revenue is chasing the

club and the South African Inland Revenue is chasing him. He has

substantial wealth. Whether he gets hold of the club and whether

Rangers are liquidated remains to be sinful stub I think they will be

liquidated. -- remains to be seen. The administrators have been quite

upbeat until today. Playing football to the end of the season

might not happen. administrators had been optimistic

about Rangers in previous statements. Some people wondered

why. Rangers might win the case on back taxes with the Inland Revenue.

Wire with the administrators be upbeat? -- why would the

administrators? Don't you think an obvious ploy for them would be that

they're doing this because they hope they can convince players and

agents to take wage cuts? They are saying everything is to Kenya

because of that. The administrators want to preserve the club as it is.

They do not want the club to go into liquidation. If it does, of

the new owners will face horrendous problems, not being -- not least

being out of Europe for a few years. Some people think that Duff and

Phelps have been eccentric about the way they have gone about it.

They have gone the extra mile. It is other -- either a fast by a or

brutal redundancies. One of the other mysteries of the various

statements we heard today is the administrators want to accelerate

the sale of the club. When you look at who might buy it, day King says

he wants to be involved with the Paul Murray offer. -- Dave King.

Paul Murray has said any offer would be trivial like sorting out

the issue with HMRC and sorting out legal issues to do with Craig White.

I think any conditional offer, as we had said previously, there are

so many conditions. The conditions are so substantial that it is

difficult to see how you would end up better off. If you are looking

at trying to accelerate something, you have the ticket is with the

potential legal case and the security over the assets. We also

have a tax tribunal. I cannot see where there is an incentive to buy

the club will try to arrange a takeover. The administrators are

saying it is the only option. just wondered if the statement is

code. It is confusing. If you are saying we cannot do a deal with the

players to get the wage cuts we want, therefore we're going to have

to lay-offs so many players that not only will it affect the club as

a footballing team, it will make any sale difficult because the

players are the assets of the club. If you are right, you cannot

accelerate any cell before this stuff happens, isn't this all code

for saying, it is bust and we're going into liquidation? Since the

Sabir began, I think the most likely outcome was going to be

liquidation. So many factors impact on the organisation. Liquidation

begins to look like the only option that makes any real sense. There is

so much noise around that you cannot chart a path through. You're

not sure of the things that will be in euros. By Richard put in place a

takeover? -- why would you put in place? What the administrators have

said today actually does not make sense. I think they are between a

rock and a hard place. They have a situation where they know the value

of this organisation is dependent on the assets - the players. They

need to retain those assets in order to get a value from the

organisation. Those are the same things that actually cast a Mini to

deal with that in order to survive in the short term. -- actually cost

and they need to deal with that. They must need cash to come in from

somewhere in order to keep the club going. That is why this attitude

they have adopted is hard to understand from the outside. They

have presumably crust the enormity of the situation when they went in.

-- craft. Do you think the fans, and indeed the politicians who have

been making noises about how important it is to save Fein just

as an institution, are really quite grasping what went on? A lot of the

fans are confused. I've amaze sports writer. When I speak to

business experts, they give conflicting evidence. Some said

they can come out of administration at others say they will go into

liquidation. Paul Murray is the most likely buyer of the club. The

BBC inquiry said, why would Craig White buy it a club with an Inland

Revenue taxes bill hanging over him? That is the situation that

Paul Murray is in. Even if this is possible, it is not possible in the

timescale, it would seem, that the administrators say they need to

have. Exactly. The administrators have been patient about this.

Rangers have hit the rocks. The current Rangers will die. The

administrators used the word, disillusion. I am sure a Phoenix

club will rise out of it. I cannot see another means of doing it. Why

were poor married to it? Liquidation as well. -- Paul Murray.

It is not as simple as it appears. If Craig White maintains he has

security over the assets if the club goes into liquidation and that

is disputed, possibly, by others including the administrators, but

were not get sorted out overnight, or will it? -- that will not. It is

not. You would be looking at legal cases to sort out the disputes. The

assets would be left in limbo. How does the company continued to trade

when it has no control all right to use some of the assets? We have the

football issue of whether or not they get be accepted back into the

SPL as the new company. Is there anything that the book for

authority, I do not mean in terms of putting money in Dom -- the

football of authority. Having Rangers disappear, albeit

temporarily, would be disastrous for them - the Scottish football

authorities - as for Rangers. would be bad. Rangers are loved and

hated in equal measure. They are hated. Rail Madrid I hated in Spain.

The big club is always detested. -- Real Madrid. Presuming the money

side is sorted out, can anything be done? Even though people are

detractors of Rangers, football authorities need them. Sky

Television, the BBC, ITV, they are not interested in the Scottish game

without Celtic and Rangers. It is the Old Firm may want. If Rangers

are diminished in some way, it is diminishing right across the

Scottish game and it will hurt us. It is not clear the authorities can

do anything to stop that scenario coming into play. The guy who feels

the heat is near Doncaster, the chief executive of the SPL. He

needs to punish Rangers but he needs them. They have a crown jewel.

What happens next? It is slightly confusing. The administrators have

not done the deal on wage cuts. They have not made people redundant.

They are also saying they cannot continue as they are. If there is

not going to be a sell within 48 The seem to be talking to people

that may be interested, investors, so they're not looking at

redundancy yet. This cannot go on a much longer, because they are

haemorrhaging cash. Thank you. We have to leave it there. Debt,

income and the ability to live within one's means are themes that

we'll stick with now. The question of whether Scotland could survive

outside the union, or whether it would be better off going alone,

has formed an important part of the independence debate. Today's

government figures on spending and taxation could help to illuminate

the issue. But, of course, it's not as simple as that. Our Business and

Economy Editor Douglas Fraser explains.

We're talking a big black hole again, but this has nothing to do

with Ibrox. This is the cover new expenditure and revenue Scotland. -

- government expenditure. This will explain how dependent Scotland is

on the rest of the UK, but it does not demonstrate this now. It adds

up how much Scots pay in tax, �53 billion. More than 10 billion comes

from income tax, more than 8 billion in value-added tax. No

surprise that Scots pay less in inheritance tax and stamp duty than

the average in Britain, but we give more per head for tobacco, alcohol

and gambling tax. On the other side of the balance sheet, what gets

spent on or off for Scotland? Of nearly �64 billion, the biggest

item covers state pensions and welfare come up last year to �21

billion. The �11 billion goes on the health service, but we spend

much more than we have raised. A gap of �10.7 billion, representing

7.4 % of GDP, more than twice the safe level of borrowings. If that

looks bad, look at the UK picture, even worse. Their deficit was

running at 9.2 % of GDP, so Scotland is in a relatively good

position, or, less bad anyway. All of this in a shocker of a year for

the public finances anyway, not want to be repeated, that is why

death as a deduction is such a priority. These figures assume that

we get their share of Scottish oil and gas revenues from under the sea

bed, and without this, the deficit would be 16 % of GDP. That Revenue

has been highly volatile. With this strong Scottish position hold? The

Centre for Public Policy and the regions at Glasgow University has

crunched new numbers saying that Scotland's better position is

eroding and it will be in a worse position than the UK after three

years. That depends on the oil prices and the rate of falling

production. Here with me is Ken MacIntosh,

Labour's Finance Spokesperson and in Edinburgh is the SNP's Mark

McDonald, who is a member of Holyrood's Finance Committee.

Mahmoud Donald, there is a report from economists, can you explain to

us or why any of the rest of us should be interested? These figures

clearly demonstrates that Scotland is, and continues to be in a better

position than the UK. That means in simple terms for the people of

Scotland that on the basis of these figures, every man, woman and child

in Scotland would be �510 better off if Scotland are independent.

Given that everyone is in deficit, do you mean that we would be in

debt, but �510 less in deft? Not be would be better off. Better off in

the sense you would be less in debt? You're assuming that deficits

are unnatural or are not normal. Just a straight factual questions.

The question on deficit is not if you have one, it is this the one

that should carry his manager but, as the figures demonstrate that

Scotland would have a deficit that would be manageable and sustainable

as an independent nation. There you go, terrific, fabulous. He put your

finger on it there, the idea that you can say we have at 11 billion

deficit and are better off is ridiculous. We are all drowning in

a sea of debt. He might argue that he is talking nonsense. Scotland

would be fine as an independent country, they show that as well.

think the figures reveal, yet again, is that finances and economies are

interdependent. The Scottish and UK economy is one, if we do not have a

separate economy. It is a strength to be part of the UK financial

system which gives us security and share risk and rewards. We are part

of the biggest manufacturing countries in the world, not just to

annoy based commodity. Their arguments about using North Sea oil

to pay in the economy, but given that other countries do, it would

not be a problem. The �500, which, by the way, bears a remarkable

similarity to the tune an opinion poll saying that that they would

vote for independence if we were better off, but the idea that we

should base Scotland's future on a finite commodity like North Sea or

while! Given that you accept that the �500 is less debt rather than

their areas a profit in that sense, where will the money for the North

Sea while funds come from? This fund has something to pursue win

the fiscal situation is correct. But today, on a released figures,

the rough projection is that this relatively less bad deficit

continues for about three or four years in Scotland and gets, a

Scotland pre-independence, worse, because of declining oil revenues.

In terms of the oil and gas revenues, the Prime Minister has

confessed that there is at least 40-50 years' worth of oil and gas

still to be extracted, up to a trillion pounds, possibly more, to

be extracted from the North Sea. The main determinant in this is the

price of oil and gas. Absolutely. The majority of the figures are

based, not on what an independent Scotland would do necessarily, they

are based on the assumption that you do what the UK government is

doing now, and we have said we do not believe the economic policies

being pursued by the UK government are necessarily the best for

Scotland. Scotland is in a relatively better position, but an

independent Scotland pursuing independent policies could be in a

much better position, but to use the extrapolation of these figures

and saying that Scotland would be in a worse situation as it was

independent, misrepresents that an independent Scotland would pursue

its own economic agenda. Scotland has had a fiscal deficit for 25

years now, nothing to be proud of, have quarter of a century, so we

have repeatedly be in a position to rely on the UK for spending

commitments. -- been in a position. The rescue of the banks have few

years back, that could not happen in an independent Scotland, we are

not big enough to find that money to rescue the two biggest companies,

so we would end up in a situation like Greece, Portugal or Orrell and

very are vulnerable and pensions would be at risk in that situation.

-- board to go or the Republic of Ireland, where they are vulnerable.

You can get round the stages, but only by cutting public spending or

raising taxes, I cannot see any other way round its. He would say

the fact that we're independent would mean that there is hugely

greater economic growth are something, but the cold reality of

it is, you have to put up taxes or cut public spending. You grow the

economy, Gordon, and that is what we would seek to do. Even the UK

government's Business Secretary is saying that the UK government's

policies are not good for growth. We would grow the economy in an end

independent Scotland and seek policies to enhance growth and

rather than the policies of austerity that are pursued at the

moment. We all want to grow the economy, but I do not want to lose