Browse content similar to 08/03/2012. Check below for episodes and series from the same categories and more!
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keeping inflation high, so as to keep some people who shouldn't have | :00:01. | :00:10. | |
borrowed the money in houses they cannot afford. Thank you very much | :00:11. | :00:13. | |
indeed. Tonight on Newsnight Scotland: The new Green Investment | :00:13. | :00:17. | |
Bank is to have its headquarters in Edinburgh. But how much new | :00:17. | :00:20. | |
investment will it actually deliver, how much will be north of the | :00:20. | :00:25. | |
border and could the whole thing be hobbled by the European Commission? | :00:25. | :00:28. | |
Also tonight, it's part of Britain, but not the European Union. It's | :00:28. | :00:31. | |
defended by the UK, but it sets its own tax rates and its own | :00:31. | :00:35. | |
parliament spends its own money on what it wants. Are we watching | :00:35. | :00:42. | |
modern independence in action? Good evening. The campaign to bring the | :00:42. | :00:45. | |
Government's Green Investment Bank to Scotland paid off today when the | :00:45. | :00:46. | |
Business Secretary announced Edinburgh as the headquarters, | :00:46. | :00:50. | |
although the team raising much of the money will be in London. Was it | :00:50. | :00:52. | |
politics or commerce? Either way nobody is complaining. But what | :00:52. | :01:02. | |
:01:02. | :01:06. | ||
will the Green Bank actually do? Nick Clegg said it could be based | :01:06. | :01:11. | |
on Mars for all the difference it could be it -- it could make. Today | :01:11. | :01:15. | |
Vince Cable said the location of the green investment bank in | :01:15. | :01:20. | |
Edinburgh and London was crucial to its success. Edinburgh is a very | :01:20. | :01:25. | |
good financial centre. There is a lot happening on the green industry | :01:25. | :01:31. | |
front. London is the centre of specialist banking. We had the | :01:31. | :01:36. | |
competition and those two cities came out on top. By the end of the | :01:36. | :01:40. | |
year, it will be getting out good projects and be well on the way to | :01:40. | :01:45. | |
making Britain a good leader in green investment. Edinburgh has the | :01:45. | :01:49. | |
asset management background and green industry expertise and London, | :01:49. | :01:54. | |
as a leading finance capital, has experience in brokering | :01:54. | :01:58. | |
transactions. The other bidders may not have been all that serious. | :01:58. | :02:03. | |
Edinburgh seem to be the standard. London is a financial centre. You | :02:03. | :02:07. | |
could have put the HQ in there but it would have been lost. In | :02:07. | :02:11. | |
Edinburgh, it says the statement about the importance of Edinburgh. | :02:11. | :02:18. | |
It brings in a lot of activity around it. On its own, a few dozen | :02:18. | :02:24. | |
jobs - high quality jobs - but it is the catalyst effect of putting | :02:24. | :02:28. | |
in green investment banking and other expertise and other financial | :02:28. | :02:32. | |
firms may see Edinburgh as a place to put their renewable energy | :02:32. | :02:37. | |
finance teams as well. Edinburgh beat of bits from 30 other centres, | :02:37. | :02:42. | |
claiming interest in wind and wave power and had support as falling | :02:42. | :02:49. | |
over themselves to work permit and claim some credit. As we build up | :02:49. | :02:54. | |
and build the public money we have committed to the bank, that will | :02:54. | :03:01. | |
create great opportunities. When it comes to long-term investment and | :03:01. | :03:05. | |
mobilising that large-scale investment, the Scottish financial | :03:05. | :03:11. | |
sector excels. I hope you believe that is the reason at Edinburgh is | :03:11. | :03:18. | |
the choice. What is a green investment bank? What is it for? It | :03:18. | :03:25. | |
is a small acorn of �3 billion of taxpayers' money come at seeking | :03:25. | :03:31. | |
businesses to invest in, so they can grow into mighty oaks. It will | :03:31. | :03:37. | |
try to get �200 billion of private sector money to turn into renewable | :03:37. | :03:42. | |
business projects, designed to reduce our reliance on fossil fuels. | :03:42. | :03:46. | |
It is partly the Government committing money long term on | :03:46. | :03:50. | |
preferential terms but also to get money leave it in from the private | :03:50. | :03:54. | |
sector and on longer term horizons than the market has been willing to | :03:54. | :03:58. | |
back. The market has come forward with a lot of money for renewable | :03:58. | :04:02. | |
energy and new technologies but nothing like enough and nothing | :04:02. | :04:07. | |
like on the long term basis that you need to develop them. This bank | :04:07. | :04:14. | |
is aimed at filling the gaps the market is not yet filling. The | :04:14. | :04:18. | |
union is seen in a positive light if the HQ of the British | :04:18. | :04:23. | |
institution comes to the capital of Scotland, despite the looming | :04:24. | :04:27. | |
referendum. Worth remembering the words of Vince Cable in a leaked | :04:27. | :04:31. | |
letter to the Prime Minister. We need to remain sensitive to the | :04:31. | :04:34. | |
Scottish dimension with the perception that Alex Salmond cares | :04:34. | :04:39. | |
and London does not. It is about renewables but it is also a | :04:39. | :04:45. | |
decision, driven at least in part, by politics. A short while ago, the | :04:45. | :04:47. | |
chief executive of Scottish Financial Enterprise, Owen Kelly, | :04:47. | :04:50. | |
came into our Edinburgh studio. I asked him what he thought this bank | :04:50. | :04:57. | |
would invest in that a normal bank wouldn't. The whole purpose of the | :04:57. | :05:02. | |
Bank is to address what the UK government perceives to be a market | :05:02. | :05:07. | |
failure in that private investors are currently not investing so | :05:07. | :05:09. | |
visually in the low carbon technology that is so necessary for | :05:09. | :05:15. | |
the transition to the low carbon economy. In that sense, they will | :05:15. | :05:19. | |
be investing and making up the slack, if you like, in order to | :05:19. | :05:24. | |
ensure the process goes at the pace it needs to go to achieve the | :05:25. | :05:29. | |
objectives. Babe want to bring in private investment, don't they? | :05:29. | :05:35. | |
They want to put up so many of their own. If this is going to be | :05:35. | :05:39. | |
investment in brings the private sector would not invest in any way, | :05:39. | :05:43. | |
I presume they are aiming this at things like pension funds, what is | :05:43. | :05:51. | |
the carrot? The carrot is the opportunity to invest along with a | :05:51. | :05:54. | |
public sector organisation. I suppose, the reason we are | :05:54. | :05:58. | |
particularly pleased about today's announcement is, the way to do that | :05:58. | :06:02. | |
is to ensure you have top quality investment professionals coming up | :06:02. | :06:07. | |
with the kind of projects that make that sort of investment attractive. | :06:07. | :06:12. | |
It is great for Edinburgh that it has been chosen as the place to do | :06:12. | :06:17. | |
that sort of thinking. In order to invest in some of these projects, a | :06:17. | :06:24. | |
state needs to get a waiver, doesn't it, from European rules? | :06:24. | :06:28. | |
Can you just explain that? My understanding is that they actually | :06:28. | :06:34. | |
have not got that way they yet. the latter point, it is a matter of | :06:34. | :06:39. | |
time. We understand this is a process that takes time. I do not | :06:39. | :06:43. | |
think we should read anything alarming into the fact there is a | :06:43. | :06:48. | |
timescale here. In terms of the reason for it, it is any state aid | :06:48. | :06:52. | |
and European law, anything that involves the state spending manic | :06:52. | :06:56. | |
or investing has to be approved by the European Commission under | :06:56. | :07:01. | |
single market rules. That is what that is about. What type of | :07:01. | :07:05. | |
spending has to be approved? Is expending a private company would | :07:05. | :07:09. | |
not engage in? Is the European Union more concerned about | :07:10. | :07:13. | |
investment in this sort of thing a private sector company might engage | :07:13. | :07:18. | |
him because it might be crowding them out? The crucial thing for the | :07:18. | :07:22. | |
European Commission is protecting a single market and ensuring that all | :07:22. | :07:25. | |
member states or public money of any kind really does not distort | :07:25. | :07:32. | |
the market. Obviously, there are exceptions. There are exceptions in | :07:32. | :07:36. | |
subsidies for railways and other things. The European Commission | :07:36. | :07:41. | |
does want to keep tight control over those things. This bank could | :07:41. | :07:47. | |
go ahead as matters stand and invest in something which was a | :07:47. | :07:52. | |
very long term renewables project which the private sector would be... | :07:52. | :07:56. | |
It is almost inconceivable the private sector would put money into | :07:56. | :08:00. | |
it. They could go ahead with that presumably because it would not be | :08:00. | :08:05. | |
competing with anything else? Public money could not do that but | :08:05. | :08:14. | |
Private Manning could. There is lots of investment in wind. -- | :08:15. | :08:22. | |
private money. This is about harnessing public and private money. | :08:22. | :08:28. | |
I am curious about this European point. What am getting at is, it is | :08:28. | :08:38. | |
:08:38. | :08:39. | ||
it things that are not... That the private sector would not do on its | :08:39. | :08:43. | |
own. I think in some areas, it might be theoretically possible but | :08:43. | :08:48. | |
it does not apply with this. What can they do until they get this | :08:48. | :08:53. | |
permission? What they can do it is what they have started doing in | :08:53. | :08:56. | |
London already and that is preparing the organisation in | :08:56. | :08:59. | |
getting the expertise together. That is what the announcement today | :08:59. | :09:04. | |
is about. They have said they want to appoint the chairmen, chief | :09:04. | :09:09. | |
executive and so on. That is part of building the banks are that it | :09:09. | :09:15. | |
is ready to hit the ground running. Obviously, I presume people like us | :09:15. | :09:20. | |
survive delighted it has come to Edinburgh. What the implications of | :09:20. | :09:24. | |
the transactions team still being in London? The transactions team is | :09:24. | :09:29. | |
part of the organisation that actually, if you like, delivers the | :09:29. | :09:33. | |
actual investments in consultation with banks and other investors. | :09:33. | :09:38. | |
That part of the organisation will be located in London. We always | :09:38. | :09:41. | |
knew it would be a challenge to prise it away from London, partly | :09:41. | :09:46. | |
because it is already up and running in shadow form. There will | :09:46. | :09:51. | |
be a bit of inertia around moving ahead. That is where the markets | :09:51. | :09:55. | |
are. The brain of the organisation and the headquarters functions that | :09:55. | :10:01. | |
we always argued the best place for them was Edinburgh, and they are | :10:01. | :10:06. | |
coming to Edinburgh. The real brain of the operation, the creation of | :10:06. | :10:10. | |
investment vehicles and taking investment decisions, will be here | :10:10. | :10:16. | |
in Edinburgh. Edinburgh is a centre for that kind of activity. Thank | :10:16. | :10:20. | |
you very much indeed. Now, something of a devolutionary riddle. | :10:20. | :10:24. | |
It is part of the British Isles but not part of the UK. It is defended | :10:24. | :10:28. | |
by the British armed forces and its currency is backed up by the Bank | :10:28. | :10:31. | |
of England, but it sets its own personal and business tax rates and | :10:31. | :10:35. | |
spends what it wants on what it wants. It is not in the EU but it | :10:35. | :10:39. | |
gets to trade with the EU. It used to be part of Scotland, then part | :10:39. | :10:42. | |
of England and it has been independent, sort of, for 150 years. | :10:42. | :10:52. | |
:10:52. | :10:55. | ||
Ian Hamilton reports from the Isle When is a country not a country? | :10:55. | :11:04. | |
When it is the Isle of Man of course. The locals would disagree. | :11:04. | :11:09. | |
It might not be a sovereign state but the Isle of Man has all the | :11:09. | :11:17. | |
trappings of a country. To all intents and purposes, we are | :11:17. | :11:22. | |
internally self-governing. We have our own Parliament, our own laws. | :11:22. | :11:30. | |
Our head of state is the Queen. We are in a very fortunate position, | :11:30. | :11:36. | |
from that point of view, what Scotland is striving for, which | :11:36. | :11:40. | |
already have and have had for a long time. The Manx government has | :11:40. | :11:45. | |
no shortage of power, they can spend and raise their own taxes. | :11:45. | :11:49. | |
The only two things they do not have control of his defence and | :11:50. | :11:54. | |
foreign affairs. It has been suggested this small island in the | :11:54. | :11:59. | |
middle of the Irish Sea, with a population of less than 90,000, is | :11:59. | :12:07. | |
a perfect example of devolution. contribute to the United Kingdom �3 | :12:07. | :12:15. | |
million a year. That covers defence and foreign affairs. That is an | :12:16. | :12:21. | |
agreed figure, which increases annually come up on the rate of | :12:21. | :12:26. | |
inflation. That relationship has been in place for a few years. | :12:26. | :12:30. | |
do tend to mirror Westminster legislation, particularly with | :12:30. | :12:35. | |
benefits, pensions and the health service. We have a reciprocal | :12:35. | :12:42. | |
agreement with the UK where we keep our benefit rates and pensions, etc, | :12:42. | :12:47. | |
in line with the United Kingdom. On the state pension, the UK set the | :12:47. | :12:52. | |
state pension. The Isle of Man pays the premium over and above the | :12:52. | :13:02. | |
:13:02. | :13:02. | ||
basic rate for local residents. island has its own currency but it | :13:02. | :13:10. | |
is linked to sterling. The island is not and never has been part of | :13:11. | :13:18. | |
the United Kingdom, not a member of the European Union. However, it can | :13:18. | :13:25. | |
deal with the EU through UK membership. It has its own bank. | :13:25. | :13:31. | |
They have attracted financial houses from around the globe. It is | :13:31. | :13:38. | |
not just about money. They want to diversify their economy into other | :13:38. | :13:44. | |
sectors. We have 34% in financial services and we also have a | :13:44. | :13:48. | |
burgeoning manufacturing sector as well as a business and other | :13:48. | :13:52. | |
sectors, such as retail and hospitality. We are doing well. | :13:52. | :13:58. | |
There are challenges. The Isle of Man has grown for 27 years | :13:58. | :14:08. | |
:14:08. | :14:10. | ||
Because they are a small country, it is easy for them to engage with | :14:10. | :14:20. | |
:14:20. | :14:20. | ||
the government and the radical. In recent years, the Manx government | :14:20. | :14:26. | |
has given the vote to 16 and 17 year-olds. At this public meeting | :14:26. | :14:36. | |
:14:36. | :14:36. | ||
about the island's health service, it is thought that it is a good | :14:36. | :14:42. | |
example of devo max. A relationship is informal, which brings a raft of | :14:42. | :14:48. | |
issues that I am sure Scotland will not want to follow. I suspect that | :14:48. | :14:54. | |
Alex Salmond is after devo max and not be for devolution. The Scottish | :14:54. | :14:58. | |
people need to be aware of the options they will be offered. | :14:58. | :15:05. | |
Scotland has a fair bit of power over Westminster. Whereas the Isle | :15:05. | :15:11. | |
of Man, we can't call any shots at all at the moment. Scotland does | :15:11. | :15:16. | |
have some control of a Westminster, I feel. Do you think the Isle of | :15:16. | :15:21. | |
Man is a good example of devo max when it refers to Scotland? Is it a | :15:21. | :15:27. | |
good model? I am not fully aware of what devo max Intel at the moment, | :15:27. | :15:30. | |
but if it were to end tell something equivalent to the Isle of | :15:30. | :15:38. | |
Man, it would be beneficial for Scotland. So some dispute the | :15:38. | :15:43. | |
independent status of the Isle of Man. They say it is just a tax | :15:43. | :15:49. | |
anomaly of the UK. As a real model of what the Scottish people want to | :15:49. | :15:57. | |
develop, I would say no. Scotland has shown itself as being more | :15:57. | :16:04. | |
willing to act as an independent country. I would say that Scotland, | :16:04. | :16:10. | |
if you do go down the road at independence, you will need to show | :16:10. | :16:19. | |
us how it is done. A combination of land mass and population means that | :16:19. | :16:24. | |
the differences are massive between Scotland and the Isle of Man. | :16:24. | :16:28. | |
Perhaps there will be looking across the water to us. | :16:28. | :16:32. | |
I'm joined now by a man who spent 15 years as Clerk to the Parliament | :16:32. | :16:35. | |
of the Isle of Man alongside his career as a constitutional Law | :16:35. | :16:38. | |
academic. St John Bates is currently a visiting professor at | :16:38. | :16:40. | |
Strathclyde University and still travels the world consulting on | :16:40. | :16:50. | |
:16:50. | :16:50. | ||
constitutional issues. First, a few facts. What -- in what meaningful | :16:50. | :16:56. | |
sense is it not part of the UK? is a Crown dependency, which means | :16:56. | :17:03. | |
the Queen is head of state, but it is not actually part of the UK. | :17:03. | :17:09. | |
in what sense is it not part of the EU? He it is part of the EU in a | :17:09. | :17:13. | |
sense. It is an illustration of one of the problems you have just seen | :17:13. | :17:18. | |
in the film really. When the UK joined the EU, the Isle of Man said, | :17:19. | :17:23. | |
what about us. So did the Channel Islands. Basically the UK | :17:23. | :17:27. | |
government response was, we are having problems getting in | :17:27. | :17:34. | |
ourselves, do not make life difficult. You're either have to | :17:34. | :17:44. | |
:17:44. | :17:45. | ||
come in at some point or stay out completely. The pro to court was | :17:46. | :17:53. | |
small and provided for what was needed at the time. -- the protocol. | :17:53. | :17:57. | |
It was a sparse document because it was done at the last moment. It was | :17:57. | :18:04. | |
an illustration of the problems someone else looking after external | :18:04. | :18:10. | |
relations if you are a small place because they are doing their own | :18:10. | :18:14. | |
thing and they are an element of that. All of these anomalies, and | :18:14. | :18:20. | |
it is an unusual set up, isn't it the case up that is fine as far as | :18:20. | :18:27. | |
Britain is concerned because it is so small? It is a bit like councils | :18:27. | :18:33. | |
for small islands get to do things... They can't legislate. | :18:33. | :18:43. | |
:18:43. | :18:46. | ||
course. The UK and a larger -- and other states are worried about the | :18:46. | :18:51. | |
financial aspect. If someone invests in the Isle of Man, it goes | :18:51. | :18:57. | |
on the London market and back into London. Public attention here was | :18:57. | :19:07. | |
:19:07. | :19:13. | ||
drawn to the Isle of Man over the saving issues. Gordon Brown wanted | :19:13. | :19:22. | |
to crack down on tax havens and wanted to know why there were some | :19:22. | :19:26. | |
that were part of Britain. There are discussions about changing | :19:26. | :19:36. | |
:19:36. | :19:38. | ||
financial regulations to make sure the financial cannot happen again. | :19:38. | :19:43. | |
-- financial crash. The offshore market is competitive and if you do | :19:43. | :19:47. | |
not regulate your industry properly, you are dead in the water because | :19:47. | :19:56. | |
you do not get a plaque listing and people will not invest. -- get the | :19:56. | :20:03. | |
right listing. In Isle of Man they have things like the FSA and they | :20:03. | :20:13. | |
:20:13. | :20:19. | ||
do a very thorough job. That did not save the bank going down the | :20:19. | :20:27. | |
drain? Of course not, but other things have gone down the drain. | :20:27. | :20:34. | |
But there are strong links with the FSA and the equipment on the Isle | :20:34. | :20:39. | |
of Man. In terms of the European thing, if you are part of the EU, | :20:39. | :20:46. | |
are there disadvantages to not being a normal part of it? There | :20:46. | :20:52. | |
are. This protocol dealt basically with agriculture. What matters now | :20:52. | :20:59. | |
our services. They can sell insurance, but they cannot sell it | :20:59. | :21:05. | |
directly into the EU. There has to be a bilateral individual state. If | :21:06. | :21:09. | |
the UK had entered 10 years later, we would have been looking for | :21:09. | :21:14. | |
something very different. Are there any parallels with the situation in | :21:14. | :21:24. | |
:21:24. | :21:29. | ||
Scotland? Yes. We heard in that piece about devo max. If you take | :21:29. | :21:35. | |
the sort of, or one end of the spectrum in terms of everything it | :21:35. | :21:42. | |
been devolved to Scotland apart from defence and foreign affairs, | :21:42. | :21:48. | |
then defence and foreign affairs are quite close to the relationship | :21:48. | :21:52. | |
on the Isle of Man. The other thing they had that was not mentioned in | :21:52. | :22:01. | |
the film is that it is dealt with by unwritten rules and not an act. | :22:01. | :22:07. | |
The convention is that the UK is responsible for defence, foreign | :22:07. | :22:10. | |
affairs and ultimately be good government of the island. Again, | :22:10. | :22:20. | |
:22:20. | :22:24. | ||
the issue there would be the economy, or what the -- what an | :22:24. | :22:33. | |
independent Scotland could do financially. What the Isle of Man | :22:33. | :22:40. | |
does is not going to affect... there is a lot of Investment there. | :22:40. | :22:46. | |
In that sense it is more like a council. It will not have a big | :22:46. | :22:51. | |
effect if one council, for example, does something that is financially | :22:51. | :22:56. | |
bad. You can look at it another way. People see it as offshore and so | :22:56. | :23:01. | |
forth, but in fact, we use the power was to create the shipping | :23:01. | :23:08. | |
register, Aircraft Register, a very large space industry by using tax | :23:08. | :23:17. | |
breaks to help people. My mind boggled their. Unfortunately we are | :23:17. | :23:23. | |
out of time. You would have to come back. Very quickly, tomorrow's | :23:23. | :23:33. | |
:23:33. | :23:49. | ||
That is all we have time for this A cloudy night tonight means it is | :23:49. | :23:57. | |
not quite as cold. It makes for a rather grey start on Friday morning. | :23:57. | :24:01. | |
The wet weather will slowly spread across Scotland and into Northern | :24:01. | :24:09. | |
Ireland. Some drizzly conditions across the Pennines. Central and | :24:09. | :24:13. | |
eastern England will see some brighter skies. With a hint of | :24:13. | :24:21. | |
sunshine, temperatures could jump up to 13 Celsius. Maybe some | :24:21. | :24:28. | |
drizzle here and there across the south-west. Most of Wales will be | :24:28. | :24:35. | |
dry and cloudy. Same for the sudden heart of Northern Ireland. Possibly | :24:35. | :24:43. | |
14 degrees in Belfast. It will turn whipped by the afternoon. Northern | :24:43. | :24:51. | |
Scotland start wet, but it should brighten up. More proneness on | :24:51. | :24:59. |